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, 1998
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OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________________To________________________
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.)
500 N. Broadway, Suite 1200, St. Louis, Missouri 63102-2124
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 206-4600
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- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date ________.
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<PAGE>
PART I
ITEM 1 - FINANCIAL STATEMENTS:
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NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
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(A LIMITED PARTNERSHIP)
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BALANCE SHEETS
--------------
August 31, November 30,
1998 1997
(Unaudited)
------------ ------------
ASSETS:
Cash $ 241,373 $ 327,910
Accounts receivable 129,452 111,353
Prepaid expenses and deposits 73,074 27,772
Investment property, at cost:
Land 1,013,858 1,013,858
Buildings and improvements 14,067,445 13,841,059
------------ ------------
15,081,303 14,854,917
Less accumulated depreciation 7,966,408 7,598,733
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7,114,895 7,256,184
Investment property held for sale 3,853,428 3,854,057
Deferred expenses - At amortized cost 40,050 50,804
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$ 11,452,272 $ 11,628,080
============ ============
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Accounts payable and accrued expenses $ 120,054 $ 108,665
Accrued real estate taxes 280,305 255,680
Mortgage notes payable 12,793,761 12,871,393
Refundable tenant deposits 81,149 80,287
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13,275,269 13,316,025
Partners' Deficit (1,822,997) (1,687,945)
------------ ------------
$ 11,452,272 $ 11,628,080
============ ============
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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<PAGE>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
-----------------------------------------
(A LIMITED PARTNERSHIP)
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STATEMENTS OF OPERATIONS AND PARTNERS' DEFICIT
----------------------------------------------
(UNAUDITED)
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<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
August 31, August 31, August 31, August 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
----------- ----------- ----------- -----------
REVENUES:
Rental and other income $ 841,024 $ 848,266 $ 2,518,372 $ 2,544,620
Interest 1,489 770 2,660 1,207
----------- ----------- ----------- -----------
842,513 849,036 2,521,032 2,545,827
EXPENSES:
Interest 287,796 287,076 863,320 847,642
Depreciation and amortization 127,192 120,090 379,059 354,763
Real estate taxes 113,773 125,016 329,481 343,840
Property management fees paid to
Nooney Inc. 44,350 44,831 133,410 135,097
Reimbursement to Nooney Inc.
for partnership management
services and indirect expenses 10,000 10,000 30,000 30,000
Repairs & Maintenance expenses 60,764 53,934 154,472 141,300
Payroll expenses 79,154 63,305 221,030 187,442
Insurance expenses 22,373 26,292 72,652 79,077
Cleaning expenses 19,732 23,466 62,608 61,933
Utility expenses 40,469 42,193 112,476 115,003
Professional fee expenses 37,219 15,224 85,939 96,088
Corporate unit expenses 16,131 17,972 38,949 36,289
Renovation expenses 6,344 18,427 6,344 29,462
Other operating expenses 41,031 51,166 166,344 219,227
----------- ----------- ----------- -----------
906,328 898,992 2,656,084 2,677,163
----------- ----------- ----------- -----------
NET LOSS $ (63,815) $ (49,956) $ (135,052) $ (131,336)
=========== =========== =========== ===========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (4.64) $ (3.63) $ (9.81) $ (9.54)
=========== =========== =========== ===========
PARTNERS' DEFICIT:
Beginning of Period $(1,759,182) $(1,575,577) $(1,687,945) $(1,494,197)
Net Loss (63,815) (49,956) (135,052) (131,336)
----------- ----------- ----------- -----------
End of Period $(1,822,997) $(1,625,533) $(1,822,997) $(1,625,533)
=========== =========== =========== ===========
</TABLE>
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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<PAGE>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
-----------------------------------------
(A LIMITED PARTNERSHIP)
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STATEMENTS OF CASH FLOWS
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(UNAUDITED)
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Nine Months Ended
August 31, August 31,
1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(135,052) $(131,336)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 379,059 354,763
Changes in assets and liabilities:
(Increase)Decrease in accounts receivable (18,099) 65,015
(Increase)Decrease in prepaid expenses and
deposits (45,302) 34,303
Increase in deferred expenses 0 (5,300)
Increase in current liabilities 36,876 141,917
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Total Adjustments 352,534 590,698
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Net cash provided by operating activities 217,482 459,362
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to investment property (166,700) (459,034)
Additions using Capital Reserve Escrow (59,687) (201,697)
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Net cash used in investing activities (226,387) (660,731)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on mortgage notes payable (77,632) (8,833)
Funding on mortgage notes payable 0 376,216
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Net cash from financing activities (77,632) 367,383
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NET (DECREASE) INCREASE IN CASH (86,537) 166,014
CASH, Beginning of period 327,910 211,840
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CASH, End of period $ 241,373 $ 377,854
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
INFORMATION - Cash paid during the period for interest $ 863,320 $ 895,335
========= =========
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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<PAGE>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
-----------------------------------------
(A LIMITED PARTNERSHIP)
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NOTES TO UNAUDITED FINANCIAL STATEMENTS
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THREE AND NINE MONTHS ENDED AUGUST 31, 1998 AND 1997
----------------------------------------------------
NOTE A:
Refer to the Registrant's financial statements for the year ended November 30,
1997, which are contained in the Registrant's Annual Report on Form 10-K, for a
description of the accounting policies which have been continued without change.
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, 1998 and for all periods presented have been
made. The results for the three-month and nine-month period ended August 31,
1998 are not necessarily indicative of the results which may be expected for the
entire year.
NOTE C:
The Registrant's properties are managed by Nooney, Inc., a wholly-owned
subsidiary of CGS Real Estate Company. Nooney Capital Corp., a general partner,
is a 75% owned subsidiary of S-P Properties, Inc. S-P Properties, Inc is a
wholly-owned subsidiary of CGS Real Estate Company.
NOTE D:
The loss per limited partnership unit for the three and nine months ended August
31, 1998 and August 31, 1997 was computed based on 13,529 units, the number of
units outstanding during the periods.
NOTE E:
Effective December 1, 1997, the Registrant adopted Statement of Financial
Accounting Standards No. 130 "Reporting Comprehensive Income," which established
standards for the reporting and display of comprehensive income and its
components. The adoption of this statement did not affect the Registrant's
consolidated financial statements for the three and nine month periods ended
August 31, 1998 and 1997.
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<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
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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, 1998 is $241,373, a decrease of $86,537 from year
ended November 30, 1997. The decrease in cash balances can partially be
attributable to timing of payments for insurance premiums for both Woodhollow
Apartments and Cobblestone Court Shopping Center. In 1998, these premiums were
paid in one lump sum, instead of monthly installments as in prior year. Cash
produced from operating activity for the nine months ended August 31, 1998 was
$217,482. Capital additions were made in the amount of $226,387 and payments on
mortgage notes in the amount of $77,632 for this nine month period were made.
The first installment of the 1998 real estate taxes for Cobblestone Court remain
unpaid from second quarter as there was not sufficient cash in the real estate
tax escrow. The Registrant is releasing payment during the fourth quarter, as it
has now funded the tax escrow enough to pay the delinquent tax installment and
any accrued penalties. The Registrant plans to maintain adequate cash reserves
for real estate taxes and fund remaining capital expenditures from operations at
Woodhollow Apartments. Capital expenditures by property anticipated for the
fourth quarter of 1998 are as follows:
Leasing Operating Other
Capital Capital Capital Total
------- --------- ------- -----
Cobblestone Court -0- -0- -0- -0-
Woodhollow Apartments -0- $ -0- $29,679 $29,679
------- ------- ------- -------
-0- $ -0- $29,679 $29,679
======= ======= ======= =======
During the last quarter of 1998 the Registrant anticipates spending $29,679 on
fencing, air conditioning units and hallway upgrading. Due to the pending sale,
capital expenditures for Cobblestone Court have not been projected.
As discussed in previous reports, Cobblestone Court is listed with a local
Minneapolis broker to lease the property by locating one or two new anchors for
the east end of the shopping center. After new tenants are found, the goal is to
sell the property.
The holder of the first and second mortgage debt on Cobblestone Court and the
second mortgages that are cross-collateralized with both Cobblestone Court and
Woodhollow Apartments extended these loans through October 31, 1998. The August
31, 1998 balance of the second mortgage on Cobblestone Court is $1,689,571 and
the second mortgage on Woodhollow Apartments is $315,284. The interest rate on
the first mortgage for Cobblestone was 8.53125% at August 31, 1998. The interest
rate for one portion of the cross collateralized second mortgages is LIBOR plus
2.75% and as of August 31, 1998 was 8.56641%, while the other portion was 9.5%.
The interest rate on Cobblestone's second mortgage was 8.52344%. Woodhollow
Apartments has a first mortgage due August 1, 2001 with an interest rate of
9.125%. The Registrant is currently negotiating a new debt agreement with a
different financial institution that is anticipated to be executed by year end
that will consolidate all Registrant's debt into one agreement.
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<PAGE>
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 are 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, 1998 and 1997 are detailed in the schedule below. Revenues and
expenses of the Registrant are excluded.
Woodhollow Cobblestone
Apartments Court
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1998
----
Revenues $ 607,235 $ 233,141
Expenses 627,330 278,938
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Net Loss $ (20,095) $ (45,797)
========= =========
1997
----
Revenues $ 606,905 $ 241,433
Expenses 628,365 270,566
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Net (Loss) Income $ (21,460) $ (29,133)
========= =========
At Woodhollow Apartments, the operating results for the third quarter ended
August 31, 1998, remained consistent when compared to the third quarter ended
August 31, 1997. Even though expenses remained stable, the following
fluctuations should be noted. There were increases in payroll expense of
($16,282), primarily due to additional maintenance hours, and professional
services ($9,183). These increases were offset by decreases in cleaning expense
($4,099), renovation expenses ($12,083), insurance expense ($2,657), and
swimming pool expense ($7,028).
At Cobblestone Court, the net loss for the third quarters ended August 31, 1998
and 1997 was ($45,797) and ($29,133), respectively. The increase in the net loss
is attributable to decreases in revenue and an increase in expenses. Revenues
decreased $8,292 when comparing the third quarter of 1998 to the third quarter
of 1997. The decrease in revenues is attributable to a decrease in occupancy.
Expenses increased $8,372 for the third quarter of 1998 as compared to the third
quarter of 1997. The increase in expenses is primarily attributable to an
increase in professional fees-other ($16,352) due to the payment of a new
property appraisal and architectural fees. This increase was partially offset by
a decrease in real estate tax expense ($7,056).
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, 1998, 1997 and 1996 are as follows:
Occupancy levels as of August 31,
Property 1998 1997 1996
-------- ---- ---- ----
Cobblestone Court Shopping Center 63% 69% 84%
Woodhollow Apartments 93% 96% 98%
At Cobblestone Court the Registrant renewed one tenant occupying 4,304 square
feet and one tenant vacated its space who occupied 584. The property has one
major tenant that occupies approximately 26% of the center with a lease that
expires in December 2000.
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<PAGE>
At Woodhollow Apartments the occupancy decreased 3% when comparing August 31,
1998 to August 31, 1997. The Registrant anticipates the property will continue
to operate with a high occupancy rate for the balance of 1998.
Year 2000 Issues
- ----------------
The Registrant believes that the impact of the year 2000 will not cause the
Registrant to incur a future expense that will have a material impact on future
results. The management company employed by the Registrant utilizes various
computer software packages as tools in running its accounting operations. The
Registrant's properties financial information is maintained on software provided
by a third party. The management company has received information from that
company indicating that the main software program has all its core products
already compatible with 2000 dates and that those have been proven in the field
for over five years. A few of the add on products that are not critical to the
management company's business are in the process of being updated and the third
party vendor anticipates compliance by the end of 1998.
1998 Comparisons
- ----------------
As of August 31, 1998, the Registrant's consolidated revenues for the quarter
ended are $842,513 and for the nine month period ended August 31, 1998,
consolidated revenues are $2,521,032. Revenues for the corresponding periods in
1997 were $849,036 and $2,545,827. Revenues decreased $6,523 for the quarter
ended August 31, 1998 and decreased $24,795 for the nine month period ended
August 31, 1998 when compared to the corresponding periods of the prior year.
The sligt decrease in revenues can be primarily attributable to the decrease in
occupancy at Cobblestone Court Shopping Center.
Consolidated expenses for the quarter ended August 31, 1998 and August 31, 1997
were $906,328 and $898,992, respectively, indicating an increase of $7,336 for
the third quarter 1998 when compared to that of prior period. For the quarter,
expenses increased in depreciation ($7,102), repairs & maintenance expenses
($6,830), payroll expenses ($15,849), and professional fees ($21,995). These
increases were partially offset by decreases in real estate tax ($11,243),
insurance expense ($3,919), cleaning expense ($3,734), utilities ($1,764),
corporate unit expenses ($1,841), renovation expenses ($12,083), and other
operating expenses ($10,135). The substantial increases and decreases in
payroll, professional fees, and renovation expenses are due to the reasons as
mentioned in the property comparisons.
Consolidated expenses for the nine month period ended August 31, 1998 and August
31, 1997 were $2,656,084 and $2,677,163, respectively, indicating a decrease of
$21,079 when compared to prior year. For the nine month period, expenses
decreased in insurance ($6,425), real estate tax ($14,359), cleaning expense
($2,527), utilities ($10,149), renovation expense ($23,118), and other operating
expenses ($52,883). These decreases were partially offset by increases in
interest expense ($15,678), depreciation ($24,296), repairs and maintenance
($13,172), and payroll ($33,588). The other operating expense decrease
represents decreases in parking lot expenses ($6,648), snow removal ($36,993),
and trash removal ($7,632). The increase in payroll expense can be attributed to
additional personnel.
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<PAGE>
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 increased $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 period. 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.
Inflation
- ---------
The effects of inflation did not have a material impact upon the Registrant's
operation in fiscal 1997 and are not expected to materially affect the
Registrant's operations in 1998.
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<PAGE>
PART II. OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits
See Exhibit Index
(b) Reports on Form 8-K
None
SIGNATURES
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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, 1998 NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
----------------------
BY: NOONEY CAPITAL CORPORATION
General Partner
By: /s/ Gregory J. Nooney, Jr.
--------------------------
Gregory J. Nooney, Jr.
Chairman
/s/ Patricia A. Nooney
----------------------
Patricia A. Nooney
Senior Vice President and Secretary
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<PAGE>
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
3.1 Amended and Restated Agreement and Certificate of
Limited Partnership dated 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-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> AUG-31-1998
<CASH> 241,373
<SECURITIES> 0
<RECEIVABLES> 129,452
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 443,899
<PP&E> 14,067,445
<DEPRECIATION> 7,966,408
<TOTAL-ASSETS> 11,452,272
<CURRENT-LIABILITIES> 400,359
<BONDS> 12,793,761
<COMMON> 0
0
0
<OTHER-SE> (1,822,997)
<TOTAL-LIABILITY-AND-EQUITY> 11,452,272
<SALES> 2,518,372
<TOTAL-REVENUES> 2,521,032
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,792,764
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 863,320
<INCOME-PRETAX> (135,052)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (135,052)
<EPS-PRIMARY> (9.81)
<EPS-DILUTED> 0
</TABLE>
