SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended November 30, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 0-11023
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NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
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(Exact name of Registrant as specified in its charter)
Missouri 43-1250566
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(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
7701 Forsyth Boulevard, St. Louis, Missouri 63105
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 863-7700
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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None Not Applicable
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Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
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(Title of Class)
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 .
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Page 1 of 32 Pages
Exhibit Index located on Page 17
<PAGE>
X Indicate by check mark if disclosure of delinquent filers pursuant to
- --- Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
As of February 1, 1997, the aggregate market value of the Registrant's units of
limited partnership interest (which constitute voting securities under certain
circumstances) held by non-affiliates of the Registrant was $13,529,000. (The
aggregate market value was computed on the basis of the initial selling price of
$1,000 per unit of limited partnership interest, using the number of units not
beneficially owned on February 1, 1997 by the General Partners or holders of 10%
or more of the Registrant's limited partnership interests. The initial selling
price of $1,000 per unit is not the current market value. Accurate pricing
information is not available because the value of the units of limited
partnership interests is not determinable since no active secondary market
exists. The characterization of such General Partners and 10% holders as
affiliates is for the purpose of this computation only and should not be
construed as an admission for any purpose that any such persons are, or other
persons not so characterized are not, in fact, affiliates of the Registrant).
Documents incorporated by reference:
Portions of the Prospectus of the Registrant dated April 8, l982, as
supplemented and filed pursuant to Rule 424(c) of the Securities Act of 1933,
are incorporated by reference in Part III of this Annual Report on Form 10-K.
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PART I
ITEM 1: BUSINESS
It should be noted that this 10-K 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.
Nooney Real Property Investors-Four, L.P. (the "Registrant") is a limited
partnership formed under the Missouri Uniform Limited Partnership Law on
February 9, 1982, to invest, on a leveraged basis, in income-producing real
properties such as shopping centers, office buildings, apartment complexes,
office/warehouses and other commercial properties. The Registrant originally
invested in five real property investments. During fiscal 1990, one of the
Registrant's properties, Yankee Square I Office Building in Eagan, Minnesota,
was sold to an individual unaffiliated with the Registrant. During fiscal 1991,
one of the Registrant's properties, Courtyard Office Building in Creve Coeur,
Missouri, was conveyed by deed in lieu of foreclosure to Courtyard Office
Building, Inc., the assignee of Courtyard Associates, in order to satisfy the
default that existed under the mortgage note held by Courtyard Associates. On
December 22, l983, the Registrant purchased the Quad I Office/Warehouse Building
("Quad I") located at 1680- 1758 Westbelt Drive in Columbus, Ohio. During fiscal
1993, Quad I Warehouse was sold to a party unaffiliated with the Registrant.
The Registrant's primary investment objectives are to preserve and protect the
Limited Partners' capital and obtain long-term appreciation in the value of its
properties. The term of the Registrant is until December 31, 2082. It was
originally anticipated that the Registrant would sell or refinance its
properties within approximately five to ten years after their acquisition. The
depression of real estate values experienced nationwide from 1988 to 1993
lengthened this time frame in order to achieve the goal of capital appreciation.
The real estate investment market began to improve in 1994, continued this
improvement in 1995 and 1996, and is expected to further continue its
improvement over the next several years. Management believes this trend should
increase the value of Woodhollow in the future. The sale value of Cobblestone
Court will be dependent on the Registrant's ability to obtain financing to re-
roof the property and re-lease its vacant spaces as discussed later. The
Registrant is intended to be self-liquidating and proceeds, if any, from the
sale or refinancing of the Registrant's real property investments will not be
invested in new properties but will be distributed to the Partners or, at the
discretion of the General Partners, applied to capital improvements to, or the
payment of indebtedness with respect to, existing properties, the payment of
other expenses or the establishment of reserves. (See Item 7: Management's
Discussion and Analysis of Financial Condition and Results of Operations.)
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The business in which the Registrant is engaged is highly competitive. The
Registrant's investment properties are located in or near major urban areas and
are subject to competition from other similar types of properties in such areas.
The Registrant competes for tenants for its properties with numerous other real
estate limited partnerships, as well as with individuals, corporations, real
estate investment trusts and other entities engaged in real estate investment
activities. Such competition is based on such factors as location, rent
schedules and services and amenities provided.
The Registrant has no employees. Property management services for the
Registrant's investment properties are provided by Nooney Krombach Company, an
affiliate of the General Partners.
ITEM 2: PROPERTIES
On February 16, l982, the Registrant purchased the Cobblestone Court Shopping
Center ("Cobblestone"), located at 14150 Nicollet Avenue South in Burnsville,
Minnesota, a suburb of Minneapolis. Cobblestone, which contains approximately
98,000 net rentable square feet, was constructed in l980 of brick and concrete
with a wood facade covering a portion of an enclosed pedestrian walkway.
Cobblestone is located on an 11 acre site which provides paved parking for 605
cars. The purchase price of Cobblestone was $5,882,318. Cobblestone was 84%
leased by 16 tenants at year end.
On July 28, l982, the Registrant purchased the Woodhollow Apartments
("Woodhollow"), a 402- unit garden apartment complex located on Dorsett Road in
west St. Louis County, Missouri. The complex, which was constructed in phases in
l971 and l972, consists of 17 buildings containing one, two and three bedroom
apartments. The complex is located on a 26 acre site which provides paved
parking for 707 cars. The purchase price of Woodhollow was $12,665,147.
Woodhollow was 95% occupied at year end.
Reference is made to Note 3 to Notes to Financial Statements filed herewith as
Exhibit 99.3 in response to Item 8 for a description of the mortgage
indebtedness secured by the Registrant's real property investments.
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<PAGE>
The following table sets forth certain information as of November 30, 1996,
relating to the properties owned by the Partnership.
<TABLE>
<CAPTION>
AVERAGE
ANNUALIZED
EFFECTIVE
TOTAL BASE RENT PRINCIPAL TENANTS
SQUARE ANNUALIZED PER SQUARE PERCENT OVER 10% OF PROPERTY LEASE
PROPERTY FEET BASE RENT FOOT LEASED BASE RENT REVENUES (%) EXPIRATION
- ----------------- --------- ---------- ----------- ------- ------------------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Cobblestone Court 97,718 $ 650,860 $7.91 84% T.J. Maxx (20%) 2001
Shopping Center Old Country Buffet (14%) 2000
Touch of Countree (11%) 1997
Woodhollow 402 Units $2,202,012 $6,478/unit 95% None
Apartments
</TABLE>
ITEM 3: LEGAL PROCEEDINGS
The Registrant is not a party to any material pending legal proceedings.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the fourth
quarter of fiscal 1996.
PART II
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
As of February 1, 1997, there were 1,354 record holders of Interests in the
Registrant. There is no public market for the Interests, and it is not
anticipated that a public market will develop.
There were no cash distributions paid to the Limited Partners during fiscal 1995
or fiscal 1996.
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<PAGE>
ITEM 6: SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended November 30,
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1996 1995 1994 1993 1992
(Not covered by independent auditors' report)
<S> <C> <C> <C> <C> <C>
Rental and other income $ 3,505,163 $ 3,391,439 $ 3,281,516 $ 3,345,802 $ 3,385,187
Net loss (18,733) (151,835) (405,172) (324,856) (771,085)
Data per limited partnership unit - net loss (1.36) (11.03) (29.43) (23.60) (56.01)
Weighted average limited partnership units outstanding 13,529 13,529 13,529 13,529 13,529
At year-end:
Total assets 11,211,633 11,322,989 11,789,994 12,303,761 14,790,938
Investment property - net 10,678,208 10,705,962 11,170,661 11,750,886 14,054,978
Mortgage notes payable 12,529,484 12,628,720 12,721,302 12,850,500 14,846,620
Partners' deficiency in assets (1,494,197) (1,475,464) (1,323,629) (918,457) (593,601)
</TABLE>
See Item 7: Management's Discussion and Analysis for
discussion of comparability of items.
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<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Cash reserves as of November 30, 1996 are $211,840, a decrease of $63,983 from
the year ended November 30, 1995. The decrease in cash from year end 1995 to
1996 is attributable to the decrease in revenues produced from Cobblestone Court
Shopping Center. The anticipated capital expenditures during 1997 are:
Leasing Operating Other
Capital Capital Capital Total
------- ------- ------- -----
Woodhollow Apartments $ 0 $61,352 $390,972 $452,324
Cobblestone Court 85,512 0 425,000 510,512
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$85,512 $61,352 $815,972 $962,836
At Woodhollow Apartments, operating capital will be spent for carpet and vinyl
replacement, hot water heaters and other appliances. In 1997, the Registrant
anticipates spending $314,443 from the capital reserve escrow for Phase II of
the renovation program. The remainder of the other capital expenditures
($76,529) will be for the cost of replacing air conditioning units, signage, tie
wall and concrete replacement. Forecasted capital expenditures at Cobblestone
Court relate to building out tenant spaces, brokerage lease commissions and
replacement of the roof which is in serious disrepair. Due to the roof leaks,
several tenants are threatening to or have ceased making rental payments. In
addition, several tenants have indicated they plan to implement a lawsuit
against the Registrant for damages. Subsequent to year-end, one tenant has filed
a lawsuit. The Registrant is currently working with the holder of the mortgages
for an increase in the balance of the second mortgage, sufficient to cover the
cost of the re-roofing once spring arrives in Minnesota. The outcome of any
lawsuits cannot be determined at this time.
During 1994, the Registrant negotiated with the first mortgage lender on
Woodhollow Apartments an extension of the maturity of its note which matured
August 1, 1994. Under the modification, the note, with a principal balance of
$8,276,961, was extended for an additional seven years reducing the interest
rate from 10-3/8% to 9-1/8%. During the first three years, the payments are
interest only, thereafter the Registrant will pay principal based on a 15-year
amortization schedule. Principal payments will commence September 1, 1997. In
connection with the refinancing, the Registrant was required to establish a
capital reserve escrow account to fund certain deferred capital improvements
including new siding, parking lot upgrades and common area renovations estimated
to cost approximately $900,000. In 1996, Phase I of the capital renovation
program was completed and $283,483 of the capital reserve escrow was spent.
During 1996, the first mortgage holder on Cobblestone Court agreed to extend the
first mortgage several times on a short term basis while the Registrant
attempted to sell the property. In the fall of 1996, the first mortgage holder
indicated they were unwilling to extend the loan any further and demanded a
payment in full. The holder of the second mortgage agreed to pay off the first
mortgage holder and enter into a new first mortgage with the Registrant. This
transaction was completed
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subsequent to year-end in December 1996. The new first mortgage is for a balance
of $2,603,049. The note requires interest only payments at LIBOR plus 2.75%
commencing February 1, 1997 to May 1, 1997 when the entire principal balance is
due. Upon sale of the property, the note also requires a payment of $100,000 as
a loan fee to the first mortgage holder. In December 1996, the holder of the
second mortgage on Cobblestone Court and the second mortgage on Woodhollow
Apartments also extended those notes until May 1, 1997. The note secured by
Cobblestone Court Shopping Center is at an interest rate of LIBOR plus 2.75% and
requires interest only payments. The note secured by Woodhollow Apartments is at
1% over the banks prime rate and also requires monthly principal payments of
$1,000 per month.
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
mortgage debt as it matures, and the sale of Cobblestone Court at a price
sufficient to cover required obligations. Until such time as the real estate
market recovers, the Registrant will continue to manage the properties to
achieve its investment objectives.
Results of Operations
The results of operations for the Registrant's properties for the year ended
November 30, 1996, 1995 and 1994 are detailed in the schedule below. The
information contained in the schedule are the results of operations for each
property. Expenses of the Registrant are excluded.
Woodhollow Cobblestone Court
Apartments Shopping Center
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1996
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Revenues $2,368,763 $1,125,543
Expenses 2,397,699 1,043,807
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Net Income (Loss) $ (28,936) $ 81,736
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1995
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Revenues $2,161,325 $1,230,146
Expenses 2,307,419 1,179,866
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Net Income (Loss) $ (146,094) $ 50,280
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1994
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Revenues $2,059,244 $1,209,300
Expenses 2,422,264 1,164,660
------------------------------------
Net Income (Loss) $ (363,020) $ 44,640
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<PAGE>
At Cobblestone Court, revenues decreased ($104,604) from 1995 to 1996 consisting
of a decrease in base rent revenues ($48,610), percentage rent ($14,473), common
area maintenance income ($25,568) and real estate tax reimbursements ($12,017).
The revenues decreased due to the decrease in occupancy from one year to the
next. Expenses at Cobblestone Court decreased significantly due substantially to
a decrease in depreciation expense ($149,424) as Cobblestone Court was held for
sale during all of 1996, no depreciation was taken, as the property is recorded
below its net realizable value. In addition, parking lot expenses decreased
($8,648) and administrative expenses decreased ($6,276). These decreases in
expenses were offset by increases in repairs and maintenance ($4,200), snow
removal ($10,617), real estate taxes ($16,784), and vacancy expense ($9,025).
The property was under contract for sale from June through November of 1996.
During this time, no attempt was made to lease the vacant space as the
prospective purchaser had plans to do a reconfiguration and renovation of the
Center. The purchaser exercised its right to cancel the contract during the due
diligence period. The property was then placed back on the market and attempts
were made to get the property under contract again. Another prospective
purchaser went through substantial due diligence measures in December 1996 and
January 1997 before ultimately deciding in February 1997 to not pursue
purchasing the center. The Registrant is currently working with a new local
brokerage firm in Minneapolis to sell the Center. The Registrant will need to
re-roof the Center before it will be able to successfully complete a sale.
The operating results at Woodhollow Apartments continue to improve. The
increased revenue over the past three years can be attributable to an overall
improvement of the apartment market in the St. Louis Metropolitan area. The
improved market has allowed rent rates to increase year-by-year while
occupancies remain at high levels. Expenses at Woodhollow Apartments increased
from 1995 to 1996 due mainly to increases in depreciation expense ($49,173) due
to the capital renovation program getting under way, cleaning ($19,520),
administrative expenses ($7,355), corporate unit expenses ($37,994), repairs and
maintenance ($24,227). These increases in expenses were offset by decreases in
electric for corporate units ($7,717), fire and crime prevention ($6,933),
payroll maintenance ($12,958), and painting ($9,266).
The occupancy levels at the Registrants properties as of November 30 were:
Occupancy rates at November 30
1996 1995 1994
-------------------------------------
Woodhollow Apartments 95% 93% 93%
Cobblestone Court 84% 92% 99%
At Woodhollow Apartments, the occupancy increased during 1996 due to the
beginning of the capital renovation program and the overall improvement in the
appearance of the property as well as overall generally favorable apartment
market conditions. The Registrant expects this trend to continue in the future
years.
Occupancy at Cobblestone Court remained at 84% during the fourth quarter. As
previously indicated no leasing activity occurred as the property was under
contract for sale and the prospective purchaser did not wish any new leasing to
be performed. The center has one major tenant who occupies
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approximately 26% of the available space under a lease which expires in January
2001. Another major tenant occupies approximately 7 1/2% of the available space
under a lease which expires April 2000. The final major tenant occupies
approximately 10% of the available space and is on a month-to-month lease. The
tenant has indicated that they wish to downsize from 10,000 square feet to 7,000
square feet and the Registrant is working with them on a renewal lease.
1996 Comparisons
As of November 30, 1996, the Registrants consolidated revenues are $3,512,832
compared to $3,395,026 for the year-ended November 30, 1995. This increase in
revenues is $117,806 or 3.5%. The increase in revenues is attributable to
Woodhollow Apartments where increases were $207,438 versus a decrease in revenue
at Cobblestone Court of $104,603. Woodhollow Apartments revenues increased due
to the strengthening market and the Registrant's ability to increase rental
rates throughout the year.
The Registrant's consolidated expenses for the year-ended November 30, 1996 and
1995 were $3,531,565 and $3,546,861 respectively. The decrease in expenses from
1995 to 1996 was $15,296 or less than 1% and was attributable to a decrease in
depreciation and amortization expense of $151,820 and offset by an increase in
other operating expenses of $131,147. The decrease in depreciation expense is
attributable to Cobblestone Court. As previously indicated, since the property
has been held for sale during all of 1996, no depreciation was taken. Other
operating expenses increased mainly at Woodhollow Apartments for expenses in
cleaning, repairs and maintenance, administrative and corporate units. The
increase in consolidated revenue combined with the relatively flat consolidated
expenses produced the Registrants net loss of $18,733 for the year-ended
November 30, 1996 versus a net loss of $151,835 for the year-ended November 30,
1995. The net loss per limited partnership unit improved to $1.36 in 1996
compared to a loss of $11.03 in 1995. Cash flow provided by operating activities
was $440,657 in 1996 compared to $158,363 in 1995. The increase is mainly
attributable to the discontinuation of taking depreciation on Cobblestone Court.
Operating cash flow, along with the capital reserve escrows for Woodhollow
Apartments enable the Registrant to fund capital expenditures of $405,409 and
reduce the balances of notes payable by $99,236.
1995 Comparisons
As of November 30, 1995, the Registrant's consolidated revenues are $3,395,026
compared to $3,285,389 for the year ended November 30, 1994. The increase in
revenues are $109,637 or 3.34%. The increase in revenues is attributable to both
Cobblestone Court and Woodhollow Apartments where increases were $20,846 and
$82,985, respectively. Cobblestone Court's revenues increased due to a
strengthening market and the Registrant's ability to negotiate increases in
rental rates on lease renewals. Additionally, percentage rent income increased
due to better than expected performance from various tenants' business
operations. Woodhollow Apartments had the largest revenue increase of the two
properties and this also can be attributed to a strengthening market and the
Registrant's ability to negotiate rental rate increases. Along with increased
rental revenues, the property had an increase in furniture rental income due to
a corporate user renting several apartments and furniture for their employees.
The Registrant's consolidated expenses for the year ended November 30, 1995 and
1994 are
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$3,546,861 and $3,690,561, respectively. The decrease of $143,700 or 3.89% is
attributable to decreases in interest, depreciation and amortization, and real
estate taxes, offset by an increase in repairs and maintenance expenses. The
decrease in interest expense relates to the refinancing of Woodhollow Apartments
first deed of trust in August 1994 which reduced the interest rate from 10.375%
to 9.125%. Offsetting the $66,072 decrease was an increase in interest expense
relating to Cobblestone Court and its floating rate debt. Depreciation and
amortization expenses decreased by $115,328 with Woodhollow Apartments
comprising $104,844 of the total. The decrease in depreciation and amortization
relate to certain capital expenditures at Woodhollow Apartments becoming fully
depreciated and/or amortized. The decrease in real estate taxes also relates to
Woodhollow Apartments. As previously discussed, the State of Missouri passed a
law that affected the classification of apartment and nursing home properties.
Woodhollow Apartments was affected and their assessment rate decreased from 32%
to 19% resulting in a real estate tax reduction of approximately 38%. Repairs
and maintenance expense increased by $63,414 when comparing November 30, 1995 to
year ended November 30, 1994. The components of the increase are landscaping,
plumbing, and apartment turnover expenses at Woodhollow Apartments along with
parking lot maintenance and landscaping at Cobblestone Court.
With the increase in consolidated revenues and the decrease in consolidated
expenses, the Registrant's net loss decreased from ($405,172) to ($151,835) for
the years ended November 30, 1994 and 1995, respectively. Net loss per limited
partnership unit improved to ($11.03). Cash flow provided by operating
activities for the year ended November 30, 1995 is $158,363. Operating cash flow
along with prior year reserve capital enabled the Registrant to fund capital
expenditures of $153,607 and reduced the note payable by $92,582.
Inflation
The effects of inflation did not have a material impact upon the Registrant's
operation in fiscal l996 and are not expected to materially affect the
Registrant's operation in l997.
Interest Rates
Interest rates on floating rate debt increased in 1995 and remained flat in
1996. Future increases in the prime interest rate can adversely affect the
operations of the Registrant.
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ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements of the Registrant are filed herewith as Exhibit 99.3 and
are incorporated herein by reference (see Item 14(a)(1)). The supplementary
financial information specified by Item 302 of Regulation S-K is provided in
Item 7.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The General Partners of the Registrant responsible for all aspects of the
Registrant's operations are Gregory J. Nooney, Jr., age 66, and Nooney Capital
Corp., a Missouri corporation. Gregory J. Nooney, Jr. is a senior officer of
Nooney Company, the sponsor of the Registrant.
The background and experience of the General Partners are as follows:
Gregory J. Nooney, Jr. joined Nooney Company in 1954 and is currently Chairman
of the Board and Chief Executive Officer.
John J. Nooney is a Special General Partner of the Partnership and as such, does
not exercise control of the affairs of the Partnership.
John J. Nooney joined Nooney Company in 1958 and was President and Treasurer
until he resigned in 1992. Mr. Nooney is currently Chairman of the Board of
Dalton Investments, a real estate asset management firm.
Nooney Capital Corp. was formed in February 1982 for the purpose of being a
general and/or limited partner in the Registrant and other limited partnerships.
Gregory J. Nooney, Jr. is a director of Nooney Capital Corp.
Gregory J. Nooney, Jr. and John J. Nooney are brothers. Gregory J. Nooney, Jr.
and Faith L. Nooney (wife of John J. Nooney) are stockholders of Nooney Company,
with Gregory J. Nooney, Jr. controlling all voting stock of Nooney Company.
The General Partners will continue to serve as General Partners until their
withdrawal or their removal from office by the Limited Partners.
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Certain of the General Partners act as general partners of limited partnerships
and hold directorships of companies with a class of securities registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934 or subject to
the requirements of Section 15(d) of the Act. A list of such directorships, and
the limited partnerships for which the General Partners serve as general
partners, is filed herewith as Exhibit 99.1 and incorporated herein by
reference.
During 1993 Lindbergh Boulevard Partners, L.P. filed a voluntary petition under
Chapter 11 of the United States Bankruptcy Code. Gregory J. Nooney, Jr. is the
general partner of Nooney Ltd. II, L.P, which in turn is the general partner of
Nooney Development Partners, L.P., which in turn is the general partner of
Nooney-Hazelwood Associates, L.P., which is the general partner of Lindbergh
Boulevard Partners, L.P. Lindbergh Boulevard Partners, L.P. emerged from
bankruptcy on May 17, 1994, when its Plan of Reorganization was confirmed.
ITEM 11: EXECUTIVE COMPENSATION
The General Partners are entitled to a share of distributions and a share of
profits and losses as more fully described under the headings "Compensation to
General Partners and Affiliates" on pages 9-11 and "Profits and Losses for Tax
Purposes; Distributions; and Expenses of General Partners" on pages A-16 to A-19
of the Prospectus of the Registrant dated April 8, 1982, as supplemented and
filed pursuant to Rule 424(c) of the Securities Act of 1933 (the "Prospectus"),
which are incorporated herein by reference.
During fiscal l996 there were no cash distributions paid to the General Partners
by the Registrant.
See Item 13 below for a discussion of transactions between the Registrant and
certain affiliates of the General Partners.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners.
No person is known to the Registrant to be the beneficial owner of more than 5%
of the outstanding Interests of the Registrant.
(b) Security Ownership of Management.
None of the General Partners is known to the Registrant to be the beneficial
owner, either directly or indirectly, of any Interests in the Registrant.
(c) Changes in Control.
There are no arrangements known to the Registrant, the operation of which may at
a subsequent date result in a change in control of the Registrant.
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ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with Management and Others.
Certain affiliates of the General Partners are entitled to certain fees and
other payments from the Registrant in connection with certain transactions of
the Registrant as more fully described under the headings "Compensation to
General Partners and Affiliates" on pages 9-11 and "Management" on pages 26-28
of the Prospectus, which are incorporated herein by reference.
Nooney Krombach Company, the manager of Registrant's properties, is a
wholly-owned subsidiary of Nooney Company. Nooney Krombach Company is entitled
to receive monthly compensation from the Registrant for property management and
leasing services, plus reimbursement of expenses. During fiscal l996 the
Registrant paid property management fees of $185,981 to Nooney Krombach Company.
During fiscal l996 the Registrant paid Nooney Krombach Company $40,000 as
reimbursement for indirect expenses incurred in connection with management of
the Registrant.
See Item 11 above for a discussion of cash distributions paid to the General
Partners during fiscal l996.
(b) Certain Business Relationships.
The relationship of certain of the General Partners to certain of their
affiliates is set forth in Item 13(a) above. Also see Item 13(a) above for a
discussion of amounts paid by the Registrant to the General Partners or their
affiliates during fiscal 1996.
(c) Indebtedness of Management.
Not Applicable.
(d) Transactions with promoters.
Not Applicable.
-14-
<PAGE>
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
(1) Financial Statements (filed herewith as Exhibit 99.3):
Independent auditors' report
Balance sheets
Statements of operations
Statements of partners' equity (deficiency in assets)
Statements of cash flows
Notes to financial statements
(2) Financial Statement Schedules (filed herewith as Exhibit 99.3)
Schedule - Reconciliation of partners' equity (deficit)
Schedule III - Real estate and accumulated depreciation
All other schedules are omitted because they are inapplicable
or not required under the instructions.
(3) Exhibits:
See Exhibit Index on Page 17.
(b) Reports on Form 8-K
During the last quarter of the period covered by this report, the
Registrant filed no reports on Form 8-K.
(c) Exhibits:
See Exhibit Index on Page 17.
(d) Not Applicable
-15-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) under the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
Date: February 28, 1997 /s/ Gregory J. Nooney, Jr.
----------------------------- -----------------------------------
Gregory J. Nooney, Jr.
General Partner
Nooney Capital Corp.
General Partner
Date: February 28, 1997 By: /s/ Gregory J. Nooney, Jr.
----------------------------- -----------------------------------
Gregory J. Nooney, Jr.
Chairman of the Board and
Chief Executive Officer
By:/s/ Patricia A. Nooney
------------------------------------
Patricia A. Nooney
Senior Vice President and
Secretary
-16-
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit Page
Number Description Number
- ------ ----------- ------
<S> <C> <C>
3.1 Amended and Restated Agreement and Certificate of Limited N/A
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).
10 Management Contract between Nooney Real Property Investors- N/A
Four, L.P. and Nooney Company is incorporated by reference to
Exhibit 10 to the Registration Statement on Form S-11 under the
Securities Act of 1933 (File No. 2-76046). The Management Contract
was assigned by Nooney Company to Nooney Management Company (now
Nooney Krombach Company), a wholly-owned subsidiary of Nooney
Company, on April 1, l985, and is identical in all material
respects.
99.1 List of Directorships filed in response to Item 10. 18
99.2 Pages 9-11, 26-28 and A-16 - A-19 to the Prospectus N/A
of the Registrant dated April 8, 1982, as supplemented
and filed pursuant to Rule 424(c) of the Securities Act of 1933
are incorporated by reference.
99.3 Financial Statements and Schedules. 20-32
</TABLE>
-17-
EXHIBIT 99.1
Below each General Partner's name is a list of the limited partnerships, other
than the Registrant, for which the General Partner serves as a general partner
and the companies for which the General Partner serves as a director. The list
includes only those limited partnerships and companies which have a class of
securities registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934 or are subject to the requirements of Section 15(d) of the Act.
Gregory J. Nooney, Jr.
Limited Partnerships:
Nooney Real Property Investors-Two, L.P. Nooney Income Fund Ltd., L.P.
Nooney Income Fund Ltd.II, L.P.
Directorships:
Nooney Realty Trust, Inc.
John J. Nooney
Limited Partnerships:
Nooney Real Property Investors-Two, L.P. Nooney Income Fund Ltd., L.P.
Nooney Income Fund Ltd.II, L.P.
-18-
<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> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
<CASH> 211,840
<SECURITIES> 0
<RECEIVABLES> 199,357
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 467,876
<PP&E> 14,332,995
<DEPRECIATION> 7,134,674
<TOTAL-ASSETS> 11,211,633
<CURRENT-LIABILITIES> 86,951
<BONDS> 12,529,484
0
0
<COMMON> 0
<OTHER-SE> (1,494,197)
<TOTAL-LIABILITY-AND-EQUITY> 11,211,633
<SALES> 3,505,163
<TOTAL-REVENUES> 3,512,832
<CGS> 3,531,565
<TOTAL-COSTS> 3,531,565
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,135,573
<INCOME-PRETAX> (18,733)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,733)
<EPS-PRIMARY> (1.36)
<EPS-DILUTED> 0
</TABLE>
Exhibit 99.3
INDEPENDENT AUDITORS' REPORT
To the Partners of
Nooney Real Property Investors-Four, L.P.:
We have audited the accompanying balance sheets of Nooney Real Property
Investors-Four, L.P. (a limited partnership) as of November 30, 1996 and 1995,
and the related statements of operations, partners' equity (deficiency in
assets) and cash flows for each of the three years in the period ended November
30, 1996. Our audits also included the financial statement schedules listed in
the index at Item 14(a)2. These financial statements and financial statement
schedules are the responsibility of the Partnership's general partners. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Partnership's general partners, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Nooney Real Property Investors-Four, L.P. as
of November 30, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended November 30, 1996 in
conformity with generally accepted accounting principles. Also, in our opinion,
such financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
The accompanying financial statements and financial statement schedules have
been prepared assuming that Nooney Real Property Investors-Four, L.P. will
continue as a going concern. As discussed in Note 1, conditions exist which
raise substantial doubt about the Partnership's ability to continue as a going
concern unless it is able to negotiate with a mortgage lender to refinance the
debt maturing in 1997 or sell Cobblestone Court Shopping Center at an adequate
price to cover required obligations. Management's plans in regard to these
matters are also described in Note 1. The financial statements and financial
statement schedules do not include any adjustments that might result from the
outcome of this uncertainty.
DELOITTE & TOUCHE LLP
January 10, 1997
St. Louis, Missouri
-20-
<PAGE>
<TABLE>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
NOVEMBER 30, 1996 AND 1995
- ----------------------------------------------------------------------------------------
<CAPTION>
ASSETS 1996 1995
<S> <C> <C>
CASH - Includes restricted cash of $172,378 at November 30, $ 211,840 $ 275,823
1996 and $152,236 at November 30, 1995
ACCOUNTS RECEIVABLE 199,357 186,369
PREPAID EXPENSES AND DEPOSITS 56,679 69,139
INVESTMENT PROPERTY (Notes 1 and 3):
Land 1,013,858 1,013,858
Buildings and improvements 13,319,137 12,904,376
------------ ------------
14,332,995 13,918,234
Less accumulated depreciation (7,134,674) (6,702,698)
------------ ------------
7,198,321 7,215,536
Investment property held for sale (Note 1) 3,479,887 3,490,426
------------ ------------
Total investment property 10,678,208 10,705,962
DEFERRED EXPENSES - At amortized cost (Note 2) 65,549 85,696
------------ ------------
TOTAL $ 11,211,633 $ 11,322,989
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIENCY IN ASSETS)
LIABILITIES:
Accounts payable and accrued expenses $ 86,951 $ 74,635
Refundable tenant deposits 89,395 95,098
Mortgage notes payable (Notes 1 and 3) 12,529,484 12,628,720
------------ ------------
Total liabilities 12,705,830 12,798,453
PARTNERS' EQUITY (DEFICIENCY IN ASSETS) (1,494,197) (1,475,464)
------------ ------------
TOTAL $ 11,211,633 $ 11,322,989
============ ============
</TABLE>
See notes to financial statements.
-21-
<PAGE>
<TABLE>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
- -------------------------------------------------------------------------------------------------
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
REVENUES:
Rental and other income (Note 4) $ 3,505,163 $ 3,391,439 $ 3,281,516
Interest 7,669 3,587 3,873
----------- ----------- -----------
Total revenues 3,512,832 3,395,026 3,285,389
----------- ----------- -----------
EXPENSES:
Interest 1,135,573 1,154,055 1,200,009
Depreciation and amortization (Note 2) 497,315 649,135 764,463
Real estate taxes 457,460 442,140 508,620
Repairs and maintenance 267,239 257,091 189,834
Property management fees - related party 185,981 181,734 176,283
Payroll 256,960 262,816 252,824
Other operating expenses (includes $40,000 in each
year to related party) 731,037 599,890 598,528
----------- ----------- -----------
Total expenses 3,531,565 3,546,861 3,690,561
----------- ----------- -----------
NET LOSS $ (18,733) $ (151,835) $ (405,172)
=========== =========== ===========
NET LOSS ALLOCATION:
General partners $ (325) $ (2,630) $ (7,020)
Limited partners (18,408) (149,205) (398,152)
LIMITED PARTNERSHIP DATA:
Net loss per unit $ (1.36) $ (11.03) $ (29.43)
=========== =========== ===========
Weighted average limited partnership units outstanding 13,529 13,529 13,529
=========== =========== ===========
</TABLE>
See notes to financial statements.
-22-
<PAGE>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY IN ASSETS)
YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
- -----------------------------------------------------------------------
Limited General
Partners Partners Total
BALANCE (DEFICIENCY IN ASSETS),
DECEMBER 1, 1993 $ (635,946) $(282,511) $ (918,457)
Net loss (398,152) (7,020) (405,172)
----------- --------- -----------
BALANCE (DEFICIENCY IN ASSETS),
NOVEMBER 30, 1994 (1,034,098) (289,531) (1,323,629)
Net loss (149,205) (2,630) (151,835)
----------- --------- -----------
BALANCE (DEFICIENCY IN ASSETS)
NOVEMBER 30, 1995 (1,183,303) (292,161) (1,475,464)
Net loss (18,408) (325) (18,733)
----------- --------- -----------
BALANCE (DEFICIENCY IN ASSETS)
NOVEMBER 30, 1996 $(1,201,711) $(292,486) $(1,494,197)
=========== ========= ===========
See notes to financial statements.
-23-
<PAGE>
<TABLE>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
- ------------------------------------------------------------------------------------------------
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (18,733) $ (151,835) $ (405,172)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation 436,460 618,306 717,339
Amortization of deferred expenses 60,855 30,829 47,124
Changes in accounts affecting operations:
Accounts receivable (12,988) (63,625) (13,749)
Due from Nooney Krombach Company 10,298
Prepaid expenses and deposits 12,460 (33,490) (3,265)
Deferred expenses (44,006) (19,234) (92,975)
Accounts payable and accrued expenses 12,316 (224,565) 11,671
Refundable tenant deposits (5,703) 1,977 8,932
----------- ----------- ----------
Net cash provided by operating activities 440,661 158,363 280,203
CASH FLOWS FROM INVESTING ACTIVITIES -
Net additions to investment property (405,408) (153,607) (137,114)
CASH FLOWS FROM FINANCING ACTIVITIES -
Payments on mortgage notes payable (99,236) (92,582) (129,198)
----------- ----------- ----------
NET (DECREASE) INCREASE IN CASH (63,983) (87,826) 13,891
CASH, BEGINNING OF YEAR 275,823 363,649 349,758
----------- ----------- ----------
CASH, END OF YEAR $ 211,840 $ 275,823 $ 363,649
=========== =========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION - Cash paid during the year for
interest $ 1,087,879 $ 1,166,752 $1,197,055
=========== =========== ==========
</TABLE>
See notes to financial statements.
-24-
<PAGE>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
- --------------------------------------------------------------------------------
1. BUSINESS
Nooney Real Property Investors-Four, L.P. (the "Partnership") is a limited
partnership organized under the laws of the State of Missouri on February
9, 1982. The Partnership was organized to invest primarily in
income-producing real properties such as shopping centers, office
buildings and other commercial properties, apartment buildings, warehouses
and light industrial properties. The Partnership's portfolio is comprised
of an apartment building located in West St. Louis County, Missouri which
generated 68% of rental and other income for the year ended November 30,
1996; and a retail shopping center located in Burnsville, Minnesota, a
suburb of Minneapolis, which generated the remaining 32% of rental and
other income for the year ended November 30, 1996.
The accompanying financial statements for the Partnership have been
presented on the basis that the Partnership will continue as a going
concern, allowing for the realization of assets and the satisfaction of
liabilities in the normal course of business. The uncertainty referred to
in the following paragraph raises substantial doubt as to the
Partnership's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the
outcome of such uncertainty.
First mortgage debt on Cobblestone Court Shopping Center of $2,603,049 and
the second mortgages on both properties of $1,438,039 and $211,435 mature
May 1, 1997. The Partnership's management is presently attempting to sell
Cobblestone Court Shopping Center, but is unable to predict when such a
sale will occur or if such a sale will be finalized. If the Partnership is
successful in selling the property, it expects to be in a position to
fully payoff the first and second mortgage on the property. If the
Partnership is unsuccessful in selling the property, it intends to
negotiate with the mortgage lender to renew and restructure the debt or
pursue refinancing with another lender. Until a sale occurs, or the
mortgage lender decides to foreclose, the Partnership will continue to
operate the property.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements include only those assets, liabilities and
results of operations of the partners which relate to the business of the
Partnership. The statements do not include any 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 personal responsibility of the partners.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The corporate general partner is a 75%-owned subsidiary of Nooney Company.
One of the individual general partners is an officer, director and
shareholder of Nooney Company. The other individual general partners'
spouse is a shareholder of Nooney Company. Nooney Krombach Company, a
wholly-owned subsidiary of Nooney Company, manages the Partnership's real
estate for a management fee. Property management fees paid to Nooney
Krombach Company were $185,981, $181,734 and $176,283
-25-
<PAGE>
for the years ended November 30, 1996, 1995 and 1994, respectively.
Additionally, the Partnership pays Nooney Krombach Company $40,000
annually as reimbursement for management services and indirect expenses in
connection with the management of the Partnership.
Investment property is recorded at the lower of cost or net realizable
value. Impairment is determined if the sum of the expected future cash
flows (undiscounted and without interest charges) is less than the
carrying amount of the property. Investment property that is currently
held for sale is recorded at the lower of its net book value or net
realizable value.
Apartment buildings are depreciated over their estimated useful lives
using the 125% declining balance method. All other buildings are
depreciated over their estimated useful lives using the straight-line
method.
Deferred expenses consist primarily of lease fees and financing costs and
are amortized over the terms of their respective leases or notes.
Lease agreements are accounted for as operating leases and rentals from
such leases are reported as revenues ratably over the terms of the leases.
Certain agreements provide for rent concessions. At November 30, 1996,
accounts receivable include approximately $1,500 ($3,600 in 1995) of
accrued rent concessions which is not yet due under the terms of the
various lease agreements.
Included in rental and other income are amounts received from tenants
under provisions of lease agreements which require the tenants to pay
additional rent equal to specified portions of certain expenses such as
real estate taxes, insurance, utilities and common area maintenance. The
income is recorded in the same period that the related expense is
incurred.
Pursuant to the terms of the Partnership Agreement, losses from operations
and cash distributions are allocated l% to the individual general partners
and the remainder pro rata to all general and limited partners based upon
the relationship of original capital contributions.
Limited partnership per unit computations are based on the weighted
average number of limited partnership units outstanding during the year.
-26-
<PAGE>
3. MORTGAGE NOTES PAYABLE
<TABLE>
<CAPTION>
Mortgage notes payable as of November 30, 1996 and 1995 and the related
collateral book values consist of the following:
1996 1995
<S> <C> <C>
Cobblestone Court Shopping Center
(Book value of $3,480,000 at November 30, 1996)
8.5%, due in monthly installments of $26,921, including interest,
to September 30, 1996 (when the note matured) when monthly
interest only payments of $18,438 until the note is refinanced
(refinanced on December 30, 1996 to mature on May 1, 1997) $ 2,603,049 $ 2,692,277
Note payable to bank, interest only due monthly at bank's prime
rate (8.25% at November 30, 1996) plus 1% to December 31, 1996
(refinanced on December 26, 1996 to adjust interest to LIBOR
plus 2.75%, payable monthly, and extend the maturity to May 1,
1997) when entire principal balance is due 1,438,039 1,438,039
Woodhollow Apartments
(Book value of $7,198,000 at November 30, 1996)
9.125%, due in monthly interest payments of $62,939 only until
August 1997 when monthly payments increase to $70,170,
consisting of both principal and interest, until August 2001
when remaining principal balance of $7,859,989 is due 8,276,961 8,276,961
Note payable to bank related to above properties, monthly principaL
payments of $834 plus interest at 1% over the bank's prime rate
(8.25% at November 30, 1996) to December 31, 1996 (refinanced
on December 26, 1996 to increase monthly principal payments to
$1,000 and extend the maturity to May 1, 1997) when entire
principal balance is due 211,435 221,443
----------- -----------
Total debt of above properties (total book value of
$10,678,000 at November 30, 1996) $12,529,484 $12,628,720
=========== ===========
</TABLE>
In December 1996, the 8.5% mortgage note payable was refinanced with the
lender of the other three notes. The note requires monthly interest only
payments at LIBOR plus 2.75% commencing February 1, 1997 to May 1, 1997
when the entire principal balance is due. The note also requires the
payment of a $100,000 loan purchase fee payable upon the sale of the
collateralized property. This fee has not been recorded as of November 30,
1996. In connection with the refinancing, the partnership is required to
establish a capital reserve account. Under the terms of the note, the
partnership is required to deposit on a monthly basis all excess cash flow
from the property as defined in the note. All withdrawals must be approved
by the lender.
In July 1994, the 9.125% mortgage note payable was refinanced with the
same lender. In connection with the refinancing, the partnership was
required to establish a capital reserve escrow account to fund certain
deferred maintenance including new siding, parking lot repairs and entry
way renovations outlined in the escrow agreement. Under the terms of the
agreement, the partnership is required to deposit on a monthly basis all
net operating income as defined in the escrow agreement. Withdrawals may
be made on a monthly basis only to fund the aforementioned repairs. Upon
completion of the repairs, any funds remaining in the escrow account will
be returned to the partnership. As of November 30, 1996 and 1995, $172,378
and $152,236, respectively, was being held in the escrow account.
-27-
<PAGE>
The mortgage notes are collateralized by deeds of trust and assignments of
rents on all investment properties. Principal payments required during the
next five years are as follows:
1997 $4,281,598
1998 92,703
1999 101,525
2000 111,887
2001 7,942,471
In accordance with Statement of Financial Accounting Standards No. 107,
Disclosures About Fair Value of Financial Instruments, the estimated fair
value of mortgage notes payable with maturities greater than one year is
determined based on rates currently available to the Partnership for
mortgage notes with similar terms and remaining maturities. The estimated
fair value of mortgage notes payable with maturities of less than one year
are valued at their carrying amounts included in the balance sheet, which
are reasonable estimates of fair value due to the relatively short period
to maturity of the instruments. The carrying amount and estimated fair
value of the Partnership's debt at November 30, 1996 and 1995 are
summarized as follows:
1996 1995
------------------------ ------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
Mortgage notes payable $12,529,484 $12,608,000 $12,628,720 $13,030,000
Fair value estimates are made at a specific point in time, are subjective
in nature and involve uncertainties and matters of significant judgment.
Settlement of the Partnership's debt obligations at fair value may not be
possible and may not be a prudent management decision. The potential loss
on extinguishment at November 30, 1996 does not take into consideration
expenses that would be incurred to settle the debt obligations at fair
value.
4. RENTAL REVENUES UNDER OPERATING LEASES
Minimum future rental revenues under noncancelable operating leases on
properties other than apartment buildings in effect as of November 30,
1996 are as follows:
1997 $512,000
1998 366,000
1999 283,000
2000 225,000
2001 46,000
----------
Total $1,432,000
==========
In addition, certain lease agreements require tenant participation in
certain operating expenses and additional contingent rentals based upon
percentages of tenant sales in excess of minimum amounts. Tenant
participation in expenses included in revenues approximated $416,000,
$454,000 and $452,000 for the years ended November 30, 1996, 1995 and
1994, respectively. Contingent rentals were not significant for the years
ended November 30, 1996, 1995 and 1994.
-28-
<PAGE>
5. FEDERAL INCOME TAX STATUS
The general partners believe, based upon opinion of legal counsel, that
Nooney Real Property Investors-Four, L.P. is considered a partnership for
income tax purposes.
Selling commissions and offering expenses incurred in connection with the
sale of limited partnership units are not deductible for income tax
purposes and therefore increase the partners' bases. Investment properties
are depreciated for income tax purposes using rates which differ from
rates used for computing depreciation for financial statement reporting.
Rents received in advance are includable in taxable income in the year
received. Rent concessions, recognized ratably over lease terms for
financial statement purposes, are includable in taxable income in the year
rents are received. Insurance premiums are deductible for tax purposes in
the year paid. Losses in connection with the writedown of investment
property are not recognized for income tax purposes until the property is
disposed.
The comparison of financial statement and income tax reporting is as
follows:
Financial Income
Statement Tax
1996:
Net loss $ (18,733) $ (631,020)
Partners' deficiency in assets (1,494,197) (6,195,675)
1995:
Net loss $ (151,835) $ (603,701)
Partners' deficiency in assets (1,475,464) (5,564,655)
1994:
Net loss $ (405,172) $ (737,206)
Partners' deficiency in assets (1,323,629) (4,960,954)
* * * * * *
-29-
<PAGE>
<TABLE>
================================================================================
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
================================================================================
(A LIMITED PARTNERSHIP)
SCHEDULE - RECONCILIATION OF PARTNERS' EQUITY (DEFICIENCY IN ASSETS)
YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
- -----------------------------------------------------------------------------------------------------------------
The reconciliation of partners' equity (deficiency in assets) between financial
statements and income tax reporting is as follows:
<CAPTION>
1996
--------------------------------------
Limited General
Partners Partners Total
<S> <C> <C> <C>
Balance (deficiency) per statement of partners' equity $(1,201,711) $ (292,486) $(1,494,197)
Add:
Selling commissions and other offering costs not deductible for income
tax purposes 1,732,907 1,732,907
Prepaid rents included in income for income tax purposes 9,911 174 10,085
Writedown of investment property not recognized for income tax purposes 1,045,565 18,435 1,064,000
----------- ----------- -----------
1,586,672 (273,877) 1,312,795
Less:
Excess depreciation deducted for income tax purposes 7,289,299 199,285 7,488,584
Rent concessions not recognized for income tax purposes 1,508 27 1,535
Insurance premiums deducted for income tax purposes 18,034 317 18,351
----------- ----------- -----------
Balance (deficiency) per tax return $ 5,722,169 $ 473,506 $ 6,195,675
=========== =========== ===========
<CAPTION>
1995
--------------------------------------
Limited General
Partners Partners Total
<S> <C> <C> <C>
Balance (deficiency) per statement of partners' equity $(1,183,303) $ (292,161) $(1,475,464)
Add:
Selling commissions and other offering costs not deductible for income
tax purposes 1,732,907 1,732,907
Prepaid rents included in income for income tax purposes 11,068 195 11,263
Writedown of investment property not recognized for income tax purposes 1,045,565 18,435 1,064,000
----------- ----------- -----------
1,606,237 (273,531) 1,332,706
Less:
Excess depreciation deducted for income tax purposes 6,678,466 188,532 6,866,998
Rent concessions not recognized for income tax purposes 3,523 62 3,585
Insurance premiums deducted for income tax purposes 26,314 464 26,778
----------- ----------- -----------
Balance (deficiency) per tax return $ 5,102,066 $ 462,589 $ 5,564,655
=========== =========== ===========
<CAPTION>
1994
--------------------------------------
Limited General
Partners Partners Total
<S> <C> <C> <C>
Balance (deficiency) per statement of partners' equity $(1,034,098) $ (289,531) $(1,323,629)
Add:
Selling commissions and other offering costs not deductible for income
tax purposes 1,732,907 1,732,907
Prepaid rents included in income for income tax purposes 23,418 413 23,831
Writedown of investment property not recognized for income tax purposes 1,045,565 18,435 1,064,000
----------- ----------- -----------
1,767,792 (270,683) 1,497,109
Less:
Excess depreciation deducted for income tax purposes 6,259,236 181,139 6,440,375
Rent concessions not recognized for income tax purposes 4,186 74 4,260
Insurance premiums deducted for income tax purposes 13,195 233 13,428
----------- ----------- -----------
Balance (deficiency) per tax return $(4,508,825) $ (452,129) $(4,960,954)
=========== =========== ===========
</TABLE>
-30-
<PAGE>
<TABLE>
=======================================================================
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
=======================================================================
(A LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
NOVEMBER 30, 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Gross Amount at Which
Initial Cost to Partnership Costs Carried at Close of Period
--------------------------------- Capitalized ----------------------------------
Buildings and Subsequent to Buildings and
Description Encumbrances Land Improvements Total Acquisition Land Improvements Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cobblestone Court Shopping
Center, Burnsville, Minnesota $ 4,041,088 $1,205,378 $ 4,676,940 $ 5,882,318 $ 340,985(1) $1,205,378 $ 5,017,925 $ 6,223,303(2)
Woodhollow Apartments,
St. Louis, Missouri 8,276,961 1,013,858 11,651,289 12,665,147 1,667,848(1) 1,013,858 13,319,137 14,332,995
Both properties 211,435 -- -- -- -- -- -- --
----------- ---------- ----------- ----------- ---------- ---------- ----------- -----------
Total $12,529,484 $2,219,236 $16,328,229 $18,547,465 $2,008,833 $2,219,236 $18,337,062 $20,556,298
=========== ========== =========== =========== ========== ========== =========== ===========
<CAPTION>
Column F Column G Column H Column I
-------- -------- -------- --------
Life on
which Depreciation
Accumulated Date of Date in Latest Income
Depreciation Construction Acquired Statement is Computed
<S> <C> <C> <C> <C>
Cobblestone Court Shopping
Center, Burnsville, Minnesota $2,743,416 (2) 1980 2/16/82 30 years
Woodhollow Apartments, St. Louis,
Missouri 7,134,674 1971-1972 7/28/82 30 years
----------
Total $9,878,090
==========
</TABLE>
(1) Amount is net of the following building writedowns to reflect the minimum
recoverable value to the Partnership:
Cobblestone Court $489,000
Woodhollow Apartments 575,000
(2) Amount is shown net in the financial statements $(3,479,887).
(Continued)
-31-
<PAGE>
<TABLE>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
(A) Reconciliation of amounts in Column E:
Balance at beginning of period $ 20,150,890 $ 20,036,471 $ 19,902,357
Add - Cost of improvements 408,706 153,607 137,114
Less - Cost of disposals (3,298) (39,188) (3,000)
------------ ------------ ------------
Balance at end of period $ 20,556,298 $ 20,150,890 $ 20,036,471
============ ============ ============
(B) Reconciliation of amounts in Column F:
Balance at beginning of period $ 9,444,928 $ 8,865,810 $ 8,151,471
Add - Provision during the period 436,460 618,306 717,339
Less - Depreciation on disposals (3,298) (39,188) (3,000)
------------ ------------ ------------
Balance at end of period $ 9,878,090 $ 9,444,928 $ 8,865,810
============ ============ ============
(C) The aggregate cost of real estate owned for
federal income tax purposes $ 21,620,298 $ 21,214,890 $ 21,100,471
============ ============ ============
</TABLE>
(Concluded)
-32-
