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 August 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, St. Louis, MO 63102-2449
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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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500 N. Broadway, Suite 1200, St. Louis, MO 63102
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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:
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NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
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(A LIMITED PARTNERSHIP)
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BALANCE SHEETS
--------------
August 31, November 30,
1999 1998
(Unaudited)
----------- ------------
ASSETS:
Cash $ 121,929 $ 227,373
Accounts receivable 139,964 106,023
Prepaid expenses and deposits 30,081 0
Investment property, at cost:
Land 1,013,858 --
Buildings and improvements 15,145,673 --
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16,159,531 --
Less accumulated depreciation 8,502,254 --
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7,657,277 --
Investment property held for sale 3,400,000 17,585,000
Deferred expenses - at amortized cost 114,382 0
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$ 11,463,633 $ 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 356,615 263,459
Accrued real estate taxes 121,243 0
Mortgage notes payable 13,857,633 13,500,465
Refundable tenant deposits 73,077 72,976
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14,408,568 21,046,929
NET LIABILITIES IN LIQUIDATION 0 $ (3,128,533)
------------ ============
PARTNERS' EQUITY (DEFICIENCY IN ASSETS) (2,944,935)
------------
TOTAL LIABILITIES AND PARTNER'S EQUITY $ 11,463,633
============
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
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(A LIMITED PARTNERSHIP)
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STATEMENTS OF OPERATIONS AND PARTNERS' DEFICIT
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(UNAUDITED)
-----------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
August 31, August 31, August 31, August 31,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Rental and other income $ 802,586 $ 841,024 $ 2,463,431 $ 2,518,372
Interest 0 1,489 56 2,660
----------- ----------- ----------- -----------
802,586 842,513 2,463,487 2,521,032
EXPENSES:
Interest 277,398 287,796 813,794 863,320
Depreciation and amortization 420,403 127,192 445,943 379,059
Real estate taxes 88,572 113,773 269,632 329,481
Property management fees paid to
American Spectrum Midwest 43,168 44,350 126,930 133,410
Reimbursement to American Spectrum Midwest
for partnership management
services and indirect expenses 10,000 10,000 30,000 30,000
Repairs & Maintenance expenses 61,321 60,764 155,725 154,472
Payroll expenses 93,089 79,154 255,288 221,030
Insurance expenses 22,752 22,373 67,049 72,652
Cleaning expenses 31,783 19,732 84,602 62,608
Utility expenses 47,990 40,469 119,164 112,476
Professional fee expenses 121,367 37,219 250,131 85,939
Corporate unit expenses 26,228 16,131 62,247 38,949
Other operating expenses 45,463 47,375 (400,615) 172,688
----------- ----------- ----------- -----------
1,289,534 906,328 2,279,889 2,656,084
----------- ----------- ----------- -----------
NET (LOSS) INCOME $ (486,947) $ (63,815) $ 183,598 $ (135,052)
=========== =========== =========== ===========
NET (LOSS) INCOME PER LIMITED
PARTNERSHIP UNIT $ (35.37) $ (4.64) $ 13.34 $ (9.81)
=========== =========== =========== ===========
PARTNERS' DEFICIT:
Beginning of Period $(2,457,988) $(1,759,182) $(3,128,533) $(1,687,945)
Net (Loss) Income (486,947) (63,815) 183,598 (135,052)
----------- ----------- ----------- -----------
End of Period $(2,944,935) $(1,822,997) $(2,944,935) $(1,822,997)
=========== =========== =========== ===========
</TABLE>
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
-----------------------------------------
(A LIMITED PARTNERSHIP)
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STATEMENTS OF CASH FLOWS
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(UNAUDITED)
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Nine Months Ended
August 31, August 31,
1999 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 183,598 $(135,052)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 445,943 379,059
Removal of liquidation basis entries (585,461) 0
Changes in assets and liabilities:
Increase in accounts receivable (33,941) (18,099)
Decrease (Increase) in prepaid expenses
and deposits 44,830 (45,302)
Increase in deferred expenses 47,877 0
Increase in current liabilities 214,500 36,876
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Total Adjustments 133,748 352,534
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Net cash provided by operating
activities 317,345 217,482
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to investment property (280,422) (166,700)
Additions using Capital Reserve Escrow (499,535) (59,687)
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Net cash used in investing activities (779,957) (226,387)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on mortgage notes payable (142,367) (77,632)
Funding on mortgage notes payable 499,535 0
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Net cash from financing activities 357,168 (77,632)
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NET DECREASE IN CASH (105,444) (86,537)
CASH, Beginning of period 227,373 327,910
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CASH, End of period $ 121,929 $ 241,373
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
INFORMATION - Cash paid during the period for interest $ 718,998 $ 863,320
========= =========
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 NINE MONTHS ENDED AUGUST 31, 1999 AND 1998
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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 August 31, 1999 and for all periods presented have been
made. The results for the three-month and nine-month period ended August 31,
1999 are not necessarily indicative of the results which may be expected for the
entire year.
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<PAGE>
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
and its general partner moved to dismiss the complaint on various grounds,
including the fact that the sale transaction did not take place. Plaintiff has
dismissed its federal securities law claim and claim for injunction against the
sale. The motion to dismiss remains pending before the court. 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 August 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) were 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 nine month
period ended August 31, 1999.
NOTE E:
The Registrant's properties are managed by American Spectrum Midwest (formerly
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 nine months
ended August 31, 1999 and August 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
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AND RESULTS OF OPERATIONS
-------------------------
It should be noted that this 10-Q contains forward-looking information (as
defined in the Private Securities Litigation Reform Act of 1995) that involves
risk and uncertainty, including trends in the real estate investment market,
projected leasing and sales, and the future prospects for Registrant. Actual
results could differ materially from those contemplated by such statements.
Liquidity and Capital Resources
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Cash on hand as of August 31, 1999 is $121,929, a decrease of $105,444 from year
ended November 30, 1998. Cash produced from operating activity for the nine
months ended August 31, 1999 was $317,345. Capital additions were made in the
amount of $280,422 and payments on mortgage notes in the amount of $142,367 for
this nine month period were made. Capital expenditures by property anticipated
for the fourth quarter of 1999 are as follows:
Leasing Capital Other Capital Total
--------------- ------------- -----
Cobblestone Court 1,000 -0- 1,000
Woodhollow Apartments -0- 43,200 43,200
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$ 1,000 $43,200 $44,200
======= ======= =======
At Cobblestone Court Shopping Center, Leasing Capital consists of tenant
alterations for an upcoming lease renewal. At Woodhollow Apartments, the Other
Capital consists of expenditures for new appliances in turnover units, tennis
court resurfacing, and carpet/tile replacement in turnover units. The capital
renovation program at Woodhollow Apartments was completed during the third
quarter of 1999. The capital items in this program were funded by the debt
agreement effective in November 1998. The total funded for this renovation phase
was $499,535. The Registrant reviews cash reserves on a regular basis prior to
beginning scheduled capital improvements. In the event there is not adequate
funds, the capital improvement will be postponed until such funds are available.
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. In the interim, the Registrant is aggressively
pursuing options for the sale of Cobblestone Court Shopping Center due to
current market conditions.
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 August 31, 1999
the principal balance due is $13,857,633. The remaining undisbursed loan
proceeds available for the capital renovation program at Woodhollow Apartments
were disbursed in the third quarter of 1999. 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 August 31, 1999 was 8.1125%. The loan matures November 30,
2001.
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<PAGE>
The long term liquidity of the Registrant is dependent on its ability to fund
future capital expenditures and mortgage payments, maintain high occupancy and
negotiate with lenders the renewal and/or refinancing of certain mortgage debt
as it matures.
The results of operations for the Registrant's properties for the quarters ended
August 31, 1999 and 1998 are detailed in the schedule below. Revenues and
expenses of the Registrant are excluded.
Woodhollow Apartments Cobblestone Court
--------------------- -----------------
1999
----
Revenues $ 600,573 $ 200,040
Expenses 991,492 298,017
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Net Loss $(390,919) $ (97,977)
========= =========
1998
----
Revenues $ 607,235 $ 233,141
Expenses 627,330 278,938
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Net Loss $ (20,095) $ (45,797)
========= =========
At Woodhollow Apartments, the operating results for the third quarter ended
August 31, 1999, decreased significantly when compared to the third quarter
ended August 31, 1998. Revenues decreased $6,662 primarily due to decreases in
laundry/vending and corporate unit revenue. Expenses increased $364,162 when
comparing the two quarters. This increase is primarily due to an increase in
depreciation entries of $288,939. Woodhollow Apartments was held for sale from
the period of December 1998 through June 1999. The property's sale status was
halted effective July 1, 1999 and liquidation basis accounting was reversed.
Commencing in July 1999, entries were posted to depreciate all new and existing
assets for the previous held for sale period. All assets have been depreciated
through the current third quarter ending date. Expense increases were also
reflected in general and administrative payroll ($13,086), office supplies
($2,704), water/sewer ($10,904), roof repairs ($8,898), landscaping ($2,954),
advertising ($1,799), corporate unit related expenses ($10,097), other
professional fees ($22,992), and various other operating expenses ($7,534). The
increase in payroll is primarily due to additional administrative staff.
Water/sewer usage and rates have increased from that of prior year. In third
quarter 1999, several small roof repairs were necessary throughout the property.
Corporate unit expenses have increased in relation to the increased corporate
income. The increase in professional fees can be attributed to the cost of a
property appraisal and fees related to the partnership and all pending
litigation issues.
At Cobblestone Court, the net loss for the third quarters ended August 31, 1999
and 1998 was ($97,977) and ($45,797), respectively. The increase in the net loss
is attributable to decreases in revenue and an increase in expenses. Revenues
decreased $33,101 when comparing the third quarter of 1999 to the third quarter
of 1998. The decrease in revenues is primarily attributable to a decrease in
occupancy. Decreases were reflected in base rental revenue ($21,099), common
area maintenance reimbursement ($9,330), and utility reimbursement and
miscellaneous rental revenue ($10,366). These decreases were partially offset by
an increase in percentage rent ($6,214). The decrease in miscellaneous rental
revenue can be attributed to the lack of vacant space used by outside
organizations on a temporary basis as in 1998. Expenses increased $19,079 for
the third quarter of 1999 as compared to the third quarter of 1998 due to
increases in professional fees ($56,618) and amortization expense ($4,290).
These increases were partially offset by decreases in cleaning ($4,828), water
($3,594), gas service ($2,084), real estate tax expense ($11,854), tax penalty
-8-
<PAGE>
expense ($13,854), and interest ($4,652). The increase in professional fees can
be attributed to an appraisal done at the property, architect fees, and costs
related to the pending sale and partnership litigation. The decrease in real
estate tax is due to a lower 1999 annual tax bill and the related decrease in
tax penalties can be attributed to a timely payment of the first installment of
the 1999 real estate tax.
The occupancy levels at the Registrant's properties during the third quarter
remained consistent at both Cobblestone Court and Woodhollow Apartments from
that of the prior quarter. The occupancy levels at August 31, 1999, 1998 and
1997 are as follows:
Occupancy levels as of August 31,
Property 1999 1998 1997
-------- ---- ---- ----
Cobblestone Court Shopping Center 54% 63% 69%
Woodhollow Apartments 91% 93% 96%
At Cobblestone Court Shopping Center, there was no leasing activity during the
third quarter. The Registrant is actively seeking new tenants on a continual
basis even with the current sale status of the property. The property has two
major tenants that occupy approximately 26% and 9% of the available space on
leases that expire January 2001 and April 2001, respectively.
At Woodhollow Apartments the occupancy remained consistent at 91% during the
quarter. The Registrant anticipates occupancy to increase above 95% during the
4th 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 completed.
The Registrant reviews long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of a property may not
be recoverable. The Registrant considers a history of operating losses or a
change in occupancy to be primary indicators of potential impairment. The
Registrant deems the Property to be impaired if a forecast of undiscounted
future operating cash flows directly related to the Property, including disposal
value, if any, is less than its carrying amount. If the Property is determined
to be impaired, the loss is measured as the amount by which the carrying amount
of the Property exceeds its fair value. Fair value is based on quoted market
prices in active markets, if available. If quoted market prices are not
available, an estimated of fair value is based on the best information
available, including prices for similar properties or the results of valuation
techniques such as discounting estimated future cash flows. Considerable
management judgement is necessary to estimate fair value. Accordingly, actual
results could vary significantly from such estimates.
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
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.
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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 August 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) were 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 nine month
period ended August 31, 1999.
For the three and nine month periods ended August 31, 1999, the Registrant's
consolidated revenues were $802,586 and $2,463,487, respectively. Revenues
decreased $39,927 for the three month period when compared to that of prior
year. This decrease in revenues can primarily be attributed to decreases in
common area maintenance reimbursements ($9,330), miscellaneous rental revenues
($10,366), base rental revenue ($21,099), and corporate rent revenue ($6,007).
These decreases were partially offset by an increase in percentage rent revenue
($6,214). The decreases and increase in revenues can be attributed to the
reasons mentioned previously in the property comparisons. The decrease in
revenue of $57,545 for the nine month period is due to decreases in base rent
($65,644), common area maintenance reimbursement ($51,938), utility
reimbursement ($2,435), real estate tax reimbursement ($20,531), and
miscellaneous rental revenue ($6,941) at Cobblestone Court and miscellaneous
resident fees ($4,622) at Woodhollow Apartments. The decreased revenues were
partially offset by increases in percentage rent ($25,169) at Cobblestone Court
and gross potential rent ($50,466) and corporate rent revenue ($18,931) at
Woodhollow Apartments. The decreases in revenue at Cobblestone Court primarily
attributable to the lower occupancy level. The common area maintenance
reimbursement decrease is due to the amount of 1998 reimbursable expenses. The
increase in percentage rent is due to higher reported sales by tenants in 1999.
The increase in gross potential rent is due to increased rental rates and a
stronger occupancy level in the first quarter. The additional corporate revenue
was addressed in the property comparisons.
Consolidated expenses for the three months ended August 31, 1999 and the three
months ended August 31, 1998 were $1,289,534 and $906,328, respectively. The
increase of $383,206 for the period can be primarily attributable to increases
in depreciation ($293,211), payroll ($13,935), cleaning ($12,051), utilities
($7,521), professional fees ($84,148), and corporate unit related expenses
($10,097). These increases were partially offset by decreases in interest
expense ($10,398) and real estate tax ($25,201). The increase in depreciation is
due to recording year to date 1999 depreciation in third quarter at Woodhollow
Apartments as mentioned in the property comparisons. The increase in payroll is
due to additional administrative staff at Woodhollow. The increase in cleaning
is primarily attributable to turnover costs, also at Woodhollow. The increased
professional fees can be attributed to additional costs incurred at both
properties for appraisals and pending sale and partnership litigation issues.
The corporate unit expense increase has also been previously addressed. The
decreased interest expense is due to a more favorable interest rate with loan
refinancing effective November 1998. The real estate tax expense decrease is due
to a lower assessment and tax billing in 1999 at Cobblestone Court. When
comparing the nine months ended August 31, 1999 and 1998, consolidated expenses
were $2,279,889 and $2,656,084, respectively. The decrease of $376,195 can
primarily be attributed to the reversal of liquidation basis entries ($585,461),
reflected in other operating expenses. Decreases were also reflected in interest
($49,526), real estate tax expense ($59,849), management fee expense ($6,480),
and insurance ($5,603). These decreased expenses were partially offset by
increases in depreciation ($66,884), payroll ($34,258), cleaning ($21,994),
utilities ($6,688), professional fees ($164,192), corporate unit expenses
($23,298), and other operating expenses ($12,158). The decrease in interest
-11-
<PAGE>
expense is due to lower interest rates, as mentioned in the property
comparisons. The decrease in real estate tax expense and the increases in
depreciation, payroll, cleaning, professional fees, and corporate unit expense
were addressed above in the three month comparison. The increase in other
operating expenses is primarily due to increased snow removal in the first
quarter.
1998 Comparisons
- ----------------
As of August 31, 1998, the Registrant's consolidated revenues for the quarter
ended are $842,513 and for the nine month period ended August 31, 1998,
consolidated revenues are $2,521,032. Revenues for the corresponding periods in
1997 were $849,036 and $2,545,827. Revenues decreased $6,523 for the quarter
ended August 31, 1998 and decreased $24,795 for the nine month period ended
August 31, 1998 when compared to the corresponding periods of the prior year.
The slight decrease in revenues can be primarily attributable to the decrease in
occupancy at Cobblestone Court Shopping Center.
Consolidated expenses for the quarter ended August 31, 1998 and August 31, 1997
were $906,328 and $898,992, respectively, indicating an increase of $7,336 for
the third quarter 1998 when compared to that of prior period. For the quarter,
expenses increased in depreciation ($7,102), repairs & maintenance expenses
($6,830), payroll expenses ($15,849), and professional fees ($21,995). These
increases were partially offset by decreases in real estate tax ($11,243),
insurance expense ($3,919), cleaning expense ($3,734), utilities ($1,764),
corporate unit expenses ($1,841), renovation expenses ($12,083), and other
operating expenses ($10,135).
Consolidated expenses for the nine month period ended August 31, 1998 and August
31, 1997 were $2,656,084 and $2,677,163, respectively, indicating a decrease of
$21,079 when compared to prior period. For the nine month period, expenses
decreased in insurance ($6,425), real estate tax ($14,359), cleaning expense
($2,527), utilities ($10,149), renovation expense ($23,118), and other operating
expenses ($52,883). These decreases were partially offset by increases in
interest expense ($15,678), depreciation ($24,296), repairs and maintenance
($13,172), and payroll ($33,588). The other operating expense decrease
represents decreases in parking lot expenses ($6,648), snow removal ($36,993),
and trash removal ($7,632). The increase in payroll expense can be attributed to
additional personnel.
Inflation
- ---------
The effects of inflation did not have a material impact upon the Registrant's
operation in 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
and its general partner moved to dismiss the complaint on various grounds,
including the fact that the sale transaction did not take place. Plaintiff has
dismissed its federal securities law claim and claim for injunction against the
sale. The motion to dismiss remains pending before the court. 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 on Page 14
(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: October 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)
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000700720
<NAME> NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-START> DEC-01-1998
<PERIOD-END> AUG-31-1999
<CASH> 121,929
<SECURITIES> 0
<RECEIVABLES> 139,964
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 291,974
<PP&E> 16,159,531
<DEPRECIATION> 8,502,254
<TOTAL-ASSETS> 11,463,633
<CURRENT-LIABILITIES> 477,858
<BONDS> 13,857,633
<COMMON> 0
0
0
<OTHER-SE> (2,944,935)
<TOTAL-LIABILITY-AND-EQUITY> 11,463,633
<SALES> 2,463,431
<TOTAL-REVENUES> 2,463,487
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,466,095
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 813,794
<INCOME-PRETAX> 183,598
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 183,598
<EPS-BASIC> 13.34
<EPS-DILUTED> 0
</TABLE>
