Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements in Item 1 and the cautionary statements below.

Critical Accounting Policies

A critical accounting policy is one that would materially affect our operations or financial condition, and requires management to make estimates or judgments in certain circumstances. These judgments often result from the need to make estimates about the effect of matters that are inherently uncertain. Critical accounting policies are not to be confused with accounting principles and methods disclosed in accordance with U.S. generally accepted accounting principles ("GAAP"). GAAP requires information in financial statements about accounting principles, methods used and disclosures pertaining to significant estimates. Our Critical Accounting Policies, as previously disclosed in our most recent annual report on Form 10-K, which was filed on March 31, 2009, discuss judgments known to management pertaining to trends, events or uncertainties known which were taken into consideration upon the application of those policies and the likelihood that materially different amounts would be reported upon taking into consideration different conditions and assumptions and remain unchanged during the quarter ended June 30, 2009.

Results of Operations

As of June 30, 2009, we owned wholly or as a tenant in common with an unaffiliated third party or through joint venture investments, fourteen multifamily properties, seven office and business centers and three retail properties. We generate substantially all of our operating income from property operations.

Net loss for the three months ended June 30, 2009 was approximately $3.7 million and net income for the three months ended June 30, 2008 was approximately $15.6 million. Net loss for the six months ended June 30, 2009 was approximately $6.4 million and net income for the six months ended June 30, 2008 was approximately $14.0 million. The decrease was primarily due to the sale of the Office Portfolio (May 2008).

The following tables include certain selected summarized operating data for the three and six months ended June 30, 2009 and 2008. This data should be read in conjunction with our financial statements, including the notes attached hereto.

                                                          (Unaudited)
                                                Three Months Ended June 30, 2009
                                    Retail     Commercial    Multifamily     Partnership       Total
Total revenues                     $ 179,245   $ 1,695,012   $  8,872,380   $      (7,276 ) $ 10,739,361
Operating expenses
and operating
expenses reimbursed
to affiliate                          46,660       710,924      3,119,316               -      3,876,900
Depreciation and
amortization                          40,062       486,990      3,728,768               -      4,255,820
Total interest
expense                              (89,369 )    (496,262 )   (2,284,595 )        19,604     (2,850,622 )
Net income (loss)                    104,216      (325,006 )   (2,799,185 )      (709,863 )   (3,729,838 )




                                                            (Unaudited)
                                                 Three Months Ended June 30, 2008
                            Land        Retail     Commercial    Multifamily     Partnership       Total
Total revenues          $          -   $ 152,486   $ 1,880,643   $  7,608,229   $     (68,706 ) $ 9,572,652
Operating expenses
and operating
expenses reimbursed
to affiliate                       -      45,400       661,099      3,158,333               -     3,864,832
Depreciation and
amortization                       -      58,381       392,439      2,846,368               -     3,297,188
Total interest
expense                            -     (92,151 )    (505,991 )   (1,884,313 )       169,749    (2,312,706 )
Net income (loss)            123,288      58,297    18,522,776     (2,658,944 )      (478,074 )  15,567,343

                                                          (Unaudited)
                                                 Six Months Ended June 30, 2009
                                    Retail     Commercial    Multifamily     Partnership       Total
Total revenues                     $ 359,384   $ 3,439,578   $ 17,462,413   $     (16,504 ) $ 21,244,871
Operating expenses
and operating
expenses reimbursed
to affiliate                          80,238     1,376,567      5,704,544               -      7,161,349
Depreciation and
amortization                          84,544       974,178      7,294,820               -      8,353,542
Total interest
expense                             (179,622 )    (963,758 )   (4,512,723 )        70,428     (5,585,675 )
Net income (loss)                    207,296      (524,894 )   (4,731,403 )    (1,324,592 )   (6,373,593 )




                                                            (Unaudited)
                                                   Six Months Ended June 30, 2008
                            Land        Retail     Commercial    Multifamily     Partnership       Total
Total revenues          $          -   $ 314,717   $ 3,990,709   $ 15,071,553   $     (99,697 ) $ 19,277,282
Operating expenses
and operating
expenses reimbursed
to affiliate                       -      72,673     1,249,782      5,315,056               -      6,637,511
Depreciation and
amortization                       -      99,289       785,722      5,682,997               -      6,568,008
Total interest
expense                            -    (184,963 )    (943,625 )   (3,774,373 )      (299,697 )   (5,202,658 )
Net income (loss)            131,358     162,084    19,430,575     (3,973,798 )    (1,748,435 )   14,001,784

Occupancy levels at our continuing properties by segment as of June 30, 2009 and 2008 were as follows:

              2009   2008
Commercial    67%    79%
Multifamily   93%    94%
Retail        98%    86%
Land          N/A    N/A

The average occupancy levels at our continuing properties by segment for the three and six months ended June 30, 2009 and 2008 were as follows:

                           Three Months Ended June 30,      Six Months Ended June 30.
                              2009             2008           2009             2008
            Commercial        67%              79%            67%              77%
            Multifamily       92%              93%            92%              93%
            Retail            98%              88%            98%              90%
            Land              N/A              N/A            N/A              N/A

We believe the remaining changes in occupancy on June 30 and in average occupancy from period to period are temporary effects of each property's specific mix of lease maturities and are not indicative of any known trend or uncertainty. The change in the commercial segment is due to the continued vacancy of Sears Office Building and the move out of Kroger, an NTS Center tenant, in October 2008.

The leasing and renewal negotiations for our commercial and retail properties are primarily handled by leasing agents that are employees of NTS Development Company. All advertising for the commercial and retail properties is coordinated by NTS Development Company's marketing staff located in Louisville, Kentucky.

We have on-site leasing staff, who are employees of NTS Development Company, at each of the multifamily properties. The staff handles all on-site visits from potential tenants, coordinates local advertising with NTS Development Company's marketing staff, makes visits to local companies to promote fully furnished apartments and negotiates lease renewals with current residents.

The following discussion relating to changes in our results of operations includes only material line items within our Statements of Operations or line items for which there was a material change between the three and six months ended June 30, 2009 and 2008.

Rental Income and Tenant Reimbursements

Rental income and tenant reimbursements from continuing operations for the three months ended June 30, 2009 and 2008 were approximately $10.7 million and $9.6 million, respectively. Rental income and tenant reimbursements from continuing operations for the six months ended June 30, 2009 and 2008 were approximately $21.2 million and $19.3 million, respectively. The increases of $1.1 million, or 11%, and $1.9 million, or 10%, were primarily the result of our 2008 acquisition of Shelby Farm Apartments (June 2008), referred to as our "2008 acquisition". There were no other material offsetting changes in rental income and tenant reimbursements for the three and six months ended June 30, 2009 and 2008.

Operating Expenses and Operating Expenses Reimbursed to Affiliate

Operating expenses from continuing operations for the three months ended June 30, 2009 and 2008 were approximately $2.7 million and $2.8 million, respectively. Operating expenses from continuing operations for the six months ended June 30, 2009 and 2008 were approximately $4.8 million and $4.5 million, respectively. The decrease of $0.1 million, or 4%, was primarily the result of decreased operating expenses in the Multifamily segment, partially offset by our 2008 acquisition. The increase of $0.3 million, or 7%, was primarily due to our 2008 acquisition. There were no other material offsetting changes in operating expenses from continuing operations for the three or six months ended June 30, 2009 and 2008.

Operating expenses reimbursed to affiliate from continuing operations for the three months ended June 30, 2009 and 2008 were approximately $1.2 million and $1.1 million, respectively. Operating expenses reimbursed to affiliate from continuing operations for the six months ended June 30, 2009 and 2008 were approximately $2.4 million and $2.1 million, respectively. The increases of $0.1 million, or 9%, and $0.3 million, or 14%, were primarily due to our 2008 acquisition. There were no other material offsetting changes in operating expenses reimbursed to affiliate from continuing operations for the three or six months ended June 30, 2009 and 2008.

We do not have any employees. Pursuant to our management agreement, NTS Development Company employs the individuals who provide services necessary to operate our properties and conduct our business. NTS Development Company provides employees that may also perform services for other properties and business enterprises. In the situation where a particular employee benefits multiple operations, the employee's cost is proportionately charged out to the entity receiving the services. We only reimburse charges from NTS Development Company for actual costs of employee services incurred for our benefit. The cost of services provided to us by NTS Development Company's employees are classified in our Condensed Consolidated Statements of Operations as "Operating expenses reimbursed to affiliate". The services provided by others are classified as "Operating expenses".

Operating expenses reimbursed to affiliate are for services performed by employees of NTS Development Company, an affiliate of our general partners. These employee services include property management, leasing, maintenance, security and other services necessary to manage and operate our business.

Operating expenses reimbursed to affiliate from continuing operations consisted approximately of the following:

                                (Unaudited)                      (Unaudited)
                        Three Months Ended June 30,       Six Months Ended June 30,
                           2009              2008            2009            2008
Property              $       802,000    $    690,000   $    1,577,000    $ 1,371,000
Multifamily Leasing           144,000         131,000          274,000        244,000
Administrative                233,000         219,000          482,000        461,000
Other                          12,000          16,000           24,000         31,000

Total                 $     1,191,000    $  1,056,000   $    2,357,000    $ 2,107,000

Management Fees

Management fees from continuing operations for the three months ended June 30, 2009 and 2008 were approximately $0.5 million and $0.5 million, respectively. Management fees from continuing operations for the six

months ended June 30, 2009 and 2008 were approximately $1.1 million and $1.0 million, respectively. The increase of $0.1 million, or 10%, was primarily the result of our 2008 acquisition. There were no other material offsetting changes in management fees for the three and six months ended June 30, 2009 and 2008.

Pursuant to our management agreement, NTS Development Company receives property management fees equal to 5% of the gross collected revenue from our wholly-owned properties and joint venture properties that are less than wholly-owned, but which we control or for which we are the primary beneficiary. NTS Development Company receives property management fees from our properties owned as a tenant in common with an unaffiliated third party equal to 3.5% of their gross collected revenue under separate management agreements. We were the beneficiary of a preferential ownership interest, disproportionately greater than our initial cash investment in each property owned as a tenant in common with an unaffiliated third party. NTS Development Company has agreed to accept a lower management fee for the properties we own as a tenant in common with an unaffiliated third party in exchange for a larger potential disposition fee. Disposition fees of up to 6% of the gross sales price may be paid to NTS Development Company for the sale of one of our properties owned as a tenant in common with an unaffiliated third party. Management fees are calculated as a percentage of cash collections and are recorded on the accrual basis. As a result, the fluctuations in revenue between years will differ from the fluctuations in management fee expense.

Property Taxes and Insurance

Property taxes and insurance expense from continuing operations for the three months ended June 30, 2009 and 2008 were approximately $1.8 million and $1.7 million, respectively. Property taxes and insurance from continuing operations for the six months ended June 30, 2009 and 2008 were approximately $3.3 million and $2.9 million, respectively. The increase of $0.4 million, or 14%, for the six months ended June 30, 2009 was primarily due to our 2008 acquisition (approximately $0.5 million) and increased expense at Willow Lake Apartments (approximately $0.4 million) due to higher property tax assessments for the six months ended June 30, 2009. The increases are partially offset by approximately $0.6 million of decreased property tax expense at Castle Creek Apartments, Lake Clearwater Apartments and The Lakes Apartments due to successful property tax assessment appeals for the six months ended June 30, 2009. There were no other material offsetting changes in property taxes and insurance for the three and six months ended June 30, 2009 and 2008.

Professional and Administrative Expenses and Professional and Administrative Expenses Reimbursed to Affiliate

Professional and administrative expenses from continuing operations for the three months ended June 30, 2009 and 2008 were approximately $0.4 million and $0.3 million, respectively. Professional and administrative expenses from continuing operations for the six months ended June 30, 2009 and 2008 were approximately $0.6 million and $0.6 million, respectively. The increase of $0.1 million, or 33%, was primarily due to increases in numerous categories of professional and administrative expenses for the three months ended June 30, 2009. There were no material offsetting changes in professional and administrative expenses for the six months ended June 30, 2009 and 2008.

Professional and administrative expenses reimbursed to affiliate from continuing operations for the three months ended June 30, 2009 and 2008 were approximately $0.4 million and $0.4 million, respectively. Professional and administrative expenses reimbursed to affiliate from continuing operations for the six months ended June 30, 2009 and 2008 were approximately $0.8 million and $0.8 million, respectively. For the three and six months ended June 30, 2009 and 2008, there were no material offsetting changes in professional and administrative expenses reimbursed to affiliate.

We do not have any employees. Pursuant to our management agreement, NTS Development Company employs the individuals who provide services necessary to operate our properties and conduct our business. NTS Development Company provides employees that may also perform services for other properties and business enterprises. In the situation where a particular employee benefits multiple operations, the employee's cost is proportionately charged out to the entity receiving the services. We only reimburse charges from NTS Development Company for actual costs of employee services incurred for our benefit. The cost of services provided to us by NTS Development Company's employees are classified in our Condensed Consolidated Statements of Operations as "Professional and administrative expenses reimbursed to affiliate". The services provided by others are classified as "Professional and administrative expenses".

Professional and administrative expenses reimbursed to affiliate are for the services performed by employees of NTS Development Company, an affiliate of our general partners. These employee services include legal, financial and other services necessary to manage and operate our business.

Professional and administrative expenses reimbursed to affiliate from continuing operations consisted approximately of the following:

                                (Unaudited)                         (Unaudited)
                        Three Months Ended June 30,          Six Months Ended June 30,
                          2009               2008              2009              2008
Finance              $       105,000    $        95,000   $      193,000    $      199,000
Accounting                   175,000            195,000          363,000           411,000
Investor Relations            74,000             73,000          153,000           151,000
Human Resources                4,000              5,000            8,000            10,000
Overhead                      34,000             36,000           68,000            72,000

Total                $       392,000    $       404,000   $      785,000    $      843,000

Depreciation and Amortization

Depreciation and amortization expense from continuing operations for the three months ended June 30, 2009 and 2008 was approximately $4.3 million and $3.3 million, respectively. Depreciation and amortization expense from continuing operations for the six months ended June 30, 2009 and 2008 was approximately $8.4 million and $6.6 million, respectively. The increases of $1.0 million, or 30%, and $1.8 million, or 27%, were primarily due to our 2008 acquisition and 2009 acquisitions of Golf Brook Apartments and Sabal Park Apartments (June 2009), referred to as our "2009 acquisitions", and our reclassification of NTS Center into continuing operations. There were no other material offsetting changes in depreciation and amortization for the three and six months ended June 30, 2009 and 2008.

Interest Expense

Interest expense from continuing operations for the three months ended June 30, 2009 and 2008 was approximately $2.9 million and $2.3 million, respectively. Interest expense from continuing operations for the six months ended June 30, 2009 and 2008 was approximately $5.6 million and $5.2 million, respectively. The increase of $0.6 million, or 26% for the three months ended June 30, 2009 and 2008 was primarily due to our 2008 acquisition and an increase in interest expense related to the interest rate swap. The increase of $0.4 million, or 8%, for the six months ended June 30, 2009 and 2008 was primarily due to our 2008 acquisition partially offset by our May 2008 payoff of our mortgage payable to a bank of $14.3 million, which relates to the sale of the Office Portfolio and a decrease in interest expense related to the interest rate swap. There were no other material offsetting changes in interest expense for the three and six months ended June 30, 2009 and 2008.

Loss on Disposal of Assets

The loss on disposal of assets from continuing operations for the three and six months ended June 30, 2009 and 2008 can be attributed to assets that were not fully depreciated at the time of replacement, spread primarily amongst the commercial and multifamily properties. The 2009 loss on disposal of assets was due to heating and air conditioning units and property handrails while the 2008 loss on disposal of assets included heating and air conditioning unit replacement, tenant finish renovations and signage.

Loss From Investment in Tenants in Common

Loss from investment in tenants in common for the three and six months ended June 30, 2009 and 2008 includes the net operating loss attributable to our investments in tenants in common with an unaffiliated third party. The properties are The Overlook at St. Thomas Apartments and Creek's Edge at Stony Point Apartments.

Discontinued Operations

Discontinued operations, net for the three months ended June 30, 2009 was net income of approximately $0.1 million and a net loss of approximately $0.1 million, for the three months ended June 30, 2008. Discontinued operations, net for the six months ended June 30, 2009 and 2008, was approximately $0.2 million and $0.6 million, respectively. Discontinued operations, net for the three and six months ended June 30, 2009 and 2008, includes the net operating results for the properties previously sold and currently held for sale as listed below.

Property                                          Location      Date of Sale
Atrium Center                                  Louisville, KY     May 2008
Blankenbaker Business Center I                 Louisville, KY     May 2008
Blankenbaker Business Center II                Louisville, KY     May 2008
Anthem Office Center                           Louisville, KY     May 2008
Plainview Center                               Louisville, KY     May 2008
Plainview Point Office Center Phase I and II   Louisville, KY     May 2008
Plainview Point Office Center Phase III        Louisville, KY     May 2008
ITT Parking Lot                                Louisville, KY     May 2008
Outlet Mall                                    Louisville, KY   Held for Sale

Gain on Sale of Discontinued Operations

Gain on sale of discontinued operations for the three and six months ended June 30, 2008 was approximately $18,910,000, due to the sale of the Office Portfolio on May 1, 2008.

Liquidity and Capital Resources

Our most liquid asset is our cash and equivalents, which consist of cash and short-term investments, but do not include any restricted cash. Operating income generated by the properties will be the primary source from which we generate cash. Other sources of cash include the proceeds from our mortgage loans and note payable. Our main uses of cash will relate to capital expenditures, required payments of our mortgages and note payable, distributions and property taxes.

The following table summarizes our approximate sources/uses of cash flow for the six months ended June 30, 2009 and 2008:

                                                           (Unaudited)
                                                    Six Months Ended June 30,
                                                       2009            2008
Operating activities                              $    2,655,000    $ 1,395,000
Investing activities                                 (32,680,000 )    2,350,000
Financing activities                                  30,445,000     (4,361,000 )

Net increase (decrease) in cash and equivalents   $      420,000    $  (616,000 )

Cash Flow from Operating Activities

Net cash provided by operating activities increased to approximately $2.7 million from $1.4 million for the six months ended June 30, 2009 and 2008, respectively. The increase was primarily due to the release of restricted cash of approximately $4.6 million from the proceeds of our sale of the Office Portfolio and $0.1 million from results of operations. The increase is offset by reserving approximately $0.9 million of restricted cash for roof maintenance, taxes and insurance for our 2009 acquisitions, a $1.1 million decrease in cash used to satisfy accounts payable, $1.0 million of cash used for other assets and a decrease of $0.4 million in accounts receivable collected.

Cash Flow from Investing Activities

Net cash used in investing activities was approximately $32.7 million for the six months ended June 30, 2009 compared to cash provided by investing activities of approximately $2.4 million for the six months ended June

30, 2008. In 2009, we used approximately $32.2 million on our 2009 acquisitions. In 2008, we used approximately $41.0 million on our 2008 acquisition and approximately $3.0 million on capital improvements which were partially offset by approximately $46.5 million of net proceeds from the sale of our Office Portfolio.

Cash Flow from Financing Activities

Net cash provided by financing activities was approximately $30.4 million for the six months ended June 30, 2009 compared to cash used in financing activities of approximately $4.4 million for the six months ended June 30, 2008. The change was primarily the result of the net usage change in activity on the revolving note payable of $24.1 million, a decrease in additional payments on mortgages of $16.8 million and $2.5 million of contributions from noncontrolling interest holders. The increase in cash provided is offset by a decrease in proceeds from mortgages payable for acquisitions of $9.7 million.

Future Liquidity

Our future liquidity depends significantly on our properties' occupancy remaining at a level which allows us to make debt payments and have adequate working capital, currently and in the future. If occupancy were to fall below that level and remain at or below that level for a significant period of time, our ability to make payments due under our debt agreements and to continue paying daily operational costs would be greatly impaired. In the next twelve months, we intend to operate the properties in a similar manner to their operation in recent years. Cash reserves, which consist of unrestricted cash as . . .