SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter period ended May 31, 1999
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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
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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.)
One Memorial Drive, Suite 1000 63102-2449
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 206-4600
-----------------------------
500 North Broadway, Suite 1200, St. Louis, MO 63102-2124
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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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PART I
ITEM 1 - FINANCIAL STATEMENTS:
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEET
AS OF MAY 31, 1999 (GOING-CONCERN BASIS)
STATEMENT OF NET LIABILITIES IN LIQUIDATION
AS OF NOVEMBER 30, 1998 (LIQUIDATION BASIS)
May 31, November 30,
1999 1998
(Unaudited)
----------- -----------
ASSETS:
Cash $ 160,065 $ 227,373
Accounts receivable 140,149 106,023
Prepaid expenses and deposits 48,055 0
Investment property, at cost:
Land 2,219,236 --
Buildings and improvements 19,633,894 --
------------ ------------
21,853,130 --
Less accumulated depreciation 10,776,748 --
------------ ------------
11,076,382 --
Investment property held for sale 0 17,585,000
Deferred expenses - at amortized cost 180,615 0
------------ ------------
$ 11,605,266 $ 17,918,396
============ ============
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Deferred gain on real estate asset $ 0 $ 7,200,029
Reserve for estimated costs during the
period of liquidation 0 10,000
Accounts payable and accrued expenses 189,830 263,459
Accrued real estate taxes 51,888 0
Mortgage notes payable 13,747,369 13,500,465
Refundable tenant deposits 74,167 72,976
------------ ------------
14,063,254 21,046,929
NET LIABILITIES IN LIQUIDATION 0 $ (3,128,533)
------------ ============
PARTNERS' EQUITY (DEFICIENCY IN ASSETS) (2,457,988)
------------
TOTAL LIABILITIES AND PARTNER'S EQUITY $ 11,605,266
============
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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<TABLE>
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS AND PARTNERS' DEFICIT
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
May 31, May 31, May 31, May 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Rental and other income $ 845,093 $ 829,046 $ 1,659,699 $ 1,677,349
Interest 0 736 56 1,170
----------- ----------- ----------- -----------
845,093 829,782 1,659,755 1,678,519
EXPENSES:
Interest 261,705 287,956 536,395 575,524
Depreciation and amortization 25,540 128,275 25,540 251,868
Real estate taxes 121,564 113,437 181,060 215,708
Property management fees paid to
Nooney Inc. 44,095 43,852 83,761 89,060
Reimbursement to Nooney Inc.
for partnership management
services and indirect expenses 10,000 10,000 20,000 20,000
Repairs & Maintenance expenses 53,679 50,076 84,393 93,709
Payroll expenses 93,097 87,421 162,199 141,876
Insurance expenses 44,298 24,207 44,298 50,278
Cleaning expenses 29,038 22,269 51,743 42,877
Utility expenses 44,372 37,233 74,023 72,008
Professional fee expenses 43,007 32,194 108,926 48,721
Snow Removal 8,825 2,206 46,529 22,075
Other operating expenses (500,928) 64,263 (429,657) 126,052
----------- ----------- ----------- -----------
278,292 903,389 989,210 1,749,756
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 566,801 $ (73,607) $ 670,545 $ (71,237)
=========== =========== =========== ===========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ 41.17 $ (5.35) $ 48.70 $ (5.17)
=========== =========== =========== ===========
PARTNERS' DEFICIT:
Beginning of Period $(3,024,789) $(1,685,575) $(3,128,533) $(1,687,945)
Net Income (Loss) 566,801 (73,607) 670,545 (71,237)
----------- ----------- ----------- -----------
End of Period $(2,457,988) $(1,759,182) $(2,457,988) $(1,759,182)
=========== =========== =========== ===========
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
May 31, May 31,
1999 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 670,545 $ (71,237)
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Depreciation and amortization 25,540 251,868
Removal of liquidation basis (585,461) 0
Changes in assets and liabilities:
(Increase) Decrease in accounts receivable (34,126) 12,427
Increase in prepaid expenses and deposits (14,223) (66,528)
Increase in deferred expense (5,626) 0
Decrease (Increase) in current liabilities 20,550 (77,890)
--------- ---------
Total Adjustments (593,346) 119,877
--------- ---------
Net cash provided by operating activities 77,199 48,640
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to investment property (52,617) (58,626)
Property additions using Capital Reserve Escrow (338,794) (1,142)
Net cash used in investing activities (391,411) (59,768)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on mortgage notes payable (94,910) (51,234)
Capital Reserve Funding 341,815 0
(Draws on Undisbursed Loan Proceeds) --------- ---------
Net cash from financing activities 246,904 (51,234)
--------- ---------
NET DECREASE IN CASH (67,308) (62,362)
CASH, Beginning of period 227,373 327,910
--------- ---------
CASH, End of period $ 160,065 $ 265,548
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
INFORMATION-Cash paid during the period
for interest $ 536,395 $ 608,259
========= =========
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED MAY 31, 1999 AND 1998
NOTE A:
Refer to the Registrant's financial statements for the year ended November 30,
1998, which are contained in the Registrant's Annual Report on Form 10-K, for a
description of the accounting policies which have been continued without change
except as noted below. Also, refer to the footnotes to those statements for
additional details of the Registrant's financial condition. The details in those
notes have not changed except as a result of normal transactions in the interim
or as noted below.
NOTE B:
As previously reported, the Registrant entered into contracts on November 13,
1998 to sell both of Registrant's properties to American Spectrum Realty, Inc.
("ASR"), an affiliate of the general partner of the Registrant. Pursuant to a
proxy statement and majority vote, the limited partners approved the sale on
January 21, 1999, at a special meeting held for that purpose.
Under the terms of the contracts, ASR was to have satisfied or waived all
contingencies contained in the contracts by April 6, 1999. Certain of the
contingencies were not satisfied or waived by that date and the general partner
agreed to extend the contingency period for 30 days. Since the time period for
satisfying the contingencies was extended, no earnest money was deposited by
ASR. Subsequently, the contingency period was extended for two additional 30-day
periods, the final one expiring July 7, 1999.
On July 7, 1999, certain contingencies remained unfulfilled and not waived and
the general partner elected not to grant any further extensions and the sale
contracts have become null and void. (See Note D)
The general partner is now re-evaluating several options regarding the sale of
the properties and liquidation of the partnership.
NOTE C:
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 May 31, 1999 and for all periods presented have been made.
The results for the three-month and six-month period ended May 31, 1999 are not
necessarily indicative of the results which may be expected for the entire year.
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NOTE D:
On June 25, 1999, a complaint was filed in the United States District Court for
the Eastern District of Missouri by Bond Purchase, L.L.C. against the Registrant
and its general partner, Nooney Capital Corporation (No. 4:99CV01031CEJ). The
complaint alleges that the defendants arranged for the sale of partnership
assets to American Spectrum Realty, Inc., an entity affiliated with Nooney
Capital Corporation, at a price which is $1 million less than another entity
affiliated with the plaintiff is willing to pay. The complaint further alleges
that Nooney Capital Corporation, as a general partner of the partnership, filed
a proxy statement relating to the sale of partnership assets which omitted
certain unspecified material facts and which otherwise failed to provide
complete information to the limited partners. In addition, the complaint alleges
that the defendants refused to allow the plaintiff access to the books and
records of the partnership. The complaint seeks injunctive relief against the
proposed sale of the partnership assets, damages for alleged violations of the
Securities Exchange Act, damages for alleged breaches of fiduciary duty,
appointment of a receiver for the partnership and an accounting. The Registrant
believes it has meritorious defenses and intends to vigorously oppose this
lawsuit.
The Partnership's financial statements as of November 30, 1998 were prepared on
a liquidation basis. Accordingly, assets were valued at estimated net realizable
value and liabilities included estimated costs associated with carrying out the
plan of liquidation. The accompanying May 31, 1999 and 1998 statements of
operations and partners' deficit have been prepared on a going-concern
(historical cost) basis due to the change in the properties' status, as the sale
of the properties was not eminent. The cost of liquidation and various accruals
made when adopting liquidation basis ($585,461) have been reversed in the 2nd of
quarter 1999. The reversal of liquidation basis adjustments are reflected in the
other operating expenses on the statement of operations for the three and six
month period ended May 31, 1999.
NOTE E:
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 F:
The income (loss) per limited partnership unit for the three and six months
ended May 31, 1999 and May 31, 1998 was computed based on 13,529 units, the
number of units outstanding during the periods.
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ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
It should be noted that this 10-Q contains forward-looking information (as
defined in the Private Securities Litigation Reform Act of 1995) that involves
risk and uncertainty, including trends in the real estate investment market,
projected leasing and sales, and the future prospects for the Registrant. Actual
results could differ materially from those contemplated by such statements.
Liquidity and Capital Resources
Cash on hand as of May 31, 1999 is $160,065, a decrease of $67,308 from year end
November 30, 1998. The decrease in cash balances can primarily be attributed to
timing of payments for insurance premiums for both Woodhollow Apartments and
Cobblestone Court Shopping Center, in addition to a semi-annual tax payment made
on behalf of Cobblestone Court Shopping Center. Cash produced from operating
activity for the six months ended May 31, 1999 was $77,199. Capital additions
were made in the amount of $52,617 and payments on mortgage notes in the amount
of $94,910 for this six month period were made. Capital expenditures by property
anticipated for the balance of the year are as follows:
Leasing Capital Other Capital Total
--------------- ------------- -----
Cobblestone Court $ 1,000 $ 0 $ 1,000
Woodhollow Apartments 0 102,963 102,963
-------- -------- --------
$ 1,000 $102,963 $103,963
======== ======== ========
At Cobblestone Court Shopping Center, Leasing Capital consists of tenant
alteration costs for an upcoming lease renewal. At Woodhollow Apartments, the
Other Capital consists of expenditures for new heating and air conditioning
units, new appliances for turnover units, tennis court resurfacing, and
carpet/tile replacement in turnover units. These are capital items outside of
the scope of the capital renovation program which is funded by draw requests
submitted monthly per the new debt agreement effective November 30, 1998. The
capital renovation program consists of new siding, parking lot overlay, interior
hallway renovation, and exterior improvements. The total amount anticipated on
this phase is $782,300. During the 2nd quarter of 1999 capital reserve draws
were funded in the amount of $341,815, therefore increasing outstanding debt.
The amount of capital improvements made during this period with above funds were
$338,794. The Registrant anticipates this renovation phase will be completed in
3rd quarter 1999.
As previously reported, the Registrant entered into agreements on November 13,
1998, to sell both of the Registrant's properties to American Spectrum Realty,
Inc., an affiliate of the general partner of the Registrant. The proposed sale
was approved by a majority of the limited partners at a special meeting held on
January 21, 1999. The agreements have terminated in accordance with their terms.
The general partner is currently evaluating the alternatives available to
the Registrant with respect to disposition of the Registrant's properties
and liquidation of the Registrant.
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On November 30, 1998, the Registrant refinanced the debt on both of its
properties. A new note with an original balance of $13,500,465 secured by both
Cobblestone Court and Woodhollow Apartments was obtained. As of May 31, 1999 the
principal balance due is $13,747,369. There is a balance of undisbursed loan
proceeds available for the capital renovation program at Woodhollow Apartments
in the amount of $157,720. The note is at an interest rate of LIBOR + 2.75% and
calls for monthly principal payments of $15,818. The interest rate on this loan
at May 31, 1999 was 7.654%. The loan matures November 30, 2001.
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 certain mortgage debt
as it matures.
Results of Property Operations
The results of operations for the Registrant's properties for the three months
ended May 31, 1999 and 1998 are detailed in the schedule below. Revenues and
expenses of the Registrant are excluded.
Woodhollow Apartments Cobblestone Court
--------------------- -----------------
1999
----
Revenues $ 614,023 $ 223,239
Expenses 544,812 249,657
--------- ---------
Net Income (Loss) $ 69,211 $ (26,418)
========= =========
1998
----
Revenues $ 589,619 $ 239,525
Expenses 629,942 273,388
--------- ---------
Net Loss $ (40,323) $ (33,863)
========= =========
At Woodhollow Apartments, revenues increased $24,404 when comparing the second
quarter of 1999 to the second quarter of 1998. This increase in revenue was
partially offset by an added number of rent concessions given for incentive
purposes to both new and renewing tenants. Expenses decreased $85,130 due to
decreases in depreciation/amortization ($119,311) and interest expense
($18,528). These decreases in expense were partially offset by increases in
maintenance payroll ($6,552) primarily attributable to additional maintenance
hours, repairs & maintenance plumbing ($5,515), pool maintenance ($7,838), snow
removal ($5,259), turnover related expenses ($12,465), corporate unit expense
($8,285), other professional fees ($4,496), and other operating expenses
($2,299). The large decrease in depreciation and amortization expense is due to
liquidation basis accounting effective November 30, 1998 and extending
throughout 2nd quarter 1999, relating to the anticipated sale of the properties
and liquidation of the partnership. The decrease in interest expense is due to
the newly structured debt, which has a lower interest rate than was paid on the
previous first mortgage. The increase in repairs and maintenance plumbing and
pool maintenance is due to an increased amount of repairs needed at the
property. The increase in turnover expenses can be attributed to the increase in
updating vacant units prior to occupancy. There has been an increase in the
amount of corporate units at the property, therefore increasing the amount of
related expenses. The additional professional fees are a result of costs
associated with the prior impending sale and proxy issued in 1998.
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At Cobblestone Court Shopping Center, revenues decreased by $16,286 when
comparing the quarter ended May 31, 1999 to the quarter ended May 31, 1998. The
decrease in income is primarily attributable to the drop in the occupancy level.
The decrease in revenues totaled $37,610 and was partially offset by an increase
in percentage rent of $21,324. This increase in percentage rent is due to higher
reported sales from tenants that were billed during the 2nd quarter of 1999.
Expenses decreased $23,731 due to decreases in real estate tax ($11,936), tax
penalty expense ($13,520), cleaning expenses ($4,729), and interest expense
($7,723). These decreases were partially offset by increases in repairs &
maintenance building ($2,936), fire/crime prevention ($3,803), and professional
fees ($7,614). The decrease in real estate tax expense is due to a lower 1999
annual tax bill, and the decrease for tax penalties is due to the 1st
installment of the 1999 taxes being paid on time, unlike the late payment for
this period in 1998. The decrease in cleaning is due to a new lower monthly
contract cleaning service and the lower interest expense can be attributed to
the newly structured debt with a lower interest rate. The increase in repairs
and maintenance building and fire/crime prevention is due to additional repair
costs at the property. The increased professional fees can be attributed to
costs associated with the prior impending sale and proxy issued.
The occupancy levels at the Registrant's properties during the second quarter
decreased at both Cobblestone Court and Woodhollow Apartments. The occupancy
levels at May 31, 1999, 1998 and 1997 are as follows:
Occupancy levels as of May 31,
Property 1999 1998 1997
-------- ---- ---- ----
Cobblestone Court Shopping Center 54% 64% 74%
Woodhollow Apartments 91% 94% 93%
At Cobblestone Court Shopping Center, leasing activity during the second quarter
consisted of one tenant occupying 3,167 square feet vacating their space and one
tenant renewing their lease for five years. The Registrant is negotiating with a
potential tenant for a five-year lease commencing in 1999 that will occupy 3,242
square feet. The property has two major tenants which occupy 26% and 9% of the
available space on leases that expire January 2001 and April 2001, respectively.
At Woodhollow Apartments, the occupancy decreased by 3% during the quarter. The
Registrant anticipates occupancy increasing to above 95% during the third
quarter of 1999 as demand for apartments in the West St. Louis County area
continues to be strong and the renovation program at the property is close to
being complete.
Year 2000 Issues
Information Technology Systems
The Registrant utilizes computer software for its corporate and real property
accounting records and to prepare its financial statements, as well as for
internal accounting purposes. The vendor of the Registrant's software has
informed the Registrant that it is Year 2000 compliant. The Registrant believes
after reasonable investigation that its information technology hardware is Year
2000 compliant. However, in the event that such systems should fail, as a
contingency plan, the Registrant could prepare all required accounting entries
manually, without incurring material additional operating expenses.
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Non-Information Technology Systems
At the request of the Registrant, its property managers have completed their
review of the major date-sensitive non-information technology systems such as
elevators, heating, ventilation, air conditioning and cooling ("HVAC") systems,
locks, and other like systems in the Registrant's properties and have determined
that such systems are materially Year 2000 compliant. In some of the
Registrant's properties, its property managers have utilized the services of
third-party consultants in making this determination, while in other properties,
the property managers have internally made such determinations. The Registrant
does separately track the internal costs incurred for its Year 2000 project. The
Registrant does not believe that the Year 2000 issue will pose significant
problems to the Registrant's Information technology systems and non-Information
technology systems, or that resolution of any potential problems with respect to
such systems will have a material effect on the Registrant's financial condition
or results of operations.
Material Third Parties' Systems Failures
The most reasonable likely worst case scenario facing the Registrant as a result
of the Year 2000 problem would be the inability of its tenants to pay rent as a
result of a breakdown in such tenants' (or other financial service providers')
computer or the refusal of such tenants to pay their rent as a result of the
Registrant's inability to provide services due to non-Information technology
systems failure. Failure in a tenant's computer systems may cause delays in such
tenant's ability to process its accounting records and to make timely rent
payments. However, any such delays in rent payments, whether caused by systems
failure of tenant, property manager or a combination of the two, should not have
a materially adverse effect on the Registrant's business or results of
operations.
Risks
While delays caused by the failure of the tenants' or the property managers'
accounting or supply systems would likely not adversely affect the Registrant's
business or results of operations, non-Information technology systems failure in
the Registrants's properties could lead to tenants attempting to withhold their
rent payments, which could materially adversely effect the Registrant's
business, results of operations and financial conditions as a result of
increased legal costs. The Registrant believes that such material effect is
primarily limited to items of a utility nature furnished by third parties to the
Registrant and a wide universe of other customers. Included are such items as
electricity, natural gas, telephone service, and water, all of which are not
readily susceptible to alternate sources and which in all likelihood should be
available in some form. The Registrant has been unable to obtain assurances from
such utility companies as to their Year 2000 compliance, and does not expect
that such assurances will be forthcoming.
Such non-Information technology systems failure could force tenants to use the
stairs in such properties, rather than the elevators. However, none of the
properties owned by the Registrant is a high-rise building where such an
elevator failure could cause a material adverse effect to the operations of its
tenants, although such failure could make it impossible for any disabled tenants
or any disabled customers to access such properties. Moreover, as previously
discussed, the Registrant may suffer adverse effects in its results of
operations and financial condition as a result of utility or HVAC failures, for
example. Such events could lead the tenants of the Registrant to withhold rent,
in the event that the Registrant's properties are not usable for their intended
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purposes. The Registrant does not believe that rent abatement would be a lawful
tenant remedy for short term obligations unless such failure extend for a period
of 30 consecutive days. The Registrant intends to pursue its remedies for any
such breach of its rent obligations by a Tenant expeditiously and to the full
extend permitted by law.
1999 Comparisons
The Partnership's financial statements as of November 30, 1998 were prepared on
a liquidation basis. Accordingly, assets were valued at estimated net realizable
value and liabilities included estimated costs associated with carrying out the
plan of liquidation. The accompanying May 31, 1999 and 1998 statements of
operations and partners' deficit have been prepared on a going-concern
(historical cost) basis due to the change in the properties' status, as the sale
of the properties was not eminent. The cost of liquidation and various accruals
made when adopting liquidation basis ($585,461) have been reversed in the 2nd of
quarter 1999. The reversal of liquidation basis adjustments are reflected in the
other operating expenses on the statement of operations for the three and six
month period ended May 31, 1999.
For the three and six month periods ended May 31, 1999, the Registrant's
consolidated revenues were $845,093 and $1,659,755, respectively. Revenues
increased $15,311 for the three month period when compared to that of prior
year. This increase in revenues can be attributed to increases in percentage
rent income ($21,324), gross potential rent income ($23,925), and corporate unit
income ($7,177). These increases were partially offset by decreases in base
rental income ($18,425), common area maintenance income ($7,162), real estate
tax income ($8,613), and other income ($2,915). The increases in percentage
rent, gross potential rent, and corporate unit income are due to the reasons
mentioned previously in the property comparisons. The decreases in base rental
income, common area maintenance income, and real estate tax income are due to
the lower occupancy level at Cobblestone Court. The decrease of $18,764 in for
the six month period is due to decreases in base rental income ($43,347), common
area maintenance income ($42,609), and real estate tax income ($22,163), again,
also all attributable to the lower occupancy level at Cobblestone Court. An
increase in vacancy also contributed to the decrease in income. These decreases
in income were partially offset by increases in percentage rent ($18,955), gross
potential rent ($41,683), other income ($2,343), and corporate unit income
($13,554). The increases in percentage rent income, gross potential rent, and
corporate unit income have all been addressed separately in the property
comparisons.
Consolidated expenses for the three months ended May 31, 1999 and the three
months ended May 31, 1998 were $278,292 and $903,389, respectively. The decrease
of $625,097 for the period can be attributable to decreases in interest expense
($26,251), depreciation ($102,375), and other operating expenses ($564,292).
These decreases were partially offset by increases in payroll ($5,676), cleaning
expense ($6,769), utilities ($7,139), professional fees ($10,813), snow removal
($6,619), repairs and maintenance related expenses ($3,603), real estate tax
expense ($8,127), and insurance ($20,091). The decrease in interest expense is
due to the newly acquired loan with a more favorable interest rate and the
depreciation decrease is due to the "held for sale" status of the properties
during 2nd quarter 1999. The decrease in tax expense is due to the lower taxes
at Cobblestone Court, as mentioned in the property comparisons. As previously
discussed, the significant decrease in other operating expenses can be
attributed to the removal of the liquidation costs and various accruals. The
increases reflected in the various expense accounts were addressed in the
property comparisons. When comparing the six months ended May 31, 1999 and 1998,
consolidated expenses were $989,210 and $1,749,756, respectively. The decrease
of $760,546 can be attributed to decreases in interest expense ($39,129),
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depreciation ($226,328), real estate tax expense ($34,648), management fees
($5,299), repairs & maintenance related expenses ($9,316), other operating
expenses ($555,708), and insurance expense ($5,980). These decreases were
partially offset by increases in payroll ($20,323), cleaning expenses ($8,866),
professional fees ($60,205), and snow removal ($24,454). All fluctuations in
expenses have been explained in the three month period and/or the property
comparisons.
1998 Comparisons
For the three and six month ended May 31, 1998, the Registrant's consolidated
revenues were $829,782 and $1,678,519, respectively. Revenues decreased $12,773
and $18,273 for the three and six month periods ended May 31, 1998 as compared
to the same periods ended May 31, 1997. The decrease in revenues can be
attributable to the lower occupancy level at Cobblestone Court. Consolidated
expenses for the three months ended May 31, 1998 and three months ended May 31,
1997 were $903,389 and $878,026 respectively. The increase in consolidated
expenses for the three months ended 1998 was $25,363 when compared to May 31,
1997. Expenses that increased were interest expense ($6,190), depreciation
($10,946), payroll expenses ($19,543), repairs and maintenance expenses
($7,259), and professional fees ($4,186). These increases were partially offset
by decreases in snow removal ($9,866), renovation landscaping ($8,075),
fire/crime prevention ($4,080), and insurance ($1,792). When comparing the six
months ended May 31, 1998 and May 31, 1997, consolidated expenses were
$1,749,756 and $1,778,172, respectively, a decrease of $28,416. The decrease can
be attributable to decreases in snow removal ($31,216) and professional fees
($29,936) due to legal costs incurred in the potential sale of Cobblestone.
These decreases were partially offset by increases in interest expense ($14,959)
due to additional borrowings secured by second mortgages in 1997 for Cobblestone
and depreciation/amortization ($17,195).
Inflation
The effects of inflation did not have a material impact upon the Registrant's
operation is fiscal 1998 and are not expected to materially affect the
Registrant's operations in 1999.
-12-
<PAGE>
PART II. OTHER INFORMATION
Item 1: Litigation
On June 25, 1999, a complaint was filed in the United States District Court for
the Eastern District of Missouri by Bond Purchase, L.L.C. against the Registrant
and its general partner, Nooney Capital Corporation (No. 4:99CV01031CEJ). The
complaint alleges that the defendants arranged for the sale of partnership
assets to American Spectrum Realty, Inc., an entity affiliated with Nooney
Capital Corporation, at a price which is $1 million less than another entity
affiliated with the plaintiff is willing to pay. The complaint further alleges
that Nooney Capital Corporation, as a general partner of the partnership, filed
a proxy statement relating to the sale of partnership assets which omitted
certain unspecified material facts and which otherwise failed to provide
complete information to the limited partners. In addition, the complaint alleges
that the defendants refused to allow the plaintiff access to the books and
records of the partnership. The complaint seeks injunctive relief against the
proposed sale of the partnership assets, damages for alleged violations of the
Securities Exchange Act, damages for alleged breaches of fiduciary duty,
appointment of a receiver for the partnership and an accounting. The Registrant
believes it has meritorious defenses and intends to vigorously oppose this
lawsuit.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit Index
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: July 15, 1999 NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
----------------------
BY: NOONEY CAPITAL CORPORATION
General Partner
BY: /s/ Gregory J. Nooney, Jr.
-----------------------------------
Gregory J. Nooney, Jr.
Vice Chairman
/s/ Patricia A. Nooney
-----------------------------------
Patricia A. Nooney
President and Secretary
-13-
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
3.1 Amended and Restated Agreement and Certificate of
Limited Partnership dated 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)
<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> 6-MOS
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-START> DEC-01-1998
<PERIOD-END> MAY-31-1999
<CASH> 160,065
<SECURITIES> 0
<RECEIVABLES> 140,149
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 348,269
<PP&E> 21,853,130
<DEPRECIATION> 10,776,748
<TOTAL-ASSETS> 11,605,266
<CURRENT-LIABILITIES> 241,818
<BONDS> 13,747,369
<COMMON> 0
0
0
<OTHER-SE> (2,457,988)
<TOTAL-LIABILITY-AND-EQUITY> 11,605,266
<SALES> 1,659,699
<TOTAL-REVENUES> 1,659,755
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 452,815
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 536,395
<INCOME-PRETAX> 670,545
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 670,545
<EPS-BASIC> 48.70
<EPS-DILUTED> 0
</TABLE>
