SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter period ended February 28, 1997
-------------------------------------------------
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
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NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
- -------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Missouri 43-1182535
- ------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7701 Forsyth Boulevard, St. Louis, Missouri 63105
- ------------------------------------------------ -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 863-7700
----------------------------
- -------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes_X_ No___.
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12,13, or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes___ No___
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date ___
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<PAGE>
PART I
ITEM 1 - FINANCIAL STATEMENTS:
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
February 28, November 30,
1997 1996
(Unaudited)
----------- -----------
ASSETS:
Cash and cash equivalents $ 398,341 $ 596,247
Accounts receivable 143,767 147,278
Prepaid expenses and deposits 86,666 46,229
Investment property
Land 1,886,042 1,886,042
Buildings and improvements 13,968,551 13,965,067
------------ ------------
15,854,593 15,851,109
Less accumulated depreciation 8,511,206 8,391,993
------------ ------------
7,343,387 7,459,116
Deferred expenses-At amortized cost 96,020 105,224
------------ ------------
$ 8,068,181 $ 8,354,094
============ ============
LIABILITIES AND PARTNERS' DEFICIT:
Liabilities:
Accounts payable and accrued expenses $ 399,428 $ 572,660
Mortgage notes payable 7,911,406 7,999,107
Refundable tenant deposits 75,014 72,449
------------ ------------
8,385,848 8,644,216
Partners' Deficit (317,667) (290,122)
------------ ------------
$ 8,068,181 $ 8,354,094
============ ============
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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<PAGE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS AND PARTNERS' DEFICIT
(UNAUDITED)
Three Months Ended
February 28, February 29,
1997 1996
---- ----
REVENUES:
Rental and other income $ 584,735 $ 563,462
Interest 3,430 2,665
--------- ---------
588,165 566,127
EXPENSES:
Interest 188,194 196,658
Depreciation and amortization 128,467 121,945
Real estate taxes 97,317 124,092
Property management fees paid to
Nooney Krombach Company 29,261 28,210
Reimbursement to Nooney Krombach
Company for partnership management
services and indirect expenses 7,500 7,500
Other operating expenses 164,971 159,558
--------- ---------
615,710 637,963
--------- ---------
NET LOSS $ (27,545) $ (71,836)
========= =========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (2.27) $ (5.93)
========= =========
PARTNERS' DEFICIT:
Beginning of Period $(290,122) $(307,048)
Net Loss (27,545) (71,836)
---------- ----------
End of Period $(317,667) $(378,884)
========= ==========
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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<PAGE>
<TABLE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
February 28, February 29,
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (27,545) $ (71,836)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 128,467 121,945
Changes in assets and liabilities:
Decrease in accounts receivable 3,511 44,417
Increase in prepaid expenses and deposits (40,437) (60,231)
Increase in deferred expenses (50) (3,730)
Increase (Decrease) in accounts payable and accrued expenses (173,232) 46,570
Increase in refundable tenant deposits 2,565 1,870
--------- ---------
Total Adjustments (79,176) 150,841
--------- ---------
Net cash provided by (used in) operating activities (106,721) 79,005
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to investment property (3,484) (37,016)
--------- ---------
Net cash used in investing activities (3,484) (37,016)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on mortgage notes payable (87,701) (80,430)
--------- ---------
Net cash used in financing activities (87,701) (80,430)
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (197,906) (38,441)
--------- ---------
CASH AND CASH EQUIVALENTS, beginning of period 596,247 628,358
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 398,341 $ 589,917
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION - Cash paid during period for interest $ 188,194 $ 196,658
========= =========
</TABLE>
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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<PAGE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
THREE MONTHS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
NOTE A:
Refer to the Registrant's financial statements for the year ended November 30,
1996, which are contained in the Registrant's Annual Report on Form 10-K, for a
description of the accounting policies which have been continued without change
except as noted below. Also, refer to the footnotes to those statements for
additional details of the Registrant's financial condition. The details in those
notes have not changed except as a result of normal transactions in the interim
or as noted below.
NOTE B:
The financial statements include only those assets, liabilities, and results of
operations of the partners which relate to the business of Nooney Real Property
Investors-Two, L.P. The statements do not include assets, liabilities, revenues
or expenses attributable to the partners' individual activities. No provision
has been made for federal and state income taxes since these taxes are the
responsibility of the partners. In the opinion of the general partners, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and changes in
financial position at February 28, 1997 and for all periods presented have been
made.
NOTE C:
The Registrant's properties are managed by Nooney Krombach Company, a
wholly-owned subsidiary of Nooney Company. Certain individual general partners
of the Registrant are officers and directors of Nooney Company. Nooney
Investors, Inc., a general partner, is a wholly-owned subsidiary of Nooney
Company.
NOTE D:
The loss per limited partnership unit for the three months ended February 28,
1997 and February 29, 1996 was computed based on 12,000 units, the number of
units outstanding during the periods.
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<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
It should be noted that this 10-Q 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.
Liquidity and Capital Resources
Cash on hand as of February 28, 1997 is $398,341, a decrease of $197,906 from
year end November 30, 1996. The decrease in cash is attributable to capital paid
during the first quarter. The partial re-roof of Jackson Industrial ($146,000)
and parking lot resurfacing at Park Plaza I & II ($49,000) were paid for during
the first quarter 1997 although they were accrued on the books at year end
November 30, 1996. Cash flows used in operations for the first quarter were
($106,721) as compared to cash flows provided by operations of $79,005 for the
quarter ended February 29, 1996. The decrease in cash flow is attributable to
the capital and other expenditures paid during the first quarter. Though cash on
hand decreased, the Registrant expects the properties to provide adequate cash
flow from operations to fund anticipated capital expenditures for the balance of
1997. The Registrant plans to maintain adequate cash reserves and if cash flow
from operations is not at a level sufficient to maintain such level, the
Registrant will postpone certain capital expenditures until 1998. The capital
expenditures budgeted for 1997 by property are as follows:
Leasing Capital Other Capital Total
--------------- ------------- -----
Park Plaza I & II $ 666 $ 62,120 $ 62,786
Morenci Professional Park 61,302 35,840 7,142
Maple Tree Shopping Center 4,533 71,521 76,054
Jackson Industrial 4,000 0 4,000
-------- -------- --------
$ 70,501 $169,481 $239,982
======== ======== ========
At Park Plaza I & II, Morenci Professional Park, Maple Tree Shopping Center and
Jackson Industrial leasing capital includes funds for tenant alterations and the
payment of lease commissions. Other capital at Park Plaza I & II as budgeted is
for major concrete replacement and resurfacing of the front lots. At Morenci
Professional Park, Phase I of resurfacing of the parking lot and construction of
one model unit is budgeted in Other Capital. At Maple Tree Shopping Center, the
Other Capital for which contracts have been signed include dumpster enclosures
and a partial roof replacement for a total of $48,523. The other items are for a
new ground sign and overlaying the main driveway. These will be done only if
cash flow is adequate.
The first mortgage debt on Morenci Professional Park and Park Plaza I & II have
maturity dates of October 2005 and December 2003, respectively. The first
mortgage on Jackson Industrial expires in November 2000. The second mortgages
secured by Park Plaza I & II, Morenci Professional Park and Maple Tree Shopping
Center continue to be extended one year at a time and currently expire November
1997. The interest rate on these two second mortgages is the current prime rate
plus 1.5%. The interest rate on this debt as of February 28, 1997, was 9.75%.
The balance of the second mortgage debt on Park Plaza I & II and Morenci
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<PAGE>
Professional Park as of February 28, 1997, is $243,260. The balance on the
second mortgage debt on Maple Tree Shopping Center as of February 28, 1997 is
$271,940.
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 the lenders the refinancing of
the 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 quarter ended
February 28, 1997 and February 29, 1996 are detailed in the schedule below.
Expenses of the Registrant are excluded.
Jackson Maple Tree Park Plaza Morenci
Industrial Shopping Center I and II Prof. Park
---------- --------------- -------- ----------
1997
----
Revenues $ 218,664 $133,230 $117,809 $ 115,500
Expenses 217,140 114,867 87,036 132,235
--------- -------- -------- ---------
Net Income (Loss) $ 1,524 $ 18,363 $ 30,773 $ (16,735)
========= ======== ======== =========
1996
----
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)
========= ======== ======== =========
The operations of Maple Tree Shopping Center and Park Plaza I & II remained
relatively stable when comparing first quarter 1997 to first quarter 1996. At
Jackson Industrial, the increase in net income is attributable to a decrease in
the real estate tax expenses. At Morenci Professional Park, revenues increased
due to increases in base rent from the improved occupancy. Expenses increased
slightly due to an increase in depreciation and amortization, partially offset
by slight decreases in operating expenses and interest expense.
Occupancy at three of the Registrant's properties were at 100% at the quarter
ended February 28, 1997. The occupancy at Morenci Professional Park increased
significantly from the first quarter of 1996 as significant lease progress was
made since the time a major tenant vacated. The occupancy levels at February 28,
1997, February 29, 1996, and February 28, 1995 are as follows:
Occupancy levels as of February 28, 1997,
February 29, 1996 and February 28, 1995
------------------------------------------
Property 1997 1996 1995
-------- ---- ---- ----
Park Plaza I & II 100% 98% 92%
Morenci Professional Park 76% 57% 99%
Maple Tree Shopping Center 100% 98% 98%
Jackson Industrial 100% 100% 100%
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<PAGE>
At Park Plaza I & II, the occupancy level remained 100% during the quarter.
Leasing activity consisted of one tenant occupying 1,800 square feet renewing
their lease. There are no major tenants occupying more than 10% of the total
space at this property.
At Morenci Professional Park, occupancy improved during the quarter to 76%.
Leasing activity was strong as new leases with eight tenants occupying 9,600
square feet were signed. Two tenants renewed leases for 2,400 square feet and
five tenants occupying 13,200 square feet vacated their space. Leasing activity
continues to be strong at this property, and the Registrant is ahead of its
lease up schedule anticipated at the time the major tenant left in December
1995. 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 remained at 100%
and there was no leasing activity. There are two major tenants occupying
approximately 18% and 42% of the available space with lease expirations of April
30, 2000 and July 31, 1999, respectively.
Jackson Industrial has two major tenants who lease 100% of the available space.
One tenant who occupies 61% of the available space has a lease which runs
through July 2000. This tenant has been in process of closing this facility and
has offered the space for sublease. In addition, this tenant has a termination
option whereby it may cancel its lease as of July 1998. At this time, the
Registrant has not received any notification as to whether the tenant will
exercise this termination option. The other major tenant occupying 39% of the
space renewed its lease effective July 31, 1997 for an additional five year term
at a slight increase in the rental rate.
1997 Comparisons
As of February 28, 1997, the Registrant's consolidated revenues are $588,165 for
the quarter ended and for the same period ended February 29, 1996, consolidated
revenues were $566,127. Revenues increased 4% or $22,038. The increase was
mainly due to an increase in base rental rates at Morenci Professional Park as a
result of the increase in occupancy. During the first quarter of 1997
consolidated expenses as of February 28, 1997 were $615,710 compared to $637,963
for the quarter ended February 29, 1996. The decrease in consolidated expenses
of $22,253 or 3.5% can be attributed to a decrease in interest expense and a
decrease in operating expenses mainly at Jackson Industrial for the decrease in
real estate tax expense.
1996 Comparisons
As of February 29, 1996, the Registrant's 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
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
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<PAGE>
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.
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.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
Dated: April 14, 1997 By: /s/ Gregory J. Nooney, Jr.
--------------------- ----------------------------------------
Gregory J. Nooney, Jr.
General Partner
NOONEY INVESTORS, INC.
By: /s/ Gregory J. Nooney, Jr.
----------------------------------------
Gregory J. Nooney, Jr.
Chairman
By: /s/ Patricia A. Nooney
----------------------------------------
Patricia A. Nooney
Senior Vice President and Secretary
BEING A MAJORITY OF THE DIRECTORS
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<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-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> FEB-28-1997
<CASH> 398,341
<SECURITIES> 0
<RECEIVABLES> 143,767
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 628,774
<PP&E> 15,854,593
<DEPRECIATION> 8,511,206
<TOTAL-ASSETS> 8,068,181
<CURRENT-LIABILITIES> 399,428
<BONDS> 7,911,406
0
0
<COMMON> 0
<OTHER-SE> (317,667)
<TOTAL-LIABILITY-AND-EQUITY> 8,068,181
<SALES> 584,735
<TOTAL-REVENUES> 588,165
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 427,516
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 188,194
<INCOME-PRETAX> (27,545)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (27,545)
<EPS-PRIMARY> (2.27)
<EPS-DILUTED> 0
</TABLE>
