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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from To
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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
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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 [ ] 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 .
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Page 1 of 11 Pages
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PART I
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ITEM 1: FINANCIAL STATEMENTS
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NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
February 29, November 30,
1996 1995
(Unaudited)
------------ ------------
ASSETS:
Cash and cash equivalents $ 589,917 $ 628,358
Accounts receivable 73,785 118,202
Prepaid expenses and deposits 98,587 38,356
Investment property
Land 1,886,042 1,886,042
Buildings and improvements 13,591,260 13,572,201
------------ ------------
15,477,302 15,458,243
Less accumulated depreciation 8,037,646 7,942,832
------------ ------------
7,439,656 7,515,411
Deferred expenses-At amortized cost 134,394 139,838
------------ ------------
$ 8,336,339 $ 8,440,165
============ ============
LIABILITIES AND PARTNERS' DEFICIT:
Liabilities:
Accounts payable and accrued expenses $ 400,877 $ 354,307
Mortgage notes payable 8,251,213 8,331,643
Refundable tenant deposits 63,133 61,263
------------ ------------
8,715,223 8,747,213
Partners' Deficit (378,884) (307,048)
------------ ------------
$ 8,336,339 $ 8,440,165
============ ============
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NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS AND PARTNERS' DEFICIT
(UNAUDITED)
Three Months Ended
--------------------------
February 29, February 28,
1996 1995
------------ ------------
REVENUES:
Rental and other income $ 563,462 $ 571,187
Interest 2,665 2,981
------------ ------------
566,127 574,168
EXPENSES:
Interest 196,658 212,855
Depreciation and amortization 121,945 118,065
Real estate taxes 124,092 102,464
Property management fees paid to
Nooney Krombach Company 28,210 28,050
Reimbursement to Nooney Krombach Company for
partnership management services and
indirect expenses 7,500 7,500
Other operating expenses 159,558 108,465
------------ ------------
637,963 577,399
------------ ------------
NET LOSS $ (71,836) $ (3,231)
============ ============
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (5.93) $ (0.27)
============ ============
PARTNERS' DEFICIT:
Beginning of Period $ (307,048) $ (361,492)
Net Loss (71,836) (3,231)
------------ ------------
End of Period $ (378,884) $ (364,723)
============ ============
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NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
--------------------------
February 29, February 28,
1996 1995
------------ ------------
CASH FLOWS PROVIDED BY (USED IN) OPERATING
ACTIVITIES:
Net Loss $ (71,836) $ (3,231)
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization 121,945 118,065
Changes in assets and liabilities:
Decrease in accounts receivable 44,417 109,277
Increase in prepaid expenses (60,231) (8,665)
Increase in deferred assets (3,730) (72,623)
Increase (Decrease) in accounts
payable and accrued expenses 46,570 (3,567)
Increase in refundable tenant deposits 1,870 1,212
------------ ------------
Total Adjustments 150,841 143,699
------------ ------------
Net cash provided by (used in)
operating activities 79,005 140,468
CASH FLOWS USED IN INVESTING ACTIVITIES:
Addition to investment property (37,016) (10,073)
------------ ------------
Net cash used in investing activities (37,016) (10,073)
------------ ------------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Payments on mortgage notes payable (80,430) (116,793)
------------ ------------
Net cash used in financing activities (80,430) (116,793)
------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (38,441) 13,602
CASH AND CASH EQUIVALENTS,
Beginning of period 628,358 603,039
------------ ------------
CASH AND CASH EQUIVALENTS,
End of period $ 589,917 $ 616,641
============ ============
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NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED FEBRUARY 29, 1996 AND 1995
NOTE A:
Refer to the Registrant's financial statements for the year ended November 30,
1995, 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. During the first quarter of fiscal year 1996, the
Registrant implemented "Financial Accounting Standards Board Rule 121,
Accounting for the Long-lived Asset and for the Long-lived Assets to Be
Disposed Of". The implementation had no financial statement impact for the
quarter ended February 29, 1996. 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 29, 1996 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 29,
1996 and 1995 was computed based on 12,000 units, the number of units
outstanding during the periods.
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ITEM 7: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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Liquidity and Capital Resources
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Cash on hand as of February 29, 1996 is $589,917, a decrease of $38,441
from year end November 30, 1995. The decrease in cash flow is attributable to
the operations of the property. Cash flow provided by operating activities for
the quarter ended February 29, 1996 is $79,005 and for the same period ended
February 28, 1995 was $140,468. Though cash on hand decreased in the first
quarter, the Registrant expects the properties to provide adequate cash flow
from operations to fund anticipated capital expenditures. The anticipated
capital expenditures by property are as follows:
Leasing Other
Capital Capital Total
------------ ------------ ------------
Park Plaza I & II $ 6,400 $ 92,100 $ 98,500
Morenci Professional Park 108,300 100,000 208,300
Maple Tree Shopping Center 8,000 20,000 28,000
Jackson Industrial 0 152,900 152,900
------------ ------------ ------------
$ 122,700 $ 365,000 $ 487,700
============ ============ ============
During the remainder of 1996, approximately $487,700 of capital expenditures
are anticipated. At Park Plaza I & II, Morenci Professional Park and Maple Tree
Shopping Center leasing capital includes funds for tenant alterations and the
payment of lease commissions. Other capital at Park Plaza I & II will be for
the following items: resurfacing sections of the rear parking lot, major
concrete repair/replacement and the adjusting of the property's sprinkler
system and sprinkler heads.The Registrant has forecasted other capital at
Morenci Professional Park to renovate the suites vacated by the major tenant in
December 1995. The renovation will divide the vacant space into 1,200 to 9,600
square foot units. Maple Tree Shopping Center has scheduled the enclosure of
its waste storage bins in an effort to comply with city ordinances. At the
remaining property, Jackson Industrial, certain sections of the roof will be
replaced/repaired and the skylights will be replaced.
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.
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.
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 Shopping Center. The term of the extensions were for a period of one year
maturing October 31, 1996 at a rate of 1.5% over the then published prime rate.
As of February 29, 1996, interest rate on the debt was 9.75%. The balance of
the debt on Park Plaza I & II and Morenci Professional Park as of February 29,
1996 is $256,592. The balance of the debt on Maple Tree Shopping Center as of
February 29, 1996 is $286,436.
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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
- ---------------------
The results of operations for the Registrants properties for the quarter ended
February 29, 1996 and February 28, 1995 are detailed in the schedule below.
Expenses of the Registrant are excluded.
Jackson Morenci
Industrial Maple Tree Park Plaza Prof. Park
------------ ------------ ------------ ------------
1996
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Revenues $ 218,473 $ 131,844 $ 113,038 $ 100,845
Expenses $ 250,493 $ 121,402 $ 91,127 $ 130,503
------------ ------------ ------------ ------------
Net Income (Loss) $ (32,020) $ 10,442 $ 21,911 $ (29,658)
============ ============ ============ ============
1995
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Revenues $ 219,303 $ 126,743 $ 110,705 $ 117,301
Expenses $ 229,985 $ 112,963 $ 79,204 $ 107,736
------------ ------------ ------------ ------------
Net Income (Loss) $ (10,682) $ 13,780 $ 31,501 $ 9,565
============ ============ ============ ============
The operations of the individual properties for the quarter ended February 29,
1996 when compared to the quarter ended February 28, 1995 have had decreases in
net income or increases in the net loss. The only property whose operations
remained relatively stable was Maple Tree Shopping Center. Jackson Industrials
increase in the net loss is attributable to an increase in real estate taxes
offset by a decrease in interest expense. Park Plaza I & II had similar results
as revenues remained relatively stable and expenses increased. Significant
increases in expenses occurred at Park Plaza I & II in the categories of snow
removal ($7,592), insurance ($1,705) and administrative costs ($1,801). At
Morenci Professional Park revenues decreased as expenses decreased resulting in
a significant decline in net income. The decrease in revenues can be attributed
to rental income as a major tenant vacated the building at the end of December
1995, as expected. The increase in expenses relates to snow removal ($7,572),
vacancy expense ($5,451) and professional fees ($4,482).
<PAGE> 8
The occupancy at three of the Registrants properties remained at high levels.
The occupancy at Morenci Professional Park, as expected, decreased
significantly due to the vacancy of a major tenant effective December 31, 1995.
The occupancy levels at February 29, 1996 and February 28, 1995 and 1994 are as
follows:
Occupancy levels as of February 29, 1996
Property and February 28, 1995 and 1994
- ------------------------------------- ----------------------------------------
1996 1995 1994
------------ ------------ ------------
Park Plaza I & II 98% 92% 98%
Morenci Professional Park 57% 99% 94%
Maple Tree Shopping Center 98% 98% 98%
Jackson Industrial 100% 100% 100%
At the beginning of fiscal year 1996, Park Plaza I & II occupancy level was
100%. However, during the first quarter, two tenants occupying 4,140 square
feet vacated, representing 4.35% of the total square feet in this facility. One
new lease was signed by the Registrant during the first quarter. The leasing
activity for the first quarter resulted in a reduction of occupancy of
approximately 2%. At Park Plaza I & II, no tenant occupies more than 10% of the
total space.
During the first quarter at Morenci Professional Park leasing activity was
significant. As previously stated, the expected move out of the Parks major
tenant put 51,600 square feet on the market. Along with the move out of the
aforementioned tenant, two other tenants occupying 6,000 square feet vacated
their suites, one of which vacated 3,600 square feet to expand into 7,200
square feet elsewhere in the property. Offsetting the vacancies, were the
signing by the Registrant of five new leases totaling 13,200 square feet and
the renewal of four leases totaling 4,800 square feet. Morenci Professional
Park has no tenants that occupy more than 10% of the available space.
In the first quarter at Maple Tree Shopping Center occupancy increased 2% or
1,200 square feet with the signing of one new lease. The Registrant also
renewed one lease with 800 square feet. No tenants vacated their suites during
the first quarter. 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 61% of the available space
renewed its lease for a period of five years commencing August 1, 1995. This
tenant has indicated to the community through a press release that they will
be closing this facility. The Registrant has not received verbal or written
notice that the tenant will be exercising their termination option. The other
tenant occupying 39% of the available space has a lease expiring July 31, 1997.
1996 Comparisons
- ----------------
As of February 29, 1996, the Registrants consolidated revenues are $566,127 for
the quarter ended and for the same period ended February 28, 1995 consolidated
revenues were $574,168. Revenues decreased 1.4% or $8,041. On a consolidated
basis revenues remained relatively stable when comparing first quarter results
<PAGE> 9
from February 29, 1996 to February 28, 1995. However, the Registrant expects
revenues on a consolidated basis to decrease in the second quarter due to the
move out of a major tenant at Morenci Professional Park.
During the first quarter of 1996 consolidated expenses as of February 29, 1996
was $637,963 compared to $577,399 for the first quarter ended February 28,
1995. The increase in consolidated expenses of $60,564 or 10.5% can be
attributed to an increase in real estate taxes and other operating expenses
offset by a decrease in interest expense. The increase in real estate taxes is
attributable to Jackson Industrial. In 1994 the property was reassessed and
during the reassessment the taxing authority discovered an error in the method
in which the property was assessed. With the increased assessment, the
properties real estate tax accruals were adjusted to properly reflect the
liability. The accrual adjustment affects 1996 and 1995 since in the state of
Indiana real estate taxes are paid in arrears. The increase in other operating
expenses can be attributed to the following expense categories: insurance
($6,804), parking lot ($4,926), repairs and maintenance ($7,586), snow removal
($15,721), vacancy expenses ($6,525) and administrative costs ($7,800). The
decrease in interest expense relates primarily to Jackson Industrial. Interest
expense paid by the Registrant on behalf of Jackson Industrial was $94,984 for
the quarter ended February 29, 1996 compared to $105,125 for the quarter ended
February 28, 1995. The decrease in expense was caused by the refinancing of the
first mortgage debt effective November 1, 1995 for a period of five years at a
rate of 9.31%, being amortized over 18 years.
1995 Comparisons
- ----------------
As of February 28, 1995 consolidated revenues were $574,168 for the quarter
ended compared to $559,109 for the quarter ended February 28, 1994. Revenues
increased $15,059 or 2.7% when comparing the quarter ending results. The
increase in revenues can be attributed to Jackson Industrial and Park Plaza I &
II. At Jackson Industrial the increase in revenues were generated through an
increase in real estate tax reimbursement. As real estate tax expense
increases, the increases are passed through to the tenant under a provision in
their lease. At Park Plaza I & II, the increase in revenues is attributable to
rental income. The cause for the increase in rental income is due to slightly
higher rents and an increase in average occupancy for the quarter.
For the quarter ended February 28, 1995 and 1994 consolidated expenses were
$577,399 and $611,096, respectively. Consolidated expenses decreased $33,697 or
5.5% when comparing the quarter ending results. The decrease in consolidated
expenses relates to decreases in depreciation and amortization and other
operating expenses offset by an increase in real estate taxes. The decrease in
depreciation and amortization can be attributed to Maple Tree Shopping Center.
At Maple Tree Shopping Center, certain tenant alterations, lease commissions
and building improvements become fully amortized and/or depreciated during
1994. The decrease in other operating expenses can be attributed to the
following expense categories: vacancy expense ($10,720), snow removal ($8,504),
repairs and maintenance ($7,001), parking lot expenditures ($5,678) with the
remainder of the decrease dispersed among several expense categories. The
increase in real estate taxes relates to an individual property, Jackson
Industrial. Real estate tax accruals increased approximately $19,000 when
comparing February 28, 1995 to 1994. The increase in the real estate tax
accruals is due to a reassessment performed by the county taxing authority in
which the taxing authority discovered an error in the method in which the
property was assessed.
<PAGE> 10
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.
PART II. OTHER INFORMATION
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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 11, 1996 /S/ GREGORY J. NOONEY, JR.
-----------------------------------------
Gregory J. Nooney, Jr.
General Partner
NOONEY INVESTORS, INC.
/S/ GREGORY J. NOONEY, JR.
-----------------------------------------
Gregory J. Nooney, Jr.
Chairman
/S/ PATRICIA A. NOONEY
-----------------------------------------
Patricia A. Nooney
Senior Vice President and Secretary
BEING A MAJORITY OF THE DIRECTORS
<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> 3-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> FEB-29-1996
<CASH> 589,917
<SECURITIES> 0
<RECEIVABLES> 73,785
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 762,289
<PP&E> 15,477,302
<DEPRECIATION> 8,037,646
<TOTAL-ASSETS> 8,336,339
<CURRENT-LIABILITIES> 400,877
<BONDS> 8,251,213
0
0
<COMMON> 0
<OTHER-SE> (378,884)
<TOTAL-LIABILITY-AND-EQUITY> 8,336,339
<SALES> 563,462
<TOTAL-REVENUES> 566,127
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 441,305
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 196,658
<INCOME-PRETAX> (71,836)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (71,836)
<EPS-PRIMARY> (5.93)
<EPS-DILUTED> 0
</TABLE>
