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, 1996
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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
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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
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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 .
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Page 1 of 32 Pages
Exhibit Index located on Page 17
<PAGE>
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, 1997, 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, 1997 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.
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<PAGE>
PART I
ITEM 1: BUSINESS
It should be noted that this 10-K contains forward-looking information (as
defined in the Private Securities Litigation Reform Act of 1995) that involves
risk and uncertainty, including trends in the real estate investment market,
projected leasing and sales, and the future prospects for the Registrant. Actual
results could differ materially from those contemplated by such statements.
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 1996, 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.
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<PAGE>
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.
ITEM 2: PROPERTIES
On October 3, l979, 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 l974 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 purchase price of the
Center was $3,184,053. The Center was 100% leased by 18 tenants at year end.
On October 15, l980, 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 l975 and Park Plaza II in l979. Park Plaza
is located on a 9 acre site which provides paved parking for 150 cars. The
purchase price of Park Plaza was $2,411,163. The buildings contain a total of
approximately 95,000 net rentable square feet and were 100% leased by 29 tenants
at year end.
On March 27, l981, 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 l975 and building G was built in l979. The total purchase price, excluding
Building G, of Morenci was $3,009,924. 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. A major tenant
occupying 49% of the property vacated as of December 31, 1995. Leasing during
1996 was strong and the buildings were 80% leased by 39 tenants at year end.
On March 27, l981, 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 l976 and
subsequently expanded in l980, contains approximately 320,000 net rentable
square feet. The purchase price of Jackson A was $6,089,929. Jackson A was 100%
leased by 2 tenants at year end.
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.
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<PAGE>
The following table sets forth certain information as of November 30, 1996,
relating to the properties owned by the Partnership.
<TABLE>
<CAPTION>
AVERAGE
ANNUALIZED
EFFECTIVE
TOTAL BASE RENT PER- PRINCIPAL TENANTS LEASE
SQUARE ANNUALIZED PER SQUARE CENT OVER 10% OF PROPERTY BASE EXPIRA-
PROPERTY FEET BASE RENT FOOT LEASED RENT REVENUES (%) TION
- ------------------ ------- ---------- ----------- ------ ----------------------------- -------
<S> <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 $ 349,224 $4.16 80% None
Maple Tree 72,000 $ 449,140 $6.24 100% Schnucks Super Markets (33%)* 1999
Super X Drugs (10%)** 2000
Park Plaza I & II 95,000 $ 454,610 $4.78 100% None
</TABLE>
* Space subleased to DeBasio Furniture
** Space subleased to Medicine & More
ITEM 3: LEGAL PROCEEDINGS
The Registrant is not a party to any material pending legal proceedings.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the fourth
quarter of fiscal 1996.
PART II
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
As of February 1, 1997, there were 1,061 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 1995
or fiscal 1996.
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<PAGE>
<TABLE>
ITEM 6: SELECTED FINANCIAL DATA
<CAPTION>
Years Ended November 30,
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1996 1995 1994 1993 1992
(Not covered by independent auditors' report)
<S> <C> <C> <C> <C> <C>
Rental and other income $ 2,301,696 $ 2,331,934 $ 2,344,886 $ 2,248,054 $ 2,160,717
Net income (loss) 16,926 54,444 (35,044) (61,339) (129,532)
Data per limited partnership unit:
Net income (loss) 1.40 4.49 (2.89) (5.06) (10.69)
Weighted average limited partnership
units outstanding 12,000 12,000 12,000 12,000 12,000
At year-end:
Total assets 8,354,094 8,440,165 8,747,540 9,110,149 9,390,676
Investment property - net 7,459,116 7,515,411 7,818,235 8,226,069 8,406,776
Mortgage notes payable 7,999,107 8,331,643 8,664,475 8,971,966 9,299,559
Partners' equity (deficiency in assets) (290,122) (307,048) (361,492) (326,448) (265,109)
See Item 7: Management's Discussion and Analysis for discussion of comparability of items.
</TABLE>
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<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Cash reserves as of November 30, 1996 are $596,247, a decrease of $32,111 from
year ended November 30, 1995. The decrease in cash was due to the expenditures
necessary during the year for capital expenditures, leasing and tenant finish
costs. As indicated in last year's report, a major tenant occupying 49% of the
space at Morenci Professional Park vacated in December 1995. The Registrant had
significant expenditures to fix the spaces up for re-leasing. In addition, a
partial roof replacement at Jackson Industrial Park was done during the year.
The Registrant expects to fund anticipated capital expenditures for 1997 from
cash flow provided by operations and the current level of cash reserves. The
anticipated capital expenditures in 1997 by property are as follows:
Other Capital Leasing Capital Total
----------------------------------------
Park Plaza I & II $ 62,120 $ 147 $ 62,267
Morenci 52,040 55,588 107,628
Maple Tree Shopping Center 71,521 0 71,521
Jackson Industrial 0 10,000 10,000
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$185,681 $ 65,735 $251,416
Morenci Professional Park and Jackson Industrial 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 front parking areas and concrete
repair/replacement. At Morenci Professional Park, the Registrant has forecasted
other capital to construct model units to facilitate leasing and asphalt
resurfacing. At Maple Tree Shopping Center, the Registrant has scheduled the
enclosure of its waste storage bins in an effort to comply with city ordinances,
a new center identification sign and re-roofing of one section of the Center.
As of November 1, 1996, 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 corporate base rate. As of November 30, 1996, interest rate on the
debt was 9.75%. The balance of the debt on Park Plaza I & II and Morenci as of
November 30, 1996, is $246,619. The balance of the debt on Maple Tree as of
November 30, 1996, is $276,772.
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.
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<PAGE>
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 Registrant's properties for the years ended
November 30, 1996, 1995, and 1994 are detailed in the schedule below. Expenses
of the Registrant are excluded.
Jackson
Industrial Maple Tree Park Plaza Morenci
1996
Revenues $ 864,995 $ 543,132 $ 478,980 $ 405,786
Expenses 847,648 479,561 359,583 490,772
--------------------------------------------------------
Net Income (Loss) $ 17,347 $ 63,571 $ 119,397 $ (84,986)
=========================================================
1995
Revenues $ 886,870 $ 524,832 $ 436,685 $ 489,455
Expenses 953,738 469,795 329,971 423,981
---------------------------------------------------------
Net Income (Loss) $ (66,868) $ 55,037 $ 106,714 $ 65,474
=========================================================
1994
Revenues $ 901,244 $ 537,252 $ 445,968 $ 475,852
Expenses 1,000,259 491,040 345,685 456,575
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Net Income (Loss) $ (99,015) $ 46,212 $ 100,283 $ 19,277
=========================================================
At Jackson Industrial revenues decreased slightly due to less real estate tax
reimbursements from one tenant whose lease renewed in 1995 with a more current
base year. Expenses were down due to a successful real estate tax appeal and the
real estate taxes being lower.
Maple Tree Shopping Center had increases in base rental revenues ($12,240) and
percentage rent income ($21,816) over the prior year offset by bad debt expense
($9,895). Expenses increased from 1995 to 1996 due primarily to increases in
real estate tax expense ($8,872) and administrative expenses ($3,989) offset by
decreases in cleaning ($1,017) and insurance ($3,472).
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<PAGE>
Net income at Park Plaza I & II for the year-ended November 30, 1996 was higher
than 1995 due to the following. Revenues increased ($42,000) as a result of a
combination of base rental rate increases ($24,423) and escalation income
($17,035). While expenses increased in the categories of fire and crime
prevention ($9,014), snow removal ($8,178), and real estate taxes ($19,286)
offset by decreases in parking lot landscaping ($4,035) and administrative
expenses ($5,980).
At Morenci Professional Park, revenues decreased significantly due to the fact
that a major tenant vacated at the end of 1995. During 1996, significant
re-leasing was done and the property ended the year at an occupancy rate of 80%.
Revenues at Morenci decreased from 1995 to 1996 due to the lower occupancy
wherein base rental income was down ($117,789) offset by increases in common
area maintenance income ($17,081) and tax reimbursement income ($12,725).
Expenses at Morenci were higher due to an increase in amortization expense
($22,623), repairs and maintenance ($5,018), snow removal ($8,242), real estate
taxes ($5,560) and vacancy expense to clean up the vacant spaces and get them
ready for re-leasing ($31,443) offset by decreases in sewer ($4,027) and water
($5,150).
The occupancy at the registrants properties at year end remained high with the
exception of Morenci Professional Park which ended the year at 80% occupancy.
Morenci's occupancy was higher than the Registrant had anticipated achieving as
re-leasing was faster than anticipated. The occupancy levels at November 30 are
as follows:
Occupancy rates at November 30
1996 1995 1994
-------------------------------------
Park Plaza I & II 100% 100% 100%
Morenci Professional Park 80% 99% 94%
Maple Tree 100% 96% 98%
Jackson Industrial 100% 100% 100%
Jackson Industrial has two tenants who lease 100% of the available space. The
major tenant who occupies approximately 70% of the available space has a lease
which runs until July 2000. The tenant has an option to cancel as of July 1998.
The tenant is in process of relocating its operation and vacating the space and
has been attempting to sublease the space unsuccessfully thus far. The
Registrant anticipates that the tenant will exercise its option to cancel as of
its cancellation date of July 1998. The other tenant has a lease which expires
at the end of July 1997. Subsequent to year-end the Registrant and that tenant
have exercised a five year extension of the lease.
Maple Tree Shopping Center remained 100% occupied during the fourth quarter. The
Center has two major tenants who occupy 18% and 42% of the available space.
Their leases have expirations of April 30, 2000 and July 31, 1999, respectively
and each has several renewal options.
Occupancy at Park Plaza I & II remained 100% during the fourth quarter. Renewal
leases were signed with three tenants who occupy a combined total of 14,400
square feet. At Park Plaza, no tenant occupies more than 10% of the total space.
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<PAGE>
During the fourth quarter, the occupancy level at Morenci Professional Park
increased from 68% to 80%. Leasing activity consisted of signing seven new
leases for a total of 14,400 square feet renewing three leases for tenants
occupying 6,000 square feet offset by two tenants vacating 2,400 square feet. As
previously stated, the leasing during 1996 was better than anticipated and the
Registrant feels that leasing activity in 1997 will remain brisk. No tenant
occupies more than 10% of the total space.
1996 Comparisons
As of November 30, 1996, the Registrants consolidated revenues are $2,316,648
compared to $2,341,704 for the year-ended November 30, 1995. On a consolidated
basis revenues decreased $25,056 or approximately 1%. Consolidated revenues
remained relatively stable from 1995 to 1996 and the fluctuations between
individual properties were analyzed above.
The Registrant's consolidated expenses for the year-ended November 30, 1996,
were $2,299,722. When compared to year-ended November 30, 1995, consolidated
revenues increased $12,462 or less than 1%.
Net income is $16,926 or $1.40 per limited partnership unit. In 1995, the net
income was $54,444 or $4.49 per limited partnership share. Cash flow provided by
operations for the yearended November 30, 1996 were $693,291. This cash flow
enabled the Registrant to fund capital expenditures of $392,866 and to reduce
loan balances by $332,536.
1995 Comparisons
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 are
$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).
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
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<PAGE>
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.
Inflation
The effects of inflation did not have a material impact upon the Registrant's
operation in fiscal l996, and are not expected to materially affect the
Registrant's operation in l997.
Interest Rates
Interest rates on floating rate debt went up in 1995 and remained constant in
1996. Future increases in the prime interest rate can adversely affect the
operations of the Registrant.
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
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 66, 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.
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<PAGE>
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.
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 l996, 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.
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<PAGE>
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners.
Title Name of Amount and Nature of Percentage
of Class Beneficial Owner Beneficial Ownership of Class
-------- ---------------- -------------------- --------
Limited Liquidity Fund XI 10 Units 0.08%
Partnership Liquidity Fund XVI 3 Units 0.02%
Interests 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%
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.
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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 l996 the
Registrant paid property management fees of $114,645 to Nooney Krombach Company.
The Registrant paid Nooney Krombach Company $30,000 during fiscal l996 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 l996.
(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 1996 in connection with various transactions.
(c) Indebtedness of Management.
Not Applicable.
(d) Transactions with promoters.
Not Applicable.
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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
-15-
<PAGE>
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 28, 1997 /s/ Gregory J. Nooney, Jr.
---------------------------- --------------------------
Gregory J. Nooney, Jr.
General Partner
Nooney Investors, Inc.
General Partner
Date: February 28, l997 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
-16-
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit Page
Number Description Number
- ------ ----------- ------
<S> <C> <C>
3.1 Amended and Restated Agreement and Certificate of Limited N/A
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- N/A
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, l985, and is identical in all material
respects.
99.1 List of Directorships filed in response to Item 10. 18
99.2 Pages 8-11, 23-25 and A-14 - A-17 of the Prospectus N/A
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. 20-32
-17-
</TABLE>
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
-18-
<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-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
<CASH> 596,247
<SECURITIES> 0
<RECEIVABLES> 147,278
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 789,754
<PP&E> 15,851,109
<DEPRECIATION> 8,391,993
<TOTAL-ASSETS> 8,354,094
<CURRENT-LIABILITIES> 572,660
<BONDS> 7,999,107
0
0
<COMMON> 0
<OTHER-SE> (290,122)
<TOTAL-LIABILITY-AND-EQUITY> 8,354,094
<SALES> 2,301,696
<TOTAL-REVENUES> 2,316,648
<CGS> 2,299,722
<TOTAL-COSTS> 2,299,722
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 775,729
<INCOME-PRETAX> 16,926
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,926
<EPS-PRIMARY> 1.40
<EPS-DILUTED> 0
</TABLE>
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, 1996 and 1995,
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, 1996. 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, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended November 30, 1996 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.
DELOITTE & TOUCHE LLP
January 10, 1997
St. Louis, Missouri
-20-
<PAGE>
<TABLE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
NOVEMBER 30, 1996 AND 1995
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
ASSETS 1996 1995
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 596,247 $ 628,358
ACCOUNTS RECEIVABLE 147,278 118,202
PREPAID EXPENSES AND DEPOSITS 46,229 38,356
INVESTMENT PROPERTY (Note 3):
Land 1,886,042 1,886,042
Buildings and improvements 13,965,067 13,572,201
------------ ------------
15,851,109 15,458,243
Less accumulated depreciation (8,391,993) (7,942,832)
------------ ------------
7,459,116 7,515,411
DEFERRED EXPENSES - At amortized cost 105,224 139,838
------------ ------------
TOTAL $ 8,354,094 $ 8,440,165
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIENCY IN ASSETS)
LIABILITIES:
Accounts payable and accrued expenses $ 572,660 $ 354,307
Refundable tenant deposits 72,449 61,263
Mortgage notes payable (Note 3) 7,999,107 8,331,643
------------ ------------
Total liabilities 8,644,216 8,747,213
PARTNERS' EQUITY (DEFICIENCY IN ASSETS) (290,122) (307,048)
------------ ------------
TOTAL $ 8,354,094 $ 8,440,165
============ ============
</TABLE>
See notes to financial statements.
-21-
<PAGE>
<TABLE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
- -------------------------------------------------------------------------------------------------
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
REVENUES:
Rental and other income (Notes 4 and 6) $ 2,301,696 $ 2,331,934 $ 2,344,886
Interest 14,952 9,770 12,482
----------- ----------- -----------
Total revenues 2,316,648 2,341,704 2,357,368
----------- ----------- -----------
EXPENSES:
Interest 775,729 838,277 860,191
Depreciation and amortization 518,000 493,498 505,528
Real estate taxes 379,527 413,490 460,075
Repairs and maintenance 109,051 104,119 100,005
Property management fees - related party 114,645 116,228 118,667
Other operating expenses (includes $30,000 in each
year to related party) 402,770 321,648 347,946
----------- ----------- -----------
Total expenses 2,299,722 2,287,260 2,392,412
----------- ----------- -----------
NET INCOME (LOSS) $ 16,926 $ 54,444 $ (35,044)
=========== =========== ===========
NET INCOME (LOSS) ALLOCATION:
General partners $ 169 $ 544 $ (350)
Limited partners 16,757 53,900 (34,694)
LIMITED PARTNERSHIP DATA:
Net income (loss) per unit $ 1.40 $ 4.49 $ (2.89)
=========== =========== ===========
Weighted average limited partnership units
outstanding 12,000 12,000 12,000
=========== =========== ===========
</TABLE>
See notes to financial statements.
-22-
<PAGE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY IN ASSETS)
YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
- --------------------------------------------------------------------------------
Limited General
Partners Partners Total
BALANCE (DEFICIENCY IN ASSETS),
DECEMBER 1, 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)
Net income 16,757 169 16,926
--------- --------- ---------
BALANCE (DEFICIENCY IN ASSETS),
NOVEMBER 30, 1996 $(207,512) $ (82,610) $(290,122)
========= ========= =========
See notes to financial statements.
-23-
<PAGE>
<TABLE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 16,926 $ 54,444 $ (35,044)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 474,196 438,029 471,158
Amortization of deferred expenses 43,804 55,465 34,370
Changes in accounts affecting operations:
Accounts receivable (29,076) 128,799 (128,857)
Due from Nooney Krombach Company 4,826
Prepaid expenses and deposits (7,873) (27,511) 63
Deferred expenses (34,225) (126,883) (10,908)
Accounts payable and accrued expenses 218,353 (35,420) (25,902)
Refundable tenant deposits 11,186 6,433 5,828
--------- --------- ---------
Net cash provided by operating activities 693,291 493,356 315,534
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES -
Net additions to investment property (392,866) (135,205) (63,324)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES -
Payments on mortgage notes payable (332,536) (332,832) (307,491)
--------- --------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (32,111) 25,319 (55,281)
CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR 628,358 603,039 658,320
--------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 596,247 $ 628,358 $ 603,039
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION - Cash paid during the year for interest $ 741,503 $ 843,312 $ 859,563
========= ========= =========
</TABLE>
See notes to financial statements.
-24-
<PAGE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
- --------------------------------------------------------------------------------
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 complex, a multi-tenant office and a warehouse all
located in Indianapolis, Indiana. These properties generated 24.1%, 21.0%,
17.6% and 37.3% of rental and other income, respectively, for the year
ended November 30, 1996.
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 the
Partnership. 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 preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
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 $114,645, $116,228 and $118,667 for the years ended
November 30, 1996, 1995 and 1994, 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.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The Partnership considers all highly liquid debt instruments with a
maturity of three months or less at date of purchase to be cash
equivalents.
-25-
<PAGE>
Investment property is recorded at the lower of cost or net realizable
value. Impairment is determined if the sum of the expected future cash
flows (undiscounted and without interest charges) is less than the
carrying amount of the property.
Land, buildings and improvements are depreciated over their estimated
useful lives using the straight-line method.
Deferred expenses consist primarily of lease fees and financing costs and
are amortized over the terms of their respective leases or notes.
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,
1996 accounts receivable include approximately $11,000 ($12,000 in 1995)
of accrued rent concessions 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 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.
-26-
<PAGE>
3. MORTGAGE NOTES PAYABLE
<TABLE>
Mortgage notes payable as of November 30, 1996 and 1995 and the related
collateral book values consist of the following:
<CAPTION>
1996 1995
<S> <C> <C>
Maple Tree Shopping Center
(Book value of $1,067,832 at November 30, 1996)
9.125%, due in monthly installments of $17,911, including
interest, to 2009 $1,604,116 $1,669,401
Note payable to bank, principal due in monthly installments of
$1,208 plus interest at bank's prime rate (8.25% at November 30, 1996) plus
1-1/2% to November 1, 1997 when entire
principal balance is due 275,564 290,060
Park Plaza I & II Office/Warehouse Complex
(Book value of $898,925 at November 30, 1996)
9.5%, due in monthly installments of $12,669, including interest,
to 2003 781,320 855,308
Morenci Professional Park
(Book value of $1,674,612 at November 30, 1996)
10.25%, due in monthly installments of $15,682, including
interest, to 2005 1,096,814 1,168,513
Note payable to bank, principal due in monthly installments of
$1,111 plus interest at bank's prime rate (8.25% at November 30, 1996) plus
1-1/2%, to November 1, 1997, when entire
principal balance is due 246,593 259,925
Jackson Industrial Park, Building A
(Book value of $3,817,747 at November 30, 1996)
9.31%, due in monthly installments of $39,203, including interest,
to 2000, when remaining principal balance of $3,542,902 is due 3,994,700 4,088,436
---------- ----------
Total $7,999,107 $8,331,643
========== ==========
</TABLE>
In November 1996, the 8.25% mortgage notes payable were refinanced with the same
lender, which extended the terms to November 1997.
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:
1997 $ 362,849
1998 368,419
1999 405,151
2000 3,964,933
2001 340,959
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,
-27-
<PAGE>
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, 1996 and 1995 are
summarized as follows:
1996 1995
---------------------- -----------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
Mortgage Notes Payable $7,999,107 $8,323,000 $8,331,643 $8,684,000
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, 1996 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, 1996 are as follows:
1997 $1,859,000
1998 1,420,000
1999 1,079,000
2000 737,000
2001 104,000
Remainder 295,000
----------
Total $5,494,000
==========
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 $236,000 for
the year ended November 30, 1996 ($240,000 in 1995) and was insignificant
for the year ended November 30, 1994. Contingent rentals were not
significant for the years ended November 30, 1996, 1995 and 1994.
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.
-28-
<PAGE>
The comparison of financial statement and income tax reporting is as
follows:
Financial Income
Statement Tax
1996:
Net income $ 16,926 $ 203,760
Partners' equity (deficiency in assets) (290,122) (1,780,435)
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)
6. MAJOR TENANTS
A substantial amount of the Partnership's revenue in 1996 was derived from
one major tenant whose rentals amounted to approximately $582,000 or 25%
of total revenues.
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.
* * * * * *
-29-
<PAGE>
<TABLE>
================================================================================
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
================================================================================
(A LIMITED PARTNERSHIP)
SCHEDULE - RECONCILIATION OF PARTNERS' EQUITY (DEFICIENCY IN ASSETS)
YEARS ENDED NOVEMBER 30, 1996, 1995 AND
1994
- --------------------------------------------------------------------------------
The reconciliation of partners' equity (deficiency in assets) between financial
statement and income tax reporting is as follows:
<CAPTION>
1996
--------------------------------------------
Limited General
Partners Partners Total
<S> <C> <C> <C>
Balance (deficiency) per statement of
partners' equity $ (207,512) $ (82,610) $ (290,122)
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 8,221 83 8,304
Writedown of investment property not
recognized for income tax purposes 214,341 2,165 216,506
----------- ----------- -----------
1,410,703 (80,362) 1,330,341
Less:
Excess depreciation deducted for
income tax purposes 3,059,861 30,906 3,090,767
Rent concessions not recognized for
income tax purposes 10,750 109 10,859
Insurance premiums deducted for
income tax purposes 9,058 92 9,150
----------- ----------- -----------
Balance (deficiency) per tax return $(1,668,966) $ (111,469) $(1,780,435)
=========== =========== ===========
<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)
=========== =========== ===========
<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)
=========== =========== ===========
</TABLE>
-30-
<PAGE>
<TABLE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
SCHEDULE III- REAL ESTATE AND ACCUMULATED DEPRECIATION
NOVEMBER 30, 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Gross Amount at Which
Initial Cost to Partnership Capitalized Carried at Close of Period
------------------------------------ Subsequent ------------------------------------
Buildings and to Buildings and
Description Encumbrances Land Improvements Total Acquisition Land Improvements Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Maple Tree Shopping Center,
St. Louis, Missouri $1,879,680 $ 474,750 $ 2,709,303 $ 3,184,053 $ 380,939 $ 474,750 $ 3,090,242 $ 3,564,992
Park Plaza I & II
Office/Warehouse Complex,
Indianapolis, Indiana 781,320 182,335 2,228,828 2,411,163 136,028 (1) 182,335 2,364,856 2,547,191
Morenci Professional Park,
Indianapolis, Indiana 1,343,407 320,418 2,689,506 3,009,924 (41,508)(2) 320,418 2,647,998 2,968,416
Jackson Industrial Park,
Building A, Indianapolis,
Indiana 3,994,700 908,539 5,181,390 6,089,929 680,581 908,539 5,861,971 6,770,510
----------- ---------- ---------- ----------- ---------- ---------- ----------- -----------
Total $7,999,107 $1,886,042 $12,809,027 $14,695,069 $1,156,040 $1,886,042 $13,965,067 $15,851,109
=========== ========== ========== =========== ========== ========== =========== ===========
<CAPTION>
Column F Column G Column H Column I
-------------------------- -------- --------
Life on Which
Depreciation
Accumulated Date of Date in Latest Income
Depreciation Construction Acquired Statement is Computed
<S> <C> <C> <C> <C>
Maple Tree Shopping Center, St. Louis, Missouri $2,497,160 1974 10/3/79 5-25 yrs.
Park Plaza I & II Office/Warehouse Complex,
Indianapolis, Indiana 1,648,266 1975, 1979 10/15/80 3-41 yrs.
Morenci Professional Park, Indianapolis, Indiana 1,293,804 1975, 1979 3/27/81 30 yrs.
Jackson Industrial Park, Building A, Indianapolis, Indiana 2,952,763 1976, 1980 3/27/81 30 yrs.
----------
Total $8,391,993
==========
</TABLE>
(1) Amount is net of a building writedown of $139,281, to reflect the minimum
recoverable value to the Partnership.
(2) 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. (Continued)
(Continued)
-31-
<PAGE>
<TABLE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
(A) Reconciliation of amounts in Column E:
Balance at beginning of period $ 15,458,243 $15,359,430 $15,312,567
Add - Cost of improvements
417,901 135,205 63,324
Less - Cost of disposals (25,035) (36,392) (16,461)
------------ ----------- -----------
Balance at end of period $ 15,851,109 $15,458,243 $15,359,430
============ =========== ===========
(B) Reconciliation of amounts in Column F:
Balance at beginning of period $ 7,942,832 $ 7,541,195 $ 7,086,498
Add - Provision during the period 474,196 438,029 471,158
Less - Depreciation on disposals (25,035) (36,392) (16,461)
------------ ----------- -----------
Balance at end of period $ 8,391,993 $ 7,942,832 $ 7,541,195
============ =========== ===========
(C) The aggregate cost of real estate owned for
federal income tax purposes $ 16,067,615 $15,674,749 $15,575,936
============ =========== ===========
(Concluded)
-32-
</TABLE>
