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 May 31, 2000
----------------------------------------------------
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from To
--------------------------------------------------
Commission file number 0-10287
-------
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
--------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Missouri 43-1182535
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Memorial Drive, Suite 1000, St. Louis, MO 63102-2449
--------------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 206-4600
-----------------------------
--------------------------------------------------------------------------------
(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 _______.
-1-
<PAGE>
PART I
ITEM 1 - FINANCIAL STATEMENTS:
-----------------------------
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
----------------------------------------
(A LIMITED PARTNERSHIP)
-----------------------
BALANCE SHEETS
--------------
May 31, November 30,
2000 1999
(Unaudited)
----------- ------------
ASSETS:
Cash and cash equivalents $ 1,929,831 $ 2,572,203
Accounts receivable 159,324 120,110
Prepaid expenses and deposits 773,948 58,448
Investment property
Land 1,886,042 1,886,042
Buildings and improvements 14,424,466 14,187,855
------------ ------------
16,310,508 16,073,897
Less accumulated depreciation 9,859,123 9,634,858
------------ ------------
6,451,385 6,439,039
Deferred expenses-at amortized cost 222,390 237,432
------------ ------------
$ 9,536,878 $ 9,427,232
============ ============
LIABILITIES AND PARTNERS' DEFICIT:
Liabilities:
Accounts payable and accrued expenses $ 608,801 $ 359,278
Mortgage notes payable 9,224,294 9,387,057
Refundable tenant deposits 102,070 100,090
------------ ------------
9,935,165 9,846,425
Partners' deficit (398,287) (419,193)
------------ ------------
$ 9,536,878 $ 9,427,232
============ ============
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
-2-
<PAGE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
----------------------------------------
(A LIMITED PARTNERSHIP)
-----------------------
STATEMENTS OF OPERATIONS AND PARTNERS' DEFICIT
----------------------------------------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------- ------------------------
May 31, May 31, May 31, May 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
REVENUES:
Rental and other income $ 652,420 $ 545,374 $ 1,287,331 $ 1,080,681
Interest 25,053 9 50,169 18
----------- ----------- ----------- -----------
677,473 545,383 1,337,500 1,080,699
EXPENSES:
Interest 214,485 167,069 459,203 336,009
Depreciation and amortization 131,939 122,731 268,839 243,862
Real estate taxes 91,550 92,364 185,411 181,088
Property management fees paid to
American Spectrum Midwest 32,644 27,317 64,391 52,620
Reimbursement to American Spectrum Midwest
for partnership management
services and indirect expenses 7,500 7,500 15,000 15,000
Insurance 16,044 11,734 32,438 22,385
Parking lot/landscaping 35,844 28,902 42,985 35,873
Repairs & maintenance 11,675 11,482 18,259 32,342
General & administrative 10,502 15,545 20,622 25,646
Payroll 28,165 30,101 54,313 45,176
Professional services 24,639 21,935 47,510 46,425
Taxes - other 0 94 6,929 6,915
Vacancy expense 22,240 18,458 29,133 34,574
Other operating expenses 19,721 16,356 71,561 74,761
----------- ----------- ----------- -----------
646,948 571,588 1,316,594 1,152,676
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 30,525 $ (26,205) $ 20,906 $ (71,977)
=========== =========== =========== ===========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ 2.52 $ (2.16) $ 1.72 $ (5.94)
=========== =========== =========== ===========
PARTNERS' DEFICIT:
Beginning of period $ (428,812) (306,955) $ (419,193) $ (261,183)
Net income (loss) 30,525 (26,205) 20,906 (71,977)
----------- ----------- ----------- -----------
End of period $ (398,287) $ (333,160) $ (398,287) $ (333,160)
=========== =========== =========== ===========
</TABLE>
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
-3-
<PAGE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
----------------------------------------
(A LIMITED PARTNERSHIP)
-----------------------
STATEMENTS OF CASH FLOWS
------------------------
(UNAUDITED)
-----------
Six Months Ended
-------------------------
May 31, May 31,
2000 1999
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 20,906 $ (71,977)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 268,839 243,862
Changes in assets and liabilities:
Increase in accounts receivable (39,214) (1,003)
Increase in prepaid expenses and
deposits (715,500) (53,635)
(Increase) decrease in deferred
expenses (27,118) 31,337
Increase (decrease) in accounts payable
and accrued expenses 249,523 (67,208)
Increase in refundable tenant deposits 1,980 19,185
----------- -----------
Total adjustments (261,490) 172,538
----------- -----------
Net cash from operating activities (240,584) 100,561
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to investment property (239,025) (46,897)
----------- -----------
Net cash used in investing activities (239,025) (46,897)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on mortgage notes payable (162,763) (211,670)
----------- -----------
Net cash used in financing activities (162,763) (211,670)
----------- -----------
NET DECREASE IN CASH
AND CASH EQUIVALENTS (642,372) (158,006)
----------- -----------
CASH AND CASH EQUIVALENTS, beginning of period 2,572,203 486,156
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,929,831 $ 328,150
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION - Cash paid during period for
interest $ 459,203 $ 336,009
=========== ===========
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
-4-
<PAGE>
NOONEY REAL PROPERTY INVESTORS-TWO, L.P.
----------------------------------------
(A LIMITED PARTNERSHIP)
-----------------------
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
THREE AND SIX MONTHS ENDED MAY 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
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 May 31, 2000 and for all periods presented have been made.
The results of operations for the three-month and six-month period ended May 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, Inc.
("CGS"), an affiliate of the corporate general partner of the Registrant. 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.
NOTE D:
The income (loss) per limited partnership unit for the three and six months
ended May 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.
-5-
<PAGE>
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 writedowns, general
and administrative expenses, unusual and extraordinary items, and interest.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
May 31, May 31,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Jackson Industrial $ 181,633 $ 120,706 $ 394,247 $ 244,798
Maple Tree Shopping Center 160,562 149,796 303,586 284,536
Park Plaza I & II 140,493 140,188 283,900 268,797
Morenci Professional Park 170,201 135,645 306,090 254,255
----------- ----------- ----------- -----------
652,889 546,335 1,287,823 1,052,386
=========== =========== =========== ===========
Operating Profit (Loss):
Jackson Industrial (28,610) (92,081) (63,477) (190,769)
Maple Tree Shopping Center 12,744 31,535 18,688 50,077
Park Plaza I & II 31,522 60,707 63,775 109,385
Morenci Professional Park 21,554 4,212 13,821 (11,913)
----------- ----------- ----------- -----------
37,210 4,373 32,807 (43,220)
=========== =========== =========== ===========
Capital Expenditures:
Jackson Industrial -0- 3,332 3,711 3,332
Maple Tree Shopping Center 215,800 17,995 215,800 17,852
Park Plaza I & II 7,948 9,845 7,948 11,250
Morenci Professional Park 11,567 9,315 11,566 14,463
----------- ----------- ----------- -----------
235,315 40,487 239,025 46,897
=========== =========== =========== ===========
Depreciation and Amortization:
Jackson Industrial 55,888 55,672 115,951 111,040
Maple Tree Shopping Center 20,239 17,356 40,754 34,625
Park Plaza I & II 20,694 16,651 40,808 32,436
Morenci Professional Park 35,118 32,991 71,326 65,639
----------- ----------- ----------- -----------
131,939 122,670 268,839 243,740
=========== =========== =========== ===========
</TABLE>
-6-
<PAGE>
Assets:
May 31, 2000 November 30, 1999
------------ -----------------
Jackson Industrial $3,169,518 $3,238,441
Maple Tree Shopping Center 1,369,650 1,152,425
Park Plaza I & II 893,088 900,312
Morenci Professional Park 1,559,626 1,521,530
---------- ----------
6,991,882 6,812,708
========== ==========
Reconciliation of segment data to the Partnerships's consolidated data follow:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
May 31, May 31,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Segments $ 652,889 $ 546,335 $ 1,287,823 $ 1,052,386
Corporate and other 24,584 (952) 49,677 28,313
----------- ----------- ----------- -----------
677,473 545,383 1,337,500 1, 080,699
=========== =========== =========== ===========
Operating Profit (Loss):
Segments $ 37,210 $ 4,373 $ 32,807 $ (43,220)
Corporate and other income (loss) 24,584 (952) 49,676 28,314
Less: General and admin expenses (31,269) (29,626) (61,577) (57,071)
----------- ----------- ----------- -----------
Net income (loss) 30,525 (26,205) 20,906 (71,977)
=========== =========== =========== ===========
Depreciation and Amortization
Segments $ 131,939 $ 122,670 $ 268,839 $ 243,740
Corporate and other -0- 61 -0- 122
----------- ----------- ----------- -----------
131,939 122,731 268,839 243,862
=========== =========== =========== ===========
Assets:
May 31, 2000 November 30, 1999
------------ -----------------
Segments $6,991,882 $6,812,708
Corporate and other 2,544,996 2,614,524
---------- ----------
9,536,878 9,427,232
========== ==========
</TABLE>
-7-
<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 May 31, 2000 is $1,929,831, a decrease of $642,372 from year
end November 30, 1999. The decrease in cash can primarily be attributed to the
payment of expenses related to the development of the real estate investment
trust as described in Note E of the notes to unaudited financial statements, and
the semi-annual and annual real estate tax payments at the Registrant's
properties. During the six month period ended May 31, 2000, capital additions
were made in the amount of $239,025 and payments were made on mortgage notes in
the amount of $162,763. 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 remainder of 2000 are as follows:
Leasing Capital Other Capital Total
--------------- ------------- -----
Park Plaza I & II $112,500 $ 5,125 $117,625
Morenci Professional Park 147,900 11,448 159,348
Maple Tree Shopping Center 163,000 10,700 173,700
Jackson Industrial -0- -0- -0-
-------- -------- --------
$423,400 $ 27,273 $450,673
======== ======== ========
Other capital at Park Plaza I & II, Morenci Professional Park and Maple Tree
Shopping Center will partly be funded by the cash reserves for such improvements
from the new loan agreements. Leasing capital at all of the Registrant's
properties will be funded from operations.
At three of the Registrant's properties, leasing capital has been budgeted to
fund tenant alterations and lease commissions for new and renewal leases to be
signed during the year. At Morenci Professional Park, the Registrant has
budgeted other capital for upgrading the exterior lighting, asphalt overlay of
the east section of the lot, replacement of concrete sidewalks, ADA (American
Disabilities Act) compliance, and asphalt sealing. At Park Plaza I & II, the
Registrant has budgeted other capital for replacement of the porch canopies,
roof repairs, exterior masonry and painting, and parking lot sealing and
striping. At Maple Tree Shopping Center, other capital has been budgeted for
replacement of a section of the roof, overlaying the rear and main drives of the
center, ADA (American Disabilities Act) compliance, and canopy renovation.
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. This
money 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 May 31, 2000 was $5,635,424. 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 $3,588,870 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.
-8-
<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 the
mortgage debt as it matures.
Results of Property Operations
------------------------------
The results of operations of the Registrant's properties for the quarter ended
May 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 $ 181,633 $ 160,562 $ 140,493 $ 170,201
Expenses (210,243) (147,818) (108,971) (148,647)
--------- --------- --------- ---------
Net (Loss) Income $ (28,610) $ 12,744 $ 31,522 $ 21,554
========= ========= ========= =========
1999
----
Revenues $ 120,706 $ 149,796 $ 140,188 $ 135,645
Expenses (212,787) (118,261) (79,481) (131,433)
--------- --------- --------- ---------
Net (Loss) Income $ (92,081) $ 31,535 $ 60,707 $ 4,212
========= ========= ========= =========
At Jackson Industrial, revenues increased $60,927 when comparing the quarter
ended May 31, 2000 to the quarter ended May 31, 1999 due to the current 100%
occupancy level at the property. Expenses remained consistent with only a $2,544
decrease when comparing the two three-month periods. No significant fluctuations
occurred in the expense categories during the comparison period.
At Maple Tree Shopping Center revenues increased $10,766 when comparing the
quarter ending May 31, 2000 to the quarter ending May 31, 1999 primarily due to
an increase in percentage rent revenue ($8,991) and real estate tax revenue
($2,337). The percentage rent revenue increase can be attributed to annual tax
billings posted for two tenants at the shopping center during the second
quarter. These billings were done in a later period during 1999. Expenses
increased $29,557 when comparing the three month periods ended May 31, 2000 and
1999. This increase can primarily be attributed to increases in interest expense
($6,863), depreciation and amortization expense ($2,883), parking lot related
expenses ($14,175), and real estate tax expense ($5,250). The increased interest
expense can be attributed to the larger principal balance than that of prior
year. The parking lot expense increase is due to black-top patching and dumpster
repair at the property during the second quarter of 2000. The increased real
estate tax expense when comparing the two three month periods can be attributed
to a larger quarterly accrual based on an increase in the annual tax due for
2000.
At Park Plaza I and II, revenues remained consistent, with a $305 increase when
comparing the quarter ended May 31, 2000 to the quarter ended May 31, 1999.
Operating expenses at Park Plaza I and II increased $29,490 when comparing the
two quarters. This increase in expenses can primarily be attributable to an
increase in interest expense ($28,064), and depreciation and amortization
expense ($4,043), partially offset by a decrease in administrative payroll
($1,933). The increased interest expense can be attributed to the increased
principal balance.
-9-
<PAGE>
At Morenci Professional Park, revenues increased $34,556 when comparing the
quarter ending May 31, 2000 to the quarter ending May 31, 1999. The increase in
revenues can primarily be attributed to increases in both common area
maintenance reimbursement revenue ($28,839) and real estate tax revenue
($5,503). The increase in common area maintenance revenue is due to a
significant increase in the reimbursable expenses when compared to that of prior
year. The increase in real estate tax revenue can primarily be attributed to an
increase in the pro-rata share of certain tenants that are responsible for the
taxes in accordance with their lease. Expenses increased $17,214 when comparing
the two quarters. The increase is primarily attributable to increases in
interest expense ($15,462), and vacancy related expenses ($6,138), partially
offset by a decrease in real estate tax expense ($4,546). The increase in
interest expense is due to the increased principal balance and the additional
costs incurred to update a vacant suite resulted in the increased vacancy
expense.
The occupancy levels at May 31 are as follows:
Property 2000 1999 1998
-------- ---- ---- ----
Park Plaza I & II 100% 92% 96%
Morenci Professional Park 92% 95% 93%
Maple Tree Shopping Center 100% 100% 100%
Jackson Industrial 100% 61% 39%
Leasing activity for the quarter at Park Plaza I & II consisted of one new lease
being signed for 2,460 square feet, three tenants renewing their leases for
10,200 square feet, and one tenant vacating 2,460 square feet. The occupancy
level remained at 100% throughout the quarter. At Park Plaza I and II, one
tenant occupies 10% of the available space, with a lease expiring in August
2004.
The second quarter leasing activity at Morenci Professional Park consisted of
six new tenants leasing 9,600 square feet, five tenants renewing 13,200 square
feet, and three tenants vacating 7,200 square feet. The occupancy level
increased 2%, to 92% from that of first quarter 2000. There are no major tenants
occupying more than 10% of the space at this property.
At Maple Tree Shopping Center occupancy remained consistent at 100% during the
quarter. There was no leasing activity during the quarter. Two tenants occupy
18% and 42% of the available space with leases expiring in April 2005 and July
2004, respectively.
At Jackson Industrial, occupancy increased 4%, to 100% from that of first
quarter 2000. Leasing activity during the quarter consisted of one major tenant
on a short-term lease vacating 56,800 square feet and an existing major tenant
expanding into that space, resulting in the 100% occupancy level. The property
now has two major tenants occupying 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
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
-10-
<PAGE>
available, an estimate 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 Comparison
---------------
Revenues for the quarter ended May 31, 2000 and 1999 are $677,473 and $545,383,
respectively. For the six month period ended May 31, 2000 and 1999 revenues are
$1,337,500 and $1,080,699 respectively. For the quarter ended, revenues
increased $132,090 when comparing the two periods and for the six month period,
revenues increased $256,801. This increase in consolidated revenue for both
comparison periods can be attributed primarily to increases in base rental
revenues, common area maintenance revenue, real estate tax revenue, and
percentage rent revenue, as previously mentioned in the property comparisons. An
increase in interest revenue of $25,044 for the three month period and $50,151
for the six month period also contributed to the consolidated increase in
revenues. This increase in interest revenue is attributable to the amount earned
on the additional principal funds obtained in November 1999 as mentioned
previously in the description of mortgage indebtedness.
For the quarters ended May 31, 2000 and 1999 consolidated expenses were $646,948
and $571,588 respectively. For the six month period ended May 31, 2000 and 1999,
consolidated expenses were $1,316,594 and $1,152,676 respectively. For the
quarter ended, consolidated expenses increased $75,360 primarily due to
increases in interest expense ($47,416), depreciation and amortization expense
($9,208), management fees ($5,327), insurance ($4,310), parking lot/landscaping
expenses ($6,942), professional services ($2,704), vacancy related expenses
($3,782), and various other operating expenses ($3,365). These increases were
partially offset by decreases in general and administrative expenses ($5,043)
and payroll ($1,936). The increase in interest expense is due to the increased
principal balance at three of the Registrant's properties, as previously
mentioned in the property comparisons. The increased management fee can be
directly attributable to the increased revenues. Also addressed in the property
comparisons were the increases in parking lot/landscaping and vacancy related
expenses. The decrease in general and administrative expenses is primarily due
to a decrease in office related expenses at all properties and at the
partnership level. For the six month period ended May 31, 2000, compared to the
same period in 1999, consolidated expenses increased $163,918 due to increases
in interest expense ($123,194), depreciation and amortization ($24,977), real
estate tax expense ($4,323), management fees ($11,771), insurance ($10,053),
parking lot/landscaping ($7,112), and payroll ($9,137). These increases were
partially offset by decreases in repairs and maintenance related expenses
($14,083), general and administrative ($5,024), vacancy ($5,441), and other
operating expenses ($3,200). The increase in insurance expense is due to a rise
in the premium for property insurance at all of the Registrant's properties, as
well as an increase in the insurance carried at the partnership level. The
decrease in repairs and maintenance related expenses is primarily due to
decreased electrical repairs and general maintenance at the Registrant's
properties. All other expense fluctuations have either been previously addressed
in the consolidated three month comparison and/or the property comparisons.
1999 Comparison
---------------
Revenues for the quarter ended May 31, 1999 and 1998 are $545,383 and $879,083,
respectively. For the six month period ended May 31, 1999 and 1998 revenues are
$1,080,699 and $1,464,773, respectively. For the quarter ended, revenues
decreased $333,700 when comparing the two periods and for the six month period
revenues decreased $384,074. The decrease in revenue, for both periods, can
primarily be attributed to termination and early cancellation fees received at
-11-
<PAGE>
Jackson Industrial during second quarter 1998 from a former major tenant, not
received in 1999. In addition there were also decreases in common area
maintenance income, bad debt recovery, and rental income. For the quarters ended
May 31, 1999 and 1998 consolidated expenses were $571,588 and $692, 370
respectively. For the six month period ended May 31, 1999 and 1998, consolidated
expenses were $1,152,676 and $1,257,605 respectively. For the quarter ended,
consolidated expenses decreased $120,782 primarily due to decreases in interest
expense ($4,435), depreciation/amortization expense ($37,013), real estate tax
expense ($5,136), management fees ($16,863), repairs and maintenance related
expenses ($29,033), other tax expense ($4,407), and vacancy related expenses
($73,397). These decreases were partially offset by increases in parking
lot/landscaping ($12,209), office expenses ($7,199), payroll ($9,677),
professional services ($15,089), and other operating expenses ($5,549). The
decrease in depreciation/amortization, management fees, vacancy, and repairs &
maintenance are all attributable to the former major tenant vacancy at Jackson
Industrial in 1998. The increase in parking lot/landscaping is due to exterior
maintenance at Maple Tree Shopping Center. Office expenses increased from that
of prior year due to computer hardware and software costs incurred in 1999. The
increase in payroll is primarily due to additional staff at Park Plaza I & II.
For the six month period ended May 31, 1999 compared to the same period in 1998,
consolidated expenses decreased $104,929 due to decreases in interest expense
($5,793), depreciation/amortization ($44,776), real estate tax expense
($14,198), management fees ($20,940), repairs and maintenance related expenses
($18,350), other taxes ($7,058) and vacancy expenses ($74,306). These decreases
were partially offset by increases in parking lot/landscaping ($9,715), office
expenses ($7,237), payroll ($4,613), professional fees ($19,300), and other
operating expenses ($41,440). All increases and decreases have been explained
earlier in the three month period comparison, and the cause remains consistent
for the six month period, with the exception of the decrease in other tax which
can be attributed to lower income tax at the partnership level and the increase
in other operating expenses, which is primarily due to significant snow removal
costs during first quarter 1999.
Inflation
---------
The effects of inflation did not have a material impact upon the Registrant's
operations in fiscal year 1999 and are not expected to materially affect the
Registrant's operations in 2000.
-12-
<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
On April 17, 2000, the Registrant filed a report on Form 8-K which
reported an Item 4, Changes in Registrant's Certifying Accountant.
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: July 14, 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
/s/ Patricia A. Nooney
--------------------------------
Patricia A. Nooney
President and Secretary
-13-
<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)
-14-
