SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the transition period from ______________________to_________________________
Commission file number 0-13241
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NOONEY INCOME FUND LTD., L.P.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Missouri 43-1302570
- ------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 N. Broadway, Suite 1200, St. Louis, MO 63102-2124
- ------------------------------------------ -------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 206-4600
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- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes ___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date _______.
<PAGE>
PART I
Item 1 - Financial Statements:
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NOONEY INCOME FUND LTD., L.P.
-----------------------------
(A LIMITED PARTNERSHIP)
-----------------------
BALANCE SHEETS
--------------
Sept. 30, December 31,
1998 1997
ASSETS: (Unaudited)
----------- ------------
Cash and Cash Equivalents $ 665,418 $ 865,287
Accounts receivable 70,694 115,038
Prepaid expenses and deposits 19,792 10,520
Investment property, at cost:
Land 1,946,169 1,946,169
Buildings and improvements 8,507,843 8,447,027
------------ ------------
10,454,012 10,393,196
Less accumulated depreciation (4,920,550) (4,731,841)
------------ ------------
5,533,462 5,661,355
Deferred expenses - At amortized cost 116,844 61,295
------------ ------------
$ 6,406,210 $ 6,713,495
============ ============
LIABILITIES AND PARTNERS' EQUITY:
Liabilities:
Accounts payable and accrued expenses $ 41,775 $ 108,209
Accrued real estate taxes 188,603 184,936
Mortgage notes payable 1,155,400 1,197,000
Refundable tenant deposits 137,412 120,017
------------ ------------
$ 1,523,190 $ 1,610,162
Partners' Equity 4,883,020 5,103,333
------------ ------------
$ 6,406,210 $ 6,713,495
============ ============
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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<PAGE>
<TABLE>
NOONEY INCOME FUND LTD., L.P.
-----------------------------
(A LIMITED PARTNERSHIP)
-----------------------
STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY
---------------------------------------------
(UNAUDITED)
-----------
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Rental and other income $ 474,398 $ 443,293 $ 1,342,185 $ 1,366,536
Interest 5,037 5,754 16,063 17,026
----------- ----------- ----------- -----------
479,435 449,047 1,358,248 1,383,562
EXPENSES:
Interest 25,602 29,596 81,810 88,229
Depreciation and amortization 108,593 105,486 329,497 334,451
Real estate taxes 62,526 64,986 192,020 209,673
Property management fees paid to
Nooney, Inc. 28,514 26,650 80,925 82,710
Reimbursement to Nooney, Inc. for
partnership management services
and indirect expenses 6,250 6,250 18,750 18,750
Repairs & maintenance 19,971 18,435 48,329 58,609
Professional services 20,116 17,617 55,426 71,515
Utilities 37,135 35,827 89,460 79,847
Cleaning 15,574 12,301 42,362 40,963
Payroll 16,737 11,682 39,058 34,348
Insurance 17,292 9,538 34,465 28,561
Parking lot/Landscaping 19,178 14,556 33,762 32,547
Vacancy Expense 13,976 755 29,547 7,677
Other operating expenses 25,034 18,453 81,458 95,921
----------- ----------- ----------- -----------
416,498 372,132 1,156,869 1,183,801
----------- ----------- ----------- -----------
NET INCOME $ 62,937 $ 76,915 $ 201,379 $ 199,761
=========== =========== =========== ===========
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 4.43 $ 4.70 $ 12.83 $ 11.46
=========== =========== =========== ===========
PARTNERS' EQUITY:
Beginning of Period $ 5,030,929 $ 5,243,908 $ 5,103,333 $ 5,226,492
Cash distributions to partners (210,846) (105,430) (421,692) (210,860)
Net Income 62,937 76,915 201,379 199,761
----------- ----------- ----------- -----------
End of Period $ 4,883,020 $ 5,215,393 $ 4,883,020 $ 5,215,393
=========== =========== =========== ===========
<FN>
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
</FN>
</TABLE>
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<PAGE>
NOONEY INCOME FUND LTD., L.P.
-----------------------------
(A LIMITED PARTNERSHIP)
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STATEMENTS OF CASH FLOW
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(UNAUDITED)
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Nine Months Ended
Sept.30, Sept.30,
1998 1997
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 201,379 $ 199,761
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 329,497 334,451
Changes in assets and liabilities:
Decrease in accounts receivable 44,344 43,828
Increase in prepaid expenses and deposits (9,272) (3,514)
Increase in deferred expenses (83,441) (6,177)
Decrease in accounts payable and accrued expenses (66,434) (88,127)
Increase in accrued real estate taxes 3,667 24,259
Increase in refundable tenant deposits 17,395 1,209
--------- ---------
Total Adjustments 235,756 305,929
--------- ---------
Net cash provided by operating activities 437,135 505,690
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CASH FLOWS FROM INVESTING ACTIVITIES -
Net additions to investment property (173,712) (148,515)
--------- ---------
Net cash from investing activities (173,712) (148,515)
CASH FLOWS FROM FINANCING ACTIVITIES -
Cash distributions to partners (421,692) (210,860)
Payments on mortgage notes payable (41,600) (48,600)
--------- ---------
Net cash from financing activities (463,292) (259,460)
--------- ---------
NET (DECREASE) INCREASE IN
CASH AND CASH EQUIVALENTS (199,869) 97,715
CASH AND CASH EQUIVALENTS, beginning of period 865,287 797,225
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 665,418 $ 894,940
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION - Cash paid during period for interest $ 81,810 $ 88,229
========= =========
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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<PAGE>
NOONEY INCOME FUND LTD., L.P.
-----------------------------
(A LIMITED PARTNERSHIP)
-----------------------
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
-------------------------------------------------------
NOTE A:
Refer to the Registrant's financial statements for the fiscal year ended
December 31, 1997 which are contained in the Registrant's Annual report on Form
10-K, for a description of the accounting policies which have been continued
without change 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:
The financial statements include only those assets, liabilities, and results of
operations of the partners which relate to the business of Nooney Income Fund.,
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 responsibilities 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 cashflows at September
30, 1998 and for all periods presented have been made. The results of operations
for the three and nine month periods ended September 30, 1998 are not
necessarily indicative of the results which may be expected for the entire year.
NOTE C:
The Registrant's properties are managed by Nooney, Inc., a wholly-owned
subsidiary of CGS Real Estate Company. Nooney Income Investments, Inc., a
general partner, is a 75% owned subsidiary of S-P Properties, Inc. S-P
Properties, Inc is a wholly-owned subsidiary of CGS Real Estate Company.
NOTE D:
The earnings per limited partnership unit for the three and nine months ended
September 30, 1998 and 1997 was computed on 15,180 units, the number of units
outstanding during the periods.
NOTE E:
Effective January 1, 1998, the Registrant adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income," which
established standards for the reporting and display of comprehensive income and
its components. The adoption of this statement did not affect the Registrant's
financial statements for the three and nine month periods ended September 30,
1998 and 1997.
-5-
<PAGE>
ITEM 7: MANAGEMENT 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 Registrant. Actual
results could differ materially from those contemplated by such statements.
Liquidity and Capital Resources
- -------------------------------
Cash on hand as of September 30, 1998 is $665,418, a decrease of $199,869 from
year end December 31, 1997. For the nine month period ended September 30, 1998
net cash provided by operating activities was $437,135. Cash was used for tenant
and capital improvements in the amount of $173,712, payments on mortgage notes
payable in the amount of $41,600, and cash distributed to partners was in the
amount of $421,692. The Registrant anticipates the properties to adequately fund
capital expenditures anticipated for the remainder of 1998. These capital
expenditures are as follows:
Other Leasing
Capital Capital Total
-------- -------- --------
Oak Grove Commons $ 21,000 $ 19,344 $ 40,344
Leawood Fountain Plaza (76%) 13,984 52,682 66,666
-------- -------- --------
$ 34,984 $ 72,026 $107,010
======== ======== ========
At Oak Grove Commons and Leawood Fountain Plaza, leasing capital includes funds
for tenant alterations and lease commissions for new and renewal leases. The
other capital anticipated at Oak Grove Commons is for repaving at the dock
areas. Other capital expenditures at Leawood Fountain Plaza are for sidewalk/
curb replacement and replacing carpet in three building hallways.
Results of Property Operations
- ------------------------------
The results of operations for the Registrant's properties for the quarters ended
September 30, 1998 and 1997 are detailed in the schedule below. Expenses and
revenues of the Registrant are excluded.
Leawood
Oak Grove Fountain
Commons Plaza (76%)
--------- -----------
1998
----
Revenues $226,536 $248,378
Expenses 192,487 214,972
-------- --------
Net Income $ 34,049 $ 33,406
======== ========
1997
----
Revenues $216,789 $227,378
Expenses 160,239 213,850
-------- --------
Net Income $ 56,550 $ 13,528
======== ========
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<PAGE>
For the quarter ended September 30, 1998 and 1997, Oak Grove Commons had net
income of $34,049 and $56,550, respectively. This represents a decrease in net
income of $22,501. Revenues increased $9,747 due to increases in base rental,
miscellaneous, and tax income. These increases were partially offset by a
decrease in common area maintenance reimbursement income. Expenses increased
$32,248 due to increases in real estate tax expense ($5,980), office expenses
($2,795), vacancy expenses ($12,806), and repairs and maintenance ($9,020), when
compared to the similar period of the prior year. The increase in vacancy
expense is due to costs incurred to make units ready for occupancy.
For the quarter ended September 30, 1998 and 1997, Leawood Fountain Plaza had
net income of $33,406 and $13,528, respectively. This represents an increase in
net income of $19,878. Revenues increased $21,000 due to an increase in base
rental income ($39,583), partially offset by a decrease in escalation income
($12,739). The increase in rental income can be attributed to the increased
occupancy level. The decrease in escalation is due to lower anticipated 1998
tenant common area maintenance reimbursements. Expenses, overall, remained
relatively stable with a $1,122 increase reflecting increases in cleaning,
office, parking lot, payroll, and management fees, partially offset by decreases
in repairs and maintenance and real estate taxes.
The occupancy levels at the Registrant's properties are listed below.
Occupancy Levels at September 30,
---------------------------------
Property 1998 1997 1996
- -------- ---- ---- ----
Oak Grove Commons 95% 93% 96%
Leawood Fountain Plaza (76%) 95% 87% 90%
Occupancy at Oak Grove Commons decreased during the third quarter from 98% to
95%. Leasing activity consisted of two new tenants signing leases for 9,100
square feet and two tenants renewing their leases for 6,603 square feet. Two
tenants vacated the property with square footage totaling 13,250. At Oak Grove
Commons one tenant occupies approximately 10% of the available space with a
lease which expires in May 2003.
During the third quarter of 1998 occupancy at Leawood Fountain Plaza increased
from 94% at the beginning of the quarter to 95% at the quarter's end. Leasing
activity during the quarter consisted of the Registrant signing one new lease
for 3,036 square feet and two tenants renewing their leases for 5,991 square
feet. Two tenants vacated their leases which occupied 2,067 square feet. The
property has two major tenants who occupy approximately 10% and 15% of the
available space with leases which expire in July 1999 and expired in July 2001,
respectively.
Each quarter, the General Partners assess the properties for impairment. If
conclusive evidence of an impairment is found in any particular quarter, further
valuation procedures would be performed. Additionally, as a matter of policy,
the Registrant performs appraisals on its properties whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. It is difficult to pinpoint an exact time or event to which
impairment of a real estate investment can be attributed. Reductions in value
are usually recognized at the time an appraisal is completed, if necessary.
-7-
<PAGE>
Year 2000 Issues
- ----------------
The Registrant believes that the impact of the year 2000 will not cause the
Registrant to incur a future expense that will have a material impact on future
results. The management company employed by the Registrant utilizes various
computer software packages as tools in running its accounting operations. The
Registrant's properties are maintained on software provided by a third party.
The management company has received information from that company indicating
that the main software program and all its core products are 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 crucial to the management
company's business are in the process of being updated and the third party
vendor anticipates compliance by the end of 1998.
Results of Consolidated Operations 1998
- ---------------------------------------
As of September 30, 1998, the Registrant's consolidated revenues for the quarter
and nine month period were $479,435 and $1,358,248, respectively. Revenues for
the same time periods for the prior year were $449,047 and $1,383,562. Revenues
increased $30,388 when comparing the three month period and decreased $25,314
when comparing the nine month period ending September 30, 1998 to the similar
periods of the prior year. The increase in revenues for the three month period
can be attributable to an increase in base rental revenue, partially offset by
decreases in escalation and common area maintenance income at both Leawood
Fountain Plaza and Oak Grove Commons. The decrease in revenues for the nine
month period can primarily be attributed to a significant decrease in escalation
and common area maintenance income from both Leawood Fountain Plaza and Oak
Grove Commons.
Consolidated expenses for the quarter ended September 30, 1998 and 1997 were
$416,498 and $372,132, reflecting an increase of $44,366 when comparing current
quarter to prior year. The increase in consolidated expenses for the quarter is
due to increases in depreciation and amortization ($3,107), professional
services ($2,499), cleaning expense ($3,273), payroll ($5,055), insurance
($7,754), parking lot ($4,622), vacancy expenses ($13,221), and other operating
expenses ($6,581). These increases were partially offset by a decrease in
interest expense of ($3,994). The increase in vacancy expense is primarily due
to Oak Grove Commons as mentioned in the property comparisons.
Consolidated expenses for the nine month period ended September 30, 1998 and
1997 were $1,156,869 and $1,183,801, respectively. Operating expenses decreased
$26,932 when comparing the current nine month period to that of prior year. The
decrease in expenses can be attributed to decreases in interest expense
($6,419), depreciation and amortization ($4,954), real estate tax expense
($17,653), repairs and maintenance ($10,280), professional services ($16,089),
and other operating expenses ($14,463). These decreases were partially offset by
increases in utilities ($9,613), payroll ($4,710), insurance ($5,904), and
vacancy expense ($21,870). The decrease in real estate tax is due to tax savings
reflected at both Leawood Fountain Plaza ($8,917) and Oak Grove Commons
($8,736). The decrease in professional services is primarily due to a decrease
in needed professional fees as in prior year. The main expense that decreased
within other operating expenses was fire & crime prevention at Oak Grove
Commons. The increase in vacancy expense is due to the same reason as mentioned
above in the three month comparisons.
-8-
<PAGE>
Results of Consolidated Operations 1997
- ---------------------------------------
As of September 30, 1997, the Registrant's consolidated revenues for the quarter
ended and nine month period ended were $449,047 and $1,383,562, respectively.
Revenues for the same time periods for the prior year were $414,730 and
$1,263,594. Revenues increased $34,317 and $119,968 when comparing the three
months and nine months ended September 30, 1997, to the similar periods of the
prior year. The increase in revenues can be attributable to increases in base
rental revenues and escalation income at Leawood Fountain Plaza and increases in
common area maintenance reimbursement income at Oak Grove Commons.
Consolidated expenses for the quarter ended September 30, 1997 and 1996 were
$372,132 and $437,513. A decrease of $65,381 when comparing the quarter ended
September 30, 1997 to the same period in the prior year. The decrease in
consolidated expenses for the quarter is due to a decrease in parking
lot/landscaping ($39,640), depreciation and amortization ($16,030), and other
operating expenses ($36,254), partially offset by an increase in professional
services ($14,025) and real estate taxes ($13,111). The change in other
operating expenses primarily includes the preventative maintenance on the
sprinkler system in the prior year. During the fourth quarter of 1996, Leawood
Fountain's property was reassessed significantly higher than the prior year. The
full increase was recorded during the fourth quarter of 1996. The 1997 real
estate tax expense includes this increased expense. No significant increase in
real estate tax expense is anticipated for the year ended 1997 compared to the
year ended 1996.
Consolidated expenses for the nine month period ended September 30, 1997 and
September 30, 1996, were $1,183,801 and $1,194,520, respectively. Operating
expenses decreased $10,719 when comparing the nine months ended September 30,
1997 to the similar period of the prior year. The decrease in expenses was due
to a decrease in utilities ($15,793), parking lot/landscaping ($39,167),
depreciation and amortization ($21,356) and other operating expenses ($13,223),
partially offset by an increase in professional services ($26,355) and real
estate taxes ($51,977).
Inflation
- ---------
The effects of inflation did not have a material impact upon the Registrant's
operations.
-9-
<PAGE>
PART II. OTHER INFORMATION
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.
NOONEY INCOME FUND LTD., L.P.
Dated: November 13, 1998 By: Nooney Income Investments, Inc.
------------------- -----------------------------------
General Partner
By: /s/ Gregory J. Nooney, Jr.
------------------------------
Gregory J. Nooney, Jr.
Director
Chairman of the Board/Chief Executive Officer
By: /s/ Patricia A. Nooney
--------------------------
Patricia A. Nooney-Director
Senior Vice President and Secretary
BEING A MAJORITY OF THE DIRECTORS
-10-
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
3 Amended and Restated Agreement and Certificate of
Limited Partnership, dated November 7, 1983, is
incorporated by reference to the Prospectus
contained in Post-Effective Amendment No. 1 to the
Registration Statement on Form S-11 under the
Securities Act of 1933 (File No. 2-85683)
27 Financial Data Schedule (provided for the
information of U.S. Securities and Exchange
Commission only)
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR NOONEY INCOME FUND LTD., L.P. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000725266
<NAME> NOONEY INCOME FUND LTD., L.P.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 665,418
<SECURITIES> 0
<RECEIVABLES> 70,694
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 755,904
<PP&E> 10,454,012
<DEPRECIATION> 4,920,550
<TOTAL-ASSETS> 6,406,210
<CURRENT-LIABILITIES> 230,378
<BONDS> 1,155,400
<COMMON> 0
0
0
<OTHER-SE> 4,883,020
<TOTAL-LIABILITY-AND-EQUITY> 6,406,210
<SALES> 1,342,185
<TOTAL-REVENUES> 1,358,248
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,075,059
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81,810
<INCOME-PRETAX> 201,379
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 201,379
<EPS-PRIMARY> 12.83
<EPS-DILUTED> 0
</TABLE>
