SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 1997
----------------------------------------------------
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 0-11023
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NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Missouri 43-1250566
- ---------------------------------- -------------------------------
(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-FOUR, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
August 31, November 30,
1997 1996
(Unaudited)
------------ ------------
ASSETS:
Cash $ 377,854 $ 211,840
Accounts receivable 134,342 199,357
Prepaid expenses and deposits 22,376 56,679
Investment property, at cost:
Land 1,013,858 1,013,858
Buildings and improvements 13,603,653 13,319,137
------------ ------------
14,617,511 14,332,995
Less accumulated depreciation 7,476,602 7,134,674
------------ ------------
7,140,909 7,198,321
Investment property held for sale 3,854,328 3,479,887
Deferred expenses - At amortized cost 59,788 65,549
------------ ------------
$ 11,589,597 $ 11,211,633
============ ============
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Accounts payable and accrued expenses $ 233,226 $ 86,951
Mortgage notes payable 12,896,867 12,529,484
Refundable tenant deposits 85,037 89,395
------------ ------------
13,215,130 12,705,830
Partners' Deficit (1,625,533) (1,494,197)
------------ ------------
$ 11,589,597 $ 11,211,633
============ ============
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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<PAGE>
<TABLE>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS AND PARTNERS' DEFICIT
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
August 31, August 31, August 31, August 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Rental and other income $ 848,266 $ 846,734 $ 2,544,620 $ 2,564,418
Interest 770 440 1,207 2,645
----------- ----------- ----------- -----------
849,036 847,174 2,545,827 2,567,063
EXPENSES:
Interest 287,076 284,188 847,642 853,362
Depreciation and amortization 120,090 124,374 354,763 374,906
Real estate taxes 125,016 106,036 343,840 315,817
Property management fees paid to
Nooney Krombach Company 44,831 44,869 135,097 135,995
Reimbursement to Nooney Krombach
Company for partnership management
services and indirect expenses 10,000 10,000 30,000 30,000
Repairs & Maintenance expenses 53,934 61,717 141,300 160,921
Payroll expenses 55,037 55,327 162,066 158,765
Insurance expenses 26,292 32,392 79,077 87,819
Cleaning expenses 23,466 14,295 61,933 43,465
Utility expenses 42,193 45,395 115,003 110,475
Professional fee expenses 15,224 4,309 96,088 55,109
Corporate unit expenses 17,972 20,660 36,289 53,847
Rennovation expenses 18,427 3,539 29,462 3,539
Other operating expenses 59,434 54,454 244,603 229,244
----------- ----------- ----------- -----------
898,992 861,555 2,677,163 2,613,264
----------- ----------- ----------- -----------
NET LOSS $ (49,956) $ (14,381) $ (131,336) $ (46,201)
=========== =========== =========== ===========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (3.63) $ (1.04) $ (9.54) $ (3.36)
=========== =========== =========== ============
PARTNERS' DEFICIT:
Beginning of Period $(1,575,577) $(1,507,284) $(1,494,197) $(1,475,464)
Net Loss (49,956) (14,381) (131,336) (46,201)
----------- ---------- ----------- -----------
End of Period $(1,625,533) $(1,521,665) $(1,625,533) $(1,521,665)
=========== =========== =========== ===========
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
</TABLE>
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<PAGE>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
August 31, August 31,
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(131,336) $ (46,201)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 354,763 374,906
Changes in assets and liabilities:
Decrease in accounts receivable 65,015 71,376
Decrease in prepaid expenses and
deposits 34,303 33,979
Increase in accounts payable and
accrued expenses 146,275 99,268
Decrease in refundable tenant deposits (4,358) (2,379)
Increase in deferred expense (5,300) (49,627)
Total Adjustments 590,698 527,523
--------- ---------
Net cash provided by operating
activities 459,362 481,322
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to investment property (459,034) (121,081)
Additions using Capital Reserve Escrow (201,697) 0
--------- ---------
Net cash used in investing
activities (660,731) (121,081)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on mortgage notes payable (8,833) (80,050)
Funding on mortgage notes payable 376,216 0
--------- ---------
Net cash from financing
activities 367,383 (80,050)
--------- ---------
NET INCREASE IN CASH 166,014 280,191
CASH, Beginning of period 211,840 275,823
--------- ---------
CASH, End of period $ 377,854 $ 556,014
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
INFORMATION - Cash paid during the
period for interest $ 895,335 $ 853,362
========= =========
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
-4-
<PAGE>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED AUGUST 31, 1997 AND 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.
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-Four, 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, 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
and a corporate general partner of the Registrant are officers and directors of
Nooney Company. Nooney Four Capital Corp., a general partner, is a 75% owned
subsidiary of Nooney Company.
NOTE D:
The loss per limited partnership unit for the three and nine months ended August
31, 1997 and August 31, 1996 was computed based on 13,529 units, the number of
units outstanding during the periods.
-5-
<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 Registrant. Actual
results could differ materially from those contemplated by such statements.
Liquidity and Capital Resources
Cash on hand as of August 31, 1997 is $377,854, an increase of $166,014 from
year ended November 30, 1996. The increase in cash can be attributable to
improved operations at Woodhollow Apartments which have increased cash flow and
from a higher balance in the Woodhollow real estate tax escrow account due to
timing. Taxes are paid towards year end and the escrow account builds up cash
throughout the year so that adequate funds are on hand to pay the taxes. The
Registrant continues its capital renovation program at Woodhollow Apartments,
depositing excess cash flow each month into the established capital reserve
account to fund the new siding, parking lot upgrades and common area
renovations. During the third quarter the Registrant drew from the capital
reserve escrow account approximately $128,000. The Registrant anticipates
drawing an additional $127,000 during the fourth quarter. The remaining capital
expenditures by property are as follows:
Leasing Operating Other
Capital Capital Capital Total
------- ------- ------- -----
Cobblestone Court -0- -0- -0- -0-
Woodhollow Apartments -0- $13,638 $34,790 $48,428
--- ------- ------- -------
-0- $13,638 $34,790 $48,428
=== ======= ======= =======
At Woodhollow Apartments, operating capital is necessary in the fourth quarter
of 1997 for appliances and carpet and vinyl replacement. During the last quarter
of 1997 the Registrant anticipates spending $34,790 on signage, air conditioning
units and balcony work. Due to the pending sale, capital expenditures for
Cobblestone Court have not been projected.
As previously indicated, the Registrant decided to list Cobblestone Court
Shopping Center to handle leasing of the property and then the ultimate sale of
the property during 1997. The approach taken has been to find a new mini-anchor
for the East end of the Mall. Once a new mini-anchor has been identified, the
intent is to put the property on the market for sale with this tenant in place.
The Registrant believes this strategy will bring the maximum dollars upon a
sale. To date, no mini-anchor has been located although there are several
prospective tenants which the brokerage firm has contacted. It is anticipated
that it will take until the end of 1997 to identify and negotiate a lease with
such a mini-tenant. The Registrant's goal is then to sell the property during
the first or second quarter of 1998.
The holder of the first and second mortgage debt on Cobblestone Court and the
second mortgage debt on Woodhollow Apartments extended these loans through
October 31, 1997. The Registrant anticipates the lender will extend the loan.
The interest rate on Cobblestone Court's first mortgage, second mortgage, and
the additional borrowing on Woodhollow's second mortgage are at an interest rate
calculated at LIBOR plus 2.75%. As of August 31, 1997, the rate was 8.5%. The
interest rate on the original Woodhollow second mortgage is at 9.5%. The balance
of the second mortgages was increased to pay for the roof replacement at
Cobblestone Court. As of August 31, 1997, the balance of the first mortgage debt
on Cobblestone Court was $2,603,049. As of August 31, 1997, the balance on the
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<PAGE>
Cobblestone Court second mortgage was $1,438,039 and the balance on the second
mortgage at Woodhollow Apartments was $578,817. The Registrant's properties are
cross-collateralized and both properties secure the debt with this lender. The
first mortgage on Woodhollow Apartments had a balance of $8,276,962 as of August
31, 1997, with an interest rate of 9.125%. This loan matures in July 2001.
Principal payments will commence on this loan starting in September 1997. The
first three years of this loan were interest only.
The long term liquidity of the Registrant is dependent on its ability to fund
future capital expenditures and mortgage payments, maintain high occupancy and
negotiate with lenders the renewal and/or refinancing of Cobblestone Court's
mortgage debt. Until such time as real estate market conditions recover and a
profitable sale of the Registrant's properties is feasible, the Registrant will
continue to manage the property to achieve its investment objectives.
The results of operations for the Registrant's properties for the quarters ended
August 31, 1997 and 1996 are detailed in the schedule below. Revenues and
expenses of the Registrant are excluded.
Woodhollow Apartments Cobblestone Court
--------------------- -----------------
1997
----
Revenues $606,905 $241,433
Expenses 628,365 270,566
-------- --------
Net Loss $(21,460) $(29,133)
======== ========
1996
----
Revenues $595,002 $251,827
Expenses 604,465 247,775
-------- --------
Net (Loss) Income $ (9,463) $ 4,052
======== ========
At Woodhollow Apartments, the operating results for the third quarter ended
August 31, 1997, declined from the third quarter ended August 31, 1996. Revenues
increased, however, due to an increase in rents and occupancy at Woodhollow
Apartments. The multi-family market in the West St. Louis County area continues
to improve, putting upward pressure on rental rates. Offsetting the increase in
revenues is an increase in expenses of $23,900 when compared to the quarter
ending results of the prior year. Operating expenses increased in advertising
($2,179), cleaning ($3,579), extermination ($3,176), professional services
($6,818), building repairs and maintenance ($10,424), and swimming pool expenses
($2,910), offset by decreases in insurance ($4,471), cleaning turnover ($2,526),
and telephone expenses ($3,190). In addition, depreciation increased $10,789
over the prior year due to the increase in capital assets added to the buildings
for the capital renovation program.
Cobblestone Court net income (loss) for the quarters ended August 31, 1997 and
1996 was ($29,133) and $4,052, respectively. The decrease in net income is
attributable to decreases in revenue and an increase in expenses. Revenues
decreased approximately $10,000 when comparing the third quarter of 1997 to the
third quarter of 1996. The decrease in revenues is attributable to a decrease in
occupancy. Expenses increased $22,791 for the third quarter of 1997 as compared
to the third quarter of 1996. The increase in expenses is attributable to an
increase in cleaning expense ($5,574), parking lot ($2,726), real estate taxes
($17,279), and professional services other ($9,103). These increases in expense
were offset by a decrease in amortization expense of $15,073.
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<PAGE>
The occupancy levels at the Registrant's properties during the third quarter
decreased at both Cobblestone Court and Woodhollow Apartments. The occupancy
levels at August 31, 1997, 1996 and 1995 are as follows:
Occupancy levels as of August 31,
Property 1997 1996 1995
-------- ---- ---- ----
Cobblestone Court Shopping Center 69% 84% 96%
Woodhollow Apartments 96% 98% 92%
At Cobblestone Court the Registrant renewed one tenant occupying 7,984 square
feet and one tenant vacated its space who occupied 4,773 square feet. The
Registrant has reviewed the valuation of the property and does not believe that
Cobblestone Court needs to incur additional write-downs. An appraisal was
performed by an independent appraisal firm in January 1997. The appraised value
of the center, $4,950,000, is higher than the book value of the property as of
November 30, 1996 and August 31, 1997. While vacancy has increased since the
appraisal was performed, upon review of the underlying assumptions of the
appraisal, the Registrant does not believe that the drop in occupancy would
result in a drop in the value of the property below book value. The property has
one major tenant that occupies approximately 26% of the center with a lease that
expires in December 2000.
At Woodhollow Apartments the occupancy decreased 2% when comparing August 31,
1997 to August 31, 1996. The decrease in occupancy level is offset by an overall
increase in the rental rates of the property. The Registrant anticipates the
property will continue to operate with a high occupancy rate for the balance of
1997.
1997 Comparisons
As of August 31, 1997, the Registrant's consolidated revenues for the quarter
ended are $849,036 and for the nine month period ended August 31, 1997, they are
$2,545,827. Revenues for the corresponding periods in 1996 were $847,174 and
$2,567,063. Revenues decreased $1,862 for the quarter ended August 31, 1997 and
decreased $21,236 for the nine month period ended August 31, 1997, when compared
to the corresponding periods of the prior year. The decrease in revenues can be
attributable to the decrease in occupancy at Cobblestone Court Shopping Center.
Consolidated expenses for the quarter ended August 31, 1997 and August 31, 1996
were $898,992 and $861,555, respectively, indicating an increase of $37,437 for
the quarter ended August 31, 1997, when compared to the prior year. For the
quarter, expenses increased in real estate taxes, cleaning expenses,
professional fees and renovation expenses. For the nine month period ended
August 31, 1997 and August 31, 1996, consolidated expenses were $2,677,163 and
$2,613,264, indicating an increase of $63,899, when compared to the prior year.
Expenses that did increase were real estate taxes, cleaning expenses,
professional fees and renovation expenses offset by decreases in repairs and
maintenance and depreciation and amortization.
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<PAGE>
1996 Comparisons
As of August 31, 1996, the Registrant's consolidated revenues for the quarter
ended are $847,174 and $2,567,063 for the nine month period ended. Revenues
increased $28,684 and $85,489 for the quarter ended and nine month period ended
August 31, 1996 when compared to the same operating results for the period ended
August 31, 1995.
On a consolidated basis when comparing revenues for the three month and nine
month periods ended August 31,1996 to 1995 revenues increased 3.5% and 3.4%,
respectively. The increase in revenues can be attributed to Woodhollow
Apartments where the Registrant had an increase in revenues of $49,712 and
$163,982 when comparing the quarter ended and nine month periods ended August
31, 1996 to 1995. The increase in revenues were offset by decreases at
Cobblestone Court for both the quarter ended and nine month periods ended August
31, 1996 of $20,507 and $82,489, respectively. The increase in revenues, as
previously stated, at Woodhollow Apartments is a result of an improving
multi-family market in the west St. Louis County area. The operating results at
Cobblestone Court over the three month and nine month periods ended August 31,
1996 when compared to 1995 can be attributed to a decrease in rental income from
a decline in average occupancy. Along with the decline in rental income were
decreases in expense pass through income resulting from tenant occupancy
changes. Tax participation income increased at Cobblestone Court due to an
increase in real estate taxes.
Consolidated expenses for the quarter ended and nine month period ended August
31, 1996 are $861,555 and $2,613,264, respectively. For the same periods ended
August 31, 1995 consolidated expenses were $855,160 and $2,650,651,
respectively. For the quarter ended consolidated expenses increased less than 1%
or $6,395. However, though the consolidated expenses on a quarterly basis
slightly increased, individual expenses significantly fluctuated. Real estate
tax expense increased $25,463 due to an adjustment in the real estate tax
accruals during the third quarter of 1995. During that quarter the State of
Missouri passed a law that reduced Woodhollow Apartment's real estate tax
assessment rate from 32% to 19%. Due to the reduction of the property's
assessment, the real estate tax accruals were adjusted to reflect the then
current level of real estate taxes to be paid at year end. Depreciation and
amortization decreased $23,940 due to under generally accepted accounting
principles when a property (i.e., Cobblestone Court) is held for sale it may no
longer be depreciated.
For the nine period ended August 31, 1996 compared to the same period ended
August 31, 1995 consolidated expenses decreased $37,387 or 1.4%. Contributing to
the decrease were decreases in depreciation and real estate taxes offset by
increases in other operating expenses. The decreases in depreciation were caused
by the factors previously discussed when analyzing the quarterly results. The
decrease in real estate taxes relates to a reduction in Woodhollow Apartment's
assessment resulting from a change in the law in the State of Missouri. The
increase in other operating expenses can be attributed to increases in furniture
rental ($32,924), repairs and maintenance ($27,617), snow removal ($23,927),
cleaning ($14,861), insurance ($9,711), swimming pool costs ($8,565), and
vacancy expense ($6,190). Offsetting the increases in the aforementioned
expenses categories was a decrease in parking lot expenditures ($14,517).
Inflation
The effects of inflation did not have a material impact upon the Registrant's
operation in fiscal 1996 and are not expected to materially affect the
Registrant's operations in 1997.
-9-
<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 June 23, 1997, the Registrant filed a report on Form 8-K
which reported an Item 5, Other Events.
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 15, 1997 NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
------------------------------
By: /S/ Gregory J. Nooney, Jr.
-----------------------------------
Gregory J. Nooney, Jr.
General Partner
PAN, INC.
By: /S/ Patricia A. Nooney
-----------------------------------
Patricia A. Nooney
President
NOONEY CAPITAL CORPORATION
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 DIRECTORS
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<PAGE>
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
3.1 Amended and Restated Agreement and Certificate of
Limited Partnership dated April 7, 1982, is
incorporated by reference to the Prospectus
contained in the Registration Statement on Form
S-11 under the Securities Act of 1933 (File No.
2-76046).
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-FOUR, L.P. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK>0000700720
<NAME>NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> AUG-31-1997
<CASH> 377,854
<SECURITIES> 0
<RECEIVABLES> 134,342
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 534,572
<PP&E> 14,617,511
<DEPRECIATION> 7,476,602
<TOTAL-ASSETS> 11,589,597
<CURRENT-LIABILITIES> 233,226
<BONDS> 12,896,867
<COMMON> 0
0
0
<OTHER-SE> (1,625,533)
<TOTAL-LIABILITY-AND-EQUITY> 11,589,597
<SALES> 2,544,620
<TOTAL-REVENUES> 2,545,827
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,829,521
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 847,642
<INCOME-PRETAX> (131,336)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (131,336)
<EPS-PRIMARY> (9.54)
<EPS-DILUTED> 0
</TABLE>
