<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended November 30, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 0-10287
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NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
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(Exact name of Registrant as specified in its charter)
Missouri 43-1182535
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(State or other jurisdiction of (I.R.S/ Employer
incorporation or organization) Identification No.)
7701 Forsyth Boulevard, St. Louis, Missouri 63105
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 863-7700
----------------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
-----------------------------
(Title of Class)
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 [ ].
Page 1 of 35 Pages
Exhibit Index located on Page 17
<PAGE> 2
[X] Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.
As of February 1, 1996, the aggregate market value of the Registrant's units of
limited partnership interest (which constitute voting securities under certain
circumstances) held by non-affiliates of the Registrant was $12,000,000. (The
aggregate market value was computed on the basis of the initial selling price
of $1,000 per unit of limited partnership interest, using the number of units
not beneficially owned on February 1, 1996 by the General Partners or holders
of 10% or more of the Registrant's limited partnership interests. The initial
selling price of $1,000 per unit is not the current market value. Accurate
pricing information is not available because the value of the units of limited
partnership interests is not determinable since no active secondary market
exists. The characterization of such General Partners and 10% holders as
affiliates is for the purpose of this computation only and should not be
construed as an admission for any purpose that any such persons are, or other
persons not so characterized are not, in fact, affiliates of the Registrant).
Documents incorporated by reference:
Portions of the Prospectus of the Registrant dated November 16, 1979, as
supplemented and filed pursuant to Rule 424(c) of the Securities Act of 1933,
are incorporated by reference in Part III of this Annual Report on Form 10-K.
<PAGE> 3
PART I
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ITEM 1: BUSINESS
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Nooney Real Property Investors-Two, L.P. (the "Registrant") is a limited
partnership formed under the Missouri Uniform Limited Partnership Law on
September 26, 1979, to invest, on a leveraged basis, in income-producing real
properties such as shopping centers, office buildings, apartment complexes,
office/warehouses and light industrial properties. The Registrant originally
invested in six real property investments described in Item 2 below. During
fiscal 1989, one of the Registrant's properties, Penn Park Office Complex in
Oklahoma City, was sold at foreclosure to the property's mortgage lender. On
November 14, 1991, a portion of one of the Registrant's properties, Building G
of the Morenci Professional Park located in Indianapolis, Indiana, was sold to
a party unaffiliated with the Registrant. During fiscal 1992, Stone City Mall
was sold at foreclosure to the property's mortgage lender.
The Registrant's primary investment objectives are to preserve and protect the
Limited Partners' capital and obtain long-term appreciation in the value of its
properties. The term of the Registrant is until December 31, 2019. It was
originally anticipated that the Registrant would sell or refinance its
properties within approximately five to ten years after their acquisition. The
depression of real estate values experienced nationwide from 1988 to 1993
lengthened this time frame in order to achieve the goal of capital
appreciation.
The real estate investment market began to improve in 1994, continued this
improvement in 1995, and is expected to further continue its improvement over
the next several years. Management believes this trend should increase the
value of the Registrant's properties in the future. The Registrant is intended
to be self-liquidating and proceeds, if any, from the sale or refinancing of
the Registrant's real property investments will not be invested in new
properties but will be distributed to the Partners or, at the discretion of the
General Partners, applied to capital improvements to, or the payment of
indebtedness with respect to, existing properties, the payment of other
expenses or the establishment of reserves.
The business in which the Registrant is engaged is highly competitive. The
Registrant's investment properties are located in or near major urban areas and
are subject to competition from other similar types of properties in such
areas. The Registrant competes for tenants for its properties with numerous
other real estate limited partnerships, as well as with individuals,
corporations, real estate investment trusts and other entities engaged in real
estate investment activities. Such competition is based on such factors as
location, rent schedules and services and amenities provided.
The Registrant has no employees. Property management services for the
Registrant's investment properties are provided by Nooney Krombach Company, an
affiliate of the General Partners.
<PAGE> 4
ITEM 2: PROPERTIES
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On October 3, 1979, the Registrant purchased the Maple Tree Shopping Center
(the "Center") located at the corner of Clayton and Clarkson Roads in West St.
Louis County, Missouri. Constructed in 1974 of steel and masonry block, the
Center contains approximately 72,000 net rentable square feet and is located on
a 7.8 acre site which provides paved parking for 366 cars. The Center was 96%
leased by 15 tenants at year end. The purchase price of the Center was
$3,184,053.
On October 15, 1980, the Registrant purchased Park Plaza I & II, ("Park Plaza")
an office/warehouse center located at 5707-5797 Park Plaza Court in
Indianapolis, Indiana. Park Plaza consists of two one-story, concrete block
buildings. Park Plaza I was built in 1975 and Park Plaza II in 1979. Park
Plaza is located on a 9 acre site which provides paved parking for 150 cars.
The buildings contain a total of approximately 95,000 net rentable square feet
and were 100% leased by 29 tenants at year end. The purchase price of Park
Plaza was $2,411,163.
On March 27, 1981, the Registrant purchased Morenci Professional Park Buildings
A, B, C, D & G ("Morenci"), an office/warehouse complex located at 62nd Street
and Guion Road in Indianapolis, Indiana. Morenci consisted of five one-story,
masonry buildings located on a 13.35 acre site. Buildings A, B, C & D were
built in 1975 and building G was built in 1979. On November 14, 1991, Building
G was sold to a party unaffiliated with the Registrant. The remaining
buildings contain a total of approximately 105,600 net rentable square feet and
were 99% leased by 29 tenants at year end. The major tenant occupying 49% of
the property vacated as of December 31, 1995. The total purchase price,
excluding Building G, of Morenci was $3,009,924.
On March 27, 1981, the Registrant purchased the Jackson Industrial Building A
("Jackson A"), a warehouse building located at Post Road and 30th Street in
Indianapolis, Indiana. Jackson A is a one-story, masonry building and is
located on a 21.87 acre site. The building, originally constructed in 1976 and
subsequently expanded in 1980, contains approximately 320,000 net rentable
square feet. Jackson A was 100% leased by 2 tenants at year end. The purchase
price of Jackson A was $6,089,929.
Reference is made to Note 3 to Notes to Financial Statements filed herewith as
Exhibit 99.3 in response to Item 8 for a description of the mortgage
indebtedness secured by the Registrant's real property investments. Reference
is also made to Note 6 to Notes to Financial Statements for a discussion of
revenues derived from major tenants.
<PAGE> 5
The following table sets forth certain information as of November 30, 1995,
relating to the properties owned by the Partnership.
<TABLE>
<CAPTION>
AVERAGE
ANNUALIZED
EFFECTIVE
TOTAL BASE RENT PRINCIPAL TENANTS
SQUARE ANNUALIZED PER PERCENT OVER 10% OF PROPERTY BASE LEASE
PROPERTY FEET BASE RENT SQUARE FOOT LEASED RENT REVENUES (%) EXPIRATION
- ----------------- ------- ---------- ----------- ------- -------------------------------- ----------
<C> <C> <C> <C> <C> <C> <C>
Jackson Warehouse 320,000 $ 834,000 $2.61 100% Paper Manufacturers (30%) 1997
Formica Corporation (70%) 2000
Morenci 105,600 $ 422,340 $4.05 99%<F3> Diversified System (49%) 1995
Maple Tree 72,000 $ 419,700 $6.04 96% Schnucks Super Markets (35%)<F1> 1999
Super X Drugs (11%)<F2> 2000
Park Plaza I & II 95,000 $ 442,650 $4.66 100% None
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<FN>
<F1> Space subleased to DeBasio Furniture
<F2> Space subleased to Medicine & More
<F3> Major tenant occupying 49% of the property vacated as of December 31, 1995
</TABLE>
ITEM 3: LEGAL PROCEEDINGS
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The Registrant is not a party to any material pending legal proceedings.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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There were no matters submitted to a vote of security holders during the fourth
quarter of fiscal 1995.
<PAGE> 6
PART II
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ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
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As of February 1, 1996, there were 1,081 record holders of Interests in the
Registrant. There is no public market for the Interests and it is not
anticipated that a public market will develop.
There were no cash distributions paid to the Limited Partners during fiscal
1994 or fiscal 1995.
ITEM 6: SELECTED FINANCIAL DATA
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<TABLE>
<CAPTION>
Years Ended November 30,
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1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
(Not covered by independent auditors' report)
<S> <C> <C> <C> <C> <C>
Rental and other income $2,331,934 $2,344,886 $2,248,054 $2,160,717 $2,668,289
Net income (loss) 54,444 (35,044) (61,339) (129,532) (383,000)
Data per limited partnership unit:
Net income (loss) 4.49 (2.89) (5.06) (10.69) (31.60)
Weighted average limited partnership units
outstanding 12,000 12,000 12,000 12,000 12,000
At year-end:
Total assets 8,440,165 8,747,540 9,110,149 9,390,676 9,683,377
Investment property - net 7,515,411 7,818,235 8,226,069 8,406,776 8,758,227
Mortgage notes payable 8,331,643 8,664,475 8,971,966 9,299,559 9,501,554
Partners' equity (deficiency in assets) (307,048) (361,492) (326,448) (265,109) (135,577)
<FN>
See Item 7: Management's Discussion and Analysis for discussion of comparability of items.
</TABLE>
<PAGE> 7
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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Liquidity and Capital Resources
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Cash reserves as of November 30, 1995 are $628,358, an increase of $25,319 from
year ended November 30, 1994. The increase in cash was provided by the
operations of the Registrant's properties. The cash balances are being allowed
to accumulate to establish adequate cash reserves to fund future capital
expenditures, leasing, and tenant finish costs. These reserves are necessary
based on the fact that a major tenant occupying 49% of the space at Morenci
Professional Park vacated in December 1995, and partial roof replacement is
needed at Jackson Industrial. The Registrant expects to fund anticipated
capital expenditures throughout 1996 from cash flow provided by operations and
the current level of cash reserves. The anticipated capital expenditures by
property are as follows:
<TABLE>
<CAPTION>
Other Leasing
Capital Capital Total
-------- -------- --------
<S> <C> <C> <C>
Park Plaza I & II $ 92,090 $ 6,361 $ 98,451
Morenci 100,000 115,500 215,500
Maple Tree S.C. 20,000 16,000 36,000
Jackson Industrial 152,840 0 152,840
-------- -------- --------
$364,930 $137,861 $502,791
</TABLE>
Throughout 1996, approximately $502,791 of capital expenditures have been
forecasted. Park Plaza I & II, Morenci Professional Park, and Maple Tree
Shopping Center have leasing capital to fund tenant alterations to their
respective suites along with lease commissions for new leases signed. At Park
Plaza I & II, the Registrant has forecasted resurfacing of sections of the rear
parking areas, concrete repair/replacement, and interior sprinkler head
adjustments. At Morenci Professional Park, the Registrant has forecasted other
capital to clean up and renovate the space previously occupied by the major
tenant in order for it to present well to potential tenants. At Maple Tree
Shopping Center, the Registrant has scheduled the enclosure of its waste
storage bins in an effort to comply with city ordinances. At Jackson
Industrial, the Registrant has forecasted the re-roofing of approximately
68,000 square feet at the southern end of the building.
As of November 1, 1995, the Registrant negotiated an extension of the second
mortgages secured by Park Plaza I & II, Morenci Professional Park, and Maple
Tree. The term of the extension is for a period of one year at a rate of 1.5%
over the then published prime rate. As of November 30, 1995, interest rate on
the debt was 10.25%. The balance of the debt on Park Plaza I & II and Morenci
as of November 30, 1995, is $259,925. The balance of the debt on Maple Tree as
of November 30, 1995, is $290,060.
The first mortgage debt on Morenci Professional Park and Park Plaza I & II have
maturity dates of October 1, 2005, and December 31, 2003, respectively.
<PAGE> 8
On November 1, 1995, the Registrant refinanced the existing first deed of trust
on Jackson Industrial for a period of five years at a rate of 9.31%, being
amortized over 18 years.
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.
Results of Operations
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The results of operations for the Registrant's properties for the years ended
November 30, 1995, 1994, and 1993 are detailed in the schedule below. Expenses
of the Registrant are excluded.
<TABLE>
<CAPTION>
Jackson
Industrial Maple Tree Park Plaza Morenci
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
1995
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Revenues $ 886,870 $ 524,832 $ 436,685 $ 489,455
Expenses 953,738 469,795 329,971 423,981
------------ ------------ ------------ ------------
Net Income $ (66,868) $ 55,037 $ 106,714 $ 65,474
============ ============ ============ ============
1994
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Revenues $ 901,244 $ 537,252 $ 445,968 $ 475,852
Expenses 1,000,259 491,040 345,685 456,575
------------ ------------ ------------ ------------
Net Income $ (99,015) $ 46,212 $ 100,283 $ 19,277
============ ============ ============ ============
1993
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Revenues $ 824,177 $ 509,934 $ 419,510 $ 473,576
Expenses 900,786 522,498 367,441 435,862
------------ ------------ ------------ ------------
Net Income $ (76,609) $ (12,564) $ 52,069 $ 37,714
============ ============ ============ ============
</TABLE>
At Jackson Industrial, the wide swings in revenues and expenses relate to the
property's real estate taxes. In 1994 the county taxing authority discovered
an error in the method in which the property had been assessed. The error was
corrected, resulting in a significant increase in the real estate tax expense
accrual in 1994. As the real estate tax accruals increased, they were passed
through to the tenants in the form of a real estate tax reimbursement. From
1994 to 1995 real estate taxes paid leveled out with the expense accrual
<PAGE> 9
resulting in a decrease of $56,212 in the expense. Real estate tax
reimbursement decreased $30,395 from 1994 to 1995 due to the renewal of a major
tenant's lease, resulting in a change in their real estate tax base year.
Maple Tree Shopping Center had increases in net income for the three years
presented due primarily to decreasing expenses. Revenues have remained
relatively stable over the three year period. The decrease in expenses from
1993 to 1994 relates to repairs and maintenance ($16,700), snow removal
($5,037), and real estate taxes ($18,662), offset by parking lot expenditures
($22,874). The expense decrease from 1994 to 1995 is attributable to
depreciation expense ($32,582) and administrative costs ($6,877), offset by
increases in repairs and maintenance ($15,317) and real estate taxes ($11,020).
The operating results at Park Plaza I & II for the years ended November 30,
1995 and 1994 are similar. However, net income from 1993 to 1994 increased
$48,214 due to an increase in revenues of $26,458 and a decrease in expenses of
$21,756. The increase in revenues can be attributed to increased occupancy
resulting in increased rental revenues. The decrease in expenses relates to
repairs and maintenance ($16,634).
At Morenci Professional Park, net income varied significantly from year to
year. Revenues increased from year to year while expenses increased from 1993
to 1994 and then decreased from 1994 to 1995. The increase in revenues from
1993 to 1994 relate to escalation income which is a result of increases in
reimbursable operating expenses. The operating expenses that increased from
1993 to 1994 are repairs and maintenance ($6,501), real estate taxes ($3,845),
snow removal ($2,917), and vacancy expenses ($3,684). Revenues from 1994 to
1995 increased due to higher occupancy which resulted in increased rental
income. Expenses trended downward from 1994 to 1995 due to decreases in
vacancy expense ($6,889), repairs and maintenance ($9,546), snow removal
($4,133), and sewer charges ($3,456).
The occupancy at the Registrant's properties at year-end remain at a high
level. However, as previously discussed, a major tenant that occupied
approximately 49% of Morenci Professional Park vacated the premises in December
1995. The occupancy levels at November 30 are as follows:
<TABLE>
<CAPTION>
Occupancy rates at November 30
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Park Plaza I & II 100% 100% 96%
Morenci Professional Park 99% 94% 98%
Maple Tree 96% 98% 98%
Jackson Industrial 100% 100% 100%
</TABLE>
For the quarter ended November 30, 1995, occupancy at Park Plaza I & II
increased from 92% to 100% through the leasing of 9,720 square feet to three
individual tenants, offset by a single tenant vacating 2,340 square feet. For
the year, leasing at Park Plaza I & II consisted of the renewal of 19,800
square feet, the execution of six new leases with a total square feet of
30,360, and the vacating by 6 tenants who occupied 30,360 square feet. At Park
<PAGE> 10
Plaza I & II, no tenant occupies more than 10% of the total space. The
occupancy at the years ended 1994 and 1995 was 100%.
During the fourth quarter, the occupancy level at Morenci Professional Park
remained the same as the previous quarter. Leasing activity during the fourth
quarter is as follows: one new lease occupying 1,200 square feet, two lease
renewals for 3,600 square feet, and one tenant vacated 1,200 square feet.
During the year, occupancy increased 5% due to the execution of four new leases
with 9,600 square feet, the renewal of 9,600 square feet, and the vacating of
4,800 square feet. As previously stated, a tenant which occupies approximately
49% of the available space vacated their space at the expiration of their
lease in December 1995. The remainder of the space is leased in small sections
by various tenants.
At Maple Tree Shopping Center during the fourth quarter, leasing activity
netted a decrease in occupancy by 2% or 1,200 square feet. The Registrant
renewed 18,560 square feet, signed one new lease for 2,640 square feet, and one
tenant vacated 1,200 square feet. For the year, occupancy decreased 2% and had
the following leasing activity: one new lease for 2,640 square feet, renewed
three leases totaling 19,360 square feet, vacated two leases with 3,840 square
feet. Maple Tree Shopping Center has two major tenants who occupy 18% and 42%
of the available space. The tenants that occupy approximately 18% and 42% of
the available space have lease expirations of April 30, 2000, and July 31,
1999, respectively.
Jackson Industrial currently has two tenants who lease 100% of the available
space. The major tenant who occupies approximately 70% of the available space
has renewed their lease for a period of five years. The renewal has a marginal
increase in rate and expires July 31, 2001. The other tenant has a lease
expiration of July 31, 1997.
1995 Comparisons
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As of November 30, 1995, the Registrant's consolidated revenues are $2,341,704
compared to $2,357,368 for the year ended November 30, 1994. On a consolidated
basis, revenues decreased $15,664 or less than 1%. Even though consolidated
revenues remained relatively stable from 1994 to 1995, the individual
properties had changes from year to year. These changes have been previously
analyzed.
The Registrant's consolidated expenses for the year ended November 30, 1995 is
$2,287,260. When compared to year ended November 30, 1994, consolidated
expenses decreased $105,152 or 4.40%. The decrease is attributable to interest
expense, real estate taxes, and other operating expenses. The decrease in
interest expense is attributable to all the Registrant's properties. All the
properties, except for Jackson Industrial, have long-term loans with original
amortization periods ranging from 25 to 30 years. As these loans amortize,
each payment is applied less to interest and more to principal resulting in a
decrease in interest expense. As previously stated, the decrease in real
estate taxes is attributable to Jackson Industrial. The decrease in other
operating expenses is comprised of several categories and they are: vacancy
expense ($16,134); administrative ($9,154); snow removal ($8,797); and
insurance ($4,675). Offsetting the aforementioned expense decreases were
increases in professional services ($12,830) and office expenses ($5,507).
<PAGE> 11
With revenues remaining relatively flat and expenses decreasing, the Registrant
had favorable operating results for the year ended November 30, 1995. Net
income is $54,444 or $4.49 per limited partnership unit, an increase in net
income of $89,488 or $7.38 per limited partnership unit when comparing
November 30, 1995, to November 30, 1994. Cash flow provided by operations for
the year ended November 30, 1995, is $493,356 which enabled the Registrant to
fund capital expenditures of $135,205 and reduce loan balances by $332,832.
1994 Comparisons
- ----------------
For the year ended November 30, 1994, consolidated revenues were $2,357,368
which represents an increase of $91,455 when compared to November 30, 1993.
The increase in revenues is attributable to an increased real estate tax
reimbursement at Jackson Industrial, rental income and expense pass throughs at
Maple Tree Shopping Center, and rental income at Park Plaza I & II. The
increase in real estate tax reimbursement at Jackson Industrial was previously
discussed. The increases in rental income at Maple Tree Shopping Center and
Park Plaza I & II relate to the Registrant's ability to renew and execute new
leases at rental rates that exceeded the previous tenants' rates. The increase
in expense pass throughs at Maple Tree Shopping Center directly correlate with
increases in expenses which can be passed through to the tenants of the
property.
As of November 30,1994, consolidated expenses for the year-end are $2,392,412,
an increase of $65,160 or 2.80% when compared to year-to-date consolidated
expenses as of November 30, 1993. The increase in consolidated expenses is
attributable to real estate tax expense at Jackson Industrial. Offsetting the
significant increase in real estate taxes are decreases in interest and
depreciation and amortization. The decrease in interest expense is
attributable to all the Registrant's properties. All the properties, except
for Jackson Industrial, have long-term loans with amortization periods ranging
from 25 to 30 years. As these loans amortize, each payment is applied less to
interest and more to principal resulting in a decrease in interest expense.
The decrease in depreciation and amortization relates to tenant alterations and
lease commissions at Jackson Industrial and the amortization of these items
over the term of the appropriate leases.
Net loss for the year ended November 30, 1994, was $35,044 or $2.89 per limited
partnership unit. For the same period ended November 30, 1993, the net loss
was $61,339 or $5.06 per limited partnership unit. Cash flow provided by
operations for the year ended November 30, 1994, was $315,534. The operating
cash flow along with reserve cash was applied by the Registrant to fund capital
expenditures of $63,324 and to fund principal payments of $307,491.
Inflation
- ---------
The effects of inflation did not have a material impact upon the Registrant's
operation in fiscal 1995, and are not expected to materially affect the
Registrant's operation in 1996.
<PAGE> 12
Interest Rates
- --------------
Interest rates on floating rate debt went up in 1995 which negatively affected
the operations of the Registrant in 1995. Future increases in the prime
interest rate can adversely affect the operations of the Registrant in 1996 and
in the future.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
Financial Statements of the Registrant are filed herewith as Exhibit 99.3 and
are incorporated herein by reference (see Item 14(a)(1)). The supplementary
financial information specified by Item 302 of Regulation S-K is provided in
Item 7.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
- ----------------------------------------------------------
None
PART III
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ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
The General Partners of the Registrant responsible for all aspects of the
Registrant's operations are Gregory J. Nooney, Jr., age 65, and Nooney
Investors, Inc., a Missouri corporation. Gregory J. Nooney, Jr. is a senior
officer of Nooney Company, the sponsor of the Registrant.
The background and experience of the General Partners are as follows:
Gregory J. Nooney, Jr. joined Nooney Company in 1954 and is currently Chairman
of the Board and Chief Executive Officer.
John J. Nooney is a Special General Partner of the Partnership and as such,
does not exercise control of the affairs of the Partnership.
John J. Nooney joined Nooney Company in 1958 and was President and Treasurer
until he resigned in 1992. Mr. Nooney is currently Chairman of the Board of
Dalton Investments, a real estate asset management firm.
Nooney Investors, Inc., a wholly-owned subsidiary of Nooney Company, was formed
in June 1979 for the purpose of being a general and/or limited partner in the
Registrant and other limited partnerships. Gregory J. Nooney, Jr. is a
director of Nooney Investors, Inc.
Gregory J. Nooney, Jr. and John J. Nooney are brothers. Gregory J. Nooney, Jr.
and Faith L. Nooney (wife of John J. Nooney) are stockholders of Nooney
Company, with Gregory J. Nooney, Jr. controlling all voting stock of Nooney
Company.
<PAGE> 13
The General Partners will continue to serve as General Partners until their
withdrawal or their removal from office by the Limited Partners.
Certain of the General Partners act as general partners of limited partnerships
and hold directorships of companies with a class of securities registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934 or subject to
the requirements of Section 15(d) of the Act. A list of such directorships,
and the limited partnerships for which the General Partners serve as general
partners, is filed herewith as Exhibit 99.1 and incorporated herein by
reference.
During 1993 Lindbergh Boulevard Partners, L.P. filed a voluntary petition under
Chapter 11 of the United States Bankruptcy Code. Gregory J. Nooney, Jr. is the
general partner of Nooney Ltd. II, L.P, which in turn is the general partner of
Nooney Development Partners, L.P., which in turn is the general partner of
Nooney-Hazelwood Associates, L.P., which is the general partner of Lindbergh
Boulevard Partners, L.P. Lindbergh Boulevard Partners, L.P. emerged from
bankruptcy on May 17, 1994, when its Plan of Reorganization was confirmed.
ITEM 11: EXECUTIVE COMPENSATION
- --------------------------------
The General Partners are entitled to a share of distributions and a share of
profits and losses as more fully described under the headings "Compensation to
General Partners and Affiliates" on pages 8-11 and "Profits and Losses for Tax
Purposes; Distributions; and Expenses of General Partners" on pages A-14 to
A-17 of the Prospectus of the Registrant dated November 16, 1979, as
supplemented and filed pursuant to Rule 424(c) of the Securities Act of 1933
(the "Prospectus"), which are incorporated herein by reference.
During fiscal 1995, there were no cash distributions paid to the General
Partners by the Registrant.
See Item 13 below for a discussion of transactions between the Registrant and
certain affiliates of the General Partners.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners.
<TABLE>
<CAPTION>
Amount and Nature of Percentage
Title of Class Name of Beneficial Owner Beneficial Ownership of Class
- ----------------------------- -------------------------------------- -------------------- ----------
<C> <C> <C> <C>
Limited Partnership Interests Liquidity Fund XI 10 Units 0.08%
Liquidity Fund XVI 3 Units 0.02%
Liquidity Fund Growth+Partners 45 Units 0.37%
Liquidity Fund Income-Growth Investors 38 Units 0.31%
Liquidity Fund Tax Exempt Partners II 298 Units 2.46%
Liquidity Fund 73, L.P. 196 Units 1.70%
LF 74, L.P. 266 Units 2.12%
</TABLE>
<PAGE> 14
The aggregate amount beneficially owned by the above listed reporting persons
totals 856 Units, or 7.06% of the outstanding interests of the Registrant. The
sole general partner of each of the above reporting persons is Liquidity
Financial Group, L.P., a California limited partnership. Voting and
dispositive power is exercised on behalf of each reporting person by its
general partner.
(b) Security Ownership of Management.
None of the General Partners is known to the Registrant to be the beneficial
owner, either directly or indirectly, of any Interests in the Registrant.
(c) Changes in Control.
There are no arrangements known to the Registrant, the operation of which may
at a subsequent date result in a change in control of the Registrant.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
(a) Transactions with Management and Others.
Certain affiliates of the General Partners are entitled to certain fees and
other payments from the Registrant in connection with certain transactions of
the Registrant as more fully described under the headings "Compensation to
General Partners and Affiliates" on pages 8-11 and "Management" on pages 23-25
of the Prospectus, which are incorporated herein by reference.
Nooney Krombach Company, the manager of Registrant's properties, is a wholly-
owned subsidiary of Nooney Company. Nooney Krombach Company is entitled to
receive monthly compensation from the Registrant for property management and
leasing services, plus administrative expenses. During fiscal 1995 the
Registrant paid property management fees of
$116,228 to Nooney Krombach Company.
The Registrant paid Nooney Krombach Company $30,000 during fiscal 1995 as
reimbursement for indirect expenses incurred in connection with management of
the Registrant.
See Item 11 above for a discussion of cash distributions paid to the General
Partners during fiscal 1995.
(b) Certain Business Relationships.
The relationship of certain of the General Partners to certain of their
affiliates is set forth in Item 13(a) above. Also see Item 13(a) above for a
discussion of amounts paid by the Registrant to the General Partners or their
affiliates during fiscal 1995 in connection with various transactions.
(c) Indebtedness of Management.
Not Applicable.
(d) Transactions with promoters.
Not Applicable.
<PAGE> 15
PART IV
-------
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------
(a) The following documents are filed as a part of this report:
(1) Financial Statements (filed herewith as Exhibit 99.3):
Independent auditors' report
Balance sheets
Statements of operations
Statements of partners' equity (deficiency in assets)
Statements of cash flows
Notes to financial statements
(2) Financial Statement Schedules (filed herewith as Exhibit 99.3):
Schedule - Reconciliation of partners' equity (deficit)
Schedule III - Real estate and accumulated depreciation
All other schedules are omitted because they are
inapplicable or not required under the instructions.
(3) Exhibits:
See Exhibit Index on Page 17.
(b) Reports on Form 8-K
During the last quarter of the period covered by this report, the
Registrant filed no reports on Form 8-K.
(c) Exhibits:
See Exhibit Index on Page 17.
(d) Not Applicable
<PAGE> 16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) under 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.
Date: February 21, 1996 /s/ Gregory J. Nooney, Jr.
-----------------------------------------
Gregory J. Nooney, Jr.
General Partner
Nooney Investors, Inc.
General Partner
Date: February 21, 1996 By: /s/ Gregory J. Nooney, Jr.
-------------------------------------
Gregory J. Nooney, Jr.
Chairman of the Board and
Chief Executive Officer
By: /s/ Patricia A. Nooney
-------------------------------------
Patricia A. Nooney
Senior Vice President and
Secretary
<PAGE> 17
EXHIBIT INDEX
-------------
Exhibit Number Description
- -------------- ---------------------------------------------------------------
3.1 Amended and Restated Agreement and Certificate of Limited
Partnership dated November 5, 1979, is incorporated by
reference to the Prospectus contained in Amendment No. 1 to the
Registration Statement on Form S-11 under the Securities Act of
1933 (File No. 2-65006).
10 Management Contract between Nooney Real Property Investors-Two,
L.P. and Nooney Company is incorporated by reference to
Exhibit 10(a) to the Registration Statement on Form S-11 under
the Securities Act of 1933 (File No. 2-65006). The Management
Contract was assigned by Nooney Company to Nooney Management
Company (now Nooney Krombach Company), a wholly-owned
subsidiary of Nooney Company, on April 1, 1985, and is
identical in all material respects.
27 Financial Data Schedule (provided for the information of the
U.S. Securities and Exchange Commission only)
99.1 List of Directorships filed in response to Item 10.
99.2 Pages 8-11, 23-25 and A-14 - A-17 of the Prospectus of the
Registrant dated November 16, 1979, as supplemented and filed
pursuant to Rule 424(c) of the Securities Act of 1933 are
incorporated by reference.
99.3 Financial Statements and Schedules.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS 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> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> NOV-30-1995
<CASH> 628,358
<SECURITIES> 0
<RECEIVABLES> 118,202
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 784,916
<PP&E> 15,458,243
<DEPRECIATION> 7,942,832
<TOTAL-ASSETS> 8,440,165
<CURRENT-LIABILITIES> 354,307
<BONDS> 8,331,643
0
0
<COMMON> 0
<OTHER-SE> (307,048)
<TOTAL-LIABILITY-AND-EQUITY> 8,440,165
<SALES> 2,331,934
<TOTAL-REVENUES> 2,341,704
<CGS> 2,287,260
<TOTAL-COSTS> 2,287,260
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 838,277
<INCOME-PRETAX> 54,444
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54,444
<EPS-PRIMARY> 4.49
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
Below each General Partner's name is a list of the limited partnerships, other
than the Registrant, for which the General Partner serves as a general partner
and the companies for which the General Partner serves as a director. The list
includes only those limited partnerships and companies which have a class of
securities registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934 or are subject to the requirements of Section 15(d) of the Act.
Gregory J. Nooney, Jr.
- ----------------------
Limited Partnerships:
Nooney Real Property Investors-Four, L.P. Nooney Income Fund Ltd., L.P.
Nooney Income Fund Ltd. II, L.P.
Directorships:
Nooney Realty Trust, Inc.
John J. Nooney
- --------------
Limited Partnerships:
Nooney Real Property Investors-Four, L.P. Nooney Income Fund Ltd., L.P.
Nooney Income Fund Ltd. II, L.P.
Nooney Investors, Inc.
- ----------------------
None
<PAGE> 1
EXHIBIT 99.3
INDEPENDENT AUDITORS' REPORT
To the Partners of
Nooney Real Property Investors-Two, L.P.:
We have audited the accompanying balance sheets of Nooney Real Property
Investors-Two, L.P. (a limited partnership) as of November 30, 1995 and 1994,
and the related statements of operations, partners' equity (deficiency in
assets) and cash flows for each of the three years in the period ended
November 30, 1995. Our audits also included the financial statement schedules
listed in the index at Item 14(a)2. These financial statements and financial
statement schedules are the responsibility of the Partnership's general
partners. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by the Partnership's general partners, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Nooney Real Property Investors-Two, L.P. as
of November 30, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended November 30, 1995 in
conformity with generally accepted accounting principles. Also, in our
opinion, such financial statement schedules, when considered in relation to the
basic financial statements taken as a whole, present fairly, in all material
respects the information set forth therein.
/S/ DELOITTE & TOUCHE LLP
January 5, 1996
<PAGE> 2
<TABLE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
NOVEMBER 30, 1995 AND 1994
- -------------------------------------------------------------------------------
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS (Note 2) $ 628,358 $ 603,039
ACCOUNTS RECEIVABLE (Note 2) 118,202 247,001
PREPAID EXPENSES AND DEPOSITS 38,356 10,845
INVESTMENT PROPERTY (Notes 1, 2 and 3):
Land 1,886,042 1,886,042
Buildings and improvements 13,572,201 13,473,388
------------ ------------
15,458,243 15,359,430
Less accumulated depreciation (7,942,832) (7,541,195)
------------ ------------
7,515,411 7,818,235
DEFERRED EXPENSES - At amortized cost (Note 2) 139,838 68,420
------------ ------------
TOTAL $ 8,440,165 $ 8,747,540
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIENCY IN ASSETS)
LIABILITIES:
Accounts payable and accrued expenses $ 354,307 $ 389,727
Refundable tenant deposits 61,263 54,830
Mortgage notes payable (Note 3) 8,331,643 8,664,475
------------ ------------
Total liabilities 8,747,213 9,109,032
PARTNERS' EQUITY (DEFICIENCY IN ASSETS) (307,048) (361,492)
------------ ------------
TOTAL $ 8,440,165 $ 8,747,540
============ ============
<FN>
See notes to financial statements.
</TABLE>
<PAGE> 3
<TABLE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
- ---------------------------------------------------------------------------------------------
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Rental and other income (Notes 2, 4 and 6) $2,331,934 $2,344,886 $2,248,054
Interest 9,770 12,482 17,859
------------ ------------ ------------
Total revenues 2,341,704 2,357,368 2,265,913
------------ ------------ ------------
EXPENSES:
Interest 838,277 860,191 884,461
Depreciation and amortization (Note 2) 493,498 505,528 549,054
Real estate taxes 413,490 460,075 345,227
Repairs and maintenance 104,119 100,005 101,411
Property management fees - related party (Note 2) 116,228 118,667 111,031
Other operating expenses (includes $30,000 in
each year to related party) (Note 2) 321,648 347,946 336,068
------------ ------------ ------------
Total expenses 2,287,260 2,392,412 2,327,252
------------ ------------ ------------
NET INCOME (LOSS) $ 54,444 $ (35,044) $ (61,339)
============ ============ ============
NET INCOME (LOSS) ALLOCATION:
General partners $ 544 $ (350) $ (613)
Limited partners 53,900 (34,694) (60,726)
LIMITED PARTNERSHIP DATA (Note 2):
Net income (loss) per unit $ 4.49 $(2.89) $ (5.06)
============ ============ ============
Weighted average limited partnership units
outstanding 12,000 12,000 12,000
============ ============ ============
<FN>
See notes to financial statements.
</TABLE>
<PAGE> 4
<TABLE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY IN ASSETS)
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
- ---------------------------------------------------------------------------------------------
<CAPTION>
Limited General
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
BALANCE (DEFICIENCY IN ASSETS),
DECEMBER 1, 1992 $(182,749) $ (82,360) $(265,109)
Net loss (60,726) (613) (61,339)
------------ ------------ ------------
BALANCE (DEFICIENCY IN ASSETS),
NOVEMBER 30, 1993 (243,475) (82,973) (326,448)
Net loss (34,694) (350) (35,044)
------------ ------------ ------------
BALANCE (DEFICIENCY IN ASSETS),
NOVEMBER 30, 1994 (278,169) (83,323) (361,492)
Net income 53,900 544 54,444
------------ ------------ ------------
BALANCE (DEFICIENCY IN ASSETS),
NOVEMBER 30, 1995 $(224,269) $ (82,779) $(307,048)
============ ============ ============
<FN>
See notes to financial statements.
</TABLE>
<PAGE> 5
<TABLE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 54,444 $ (35,044) $ (61,339)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation 438,029 471,158 471,671
Amortization of deferred expenses 55,465 34,370 77,383
Changes in accounts affecting operations:
Accounts receivable 128,799 (128,857) 4,578
Due from Nooney Krombach Company 4,826 (4,826)
Prepaid expenses and deposits (27,511) 63 (5,236)
Deferred expenses (126,883) (10,908) (7,405)
Accounts payable and accrued expenses (35,420) (25,902) 110,081
Refundable tenant deposits 6,433 5,828 (1,676)
------------ ------------ ------------
Net cash provided by operating activities 493,356 315,534 583,231
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES -
Additions to investment property (135,205) (63,324) (290,964)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES -
Payments on mortgage notes payable (332,832) (307,491) (327,593)
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 25,319 (55,281) (35,326)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 603,039 658,320 693,646
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 628,358 $ 603,039 $ 658,320
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
Cash paid during the year for interest $ 843,312 $ 859,563 $ 884,515
============ ============ ============
<FN>
See notes to financial statements.
</TABLE>
<PAGE> 6
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
- -------------------------------------------------------------------------------
1. BUSINESS
Nooney Real Property Investors-Two, L.P. (the "Partnership") is a limited
partnership organized under the laws of the State of Missouri on
September 26, 1979. The Partnership was organized to invest primarily in
income-producing real properties such as shopping centers, office
buildings, other commercial properties, apartment buildings, warehouses and
light industrial properties. The Partnership's portfolio is comprised of:
a shopping center located in West St. Louis County, Missouri; an
office/warehouse center, an office/warehouse complex and a warehouse all
located in Indianapolis, Indiana. These properties generated 22.5%, 20.9%,
18.7% and 37.9% of rental and other income, respectively, for the year
ended November 30, 1995.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 any 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 personal responsibility of the partners.
The corporate general partner is a wholly-owned subsidiary of Nooney
Company. One of the individual general partners is an officer, director
and shareholder of Nooney Company. The other individual general partners'
spouse is a shareholder of Nooney Company. Nooney Krombach Company, a
wholly-owned subsidiary of Nooney Company, manages the Partnership's real
estate for a management fee. Property management fees paid to Nooney
Krombach Company were $116,228, $118,667 and $111,031 for the years ended
November 30, 1995, 1994 and 1993, respectively. Additionally, the
Partnership pays Nooney Krombach Company $30,000 annually as reimbursement
for management services and indirect expenses in connection with the
management of the Partnership.
Investment property is recorded at the lower of cost or net realizable
value.
Land improvements and buildings are depreciated over their estimated useful
lives using the straight-line method.
Lease agreements are accounted for as operating leases and rentals from
such leases are reported as revenues ratably over the terms of the leases.
Certain lease agreements provide for rent concessions. At November 30,
1995 accounts receivable include approximately $12,000 ($19,000 in 1994) of
accrued rent which is not yet due under the terms of the various lease
agreements.
Included in rental and other income are amounts received from tenants under
provisions of lease agreements which require the tenants to pay additional
rent equal to specified portions of certain expenses such as real estate
<PAGE> 7
taxes, insurance, utilities and common area maintenance. The income is
recorded in the same period that the related expense is incurred.
Pursuant to the terms of the Partnership Agreement, income and losses from
operations and cash distributions are allocated pro rata to the general and
limited partners based upon the relationship of original capital
contributions.
Limited partnership per unit computations are based on the weighted average
number of limited partnership units outstanding during the year.
The Partnership considers all highly liquid debt instruments with a
maturity of three months or less at date of purchase to be cash
equivalents.
Deferred expenses consist of lease fees and financing costs and are
amortized over the terms of their respective leases or notes.
Certain reclassifications have been made to 1994 and 1993 amounts to
conform to 1995 presentation.
<PAGE> 8
3. MORTGAGE NOTES PAYABLE
Mortgage notes payable as of November 30, 1995 and 1994 and the related
collateral book values consist of the following:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Maple Tree Shopping Center
--------------------------
(Book value of $1,113,000 at November 30, 1995)
9.125%, due in monthly installments of $17,911, including interest, to 2009 $1,669,401 $1,729,013
Note payable to bank, principal due in monthly installments of $1,208 plus
interest at bank's prime rate (8.75% at November 30, 1995) plus 1-1/2% to
November 1, 1996 when entire principal balance is due 290,060 305,764
Park Plaza I & II Office/Warehouse Complex
------------------------------------------
(Book value of $930,000 at November 30, 1995)
9.5%, due in monthly installments of $12,669, including interest, to 2003 855,308 922,571
Morenci Professional Park
-------------------------
(Book value of $1,614,000 at November 30, 1995)
10.25%, due in monthly installments of $15,682, including interest, to 2005 1,168,513 1,233,255
Note payable to bank, principal due in monthly installments of $1,111 plus
interest at bank's prime rate (8.75% at November 30, 1995) plus 1-1/2%,
to November 1, 1996, when entire principal balance is due 259,925 322,049
Jackson Industrial Park, Building A
-----------------------------------
(Book value of $3,987,000 at November 30, 1995)
9.31%, due in monthly installments of $39,203, including interest, to 2000,
when remaining principal balance of $3,542,902 is due 4,088,436 4,151,823
---------- ----------
Total $8,331,643 $8,664,475
========== ==========
</TABLE>
In November 1995, the 9.31% mortgage note payable was refinanced with the
same lender, which reduced the interest rate from 10.14% to 9.31% and
extended the term to November 2000.
<PAGE> 9
The mortgage notes are collateralized by deeds of trust and assignments of
rents on all investment properties. Principal payments required during the
next five years are as follows:
<TABLE>
<C> <C>
1996 $ 854,000
1997 335,000
1998 368,000
1999 405,000
2000 3,965,000
</TABLE>
In accordance with Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments", the estimated fair
value of mortgage notes payable with maturities greater than one year is
determined based on rates currently available to the Partnership for
mortgage notes with similar terms and remaining maturities. The estimated
fair value of mortgage notes payable with maturities of less than one year
are valued at their carrying amounts included in the balance sheet, which
are reasonable estimates of fair value due to the relatively short period
to maturity of the instruments. The carrying amount and estimated fair
value of the Partnership's debt at November 30, 1995 are summarized as
follows:
<TABLE>
<CAPTION>
Carrying Estimated
Amount Fair Value
---------- ----------
<S> <C> <C>
Mortgage Notes Payable $8,331,643 $8,683,614
</TABLE>
Fair value estimates are made at a specific point in time, are subjective
in nature and involve uncertainties and matters of significant judgment.
Settlement of the Partnership's debt obligations at fair value may not be
possible and may not be a prudent management decision. The potential loss
on extinguishment at November 30, 1995 does not take into consideration
expenses that would be incurred to settle the debt obligations at fair
value.
4. RENTAL REVENUES UNDER OPERATING LEASES
Minimum future rental revenues under noncancelable operating leases in
effect as of November 30, 1995 are as follows:
<TABLE>
<C> <C>
1996 $ 1,827,000
1997 1,486,000
1998 1,091,000
1999 875,000
2000 744,000
Remainder 43,000
------------
Total $ 6,066,000
============
</TABLE>
<PAGE> 10
In addition, certain lease agreements require tenant participation in
certain operating expenses and additional contingent rentals based upon
percentages of tenant sales in excess of minimum amounts. Tenant
participation in expenses included in revenues approximated $240,000 for
the year ended November 30, 1995 ($295,000 in 1994) and was insignificant
for the year ended November 30, 1993. Contingent rentals were not
significant for the years ended November 30, 1995, 1994 and 1993.
5. FEDERAL INCOME TAX STATUS
The general partners have received a ruling from the Internal Revenue
Service that Nooney Real Property Investors-Two, L.P. is considered a
partnership for income tax purposes.
Selling commissions and offering expenses incurred in connection with the
sale of limited partnership units are not deductible for income tax
purposes and therefore increase the partners' bases. Investment property
additions after December 31, 1980 are depreciated for income tax purposes
using rates which differ from rates used for computing depreciation for
financial statement reporting. Rents received in advance are includable in
taxable income in the year received. Rent concessions, recognized ratably
over lease terms for financial statement purposes, are includable in
taxable income in the year rents are received. Insurance premiums are
deductible for tax purposes in the year paid. Losses in connection with
the writedown of investment property are not recognized for income tax
purposes until the property is disposed.
The comparison of financial statement and income tax reporting is as
follows:
<TABLE>
<CAPTION>
Financial Income
Statement Tax
------------ ------------
<S> <C> <C>
1995:
Net income (loss) $ 54,444 $ (27,316)
Partners' equity (deficiency in assets) (307,048) (1,984,195)
1994:
Net (loss) $ (35,044) $ (144,494)
Partners' equity (deficiency in assets) (361,492) (1,956,879)
1993:
Net (loss) $ (61,339) $ (332,997)
Partners' equity (deficiency in assets) (326,448) (1,812,385)
</TABLE>
<PAGE> 11
6. MAJOR TENANTS
A substantial amount of the Partnership's revenue in 1995 was derived from
two major tenants whose rentals amounted to approximately $582,000 and
$252,000 or 25% and 11%, respectively, of total revenues.
A substantial amount of the Partnership's revenue in 1994 was derived from
two major tenants whose rentals amounted to approximately $534,000 and
$252,000 or 23% and 11%, respectively, of total revenues.
A substantial amount of the Partnership's revenue in 1993 was derived from
two major tenants whose rentals amounted to approximately $533,000 and
$252,000 or 24% and 11%, respectively, of total revenues.
* * * * * *
<PAGE> 12
<TABLE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
SCHEDULE - RECONCILIATION OF PARTNERS' EQUITY (DEFICIENCY IN ASSETS)
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
- ------------------------------------------------------------------------------------------------------------
The reconciliation of partners' equity (deficiency in assets) between financial statement and income tax
reporting is as follows:
<CAPTION>
1995
----------------------------------------
Limited General
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance (deficiency) per statement of partners' equity $ (224,269) $ (82,779) $ (307,048)
Add:
Selling commissions and other offering costs not deductible for
income tax purposes 1,395,653 1,395,653
Prepaid rents included in income for income tax purposes 15,377 155 15,532
Writedown of investment property not recognized for income tax
purposes 214,341 2,165 216,506
------------ ------------ ------------
1,401,102 (80,459) 1,320,643
Less:
Excess depreciation deducted for income tax purposes 3,247,195 32,800 3,279,995
Rent concessions not recognized for income tax purposes 12,099 122 12,221
Insurance premiums deducted for income tax purposes 12,496 126 12,622
------------ ------------ ------------
Balance (deficiency) per tax return $(1,870,688) $ (113,507) $(1,984,195)
============ ============ ============
(Continued)
<PAGE> 13
<CAPTION>
1994
----------------------------------------
Limited General
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance (deficiency) per statement of partners' equity $ (278,169) $ (83,323) $ (361,492)
Add:
Selling commissions and other offering costs not deductible for
income tax purposes 1,395,653 1,395,653
Prepaid rents included in income for income tax purposes 15,164 153 15,317
Writedown of investment property not recognized for income tax
purposes 214,341 2,165 216,506
------------ ------------ ------------
1,346,989 (81,005) 1,265,984
Less:
Excess depreciation deducted for income tax purposes 3,165,722 31,977 3,197,699
Rent concessions not recognized for income tax purposes 19,287 194 19,481
Insurance premiums deducted for income tax purposes 5,626 57 5,683
------------ ------------ ------------
Balance (deficiency) per tax return $(1,843,646) $ (113,233) $(1,956,879)
============ ============ ============
<CAPTION>
1993
----------------------------------------
Limited General
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance (deficiency) per statement of partners' equity $ (243,475) $ (82,973) $ (326,448)
Add:
Selling commissions and other offering costs not deductible for
income tax purposes 1,395,653 1,395,653
Prepaid rents included in income for income tax purposes 12,112 122 12,234
Writedown of investment property not recognized for income tax
purposes 214,341 2,165 216,506
------------ ------------ ------------
1,378,631 (80,686) 1,297,945
Less:
Excess depreciation deducted for income tax purposes 3,038,341 30,690 3,069,031
Rent concessions not recognized for income tax purposes 35,200 356 35,556
Insurance premiums deducted for income tax purposes 5,686 57 5,743
------------ ------------ ------------
Balance (deficiency) per tax return $(1,700,596) $ (111,789) $(1,812,385)
============ ============ ============
</TABLE>
<PAGE> 14
<TABLE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
SCHEDULE III- REAL ESTATE AND ACCUMULATED DEPRECIATION
NOVEMBER 30, 1995
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
Column A Column B Column C
- ---------------------------------------------------- ------------ ----------------------------------------
Initial Cost to Partnership
----------------------------------------
Buildings
and
Description Encumbrances Land Improvements Total
- ---------------------------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Maple Tree Shopping Center, St. Louis, Missouri $ 2,034,777 $ 474,750 $ 2,709,303 $ 3,184,053
Park Plaza I & II Office/Warehouse Complex,
Indianapolis, Indiana 922,571 182,335 2,228,828 2,411,163
Morenci Professional Park, Indianapolis, Indiana 1,555,304 320,418 2,689,506 3,009,924
Jackson Industrial Park, Building A,
Indianapolis, Indiana 4,151,823 908,539 5,181,390 6,089,929
------------ ------------ ------------ ------------
Total $ 8,664,475 $ 1,886,042 $12,809,027 $14,695,069
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Column A Column D Column E
- --------------------------------------------------- ------------- ----------------------------------------
Gross Amount at Which
Costs Carried at Close of Period
Capitalized ----------------------------------------
Subsequent Buildings
to and
Description Acquisition Land Improvements Total
- --------------------------------------------------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Maple Tree Shopping Center, St. Louis, Missouri $340,505 $ 474,750 $ 3,065,221 $ 3,539,971
Park Plaza I & II Office/Warehouse Complex,
Indianapolis, Indiana 77,190 <F1> 182,335 2,302,311 2,484,646
Morenci Professional Park, Indianapolis, Indiana (205,567)<F2> 320,418 2,488,653 2,809,071
Jackson Industrial Park, Building A,
Indianapolis, Indiana 452,233 908,539 5,716,016 6,624,555
------------- ------------ ------------ ------------
Total $664,361 $1,886,042 $13,572,201 $15,458,243
============= ============ ============ ============
<FN>
<F1> Amount is net of a building writedown of $139,281, to reflect the minimum recoverable value to the
Partnership.
<F2> Amount includes the disposal of Building G of Morenci Professional Park for $482,387 and a building
writedown of $77,225 to reflect the minimum recoverable value to the Partnership.
</TABLE>
<PAGE> 15
<TABLE>
<CAPTION>
Column A Column F Column G Column H Column I
- ---------------------------------------------------- ------------ ------------ ------------ ------------
Life on
Which
Depreciation
in Latest
Income
Accumulated Date of Date Statement
Description Depreciation Construction Acquired is Computed
- ---------------------------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Maple Tree Shopping Center, St. Louis, Missouri $2,431,980 1974 10/3/79 5-25 yrs.
Park Plaza I & II Office/Warehouse Complex,
Indianapolis, Indiana 1,582,196 1975, 1979 10/15/80 3-41 yrs.
Morenci Professional Park, Indianapolis, Indiana 1,195,055 1975, 1979 3/27/81 30 yrs.
Jackson Industrial Park, Building A,
Indianapolis, Indiana 2,733,601 1976, 1980 3/27/81 30 yrs.
------------
Total $7,942,832
============
(Continued)
</TABLE>
<PAGE> 16
<TABLE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993
- ----------------------------------------------------------------------------------------------
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
(A) Reconciliation of amounts in Column E:
Balance at beginning of period $15,359,430 $15,312,567 $15,037,808
Add - Cost of improvements 135,205 63,324 290,964
Less:
Cost of disposals (36,392) (16,461) (16,205)
------------ ------------ ------------
Balance at end of period $15,458,243 $15,359,430 $15,312,567
============ ============ ============
(B) Reconciliation of amounts in Column F:
Balance at beginning of period $ 7,541,195 $ 7,086,498 $ 6,631,032
Add - Provision during the period 438,029 471,158 471,671
Less - Depreciation on disposals (36,392) (16,461) (16,205)
------------ ------------ ------------
Balance at end of period $ 7,942,832 $ 7,541,195 $ 7,086,498
============ ============ ============
(C) The aggregate cost of real estate owned for
federal income tax purposes $15,674,749 $15,575,936 $15,529,073
============ ============ ============
(Concluded)
</TABLE>
