<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter period ended February 28, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________________ To ______________________
Commission file number 0-10287
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
- -------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Missouri 43-1182535
- ------------------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7701 Forsyth Boulevard, St. Louis, Missouri 63105
- ------------------------------------------- ---------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 863-7700
- -------------------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12,13, or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date __________.
Page 1 of 12 Pages
<PAGE> 2
PART I
ITEM 1 - FINANCIAL STATEMENTS:
- ------------------------------
<TABLE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
----------------------------------------
(A LIMITED PARTNERSHIP)
-----------------------
BALANCE SHEETS
--------------
<CAPTION>
February 28, November 30,
1995 1994
(Unaudited)
------------ ------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 616,641 $ 603,039
Accounts receivable 137,724 247,001
Prepaid expenses and deposits 19,510 10,845
Investment property
Land and improvements 2,345,598 2,345,598
Buildings 13,013,199 13,013,832
------------ ------------
15,358,797 15,359,430
Less accumulated depreciation 7,638,849 7,541,195
------------ ------------
7,719,948 7,818,235
Deferred expenses-At amortized cost 131,338 68,420
------------ ------------
$ 8,625,161 $ 8,747,540
============ ============
LIABILITIES AND PARTNERS' DEFICIT:
Liabilities:
Accounts payable and accrued expenses $ 386,160 $ 389,727
Mortgage notes payable 8,547,682 8,664,475
Refundable tenant deposits 56,042 54,830
------------ ------------
8,989,884 9,109,032
Partners' Deficit (364,723) (361,492)
------------ ------------
$ 8,625,161 $ 8,747,540
============ ============
</TABLE>
<PAGE> 3
<TABLE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
----------------------------------------
(A LIMITED PARTNERSHIP)
-----------------------
STATEMENTS OF OPERATIONS AND PARTNERS' DEFICIT
----------------------------------------------
(UNAUDITED)
-----------
<CAPTION>
Three Months Ended
February 28, February 28,
1995 1994
As Restated
See Note E
------------ ------------
<S> <C> <C>
REVENUES:
Rental and other income $ 571,187 $ 555,278
Interest 2,981 3,831
------------ ------------
574,168 559,109
EXPENSES:
Interest 212,855 215,964
Depreciation and amortization 118,065 128,865
Real estate taxes 102,464 82,031
Property management fees paid to
Nooney Krombach Company 28,050 27,753
Reimbursement to Nooney Krombach
Company for partnership management
services and indirect expenses 7,500 7,500
Other operating expenses 108,465 148,983
------------ ------------
577,399 611,096
------------ ------------
NET LOSS $ (3,231) $ (51,987)
============ ============
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (0.27) $ (4.29)
============ ============
PARTNERS' DEFICIT:
Beginning of Period $ (361,492) $ (326,448)
Net Loss (3,231) (51,987)
------------ ------------
End of Period $ (364,723) $ (378,435)
============ ============
</TABLE>
<PAGE> 4
<TABLE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
----------------------------------------
(A LIMITED PARTNERSHIP)
-----------------------
STATEMENTS OF CASH FLOWS
------------------------
(UNAUDITED)
-----------
<CAPTION>
Three Months Ended
February 28, February 28,
1995 1994
As Restated
See Note E
------------ ------------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Net Loss $ (3,231) $ (51,987)
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 118,065 128,865
Changes in assets and liabilities:
Decrease in accounts receivable 109,277 27,223
(Increase) Decrease in prepaid expenses (8,665) 3
Increase in deferred assets (72,623) (472)
Decrease in accounts payable
and accrued expenses (3,567) (124,991)
Increase in refundable tenant deposits 1,212 549
------------ ------------
Total Adjustments 143,699 31,177
------------ ------------
Net cash provided by (used in)
operating activities 140,468 (20,810)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Addition to investment property (10,073) (194)
------------ ------------
Net cash used in investing activities (10,073) (194)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Payments on mortgage notes payable (116,793) (112,420)
------------ ------------
Net cash used in financing activities (116,793) (112,420)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 13,602 (133,424)
CASH AND CASH EQUIVALENTS,
Beginning of period 603,039 658,320
------------ ------------
<PAGE> 5
CASH AND CASH EQUIVALENTS,
End of period $ 616,641 $ 524,896
============ ============
</TABLE>
<PAGE> 6
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
----------------------------------------
(A LIMITED PARTNERSHIP)
-----------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
THREE MONTHS ENDED FEBRUARY 28, 1995 AND 1994
---------------------------------------------
NOTE A:
Refer to the Registrant's financial statements for the year ended November 30,
1994, which are contained in the Registrant's Annual Report on Form 10-K, for a
description of the accounting policies which have been continued without change
except as noted below. Also, refer to the footnotes to those statements for
additional details of the Registrant's financial condition. The details in
those notes have not changed except as a result of normal transactions in the
interim or as noted below.
NOTE B:
The financial statements include only those assets, liabilities, and results of
operations of the partners which relate to the business of Nooney Real Property
Investors-Two, L.P. The statements do not include assets, liabilities,
revenues or expenses attributable to the partners' individual activities. No
provision has been made for federal and state income taxes since these taxes
are the responsibility of the partners. In the opinion of the general
partners, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
changes in financial position at February 28, 1995 and for all periods
presented have been made.
NOTE C:
The Registrant's properties are managed by Nooney Krombach Company, a
wholly-owned subsidiary of Nooney Company. Certain individual general partners
of the Registrant are officers and directors of Nooney Company. Nooney
Investors, Inc., a general partner, is a wholly-owned subsidiary of Nooney
Company.
NOTE D:
The loss per limited partnership unit for the three months ended February 28,
1995 and 1994 was computed based on 12,000 units, the number of units
outstanding during the periods.
NOTE E:
Subsequent to the filing of the 1994 10-Q's, the Registrant's management
determined that certain adjustments were not properly reflected in the
quarterly financial statements. The adjustments were as follows:
(i) Depreciation expense had previously been overstated as a result of a
computational error. The adjustment results in a reduction of
depreciation expense and an increase in net income of $1,834 for the
quarter ended February 28, 1994. The aforementioned adjustment was
properly reflected in the November 30, 1994 financial statements.
<PAGE> 7
(ii) Net loss per limited partnership unit amounts have also been restated to
reflect an error made in the previous per unit calculations.
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
The Registrant's cash and cash equivalents at February 28, 1995 were
higher than the previous year-end due to higher cash flow from operations. The
Registrant is reserving all cash in order to meet future capital expenditures.
The Registrant has a second mortgage on Park Plaza I and II and Morenci
Professional Park with a balance of $271,061, and Maple Tree Shopping Center
with a balance of $300,932. These second mortgages mature in May 1995. The
Registrant made a $50,000 principal payment during the first quarter of 1995.
The mortgage holder has agreed to renew the second mortgage debt.
During the first quarter of 1995, the properties generated cash flow after
capital expenditures. In addition to continued leasing expenditures at
Morenci, Maple Tree completed utility infrastructure enhancements. The
Registrant expects the properties to provide adequate cash flow from operations
to fund capital expenditures anticipated during the remainder of 1995 (See
Expected Cost of Capital).
During the first quarter of 1995, the Registrant signed an application to
refinance the first mortgage debt on Park Plaza I and II, Morenci Professional
Park and Jackson Industrial. The lender had indicated that the major tenant at
Jackson Industrial, whose lease expires on July 31, 1995, must be renewed for a
minimum 3-year term. During the second quarter, the lender rejected the
application due to the contingency of the renewal of the major tenant at
Jackson Industrial and the upcoming vacancy of the major tenant at Morenci
Professional Park. The first mortgage debt on Jackson Industrial matures in
October 1995. The Registrant plans to negotiate an extension of this debt.
The Registrant is also seeking to refinance the Maple Tree Shopping Center for
approximately $2,000,000.
The future liquidity of the Registrant is dependent on its ability to fund
future capital expenditures and mortgage payments from operations and cash
reserves, maintain occupancy and negotiate with lenders the refinancing of
mortgage debt as it matures. Until such time as the real estate market
recovers and profitable sale of the properties is feasible, the Registrant will
continue to manage the properties to achieve its investment objectives.
<PAGE> 8
Results of Operations
- ---------------------
For the quarters ended February 28, 1995, 1994 and 1993, the Registrant's
properties generated cash flows (excluding any partnership expenses) as
follows:
<TABLE>
<CAPTION>
Jackson A Maple Tree Park Plaza Morenci
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
1995
- ----
Net Operating Cash
Income <F1> $ 33,000 $ 15,000 $ 37,000 $ 17,000
Capital Expenditures (-0-) (5,000) (-0-) (-0-)
Tenant Alterations (-0-) (-0-) (-0-) (5,000)
Lease Commissions (-0-) (-0-) (-0-) (-0-)
------------ ------------ ------------ ------------
Net Property Cash Flow $ 33,000 $ 10,000 $ 37,000 $ 12,000
============ ============ ============ ============
1994
- ----
Net Operating Cash
Income <F1> $ 36,000 $ 3,000 $ 15,000 $ 11,000
Capital Expenditures (-0-) (-0-) (-0-) (-0-)
Tenant Alterations (-0-) (-0-) (-0-) (-0-)
Lease Commissions (-0-) (-0-) (-0-) (-0-)
------------ ------------ ------------ ------------
Net Property Cash Flow $ 36,000 $ 3,000 $ 15,000 $ 11,000
============ ============ ============ ============
1993
- ----
Net Operating Cash
Income <F1> $ 40,000 $ 16,000 $ 28,000 $ 11,000
Capital Expenditures (-0-) (4,000) (-0-) (-0-)
Tenant Alterations (18,000) (-0-) (3,000) (1,000)
Lease Commissions (-0-) (-0-) (-0-) (-0-)
------------ ------------ ------------ ------------
Net Property Cash Flow $ 22,000 $ 12,000 $ 25,000 $ 10,000
============ ============ ============ ============
- ---------------
<FN>
<F1> Net Operating Cash Income represents Rental Revenue less Operating
Expenses, excluding depreciation and amortization, less Debt Service.
</TABLE>
<PAGE> 9
Expected remaining 1995 Capital Expenditures:
<TABLE>
<CAPTION>
Other Leasing
Capital Capital Total
------------ ------------ ------------
<S> <C> <C> <C>
Park Plaza I & II $ 7,000 8,000 $ 15,000
Morenci 10,000 -0- 10,000
Maple Tree S.C. 15,000 -0- 15,000
Jackson A -0- 101,000 101,000
------------ ------------ ------------
$32,000 $109,000 $141,000
============ ============ ============
</TABLE>
During the remainder of 1995, approximately $141,000 of capital
expenditures are expected. Park Plaza will incur leasing capital along with
other miscellaneous capital expenditures required to keep the properties in
good condition. Maple Tree is scheduled for new signage which will enhance the
overall appearance of the center. Leasing capital for Jackson A is contingent
on its major tenant renewing its lease in 1995.
The occupancy rates at the Registrant's properties are listed below:
<TABLE>
<CAPTION>
PROPERTY Occupancy Rates at February 28,
- -------- -------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Park Plaza I &II 96% 96% 96%
Morenci 96% 99% 98%
Maple Tree S.C. 98% 98% 98%
Jackson A 100% 100% 100%
</TABLE>
At Park Plaza I and II, during the first quarter of 1995, the
Registrant renewed 2,340 and vacated 3,600 square feet. This activity resulted
in a 4% decrease in occupancy and flat rental rates during the first quarter of
1995. Park Plaza I and II has no tenant occupying more than 10% of the total
space.
During the first quarter of 1995 at Morenci, the Registrant leased
3,600 square feet of space. This activity resulted in a 2% increase in
occupancy. The rental rates remained relatively flat during the first quarter
of 1995. Morenci has one major tenant who leases 47% of the space. This lease
expires in December 1995. The tenant has given the Registrant verbal notice
that they will be vacating at the expiration of their lease. The remainder of
the property is leased in small sections by various tenants.
<PAGE> 10
At Maple Tree Shopping Center there was no leasing activity during the
first quarter of 1995. Maple Tree Shopping Center has two major tenants
occupying 42% and 18% of the leasable area. These leases expire in 1999 and
1995, respectively. The tenant whose lease expires in April 1995 has exercised
its option to renew the lease for an additional 5-year term at the same rental
rate.
Jackson A currently has two tenants who lease 100% of the property.
These leases expire in 1995 and 1997. The Registrant has entered into
negotiations with the tenant whose lease expires in July 1995. The Registrant
is unable to predict the outcome of this renewal.
1995 Comparisons
- ----------------
Rental revenues for the quarter ended February 28, 1995 increased 3%
over revenue for the same quarter of the previous year. Revenue at Jackson
Industrial increased 6% primarily due to higher real estate tax recoveries as a
result of higher real estate tax expense. Park Plaza I and II revenue
increased 5% due to higher rental revenue due to slightly higher rental rates.
Operating expenses, excluding depreciation and amortization, for the
quarter ended February 28, 1995, decreased 7% from the same quarter of the
previous year. Operating expenses at Maple Tree, Morenci and Park Plaza I and
II decreased due to lower vacancy expense, repairs and maintenance and less
snow removal. Operating expenses at Jackson Industrial increased 34% due to
higher real estate taxes related to a correction of an assessment.
Interest expense for the quarter ended February 28, 1995 decreased
slightly when compared to the same quarter of he previous year. This decrease
is due to a $50,000 principal payment made in January 1995 on second mortgage
debt partially offset by increasing rates on this debt. In addition, interest
expense declines as first mortgage debt installments are made.
1994 Comparisons
- ----------------
Rental revenues for the quarter ended February 28, 1994 increased 2%
compared to those of the previous quarter. Revenues at Maple Tree and Park
Plaza remained constant. Revenues at Jackson Industrial increased 1% due to
increased tax recoveries. Revenues at Morenci increased due to increased
average occupancy partially offset by recovery of bad debt in the prior
quarter.
Operating expenses, excluding depreciation and amortization, in
aggregate, increased by 21% compared to the previous quarter. Operating
expenses at Maple Tree increased 25% due to increased repairs, maintenance and
snow removal, partially offset by lower real estate taxes. Operating expenses
at Park Plaza increased 34% primarily due to parking lot repairs in 1994,
increased vacancy costs, and higher snow removal. Operating expenses at
Jackson Industrial increased due to slightly higher real estate taxes.
Operating expenses at Morenci increased 18% primarily due to higher snow
removal and exterior maintenance.
Interest expense declined slightly due to a reduction in second
mortgage debt as a result of a $100,000 principal payment in 1993 and $50,000
in first quarter of 1994.
<PAGE> 11
1993 Comparison
- ---------------
Revenue for the quarter ended February 28, 1993 increased 8%,
compared to those of the previous quarter. Revenues at Maple Tree increased 5%
due to higher occupancy. Revenues at Park Plaza increased 29% due to higher
occupancy. Revenues at Jackson Industrial increased 1% due to Formica rent
increase of .15/SF and Paper Manufacturers renewal slightly higher than prior
year. These are partially offset by miscellaneous storage income from Formica,
which included 12 months in 1992 versus 3 months in 1993. Revenues at Morenci
increased 3% due to recovery of bad debts from a tenant, partially offset by
slow leasing plus 1992 included a tenant termination fee reflected in 1992.
Operating expenses, excluding depreciation and amortization, in
aggregate decreased 7% compared to the previous quarter. Operating expenses at
Maple Tree decreased 20% due to the timing of insurance payments, fewer vacancy
expenses due to increased occupancy, and slightly lower real estate tax
increase than compared to prior year. Operating expenses at Park Plaza
decreased 14% primarily due to parking lot repairs in 1992, lower vacancy
expense from increased occupancy, and less snow removal. Operating expenses at
Jackson increased 15% due primarily to higher administrative expenses.
Operating expenses at Morenci decreased 11% primarily due to lower vacancy
expenses from higher occupancy, less snow removal, and lower administrative
expenses partially offset by higher real estate taxes.
Interest expense was comparable.
Inflation
- ---------
The effects of inflation did not have a material impact upon the
Registrant's operation in fiscal 1994, and are not expected to materially
affect the Registrant's operation in 1995.
Interest Rates
- --------------
Declining interest rates on floating rate debt positively affected the
operations of the Registrant during 1993. Increases in the prime interest rate
did adversely affect the operations of the Registrant in 1994, 1995 and will in
the future.
<PAGE> 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits
None
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
Dated: April 17, 1995 /S/ GREGORY J. NOONEY, JR.
----------------------------------------
Gregory J. Nooney, Jr.
General Partner
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATMENTS FOR NOONEY REAL PROPERTY INVESTORS-TWO, L.P. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000312155
<NAME> NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> FEB-28-1995
<CASH> 616,641
<SECURITIES> 0
<RECEIVABLES> 137,724
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 754,365
<PP&E> 15,358,797
<DEPRECIATION> 7,638,849
<TOTAL-ASSETS> 8,625,161
<CURRENT-LIABILITIES> 442,202
<BONDS> 8,547,682
<COMMON> 0
0
0
<OTHER-SE> (364,723)
<TOTAL-LIABILITY-AND-EQUITY> 8,625,161
<SALES> 574,168
<TOTAL-REVENUES> 574,168
<CGS> 364,544
<TOTAL-COSTS> 364,544
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 212,855
<INCOME-PRETAX> (3,231)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,231)
<EPS-PRIMARY> (.27)
<EPS-DILUTED> 0
</TABLE>
