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 August 31, 2000
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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.
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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.)
One Memorial Drive, Suite 1000, St. Louis, MO 63102-2449
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 206-4600
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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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PART I
ITEM 1 - FINANCIAL STATEMENTS:
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NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
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(A LIMITED PARTNERSHIP)
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BALANCE SHEETS
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August 31, November 30,
2000 1999
(Unaudited)
------------ ------------
ASSETS:
Cash and cash equivalents $ 967,820 $ 2,572,203
Accounts receivable 150,275 120,110
Prepaid expenses and deposits 1,866,359 58,448
Investment property
Land 1,886,042 1,886,042
Buildings and improvements 14,613,491 14,187,855
------------ ------------
16,499,533 16,073,897
Less accumulated depreciation 9,962,415 9,634,858
------------ ------------
6,537,118 6,439,039
Deferred expenses-At amortized cost 201,162 237,432
------------ ------------
$ 9,722,734 $ 9,427,232
============ ============
LIABILITIES AND PARTNERS' DEFICIT:
Liabilities:
Accounts payable and accrued expenses $ 823,167 $ 359,278
Mortgage notes payable 9,146,293 9,387,057
Refundable tenant deposits 99,269 100,090
------------ ------------
10,068,729 9,846,425
Partners' Deficit (345,995) (419,193)
------------ ------------
$ 9,722,734 $ 9,427,232
============ ============
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
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(A LIMITED PARTNERSHIP)
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STATEMENTS OF OPERATIONS AND PARTNERS' DEFICIT
----------------------------------------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Aug. 31, Aug. 31, Aug. 31, Aug. 31,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Rental and other income $ 675,923 $ 542,361 $ 1,965,148 $ 1,623,040
Interest 16,513 15 66,682 33
----------- ----------- ----------- -----------
692,436 542,376 2,031,830 1,623,073
EXPENSES:
Interest 212,665 164,680 671,868 500,688
Depreciation and amortization 133,281 122,962 402,120 366,823
Real estate taxes 94,500 90,500 279,911 271,588
Property management fees paid to
American Spectrum Midwest 32,238 26,733 96,629 79,353
Reimbursement to American Spectrum Midwest
for partnership management
services and indirect expenses 7,500 7,500 22,500 22,500
Insurance 19,707 16,613 52,146 38,999
Parking Lot/Landscaping 20,768 18,140 63,752 54,013
Repairs & Maintenance 10,580 10,372 35,557 42,714
Office - General 8,034 10,134 28,656 35,779
Payroll 22,243 23,214 76,556 68,390
Professional Services 29,441 62,387 76,951 108,811
Vacancy Expense 2,966 6,416 32,099 40,990
Other operating expenses 46,221 (512) 119,887 81,165
----------- ----------- ----------- -----------
640,144 559,139 1,958,632 1,711,811
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 52,292 $ (16,763) $ 73,198 $ (88,740)
=========== =========== =========== ===========
NET INCOME (LOSS)PER LIMITED
PARTNERSHIP UNIT $ 4.31 $ (1.38) $ 6.04 $ (7.32)
=========== =========== =========== ===========
PARTNERS' EQUITY (DEFICIT):
Beginning of Period $ (398,287) $ (333,160) $ (419,193) $ (261,183)
Net Income (Loss) 52,292 (16,763) 73,198 (88,740)
----------- ----------- ----------- -----------
End of Period $ (345,995) $ (349,923) $ (345,995) $ (349,923)
=========== =========== =========== ===========
</TABLE>
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
----------------------------------------
(A LIMITED PARTNERSHIP)
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STATEMENTS OF CASH FLOWS
------------------------
(UNAUDITED)
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Nine Months Ended
Aug. 31, Aug. 31,
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 73,198 $ (88,740)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 402,120 366,823
Changes in assets and liabilities:
Increase in accounts receivable (30,165) (6,903)
Increase in prepaid expenses and
deposits (1,807,911) (39,454)
(Increase) Decrease in deferred
expenses (27,118) 25,559
(Decrease) Increase in refundable tenant
deposits (821) 17,631
Increase (Decrease) in accounts payable
and Accrued expenses 463,889 (62,596)
----------- -----------
Total Adjustments (1,000,006) 301,060
----------- -----------
Net cash from operating activities (926,808) 212,320
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to investment property (436,811) (53,098)
----------- -----------
Net cash used in investing activities (436,811) (53,098)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on mortgage notes payable (240,764) (321,103)
----------- -----------
Net cash used in financing activities (240,764) (321,103)
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NET DECREASE IN CASH
AND CASH EQUIVALENTS (1,604,383) (161,881)
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CASH AND CASH EQUIVALENTS, beginning of period 2,572,203 486,156
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 967,820 $ 324,275
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION - Cash paid during period for
interest $ 671,868 $ 500,688
=========== ===========
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
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(A LIMITED PARTNERSHIP)
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NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
THREE AND NINE MONTHS ENDED AUGUST 31, 2000 AND 1999
----------------------------------------------------
NOTE A:
Refer to the Registrant's financial statements for the year ended November 30,
1999, 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.
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 August 31, 2000 and for all periods presented have been
made. The results of operations for the three-month and nine-month period ended
August 31, 2000 are not necessarily indicative of the results which may be
expected for the entire year.
NOTE C:
The Registrant's properties are managed by American Spectrum Midwest (formerly
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 per limited partnership unit for the three and nine months ended
August 31, 2000 and 1999 was computed based on 12,000 units, the number of units
outstanding during the periods.
NOTE E:
CGS is continuing the process of developing a plan pursuant to which the
properties owned by the Registrant would be combined with the properties of
other real estate partnerships managed by CGS and its affiliates. These limited
partnerships own office properties, industrial properties, shopping centers, and
residential apartment properties. It is expected that the acquiror would in the
future qualify as a real estate investment trust. Limited partners would receive
shares of common stock in the acquiror which would be listed on a national
securities exchange or the NASDAQ national market system. The transaction is
subject to the approval of the limited partners of the Registrant and portions
of the other partnerships. The Registrant has filed a Registration Statement on
Form S-4 relating to the solicitation of consents with the Security and Exchange
Commission.
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NOTE F:
The Registrant has no other comprehensive income items, accordingly,
comprehensive income and net income are the same for all periods presented.
NOTE G:
The Partnership has four reportable operating segments: Jackson Industrial,
Maple Tree Shopping Center, Park Plaza I & II, and Morenci Professional Park.
The Partnership's management evaluates performance of each segment based on
profit or loss from operations before allocation of property write downs,
general and administrative expenses, unusual and extraordinary items, and
interest.
Three Months Ended Nine Months Ended
August 31, August 31,
2000 1999 2000 1999
---- ---- ---- ----
Revenues:
Jackson Industrial $ 246,016 $ 120,722 $ 640,263 $ 365,520
Maple Tree Shopping Center 140,394 150,872 443,980 435,408
Park Plaza I & II 147,422 123,648 431,322 392,445
Morenci Professional Park 141,714 139,424 449,698 393,679
---------- ---------- ---------- ----------
675,546 534,666 1,965,263 1,587,052
========== ========== ========== ==========
Operating Profit:
Jackson Industrial $ 31,017 $ (78,402) $ (32,460) $ (269,171)
Maple Tree Shopping Center 4,889 41,767 23,576 91,843
Park Plaza I & II 32,785 54,456 96,561 163,841
Morenci Professional Park (3,201) 26,603 12,515 14,690
---------- ---------- ---------- ----------
65,490 44,424 100,192 1,203
========== ========== ========== ==========
Capital Expenditures:
Jackson Industrial $ 0 $ 0 $ 3,711 $ 3,332
Maple Tree Shopping Center 127,805 (55) 343,605 17,797
Park Plaza I & II 21,894 1,151 29,842 12,401
Morenci Professional Park 48,088 2,910 59,654 19,569
---------- ---------- ---------- ----------
197,787 4,006 436,812 53,099
========== ========== ========== ==========
Depreciation and Amortization:
Jackson Industrial $ 57,630 $ 55,672 $ 173,582 $ 166,711
Maple Tree Shopping Center 20,195 17,430 60,948 52,055
Park Plaza I & II 21,566 16,481 62,374 48,917
Morenci Professional Park 33,890 33,379 105,216 98,937
---------- ---------- ---------- ----------
133,281 122,962 402,120 366,620
========== ========== ========== ==========
Assets:
August 31, 2000 November 30, 1999
--------------- -----------------
Jackson Industrial $3,178,368 $3,238,441
Maple Tree Shopping Center 1,514,297 1,152,425
Park Plaza I & II 901,951 900,312
Morenci Professional Park 1,559,198 1,521,530
---------- ----------
7,153,814 6,812,708
========== ==========
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Reconciliation of segment data to the Partnerships's consolidated data is as
follows:
Three Months Ended Nine Months Ended
August 31, August 31,
2000 1999 2000 1999
---- ---- ---- ----
Revenues:
Segments $ 675,546 $ 534,666 $1,965,263 $1,587,052
Corporate and other 16,890 7,710 66,567 36,021
---------- ---------- ---------- ----------
692,436 542,376 2,031,830 1,623,073
========== ========== ========== ==========
Net Income:
Segments $ 65,490 $ 44,424 $ 100,192 $ 1,203
Corporate and other income 16,890 7,710 66,567 36,021
General and admin expenses (30,088) (68,897) (93,561) (125,964)
---------- ---------- ---------- ----------
Net income 52,292 (16,763) 73,198 (88,740)
========== ========== ========== ==========
Depreciation and Amortization
Segments $ 133,281 $ 122,962 $ 402,120 $ 366,620
Corporate and other 0 0 0 203
---------- ---------- ---------- ----------
133,281 122,962 402,120 366,823
========== ========== ========== ==========
Assets:
August 31, 2000 November 30, 1999
--------------- -----------------
Segments $7,153,814 $6,812,708
Corporate and other 2,568,920 2,614,524
---------- ----------
9,722,734 9,427,232
========== ==========
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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 Registrant. Actual
results could differ materially from those contemplated by such statements.
Liquidity and Capital Resources
-------------------------------
Cash on hand as of August 31, 2000 is $967,820, reflecting a decrease of
$1,604,383 from year ended November 30, 1999. The decrease in cash can primarily
be attributed to the Registrant having advanced more than its proportionate
share of the costs relating to the formation of the real estate investment trust
currently being formed by affiliates of the general partner. To the extent that
expenses advanced by the Registrant exceed its proportionate share, the
Registrant will receive a credit for any excess portion in determining the
shares in the real estate investment trust to be issued to partners in the
Registrant. If the transaction is not consummated, the general partner of the
Registrant will reimburse the Registrant for expenses incurred by the Registrant
in connection with the transaction. Cash used in operating activities for the
nine months ended August 31, 2000 was $1,000,006. Capital additions in the
amount of $436,811 and payments on mortgage notes of $240,764 were made during
the first three quarters of 2000. The Registrant plans to maintain adequate cash
reserves and fund capital expenditures during the remainder of 2000. The capital
expenditures by property anticipated for the balance of 2000 are as follows:
Leasing Capital Other Capital Total
--------------- ------------- -----
Park Plaza I & II $ 8,493 $ 82,500 $ 90,993
Maple Tree Shopping Center 0 38,000 38,000
Jackson Industrial 1,100 0 1,100
Morenci Professional Park 3,600 61,000 64,600
-------- -------- --------
$ 13,193 $181,500 $194,693
======== ======== ========
Leasing Capital at Park Plaza I & II, Jackson Industrial, and Morenci
Professional Park will fund tenant alterations and lease commissions for both
new and renewal tenants. Other Capital at Park Plaza I & II represents the
replacement of porch canopies and roof repairs. Other Capital at Maple Tree
Shopping Center will be for roof replacement and at Morenci Professional Park,
Other Capital represents costs for sidewalk replacement and an asphalt overlay
of the parking lot. The Registrant reviews cash reserves on a regular basis
prior to beginning scheduled capital improvements. In the event there is not
adequate funds, the capital improvement will be postponed until such funds are
available.
On November 30, 1999, the Registrant refinanced the debt on three of its
properties. A new note with a balance of $5,721,083 secured by Park Plaza I and
II, Morenci Professional Park, and Maple Tree Shopping Center was obtained. In
addition, the lender held back $628,917 for specified capital improvements.
$143,419 of the previously mentioned 'Other Capital' will be funded by this
capital reserve. The remaining money from this lender held account will be drawn
upon by the Registrant as needed. The refinancing resulted in a total mortgage
for the above-mentioned properties of $6,350,000. The balance of this mortgage
at August 31, 2000 was $5,591,766. The note bears interest at a rate of 9.01%
per annum and calls for monthly installments of $57,348 including both interest
and principal, through December 2004. The first mortgage debt on Jackson
Industrial has a balance due of $3,554,527 and a maturity date of November 2000.
The interest rate on the debt is 9.31%. The Registrant intends to renew the
Jackson Industrial note payable under similar terms.
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The future liquidity of the Registrant is dependent on its ability to fund
future capital expenditures and mortgage payments from operations and cash
reserves, maintain occupancy, and negotiate with lenders the refinancing of the
mortgage debt as it matures.
Results of Property Operations
------------------------------
The results of operations of the Registrant's properties for the quarter ended
August 31, 2000 and 1999 are detailed in the schedule below. Revenues and
expenses of the Registrant are not presented:
Jackson Maple Tree Park Plaza Morenci
Industrial Shopping Center I and II Prof. Park
---------- --------------- ---------- ----------
2000
----
Revenues $ 246,016 $ 140,394 $ 147,422 $ 141,714
Expenses 214,999 135,505 114,637 144,915
--------- --------- --------- ---------
Net Income (Loss) $ 31,017 $ 4,889 $ 32,785 $ (3,201)
========= ========= ========= =========
1999
----
Revenues $ 120,722 $ 150,872 $ 123,648 $ 139,424
Expenses 199,124 109,105 69,192 112,821
--------- --------- --------- ---------
Net (Loss) Income $ (78,402) $ 41,767 $ 54,456 $ 26,603
========= ========= ========= =========
The operating results at Jackson Industrial reflect an increase in revenue of
$125,294 when comparing the quarter ended August 31, 2000 to the quarter ended
August 31, 1999. This increase is primarily due to a 39% rise in the occupancy
level, than that of prior year. Expenses increased $15,875 when comparing the
two quarters. This increase was primarily due to increase in management fees
($6,265), repairs & maintenance related expenses ($4,776), and various other
operating expenses ($4,834). The increased management fee expense is direct
result of the increased revenue.
At Maple Tree Shopping Center, revenues decreased $10,478 when comparing the two
three month periods ending August 31, 2000 and 1999, primarily due to a decrease
in percentage rent revenues based on reported sales from the tenants located at
the property. Expenses increased $26,400 when comparing the two periods. This
increase can primarily be attributed to increases in interest expense ($7,001),
professional service fees ($4,308), bad debt expense ($8,486), real estate tax
expense ($5,250), and landscaping expense ($1,971). The increase in interest
expense can be attributed to a larger principal balance than that reflected at
August 31, 1999. The bad debt expense reflects an allowance set up for accounts
receivable that is 90 days past due and over.
Revenues at Park Plaza I & II increased $23,774 when comparing the quarter ended
August 31, 2000 to 1999. This increase is primarily due to increases in base
rental revenue ($11,677) and common area maintenance reimbursements ($13,225).
The base rent increase is attributable to the 100% occupancy level at the
property at August 31, 2000. The property reflected an occupancy level of 92%
for the same period in 1999. The common area maintenance reimbursement increase
is a direct result of the larger amount of reimbursable expenses that have been
incurred by the property. Expenses increased when comparing the two quarters by
$45,445 mainly due to increases in interest expense ($28,322), depreciation &
amortization expense ($5,085), and bad debt expense ($11,848). The increased
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interest expense is directly related to the higher principal balance than that
of prior year. The bad debt expense represents an allowance set up for those
receivables 90 days and over.
At Morenci Professional Park, revenues remained relatively stable when comparing
the third quarters of 2000 to 1999. Revenues increased $2,290 primarily due to
increases in both base rental revenue ($4,656) and common area maintenance
reimbursements ($2,561), partially offset by a decrease in miscellaneous
revenues of ($4,636). Expenses increased $32,094 when comparing the two quarters
primarily due to increases in repairs and maintenance related expenses ($3,243),
interest expense ($15,704), and bad debt expense ($12,352). The increase in
interest expense is attributable to the larger principal balance and the bad
debt expense increase is due to the 90 days and over allowance now being
recorded, as both mentioned above in previous property comparisons.
The occupancy levels of the Registrant's properties at August 31, 2000, 1999 and
1998 are as follows:
Occupancy levels as of August 31,
Property 2000 1999 1998
-------- ---- ---- ----
Park Plaza I & II 100% 92% 98%
Morenci Professional Park 90% 93% 94%
Maple Tree Shopping Center 100% 100% 100%
Jackson Industrial 100% 61% 39%
At Park Plaza I & II, occupancy remained consistent at 100% during the quarter.
Leasing activity consisted of the renewal of one tenant occupying 4,140 square
feet. At Park Plaza I & II, one tenant occupies 10% of the available space, with
a lease expiring in 2004.
At Morenci Professional Park, occupancy decreased 2% to 90% during the quarter.
Leasing activity consisted of one tenant vacating 2,400 square feet and one
tenant renewing 6,000 square feet during the quarter. No tenant occupies more
than 10% of the available space at Morenci Professional Park.
At Maple Tree Shopping Center, occupancy remained at 100% throughout the
quarter. No leasing activity occurred during the quarter. The property has two
major tenants who occupy approximately 18% and 42% of the available space with
leases expiring in April 2005 and July 2004, respectively.
Jackson Industrial remained 100% occupied during the quarter. The property has
two tenants who lease 61% and 39% of the available space, with leases expiring
in November 2001 and July 2002, respectively.
The Registrant reviews long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of a property may not
be recoverable. The Registrant considers a history of operating losses or a
change in occupancy to be primary indicators of potential impairment. The
Registrant deems the Property to be impaired if a forecast of undiscounted
future operating cash flows directly related to the Property, including disposal
value, if any, is less than its carrying amount. If the Property is determined
to be impaired, the loss is measured as the amount by which the carrying amount
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of the Property exceeds its fair value. Fair value is based on quoted market
prices in active markets, if available. If quoted market prices are not
available, an estimated of fair value is based on the best information
available, including prices for similar properties or the results of valuation
techniques such as discounting estimated future cash flows. Considerable
management judgement is necessary to estimate fair value. Accordingly, actual
results could vary significantly from such estimates.
2000 Comparisons
----------------
Consolidated revenues for the three month period ended August 31, 2000 and 1999
are $692,436 and $542,376, respectively. For the nine month period ended August
31, 2000 and 1999, consolidated revenues are $2,031,830 and $1,623,073,
respectively. For the quarter ended, revenues increased $150,060 and for the
nine month period, revenues increased $408,757. The increase in consolidated
revenues for the three month period can be attributed to increases in base
rental revenue ($96,163), interest income ($3,070), common area maintenance
reimbursements ($13,502), and escalation revenue ($47,318). These increases in
revenue were partially offset by a decrease in percentage rent revenue
($10,444). The increase in base rent is primarily due to increased occupancy
levels at Jackson Industrial and Park Plaza I & II from that of the same quarter
in the prior year. The increases in both common area maintenance reimbursements
and escalation revenue can be attributed to a significant increase in the
reimbursable expenses at the properties, in addition to increases in occupancy
and certain tenants' proportionate share of the responsibility. The increase in
interest revenue is due to interest being earned on larger bank account balances
than that of prior year. The decrease in percentage rent is attributable to the
lack of billings based on tenant sales at Maple Tree Shopping Center, as
mentioned in the property comparisons. The significant increase in consolidated
revenues when comparing the nine month periods ending August 31, 2000 and 1999
can be attributed to increases in real estate tax revenue ($18,141), base rental
revenue ($244,092), common area maintenance reimbursements ($60,787), interest
income ($38,709), and escalation revenue ($54,461). These increases in revenue
were partially offset by decreases in percentage rent ($5,239) and miscellaneous
revenues ($2,194). The increase in base rent, common area maintenance
reimbursements, escalation revenue, and interest income is the same for the nine
month period ended as was previously stated above for the three month period
when compared to the same periods of prior year. The increase in real estate tax
revenue is primarily due to an increase in both real estate tax revenue and
related tax expense at Maple Tree Shopping Center.
As of August 31, 2000 and 1999, consolidated expenses for the quarter ended were
$640,144 and $559,139, respectively. For the nine month period ended August 31,
2000 and 1999, consolidated expenses were $1,958,632 and $1,711,811,
respectively. For the quarter ended expenses increased $81,005. This increase
can primarily be attributed to increases in interest expense ($47,985), real
estate tax expense ($4,000), depreciation & amortization expense ($10,319),
management fees ($5,505), insurance ($3,094), parking lot & landscaping
($2,628), and other operating expenses ($46,733). These increased expenses were
partially offset by decreases in office related expenses ($2,100), professional
service fees ($32,946), and vacancy related expenses ($3,450). The increase in
interest expense can be attributed to a higher principal balance reflected at
three of the Registrant's properties as a result of the debt refinancing in
November 1999. The depreciation & amortization increase is due to new tenant and
capital assets added since the prior year comparison period. Bad debt expense
accounts for the majority of the increased other operating expenses ($32,686).
This can be attributed to allowances now being set up for receivables 90 days
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and older. This allowance was not recorded during the same reporting period for
1999. The decrease in professional services is primarily due to the lack of
appraisals performed and expensed during the third quarter of 2000, as was done
in the third quarter of 1999. For the nine month period ending August 31, 2000,
expenses increased $246,821. This was due to increases in interest expense
($171,180), depreciation & amortization expense ($35,297), real estate tax
expense ($8,323), management fees ($17,276), payroll ($8,166), other operating
expenses ($38,724), insurance ($13,147), and parking lot/landscaping expense
($9,739). These increases were partially offset by decreases in repairs and
maintenance related expenses ($7,157), office expenses ($7,123), professional
services ($31,860), and vacancy related expenses ($8,891). The increases in
interest, depreciation & amortization, and other operating expenses, as well as
the decrease in professional services has been addressed above in the three
month consolidated expense comparison. The increased management fee expense for
the nine month period is a direct result of the higher revenues reflected than
that of prior year. Insurance rates increased for the current policy period when
compared to the same coverage period in 1999.
1999 Comparisons
----------------
Revenues for the quarter ended August 31, 1999 and 1998 are $542,376 and
$471,262, respectively. For the nine month period ended August 31, 1999 and
1998, revenues are $1,623,073 and $1,936,036, respectively. For the quarter
ended, revenues increased $71,114 when comparing August 31, 1999 to 1998 and for
the nine month period ended revenues decreased $312,963 when compared to prior
year. The increase in consolidated revenues for the three month periods can be
attributed to increases in rental revenue ($59,103), miscellaneous revenues
($6,108), common area maintenance reimbursements ($2,602), and real estate tax
reimbursement ($2,840). The increase in rental revenue is primarily due to the
increased occupancy level at Jackson Industrial from that of same quarter in the
prior year. The significant decrease in consolidated revenues for the nine month
period can be attributed to decreases in miscellaneous revenues ($141,010),
rental revenue ($151,248), common area maintenance reimbursements ($14,456),
interest revenue ($4,931), and debt recovery ($6,663). These decreases in
revenue were partially offset by an increase in percentage rent ($3,730). Both
the decrease in miscellaneous and rental revenue are due to termination and
early cancellation fees received at Jackson Industrial during second quarter
1998 from a former major tenant. These fees were not received during 1999 and
Jackson Industrial has yet to become fully leased as it was in early 1998. The
decrease in common area maintenance reimbursements is primarily due to lower
reimbursable expenses reflected at Morenci Professional Park ($12,488). The
decrease in debt recovery can be attributed to the lack of recovery in 1999 at
Maple Tree Shopping Center compared to the collection of previously written off
rents in 1998.
As of August 31, 1999 and 1998 consolidated expenses for the quarter ended were
$559,139 and $625,706, respectively. For the nine month period ended August 31,
1999 and 1998 consolidated expenses were $1,711,811 and $1,883,312,
respectively. For the quarter ended, expenses decreased $66,567. This decrease
can primarily be attributed to decreases in interest expense ($10,673), real
estate tax ($7,750), vacancy related expenses ($88,668), and other operating
expenses ($11,497). These decreased expenses were partially offset by increases
in management fee expense ($2,820), insurance ($5,838), and professional
services ($43,620). The decrease in interest expense is due to a decreased
principal balance outstanding. The decreased real estate tax expense is due to
lower annual tax at Park Plaza I & II. The vacancy expense decrease can be
attributed to the costs incurred in 1998 in relation to the former major tenant
at Jackson Industrial, as previously mentioned. These costs were not necessary
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in 1999. The decrease in other operating expenses is primarily due to reduced
costs and the write off of a previously disputed liability ($9,804). The
increase in professional services is primarily due to appraisals performed at
all the properties within the partnership and related professional costs. For
the nine month period ending August 31, 1999, expenses decreased $171,501. This
was primarily due to decreases in interest ($16,467), depreciation/amortization
expense ($46,670), real estate tax expense ($21,948), management fees ($18,118),
repairs and maintenance related expenses ($16,267), and vacancy related expenses
($162,973). These decreases were partially offset by increases in insurance
($4,025), parking lot ($13,429), office related expenses ($7,900), payroll
($3,887), professional services ($62,919), and other operating expenses
($18,782). The decreases in interest, real estate tax, and vacancy expenses, as
well as the increase in professional services have been addressed in the above
three month expense comparison. The decrease in depreciation and amortization is
due to equipment and leasehold improvements becoming fully depreciated and
amortized during 1998 and not requiring depreciation in 1999 The lower
management fee expense is directly related to the lower year to date income in
1999 when compared to that of prior year. The decrease in repairs and
maintenance is primarily due to repair costs in 1998 at Jackson Industrial
associated with the vacating of previously mentioned major tenant. These costs
were also not necessary in 1999. The increase in parking lot is primarily due to
parking lot landscaping improvements at Maple Tree Shopping Center incurred in
second quarter 1999. Office related expenses increased from prior year due to
computer hardware and software costs incurred in 1999. The increase in other
operating expense is primarily due to the increased amount of snow removal
necessary in first quarter 1999 than that of prior year, due to harsh weather
conditions.
Inflation
---------
The effects of inflation did not have material impact upon the Registrant's
operations in fiscal year 1999 and are not expected to materially affect the
Registrant's operations in 2000.
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<PAGE>
PART II. OTHER INFORMATION
---------------------------
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits
See Exhibit Index on Page 13
(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: October 13, 2000 NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
-----------------------
By: NOONEY INVESTORS, INC.
General Partner
By: /s/ Gregory J. Nooney, Jr.
-----------------------------------
Gregory J. Nooney, Jr.
Vice Chairman
By: /s/ Patricia A. Nooney
-----------------------------------
Patricia A. Nooney
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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