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, 1998
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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.)
500 N. Broadway, Suite 1200, St. Louis, Missouri 63102-2124
- ------------------------------------------------ ---------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 206-4600
------------------------------
7701 Forsyth Boulevard, Suite 700, St. Louis, MO 63105
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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 _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,
1998 1997
(Unaudited)
ASSETS: ----------- ------------
Cash and cash equivalents $ 485,012 $ 448,898
Accounts receivable 81,368 127,415
Prepaid expenses and deposits 75,703 45,946
Investment property
Land 1,886,042 1,886,042
Buildings and improvements 14,216,984 14,195,916
, ---------- ----------
16,103,026 16,081,958
Less accumulated depreciation 8,988,286 8,871,663
---------- ----------
7,114,740 7,210,295
Deferred expenses-At amortized cost 68,191 73,568
---------- ----------
$7,825,014 $7,906,122
========== ==========
LIABILITIES AND PARTNERS' DEFICIT:
Liabilities:
Accounts payable and accrued expenses $ 383,971 $ 394,616
Mortgage notes payable 7,543,464 7,633,066
Refundable tenant deposits 78,882 80,198
---------- ----------
8,006,317 8,107,880
Partners' Deficit (181,303) (201,758)
---------- ----------
$7,825,014 $7,906,122
========== ==========
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 28,
1998 1997
------------ ------------
REVENUES:
Rental and other income $ 584,983 $ 584,735
Interest 710 3,430
--------- ---------
585,693 588,165
EXPENSES:
Interest 170,297 188,194
Depreciation and amortization 128,894 128,467
Real estate taxes 97,786 97,317
Property management fees paid to Nooney, Inc. 29,380 29,261
Reimbursement to Nooney, Inc. for partnership
management services and indirect expenses 7,500 7,500
Insurance 12,243 12,303
Office - General 10,063 8,235
Parking Lot 9,464 10,715
Payroll 20,139 16,274
Professional Services 20,280 51,397
Repairs & Maintenance 11,178 9,115
Taxes - Other 9,472 6,997
Vacancy 17,025 10,609
Other operating expenses 21,517 39,335
--------- ---------
565,238 615,719
--------- ---------
NET INCOME (LOSS) $ 20,455 $ (27,554)
========= =========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ 1.69 $ (2.27)
========= =========
PARTNERS' DEFICIT:
Beginning of Period $(201,758) $(290,122)
Net Loss (Loss) 20,455 (27,554)
--------- ---------
End of Period $(181,303) $(317,676)
========= =========
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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<PAGE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
February 28, February 28,
1998 1997
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 20,455 $ (27,554)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 128,894 128,467
Changes in assets and liabilities:
Accounts receivable 46,047 3,511
Prepaid expenses and deposits (29,757) (40,437)
Deferred expenses (6,894) (41)
Accounts payable and accrued expenses (10,645) (173,232)
Refundable tenant deposits (1,316) 2,565
--------- ---------
Total Adjustments 126,329 (79,167)
--------- ---------
Net cash provided by (used in)
operating activities 146,784 (106,721)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to investment property (21,068) (3,484)
--------- ---------
Net cash used in investing
activities (21,068) (3,484)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on mortgage notes payable (89,602) (87,701)
--------- ---------
Net cash used in financing
activities (89,602) (87,701)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 36,114 (197,906)
--------- ---------
CASH AND CASH EQUIVALENTS, beginning of period 448,898 596,247
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 485,012 $ 398,341
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION - Cash paid during period
for interest $ 170,297 $ 188,194
========= =========
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, 1998 AND 1997
NOTE A:
Refer to the Registrant's financial statements for the year ended November 30,
1997, 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, 1998 and for all periods presented have been
made. The results of operations for the three-month period ended February 28,
1998 are not necessarily indicative of the results which may be expected for the
entire year.
NOTE C:
The Registrant's properties are managed by Nooney, Inc., a wholly-owned
subsidiary of CGS Real Estate Company. Nooney Investors, Inc., a general
partner, is a wholly-owned subsidiary of S-P Properties, Inc. S-P Properties,
Inc is a wholly-owned subsidiary of CGS Real Estate Company.
NOTE D:
The income (loss) per limited partnership unit for the three months ended
February 28, 1998 and 1997 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, 1998 is $485,012, an increase of $36,114 from
year end November 30, 1997. During the quarter, cash flow provided by operating
activities was $146,784 and was used to fund capital additions of $21,068 and
make payments on mortgage notes of $89,602. The Registrant plans to maintain
adequate cash reserves and to fund capital expenditures from operations. The
capital expenditures anticipated for the balance of 1998 are as follows:
Leasing Capital Other Capital Total
--------------- ------------- ------
Park Plaza I & II $ 36,889 $ 0 $ 36,889
Morenci Professional Park 0 73,705 73,705
Maple Tree Shopping Center 12,000 36,000 48,000
Jackson Industrial 261,900 0 261,900
-------- -------- --------
$310,789 $109,705 $420,694
======== ======== ========
At Park Plaza I & II, Maple Tree Shopping Center and Jackson Industrial leasing
capital includes funds for tenant alterations and lease commissions for new and
renewal tenants. Other Capital at Morenci Professional Park is for asphalt
resurfacing, concrete sidewalk replacements and upgrading the exterior lighting.
At Maple Tree Shopping Center the Other Capital budgeted is for a new ground
sign and for overlaying of the main parking lot drive.
The first mortgage debt on Morenci Professional Park and Park Plaza I & II have
maturity dates of October 2005 and January 2004, 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 and currently expires August 1, 1998. 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, 1998, was 10%. The balance of
the second mortgage debt on Park Plaza I & II and Morenci Professional Park as
of February 28, 1998, is $227,732. The balance on the second mortgage debt on
Maple Tree Shopping Center as of February 28, 1998 is $256,236.
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.
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<PAGE>
Results of Operations
The results of operations for the Registrant's properties for the quarter ended
February 28, 1998 and 1997 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
---------- --------------- -------- ----------
1998
----
Revenues $ 217,508 $ 131,150 $114,389 $124,545
Expenses 210,203 121,405 89,365 117,145
--------- --------- -------- ---------
Net Income $ 7,305 $ 9,745 $ 25,024 $ 7,400
========= ========= ======== =========
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)
========= ========= ======== =========
The operations of Jackson Industrial, Maple Tree Shopping Center and Park Plaza
I & II remained relatively stable when comparing the first quarter 1998 to first
quarter 1997. At Morenci Professional Park, revenues increased slightly due to
the increases in base rent from improved occupancy. Expenses decreased due to a
decrease in interest expense, snow removal and real estate taxes.
The occupancy levels at February 28, 1998 and 1997, and February 29, 1996 are as
follows:
Occupancy levels as of February 28, 1998
and 1997 and February 29, 1996
--------------------------------
Property 1998 1997 1996
-------- ---- ---- ----
Park Plaza I & II 98% 100% 98%
Morenci Professional Park 92% 76% 57%
Maple Tree Shopping Center 100% 100% 98%
Jackson Industrial 100% 100% 100%
At Park Plaza I & II, the occupancy level increased to 98% during the quarter.
Leasing activity consisted of two new tenants occupying 4,800 square feet, two
tenants renewing their leases for 4,680 square feet and two tenants vacating
4,140 square feet. There are no major tenants occupying more than 10% of the
total space at this property.
At Morenci Professional Park, occupancy declined 1% to 92% during the quarter.
Leasing activity consisted of one tenant signing a new lease for 2,400 square
feet, four tenants renewed leases for 7,200 square feet and three tenants
occupying 3,600 square feet vacated their space. Morenci Professional Park has
no tenants that occupy more than 10% of the available space.
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<PAGE>
In the first quarter at Maple Tree Shopping Center, occupancy remained at 100%.
One tenant renewed their lease for 1,200 square feet. 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 had two major tenants who leased 100% of the available space.
One tenant who occupied 61% of the available space had a lease which ran through
July 2000. This tenant has exercised their termination option whereby it
canceled its lease as of July 1998. Subsequent to exercising the termination
option, the Registrant and tenant negotiated an even earlier termination and the
tenant returned the space to the Registrant as of March 31 upon payment of the
termination fee, all rent due through July 1998, and an extra termination
penalty to cover the Registrant's costs for utilities through July 1998. The
Registrant is in process of preparing the space for re-leasing. The other major
tenant occupies 39% of the space on a lease which expires July 2002.
1998 Comparisons
As of February 28, 1998, consolidated revenues were $585,693 for the quarter
ended and for the same period ended February 28, 1997, consolidated revenues
were $588,165. The slight decrease in revenues is due to a decrease in interest
earned on the partnership's investments. Consolidated expenses were $565,238 and
$615,719 for the quarters ended February 28, 1998 and 1997, respectively.
Consolidated expenses decreased $50,481 due to decreases in interest expense
($17,897), professional services ($31,117) and other operating expenses
($17,818), partially offset by an increase in vacancy expense ($6,416).
1997 Comparisons
As of February 28, 1997, the Registrant's consolidated revenues were $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 $615,709
compared to $637,963 for the quarter ended February 29, 1996. The decrease in
consolidated expenses of $22,244 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.
Inflation
The effects of inflation did not have a material impact upon the Registrant's
operation in fiscal l997, and are not expected to materially affect the
Registrant's operation in l998.
-8-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit Index
(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.
Dated: April 14, 1998 NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
--------------------------
BY: NOONEY INVESTORS, INC.
General Partner
BY: /s/ Gregory J. Nooney, Jr.
-----------------------------------
Gregory J. Nooney, Jr.
Chairman
/s/ Patricia A. Nooney
-----------------------------------
Patricia A. Nooney
Senior Vice President and Secretary
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<PAGE>
EXHIBIT INDEX
Exhibit Number Description
3.1 Amended and Restated Agreement and
Certificate of Limited Partnership dated
November 5, 1979, is incorporated by
reference to the Prospectus contained in
Amendment No. 1 to the Registration
Statement on Form S-11 under the Securities
Act of 1933 (File No. 2-65006).
27 Financial Data Schedule (provided for the
information of U.S. Securities and Exchange
Commission only)
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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-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> FEB-28-1998
<CASH> 485,012
<SECURITIES> 0
<RECEIVABLES> 81,368
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 422,083
<PP&E> 16,103,026
<DEPRECIATION> 8,988,286
<TOTAL-ASSETS> 7,825,014
<CURRENT-LIABILITIES> 383,971
<BONDS> 7,543,464
<COMMON> 0
0
0
<OTHER-SE> (181,303)
<TOTAL-LIABILITY-AND-EQUITY> 7,825,014
<SALES> 584,983
<TOTAL-REVENUES> 585,693
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 394,941
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 170,297
<INCOME-PRETAX> 20,455
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,455
<EPS-PRIMARY> 1.69
<EPS-DILUTED> 0
</TABLE>
