SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 1997
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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.)
500 North Broadway, St. Louis, Missouri 63102
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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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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 ___.
Page 1 of 32 Pages
Exhibit Index located on Page 18
<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, 1998, 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, 1998 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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<PAGE>
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 and has continued
this improvement through 1997 and is expected to further continue improving 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 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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<PAGE>
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, Inc. 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 69%
leased by 14 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 92% 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, 1997,
relating to the properties owned by the Registrant.
<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 97,718 $ 549,000 $8.13 69% T.J. Maxx (23%) 2001
Old Country Buffet (16%) 2000
Woodhollow 402 Units $2,174,220 $5,409/unit 92% None
</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 1997.
PART II
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
As of February 1, 1998, there were 1,250 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 1996
or fiscal 1997.
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<PAGE>
ITEM 6: SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended November 30,
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1997 1996 1995 1994 1993
(Not covered by independent auditors' report)
<S> <C> <C> <C> <C> <C>
Rental and other income $ 3,406,566 $ 3,505,163 $ 3,391,439 $ 3,281,516 $ 3,345,802
Net loss
(193,748) (18,733) (151,835) (405,172) (324,856)
Data per limited partnership unit - net loss
(14.07) (1.36) (11.03) (29.43) (23.60)
Weighted average limited partnership units
outstanding 13,529 13,529 13,529 13,529 13,529
At year-end:
Total assets
11,628,080 11,211,633 11,322,989 11,789,994 12,303,761
Investment property - net
11,110,241 10,678,208 10,705,962 11,170,661 11,750,886
Mortgage notes payable
12,871,393 12,529,484 12,628,720 12,721,302 12,850,500
Partners' deficiency in assets
(1,687,945) (1,494,197) (1,475,464) (1,323,629) (918,457)
See Item 7: Management's Discussion and Analysis for discussion of comparability of items.
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</TABLE>
<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, 1997 are $327,910, an increase of $116,070 from
the year ended November 30, 1996. The increase in cash from year to year is due
to higher balances in the real estate tax escrow accounts. The real estate taxes
for Woodhollow are due in December of each year. In 1996 the taxes were paid
early due to resolution of a real estate tax appeal. Cobblestone's taxes are due
in May and October each year. Cobblestone did not have adequate funds in its
real estate tax escrow to pay the taxes due October 15, 1997, ($152,649). These
taxes remain delinquent to date and penalties and interest continue to accrue.
The real estate tax escrow account for Cobblestone had a balance of $105,227 as
of November 30, 1997. The anticipated capital expenditures during 1998 are:
Leasing Operating Other
Capital Capital Capital Total
------- ------- ------- -----
Woodhollow $ 0 $64,220 $44,369 $108,589
Cobblestone 0 0 0 0
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$ 0 $64,220 $44,369 $108,589
At Woodhollow, operating capital will be spent for carpet and vinyl replacement,
hot water heaters, refrigerators, and other appliances. In 1998, the Registrant
anticipates spending $270,000 from the capital reserve escrow for Phase III of
the renovation program. The other capital expenditures will be for new heating
and air conditioning units and new signage on the property. No capital
expenditures have been forecasted at Cobblestone as no new anchor has been
identified for the East end of the Mall at this time.
During 1994, the Registrant negotiated with the first mortgage lender on
Woodhollow an extension of the maturity of its note which matured August 1,
1994. Under the modification, the note 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 were interest only. Commencing September 1, 1997, the
Registrant pays principal based on a 15-year amortization schedule. The balance
of the loan as of November 30, 1997, was $8,255,105.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. Since the capital renovation program was begun, the costs to complete
the scope of work have increased due to faster deterioration of building
exteriors not yet completed. The program will also take four, not three years to
complete as funds can only be spent as they accumulate in the reserve account.
In 1996, Phase I of the capital renovation program was completed and $283,000 of
the capital reserve escrow was spent. In 1997, Phase II was completed and
$387,000 of the capital reserve escrow was spent.
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<PAGE>
In December 1996 the Registrant entered into a new first mortgage on Cobblestone
which called for interest only payments at a rate of LIBOR plus 2.75%. The note
was originally due in May 1997 and had been extended several times by the
lender. The note was due February 1, 1998. The balance of the loan as of
November 30, 1997, was $2,602,432. The holder of the second mortgage on
Cobblestone and a second mortgage on Woodhollow also extended these notes until
October 31, 1998. The note secured by Cobblestone is at an interest rate of
LIBOR plus 2.75% and requires interest only payments. At November 30, 1997, the
balance of the second mortgage on Cobblestone was $1,689,571. The note secured
by Woodhollow is at 1% over the bank's prime rate and also requires monthly
principal payments of $1,000 per month. The balance of the second mortgage on
Woodhollow was $199,601 at November 30, 1997. During 1997 the lender advanced
additional funds on the Cobblestone second mortgage note to pay for the
re-roofing of Cobblestone. This advance is secured by both properties and due
October 31, 1998. At the time the roofing commenced, the new advance was changed
to be at a rate of LIBOR plus 2.75%. The balance of this advance was $124,684.
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 at a price sufficient
to cover required obligations. As stated earlier, the Registrant is delinquent
in the payment of real estate taxes due October 1997 for Cobblestone. At this
time, the Registrant is unable to determine when it will have sufficient cash
available to bring the taxes current. The Registrant believes the real estate
taxes will not be paid until the center is sold and cash proceeds from the sale
are available to pay all real estate taxes and penalties due. The Registrant
will continue to manage the properties to achieve its investment objectives.
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<PAGE>
Results of Operations
The results of operations for the Registrant's properties for the year ended
November 30, 1997, 1996 and 1995 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
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1997
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Revenues $ 2,375,142 $ 1,036,061
Expenses 2,446,486 1,156,046
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Net (Loss) $ (70,344) $ (119,985)
================================
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
===============================
1997 Property Comparisons
Cobblestone revenue declined $89,482 from 1996 to 1997, due to a decrease in
base rental revenue ($41,148), real estate tax reimbursement ($30,589),
percentage rent income ($5,503), and an increase in bad debt expense ($30,745).
The revenues decreased due to the decrease in occupancy from 1997 to 1996.
Expenses at Cobblestone increased $105,752 when comparing 1997 to 1996. Expenses
increased primarily in the categories of cleaning ($19,175), snow removal
($19,028), real estate tax expense ($37,195), other professional services
($81,222), partially offset by a decrease in amortization expense ($55,269). The
Registrant continues to work with a local brokerage firm to find an anchor
tenant for the East end of the Mall. When the anchor tenant is located, the Mall
will be put on the market for sale with the new lease in place. During 1997 the
Registrant re-roofed the entire center to make it more saleable.
Operating results at Woodhollow were relatively steady. Revenue increased
slightly when comparing 1997 to 1996. Operating expenses increased $47,787 when
comparing the two years, mainly due to an increase in depreciation ($38,663) due
to the numerous capital additions as part of the renovation program.
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<PAGE>
The occupancy levels at the Registrant's properties as of November 30 were:
Occupancy rates at November 30
1997 1996 1995
-------------------------------
Woodhollow 92% 95% 93%
Cobblestone 69% 84% 92%
At Woodhollow, occupancy decreased during the fourth quarter of 1997 to 92%. The
Registrant believes that the overall occupancy of the apartments will rebound
once spring arrives and the demand for rental apartments improves.
Occupancy at Cobblestone decreased from 84% at the beginning of the year to 69%
at the end of the year. During the year, one tenant renewed its space for 7,984
square feet and two tenants vacated who occupied 14,773 square feet. No new
tenants were signed during the year. The main focus has been on finding a new
anchor tenant for the East end of the Mall which was not accomplished during
1997. The brokerage firm is working several prospects and anticipate identifying
a potential user during the first half of 1998. The center has one major tenant
who occupies approximately 26% of the available space under a lease which
expires in January 2001. A second major tenant occupies approximately 7-1/2% of
the available space under a lease which expires April 2000.
Year 2000 issues
The Registrant believes that the impact of the year 2000 will not be of a major
concern on any 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 are 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 these 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 process of being updated and the third party vendor
anticipates compliance by the end of 1998.
1997 Comparisons
For the year ended November 30, 1997, the Registrant's consolidated revenues are
$3,441,424 compared to $3,512,832 for the year ended November 30, 1996. This
decrease in revenues is $71,408 or 2% and can be attributable to the decrease in
revenues at Cobblestone due to the decrease in occupancy as previously
discussed.
The Registrant's consolidated expenses for the year ended November 30, 1997 and
1996 were $3,635,172 and $3,531,565 respectively. The increase in expenses is
$103,607 or 2.9% which can be mainly attributable to an increase in other
operating expenses ($128,120), partially offset by a decrease in repairs and
maintenance ($13,628) and a decrease in depreciation and amortization ($16,464).
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<PAGE>
The decrease in consolidated revenues combined with the increase in consolidated
expenses produced the Registrant's net loss of $193,748 for the year ended
November 30, 1997 versus net loss of $18,733 for the year ended November 30,
1996. The net loss per limited partnership unit dropped to $14.07 in 1997
compared to a loss of $1.36 in 1996. Cash flow provided by operating activities
was $672,300 in 1997 compared to $443,959 in 1996. The increase is mainly
attributable to the non-payment of real estate taxes on Cobblestone as discussed
previously. Operating cash flow along with the capital reserve escrow for
Woodhollow and additional borrowings of $376,216 enabled the Registrant to fund
capital expenditures of $898,139.
1996 Comparisons
For the year ended November 30, 1996, the Registrant's consolidated revenues
were $3,512,832 compared to $3,395,026 for the year-ended November 30, 1995.
This increase in revenues was $117,806 or 3.5%. The increase in revenues is
attributable to Woodhollow where increases were $207,438 versus a decrease in
revenue at Cobblestone of $104,603. Woodhollow's 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. Since the property has been held for sale during
all of 1996, no depreciation was taken. Other operating expenses increased
mainly at Woodhollow 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
Registrant's 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 $443,959 in 1996
compared to $158,363 in 1995. Operating cash flow, along with the capital
reserve escrows for Woodhollow enabled the Registrant to fund capital
expenditures of $408,706 and reduce the balances of notes payable by $99,236
during 1996.
Inflation
The effects of inflation did not have a material impact upon the Registrant's
operation in fiscal l997 and are not expected to materially affect the
Registrant's operation in l998.
Interest Rates
Interest rates on floating rate debt remained constant in 1996 and went down in
1997. Future increases in the prime interest rate can adversely affect the
operations of the Registrant.
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<PAGE>
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 67, 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.
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. and Patricia A. Nooney are directors of Nooney Capital
Corp.
Gregory J. Nooney, Jr. and John J. Nooney are brothers. Gregory J. Nooney, Jr.
and the estae of Faith L. Nooney (the deceased wife of John J. Nooney) are
stockholders of Nooney Company, with Gregory J. Nooney, Jr. controlling all
voting stock of Nooney Company.
PAN, Inc. became a General Partner during 1997 and is wholly-owned by Patricia
A. Nooney, the daughter of Gregory J. Nooney, Jr.
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<PAGE>
The General Partners will continue to serve as General Partners until their
withdrawal or their removal from office by the Limited Partners.
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.
On October 31, 1997, Nooney Company sold its wholly-owned subsidiary, Nooney
Capital Corp., the corporate general partner of the Partnership to S-P
Properties, Inc., a California corporation, which in turn is a wholly-owned
subsidiary of CGS Real Estate Company, Inc., a Texas corporation.
Simultaneously, Gregory J. Nooney, Jr., an individual general partner and PAN,
Inc., a corporate general partner, sold their economic interests to S-P
Properties, Inc. and resigned as general partners.
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 l997 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.
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<PAGE>
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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<PAGE>
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 the 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 administrative expenses. During fiscal 1997 the
Registrant paid property management fees of $166,624 to Nooney Krombach Company
and $36,667 as reimbursement for indirect expenses incurred in connection with
management of the Registrant. On October 31, 1997, CGS Real Estate Company
purchased the real estate management business of Nooney Krombach Company and
formed Nooney, Inc. to perform the management of the Registrant. The Registrant
paid Nooney, Inc. $14,296 in property management fees in 1997 and $3,333 as
reimbursement for indirect expenses incurred in connection with the management
of the Registrant.
See Item 11 above for a discussion of cash distributions paid to the General
Partners during fiscal l997.
(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 1997.
(c) Indebtedness of Management.
Not Applicable.
(d) Transactions with promoters.
Not Applicable.
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<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 (deficiency in
assets) 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 18.
(b) Reports on Form 8-K
On November 14, 1997, the Registrant filed a report on Form 8-K which
reported an Item 1, Changes in Control of Registrant.
(c) Exhibits:
See Exhibit Index on Page 18.
(d) Not Applicable
-16-
<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 27, 1998 /s/ Gregory J. Nooney, Jr.
----------------------------- --------------------------------
Gregory J. Nooney, Jr.
General Partner
PAN, Inc.
General Partner
Date: February 27, 1998 By: /s/ Patricia A. Nooney
----------------------------- --------------------------------
Patricia A. Nooney
President and Secretary
Nooney Capital Corp.
General Partner
Date: February 27, 1998 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
-17-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
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 Krombach Company, a wholly-owned subsidiary of
Nooney Company, on October 31, 1997, to Nooney, Inc. a wholly-owned
subsidiary of CGS Real Estate Company, Inc., and is identical in all
material respects to the management contract referred to above.
99.1 List of Directorships filed in response to Item 10. 19
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
-18-
</TABLE>
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.
PAN, Inc.
Limited Partnerships:
Nooney Real Property Investors-Two, L.P. Nooney Income Fund Ltd., L.P.
Nooney Income Fund Ltd.II, L.P.
-19-
<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> 12-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<CASH> 327,910
<SECURITIES> 0
<RECEIVABLES> 111,353
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 467,035
<PP&E> 14,854,917
<DEPRECIATION> 7,598,733
<TOTAL-ASSETS> 11,628,080
<CURRENT-LIABILITIES> 364,345
<BONDS> 12,871,393
<COMMON> 0
0
0
<OTHER-SE> (1,687,945)
<TOTAL-LIABILITY-AND-EQUITY> 11,628,080
<SALES> 3,406,566
<TOTAL-REVENUES> 3,412,192
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,469,712
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,136,228
<INCOME-PRETAX> (193,748)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (193,748)
<EPS-PRIMARY> (14.07)
<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, 1997 and 1996,
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, 1997. 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, 1997 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended November 30, 1997 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, the Partnership has
suffered recurring losses from operations and is trying to sell Cobblestone
Court Shopping Center at an adequate price to cover required obligations or
refinance the debt maturing in 1998 which raise substantial doubt about its
ability to continue as a going concern. 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 9, 1998
(January 31, 1998 as to Note 3)
St. Louis, Missouri
-20-
<PAGE>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
NOVEMBER 30, 1997 AND 1996
- --------------------------------------------------------------------------------
ASSETS 1997 1996
CASH - Includes restricted cash of $36,855
at November 30, 1997 and $172,378 at
November 30, 1996 (Note 3) $ 327,910 $ 211,840
ACCOUNTS RECEIVABLE - No allowance for
doubtful accounts considered necessary 111,353 199,357
PREPAID EXPENSES AND DEPOSITS 27,772 56,679
INVESTMENT PROPERTY (Note 3):
Land 1,013,858 1,013,858
Buildings and improvements 13,841,059 13,319,137
------------ ------------
14,854,917 14,332,995
Less accumulated depreciation (7,598,733) (7,134,674)
------------ ------------
7,256,184 7,198,321
Investment property held for sale 3,854,057 3,479,887
------------ ------------
Total investment property 11,110,241 10,678,208
DEFERRED EXPENSES - At amortized cost 50,804 65,549
------------ ------------
TOTAL $ 11,628,080 $ 11,211,633
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIENCY IN ASSETS)
LIABILITIES:
Accounts payable and accrued expenses $ 364,345 $ 86,951
Refundable tenant deposits 80,287 89,395
Mortgage notes payable (Note 3) 12,871,393 12,529,484
------------ ------------
Total liabilities 13,316,025 12,705,830
PARTNERS' EQUITY (DEFICIENCY IN ASSETS) (1,687,945) (1,494,197)
------------ ------------
TOTAL $ 11,628,080 $ 11,211,633
============ ============
See notes to financial statements.
-21-
<PAGE>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
YEARS ENDED NOVEMBER 30, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
1997 1996 1995
REVENUES:
Rental and other income (Note 4) $ 3,406,566 $ 3,505,163 $ 3,391,439
Interest 5,626 7,669 3,587
----------- ----------- -----------
Total revenues 3,412,192 3,512,832 3,395,026
----------- ----------- -----------
EXPENSES:
Interest 1,136,228 1,135,573 1,154,055
Depreciation and amortization 480,851 497,315 649,135
Real estate taxes 459,618 457,460 442,140
Payroll 264,786 256,960 262,816
Repairs and maintenance 270,225 267,239 257,091
Property management fees -
related party 180,921 185,981 181,734
Other operating expenses (includes
$40,000 in each year to related
party) 813,311 731,037 599,890
----------- ----------- -----------
Total expenses 3,605,940 3,531,565 3,546,861
----------- ----------- -----------
NET LOSS $ (193,748) $ (18,733) $ (151,835)
=========== =========== ===========
NET LOSS ALLOCATION:
General partners $ (3,357) $ (325) $ (2,630)
Limited partners (190,391) (18,408) (149,205)
LIMITED PARTNERSHIP DATA:
Net loss per unit $ (14.07) $ (1.36) $ (11.03)
=========== =========== ===========
Weighted average limited
partnership units outstanding 13,529 13,529 13,529
=========== =========== ===========
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, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
Limited General
Partners Partners Total
BALANCE (DEFICIENCY IN ASSETS),
DECEMBER 1, 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)
Net loss (190,391) (3,357) (193,748)
----------- ----------- -----------
BALANCE (DEFICIENCY IN ASSETS)
NOVEMBER 30, 1997 $(1,392,102) $ (295,843) $(1,687,945)
=========== =========== ===========
See notes to financial statements.
-23-
<PAGE>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED NOVEMBER 30, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
1997 1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (193,748) $ (18,733) $ (151,835)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation 466,106 436,460 618,306
Amortization of deferred expenses 14,745 60,855 30,829
Changes in accounts affecting
operations:
Accounts receivable 88,004 (12,988) (63,625)
Prepaid expenses and deposits 28,907 12,460 (33,490)
Deferred expenses -- (40,708) (19,234)
Accounts payable and accrued
expenses 277,394 12,316 (224,565)
Refundable tenant deposits (9,108) (5,703) 1,977
----------- ----------- -----------
Net cash provided by operating
activities 672,300 443,959 158,363
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES -
Net additions to investment property (898,139) (408,706) (153,607)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on mortgage notes payable (34,307) (99,236) (92,582)
Additional borrowings on mortgage
notes payable 376,216 -- --
----------- ----------- -----------
Net cash provided by (used in)
financing activities 341,909 (99,236) (92,582)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 116,070 (63,983) (87,826)
CASH, BEGINNING OF YEAR 211,840 275,823 363,649
----------- ----------- -----------
CASH, END OF YEAR $ 327,910 $ 211,840 $ 275,823
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION - Cash paid during the
year for interest $ 1,183,922 $ 1,087,879 $ 1,166,752
=========== =========== ===========
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, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------
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 69% of rental and other income for the year ended November 30,
1997; and a retail shopping center located in Burnsville, Minnesota, a
suburb of Minneapolis, which generated the remaining 31% of rental and
other income for the year ended November 30, 1997.
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.
All debt on Cobblestone Court Shopping Center of $4,292,003 and the second
mortgages on both properties of $324,285 mature February 1, 1998
(subsequently extended to October 31, 1998). 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. If the sale were to occur, the
Cobblestone Court second mortgage note payable requires the payment of a
$100,000 loan purchase fee which is contingent upon the sale of the
collateralized property. The fee would be paid out of the sale proceeds.
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'
-25-
<PAGE>
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 $166,624, $185,981 and $181,734 for the years ended
November 30, 1997, 1996 and 1995, respectively. Property management fees
paid to Nooney, Inc. in 1997 were $14,296. Additionally, the Partnership
paid Nooney Krombach Company $36,667 in 1997 and $40,000 in 1996 and 1995
as reimbursement for management services and indirect expenses in
connection with the management of the Partnership. The Partnership paid
Nooney, Inc. $3,333 in 1997 for these same reimbursement items.
On October 31, 1997, Nooney Company sold its 75% interest in Nooney Capital
Corp., the corporate general partner of the Registrant to S-P Properties,
Inc., a California corporation, which in turn is a wholly-owned subsidiary
of CGS Real Estate Company, Inc., a Texas corporation. Simultaneously,
Gregory J. Nooney, Jr., an individual general partner and PAN, Inc., a
corporate general partner, sold their economic interests to S-P Properties,
Inc. and resigned as general partners subject to a ninety day notification
to the limited partners. CGS Real Estate also purchased the real estate
management business of Nooney Krombach Company and formed Nooney, Inc. to
perform the management of the Partnership. The Partnership continues to pay
management fees to Nooney, Inc.
Investment property is recorded at the lower of cost or fair market 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 (30 years) using the straight-line method.
Tenant alterations are depreciated over the term of the lease on a
straight-line basis.
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.
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
Mortgage notes payable as of November 30, 1997 and 1996 and the related
collateral book values consist of the following:
1997 1996
Cobblestone Court Shopping Center
- ---------------------------------
(Book value of $3,854,000 at November 30, 1997)
8.53%, due in monthly interest only payments of
$18,438 at LIBOR plus 2.75% (8.47% at November
30, 1997) until February 1, 1998 when the entire
principal balance is due. $ 2,602,432 $ 2,603,049
Note payable to bank, interest only due monthly
at LIBOR plus 2.75% (8.47% at November 30, 1997)
until February 1, 1998 when entire principal
balance is due. 1,689,571 1,438,039
Woodhollow Apartments
- ---------------------
(Book value of $7,256,000 at November 30, 1997)
9.125%, due in monthly payments of $70,170,
consisting of both principal and interest,
until August 2001 when remaining principal
balance of $7,859,989 is due. 8,255,105 8,276,961
Cobblestone Court Shopping Center and Woodhollow
Apartments
- ------------------------------------------------
Note payable to bank, due in monthly principal
payments of $1,000 plus interest at 1% over
the bank's prime rate (8.5% at November 30, 1997)
until February 1, 1998 when entire principal
balance is due. 199,601 211,435
Note payable to bank, interest only due monthly at
LIBOR plus 2.75% (8.47% at November 30, 1997) until
February 1, 1998, when entire principal balance is
due. 124,684 --
----------- -----------
Total debt of above properties (total book value
of $11,110,000 at November 30, 1997) $12,871,393 $12,529,484
=========== ===========
In connection with the Cobblestone Court first mortgage 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. As of November 30, 1997 and
1996 there were no excess cash flows.
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, 1997 and 1996, $36,855
and $172,378, respectively, was being held in escrow accounts.
On January 31, 1998, the holders of the two notes jointly collateralized by
Woodhollow Apartments and Cobblestone Court Shopping Center and the notes
on Cobblestone Court Shopping Center extended the due dates to October 31,
1998 at the same rate.
-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:
1998 $4,708,292
1999 100,759
2000 110,348
2001 7,951,994
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, 1997 and 1996 are
summarized as follows:
1997 1996
------------------------ -----------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
Mortgage notes payable $12,871,393 $12,968,000 $12,529,484 $12,608,000
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, 1997 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, 1997
are as follows:
1998 $ 437,411
1999 354,756
2000 266,816
2001 46,083
-----------
Total $ 1,105,066
===========
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 $387,000,
$416,000 and $454,000 for the years ended November 30, 1997, 1996 and 1995,
respectively. Contingent rentals were not significant for the years ended
November 30, 1997, 1996 and 1995.
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.
-28-
<PAGE>
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
1997:
Net loss $ (193,748) $ (307,511)
Partners' deficiency in assets (1,687,945) (6,503,186)
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)
* * * * * *
-29-
<PAGE>
<TABLE>
<CAPTION>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
SCHEDULE - RECONCILIATION OF PARTNERS' EQUITY (DEFICIENCY IN ASSETS)
YEARS ENDED NOVEMBER 30, 1997, 1996 AND 1995
- ------------------------------------------------------------------------------------------------------------------------------------
The reconciliation of partners' equity (deficiency in assets) between financial statements and income tax reporting is as follows:
1997
-----------------------------------------------
Limited General
Partners Partners Total
<S> <C> <C> <C>
Balance (deficiency) per statement of partners' equity $ (1,392,102) $ (295,843) $ (1,687,945)
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 3,985 70 4,055
Writedown of investment property not recognized for income tax purposes 1,045,565 18,435 1,064,000
------------ ----------- ------------
1,390,355 (277,338) 1,113,017
Less:
Excess depreciation deducted for income tax purposes 7,395,960 201,166 7,597,126
Rent concessions not recognized for income tax purposes 190 2 192
Insurance premiums deducted for income tax purposes 18,558 327 18,885
------------ ------------ ------------
Balance (deficiency) per tax return $ (6,024,353) $ (478,833) $ (6,503,186)
============ ============ ============
1996
-----------------------------------------------
Limited General
Partners Partners Total
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)
============ ============ ============
1995
-----------------------------------------------
Limited General
Partners Partners Total
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)
============ ============ ============
-30-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
SCHEDULE III- REAL ESTATE AND ACCUMULATED DEPRECIATION
NOVEMBER 30, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C
-------- -------- --------
Initial Cost to Partnership
--------------------------------------------
Buildings and
Description Encumbrances Land Improvements Total
<S> <C> <C> <C> <C>
Cobblestone Court Shopping Center, Burnsville, Minnesota $ 4,292,003 $ 1,205,378 $ 4,676,940 $ 5,882,318
Woodhollow Apartments, St. Louis, Missouri 8,255,105 1,013,858 11,651,289 12,665,147
Both properties 324,285 - - -
------------ ------------ ------------ ------------
Total $ 12,871,393 $ 2,219,236 $ 16,328,229 $ 18,547,465
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Column D Column E
-------- --------
Costs Gross Amount at Which
Capitalized Carried at Close of Period
Subsequent --------------------------------------------
to Buildings and
Description Acquisition Land Improvements Total
<S> <C> <C> <C> <C>
Cobblestone Court Shopping Center, Burnsville, Minnesota $ 657,789(1) $ 1,205,378 $ 5,334,729 $ 6,540,107(2)
Woodhollow Apartments, St. Louis, Missouri 2,189,770(1) 1,013,858 13,841,059 14,854,917
Both properties - - - -
------------ ------------ ------------ -----------
Total $ 2,847,559 $ 2,219,236 $ 19,175,788 $21,395,024
============ ============ ============ ===========
</TABLE>
<TABLE>
<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 $ 2,686,050(2) 1980 2/16/82 30 yrs.
Woodhollow Apartments, St. Louis, Missouri 7,598,733 1971-1972 7/28/82 30 yrs.
------------
Total $ 10,284,783
============
(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 $(3,854,057).
(Continued)
-31-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
YEARS ENDED NOVEMBER 30, 1997, 1996 AND 1995
- ----------------------------------------------------------------------------------------------------------------------
1997 1996 1995
<S> <C> <C> <C>
(A) Reconciliation of amounts in Column E:
Balance at beginning of period $ 20,556,298 $ 20,150,890 $ 20,036,471
Add - Cost of improvements 898,139 408,706 153,607
Less - Cost of disposals (59,413) (3,298) (39,188)
------------ ------------ ------------
Balance at end of period $ 21,395,024 $ 20,556,298 $ 20,150,890
============ ============ ============
(B) Reconciliation of amounts in Column F:
Balance at beginning of period $ 9,878,090 $ 9,444,928 $ 8,865,810
Add - Provision during the period 466,106 436,460 618,306
Less - Depreciation on disposals (59,413) (3,298) (39,188)
------------ ------------ ------------
Balance at end of period $ 10,284,783 $ 9,878,090 $ 9,444,928
============ ============ ============
(C) The aggregate cost of real estate owned for
federal income tax purposes $ 22,459,024 $ 21,620,298 $ 21,214,890
============ ============ ============
(Concluded)
-32-
</TABLE>
