NTS REALTY HOLDINGS LP

Under Delaware law, approval of the Merger Agreement required the affirmative vote of the holders of a majority of NTS Realty’s issued and outstanding Units.  On April 15, 2014, action was taken by written consent (the “Consent”) of the holders of over a majority of the issued and outstanding limited partnership units approving the Merger Agreement and the transactions contemplated thereby.  The Consent approving the merger and the transactions contemplated by the Merger Agreement was approved by holders of approximately 61.9% of NTS Realty’s issued and outstanding Units, representing approximately 59.3% of NTS Realty’s aggregate voting power.  As a result, no other vote to approve the merger and the transactions contemplated by the Merger Agreement is required.

In addition to dismissing the Kentucky Action with prejudice, the Settlement Agreement provides that, after entry of the Order and Final Judgment, the parties to the Settlement Agreement will file a stipulation and order dismissing the Delaware Action with prejudice; which stipulation was filed on May 5, 2014 and the court entered an order dismissing the Delaware Action on May 6, 2014.  Generally, if there are no appeals filed to the Order and Final Judgment or to any orders dismissing the Actions, then each such order will become final and no longer be subject to appeal after expiration of thirty (30) days following the date of entry of each respective order. Assuming no appeal of the Order and Final Judgment or any orders dismissing the Actions is filed, NTS Realty expects to satisfy the conditions to closing of the Merger Agreement and to close the merger in June 2014, although there can be no assurance that it will be able to do so.

Net loss for the three months ended March 31, 2014 was approximately $1.7 million, and net income for the three months ended March 31, 2013 was approximately $0.3 million.  The change in net loss for the three months ended March 31, 2014 as compared to the net income for the three months ended March 31, 2013 was primarily the result of a $1.6 million decrease in interest and other income in our multifamily segment primarily from a non-recurring settlement received in 2013 for landscaping and tree damage and a $0.2 million increase in deferred compensation expense in our partnership segment.  In addition, there was a $0.9 million decrease in income from investments in tenants in common primarily from a $0.8 million non-recurring settlement received in 2013 for landscaping and tree damage and a $0.1 million decrease in operating income in our tenants in common properties.  These changes were partially offset by a $0.5 million increase in operating income in our multifamily segment and a $0.1 million decrease in legal and professional fees in our partnership segment primarily related to ongoing litigation in 2014 as compared to 2013.  There were no other material offsetting changes in net (loss) income for the three months ended March 31, 2014 and 2013.

Pursuant to our various management agreements, NTS Development Company and/or its affiliate, NTS Management Company, (collectively referred to as “NTS Development”), receives property management fees equal to 5% of the gross collected revenue from our properties.  This includes our wholly-owned properties, our consolidated and unconsolidated joint venture properties and properties owned by our eight wholly-owned subsidiaries financed through FHLMC.  NTS Development receives property management fees from our unconsolidated properties owned as a tenant in common with unaffiliated third parties equal to 3.5% of their gross collected revenue under separate management agreements.  We are 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 has agreed to accept a lower management fee for the properties we own as a tenant in common with unaffiliated third parties 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 for the sale of one of our properties owned as a tenant in common with unaffiliated third parties.  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 of management fee expense.

In addition to dismissing the Kentucky Action with prejudice, the Settlement Agreement provides that, after entry of the Order and Final Judgment, the parties to the Settlement Agreement will file a stipulation and order dismissing the Delaware Action with prejudice; which stipulation was filed on May 5, 2014 and the court entered an order dismissing the Delaware Action on May 6, 2014.  Generally, if there are no appeals filed to the Order and Final Judgment or to any orders dismissing the Actions, then each such order will become final and no longer be subject to appeal after expiration of thirty (30) days following the date of entry of each respective order.