<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1998
----------------------------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
------------------------ ---------------------
Commission file number 0-13754
-----------------
NOONEY REALTY TRUST, INC.
- ------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Missouri 43-1339136
- --------------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 N. Broadway, St. Louis, Missouri 63102
- ----------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 206-4600
--------------------------
- ------------------------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None Not Applicable
- ------------------------------ ---------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock - $1.00 Par Value
------------------------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No .
-------- --------
<PAGE> 2
/ / Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
As of February 1, 1999, there were 866,624 shares of the Registrant's
common stock, par value $1 per share, issued and outstanding. (See Item 3:
Legal Proceedings - the number of outstanding shares is in dispute).
Documents incorporated by reference:
(1) Portions of the Registrant's 1998 Annual Report to Shareholders are
incorporated by reference in Parts I & II of this Annual Report on Form 10-K.
-2-
<PAGE> 3
PART I
------
ITEM 1: BUSINESS
- --------------------
It should be noted that this 10-K contains forward-looking information (as
defined in the Private Securities Litigation Reform Act of 1995) that
involves risk and uncertainty, including trends in the real estate investment
market, projected leasing and sales, and the future prospects for the
Registrant. Actual results could differ materially from those contemplated
by such statements.
Nooney Realty Trust, Inc. (the "Registrant" or "Trust") is a corporation
formed under The General and Business Corporation Law of Missouri on June 14,
1984, to make equity investments in income-producing real properties,
primarily commercial and light industrial properties. The Registrant has
invested in three real property investments as set forth in Item 2 below.
The Registrant's primary investment objectives are to preserve and protect
Shareholders' capital, provide the maximum possible cash distributions to
Shareholders and provide for capital growth through appreciation in property
values. Since 1985 the Registrant has qualified as a real estate investment
trust ("REIT") under the Internal Revenue Code. It was management's original
objective to sell or refinance the Registrant's properties approximately
eight to twelve years after their acquisition. The depression of real estate
values experienced nationwide from 1988 to 1993 lengthened this time frame in
order to achieve the goal of capital appreciation.
The real estate investment market began to improve in 1994, and has
continued this improvement through 1998, and is expected to further continue
its improvement over the next several years. Management believes this trend
should increase the value of the Trust's properties in the future. The
status of the Trust's individual properties and opportunities to increase
their value is carefully reviewed by management and the Board of Directors on
a quarterly basis along with any proposals or opportunities that are
presented to expand or merge the Trust.
The Registrant is intended to be self-liquidating and the proceeds from the
sale or refinancing of the Registrant's real property investments will not be
invested in new properties but will be distributed to the Shareholders or, at
the discretion of management, applied to capital improvements to, or the
payment of indebtedness with respect to, existing properties, other expenses
or the establishment of reserves.
The business in which the Registrant is engaged is highly competitive. The
Registrant's investment properties are located in or near major urban areas
and are subject to competition from other similar types of properties in such
areas. The Registrant competes for tenants for its properties with numerous
other real estate investment trusts, as well as with individuals,
corporations, real estate limited partnerships and other entities engaged in
real estate investment activities. Such competition is based on such factors
as location, rent schedules and services and amenities provided.
-3-
<PAGE> 4
The Registrant retained Nooney Advisors Ltd., L.P. (the "Advisor"), a
Missouri limited partnership, to serve as the Registrant's investment and
financial counselor and to supervise the day-to-day operations of the
Registrant. Property management services for the Registrant's investment
properties are provided by "independent contractors" (as defined in the
Internal Revenue Code and regulations promulgated thereunder), which
independent contractor was Nooney, Inc., which is an affiliate of the
Advisor.
Throughout the 10-K, references are made to the following companies listed in
Column A below. Please note that on January 28, 1998, the names of said
companies were changed to the names listed in Column B below.
<TABLE>
<CAPTION>
Column A Column B
-------- --------
<S> <C>
Nooney Company Brooklyn Street Properties, Inc.
Nooney Krombach Company Hanley Brokers, Inc.
</TABLE>
ITEM 2: PROPERTIES
- ----------------------
On March 28, 1985, the Registrant purchased The Atrium at Alpha Business
Center ("The Atrium"), an office building located at 2626 East 82nd Street in
Bloomington, Minnesota, a suburb of Minneapolis. The Atrium contains
approximately 89,000 net rentable square feet and is located, along with a
parking lot that will accommodate 336 cars, on a 4.2 acre site. The purchase
price of The Atrium was $8,393,716. The Atrium was 76% leased by 27 tenants
at year-end.
On January 22, 1986, the Registrant purchased the Applied Communications,
Inc. Building (the "ACI Building"), an office building located at 330 South
108th Avenue in Omaha, Nebraska. The ACI Building contains approximately
70,000 net rentable square feet and is located on a 7.59 acre site which
provides paved parking for 400 cars. The purchase price of the ACI Building
was $6,401,008. The building is 100% leased by a single tenant, Applied
Communications, Inc.
On December 16, 1986, the Registrant purchased the Franklin Park Distribution
Center ("Franklin Park"), a warehouse and distribution facility located at
3431 N. Powell Avenue in Franklin Park, Illinois, a suburb west of Chicago.
Franklin Park contains approximately 162,000 net rentable square feet and is
located on a 5 acre site which provides parking for 100 cars. The purchase
price of Franklin Park was $4,301,494. Franklin Park was 57% leased by 1
tenant at year-end.
Reference is made to Note 3 of Notes to Financial Statements incorporated by
reference to the Registrant's 1998 Annual Report to Shareholders under the
heading "Financial Statements and Notes" for a description of the mortgage
indebtedness secured by the Registrant's real property investments.
Reference is also made to Note 6 of Notes to Financial Statements for a
discussion of revenues derived from major tenants.
-4-
<PAGE> 5
The following table sets forth certain information as of December 31, 1998,
relating to the properties owned by the Registrant.
<TABLE>
<CAPTION>
============================================================================================================================
AVERAGE
ANNUALIZED
EFFECTIVE
TOTAL BASE RENT PRINCIPAL TENANTS
SQUARE ANNUALIZED PER SQUARE PERCENT OVER 10% OF PROPERTY LEASE
PROPERTY FEET BASE RENT FOOT LEASED SQUARE FOOTAGE EXPIRATION
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Atrium At Alpha
Business Center 89,000 $1,034,355 $15.14 76% Case Corp. (11%) 1999
Applied
Communications Inc. Applied Communications,
Building 70,000 $987,000 $14.10 100% Inc. (100%) 2008
Franklin Park
Distribution Center 162,000 $280,152 $3.05 57% Household Finance (57%) 1999
============================================================================================================================
</TABLE>
ITEM 3: LEGAL PROCEEDINGS
- -----------------------------
During 1998, the Trust successfully completed litigation of State of Missouri
ex rel. KelCor, Inc. v. Nooney Realty Trust, Inc. On August 7, 1997, KelCor,
Inc., a shareholder of the Trust, filed a Petition for mandamus relief
against the Trust. KelCor's Petition sought a writ of mandamus compelling
the Trust to hold an Annual Meeting of shareholders by October 31, 1997. The
Trust opposed KelCor's Petition on the basis that the Trust was unable to
hold a valid meeting because of uncertainty over the validity of certain
shares of the Trust and that the determination of the validity of those
shares needed to first be determined. The case was tried before the Court on
December 1, 1997, on which date the Court entered a permanent order of
mandamus requiring the Trust to hold an Annual Meeting by January 15, 1998.
The Trust appealed the Court's order to the Missouri Court of Appeals for the
Eastern District. On April 14, 1998, the Court of Appeals reversed and
remanded the cause to the trial court with directions to quash the writ of
mandamus, finding that KelCor had attempted "to play fast and loose with the
court." The trial court quashed the writ of mandamus and entered judgment
for the Trust on October 22, 1998.
The Trust is a party to a lawsuit entitled Nooney Realty Trust, Inc. v.
David L. Johnson, et al. This lawsuit has been filed in the Circuit Court of
Jackson County, Missouri. On August 18, 1997, the Trust filed a petition for
declaratory judgment against certain individuals and entities who claim to
hold shares of the Trust. The Trust initiated the suit to obtain a judicial
determination of the validity and status of some of the Trust's shares (known
as "Excess Shares") which Defendants claim to have purchased as a group on
August 26, 1997. The Defendants moved to dismiss the suit and/or to stay the
suit pending resolution of a mandamus suit filed by KelCor, Inc. against the
Trust on August 7, 1997, in St. Louis County, Missouri. On December 9, 1997,
the Court denied Defendant's motion to dismiss the suit but stayed the case
pending disposition of the mandamus action. The mandamus action has been
resolved in favor of the Trust. On July 10, 1998, pursuant to a motion made
by Defendants on June 25, 1998, the Court ordered that the December 9, 1997
order staying the proceedings be lifted and that the case be placed on the
active trial docket. On July 7, 1998, the Trust filed an Amended Petition to
add two additional Defendants to the case and to add additional claims
against certain of the Defendants for
-5-
<PAGE> 6
malicious prosecution and abuse of process. The Defendants, on August 3,
1998, filed a Motion for Summary Judgment to dismiss the Trust's count for
declaratory judgment. On December 11, 1998, the Trust filed its cross-motion
for summary judgment on the declaratory judgment count and the parties'
cross-motions are currently pending before the Court. The case has been
placed on the March 29, 1999, trial docket call. The Board of Directors
intends for the validity and status of the Excess Shares to be finally
determined pursuant to this suit.
While the results of such litigation cannot be predicted with certainty,
management, after discussion with counsel, believes the final outcome will
not have a material adverse effect on the financial position and results of
operations reflected in the financial statements that are incorporated by
reference. In addition, a determination in the lawsuit that the Trust's
shares at issue are Excess Shares may result in these shares being returned
to the Trust's treasury without compensation, thus reducing the number of
shares outstanding and increasing shareholders' equity per outstanding share.
At this point, however, management cannot predict with certainty whether such
shares will be deemed to be Excess Shares or how such shares will be treated
if they are deemed to be Excess Shares. Once the validity and status of the
Excess Shares can be determined, the Trust will be in a position to hold an
Annual Meeting. Until the validity of the Excess Shares is known, the
payment of dividends has been suspended. In order for the Trust to continue
to qualify as a REIT, substantially all of the Trust's taxable income must be
distributed to its shareholders. Accordingly, lack of resolution of the
status of the Excess Shares could affect the Trust's ability to continue to
qualify as a REIT under the Internal Revenue Code in the future. The cost of
these lawsuits negatively impacted earnings during 1998 and 1997.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ---------------------------------------------------------------
There were no matters submitted to a vote of Shareholders during the fourth
quarter of fiscal 1998.
PART II
-------
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
- -----------------------------------------------------------------
STOCKHOLDER MATTERS
-------------------
The information required by Item 201 of Regulation S-K is incorporated by
reference to the Registrant's 1998 Annual Report to Shareholders under the
headings "Market Information" and "Dividends".
ITEM 6: SELECTED FINANCIAL DATA
- -----------------------------------
The information required by Item 301 of Regulation S-K is incorporated by
reference to the Registrant's 1998 Annual Report to Shareholders under the
heading "Financial Highlights".
-6-
<PAGE> 7
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- -------------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
The information required by Item 303 of Regulation S-K is incorporated by
reference to the Registrant's 1998 Annual Report to Shareholders under the
heading "Management's Discussion and Analysis of Financial Condition and
Results of Operations".
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
- -----------------------------------------------------------------
RISK
----
The Registrant considered the provision of Financial Reporting Release No.
48 "Disclosure of Accounting Policies for Derivative Financial Instruments
and Derivative Commodity Instruments, and Disclosure of Quantitative and
Qualitative Information about Market Risk Inherent in Derivative Financial
Instruments, Other Financial Instruments and Derivative Commodity
Instruments". The Registrant had no holdings of derivative financial or
commodity instruments at December 31, 1998. A review of the Registrant's
other financial instruments and risk exposures at that date revealed that the
Company had no exposure to interest rate risk.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- -------------------------------------------------------
The financial statements of the Registrant are incorporated by reference to
the Registrant's 1998 Annual Report to Shareholders. Financial Statement
Schedules are filed herewith as Exhibit 99.1 and are incorporated herein by
reference. The supplementary financial information specified by Item 302 of
Regulation S-K is not applicable.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
- ------------------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------
None
-7-
<PAGE> 8
PART III
--------
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- --------------------------------------------------------------
EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------
The following table sets forth certain information with respect to the
executive officers of the Registrant as of March 1, 1999.
<TABLE>
<CAPTION>
Has served as
Name Position Age officer since
---- -------- --- -------------
<S> <C> <C> <C>
William J. Carden Chief Executive Officer and 54 March 1, 1998
Chairman of the Board
Gregory J. Nooney, Jr.<F1> Vice Chairman 68 1984
Thomas N. Thurber Treasurer and CFO 48 March 1, 1998
Patricia A. Nooney <F1> President and Secretary 42 1990
<FN>
<F1> Patricia A. Nooney is the daughter of Gregory J. Nooney, Jr.
</TABLE>
William J. Carden is founder and President of CGS Real Estate Company, Inc.
of Newport Beach, California. CGS Real Estate Company is a diversified real
estate investment management company which owns commercial and residential
real estate. (See also Item 13). Mr. Carden founded Texas-DVM Properties,
Inc. in 1974 which concentrated on rehabilitation of retail, office,
industrial, and commercial real estate. Mr. Carden is a former Director of
Bay Financial, a New York Stock Exchange company.
Gregory J. Nooney, Jr. has served as Chairman of the Board and Chief
Executive Officer of Brooklyn Street Properties, Inc. since May 1983. Mr.
Nooney joined Brooklyn Street Properties, Inc. in 1954 and served as
President from 1969 to May 1983. Brooklyn Street Properties, Inc., which
was founded in 1945, is a real estate investment company. Mr. Nooney is
currently Chairman of Nooney, Inc. (See also Item 13.) In addition, Mr.
Nooney was Chairman and Chief Executive Officer of the Registrant from 1984
through February 1998.
Thomas N. Thurber is a Certified Public Accountant who began his career with
Arthur Andersen & Co. in 1972. In 1979, he joined a major publicly traded
real estate development firm (Daon) where he became Controller for U.S.
Operations. Subsequently, Mr. Thurber served as Director of Real Estate for
a developer of retail properties, and Chief Financial Officer of a trust with
significant investments in commercial real estate. Mr. Thurber holds a
bachelors degree in accounting from Florida State University.
-8-
<PAGE> 9
Patricia A. Nooney is President of Nooney, Inc., a wholly-owned subsidiary of
CGS Real Estate Company. (See also Item 13.) Ms. Nooney joined Brooklyn
Street Properties, Inc. in 1981 and has served as an officer since 1985.
Since 1990, Ms. Nooney has been President and Secretary of the Registrant.
DIRECTORS OF THE REGISTRANT
- ---------------------------
The following table sets forth certain information with respect to the Board
of Directors of the Registrant.
<TABLE>
<CAPTION>
NAME AGE POSITIONS OR OFFICES
---- --- WITH THE TRUST
--------------------
<S> <C> <C>
William J. Carden 54 Chairman of the Board, Chief
Executive Officer and Director
Gregory J. Nooney, Jr. 68 Vice Chairman and Director
Lawrence E. Fiedler 60 Director<F*>
William W. Geary, Jr. 56 Director<F*>
James P. Ingram 58 Director<F*>
<FN>
<F*>Independent Director as defined in the Trust's Bylaws.
</TABLE>
Mr. Nooney and Mr. Ingram have served as directors of the Trust since its
formation in June 1984. Mr. Carden, Mr. Fielder and Mr. Geary have served as
directors since November 1997.
The following is a brief summary of the business experience during the past
five years of each of the directors of the Trust, including, where
applicable, information regarding other directorships held by each director:
William J. Carden is founder and President of CGS Real Estate Company, Inc.
of Newport Beach, California. CGS Real Estate Company is a diversified real
estate investment management company which owns commercial and residential
real estate. Mr. Carden founded Texas-DVM Properties, Inc. in 1974 which
concentrated on rehabilitation of retail, office, industrial, and commercial
real estate. Mr. Carden is a former Director of Bay Financial, a New York
Stock Exchange company.
Gregory J. Nooney, Jr. has served as Chairman of the Board and Chief
Executive Officer of Brooklyn Street Properties, Inc. since May 1983. Mr.
Nooney joined Brooklyn Street Properties, Inc. in 1954 and served as
President from 1969 to May 1983. Brooklyn Street Properties, Inc.,
-9-
<PAGE> 10
which was founded in 1945, is a real estate investment company. From 1984
through February 1998, Mr. Nooney was Chairman and Chief Executive Officer of
the Registrant.
Lawrence E. Fiedler is a real estate owner, consultant and educator. He is a
principal in JRM Development Enterprises, Inc., JRM Nebraska Management and
Leasing Corp., as well as various limited partnerships and joint venture
agreements. He is a professor at New York University.
William W. Geary, Jr. is President of Carlsberg Management Company, which is
a large diversified real estate management company. Previously, he served as
Vice President of Walston & Co., Inc., Chicago, Illinois. Mr. Geary also
serves as a director of IDM Corporation.
James P. Ingram is President of Cambridge Savings Bank, Cambridge,
Massachusetts. From 1986 through 1987 Mr. Ingram was a partner in McManus,
Wakeman & Ingram, Inc., Boston, Massachusetts, a real estate consulting and
development firm. From 1965 until December 1985, Mr. Ingram was employed by
R.M. Bradley & Co., Inc., Boston, Massachusetts, a full service commercial
real estate investment and management company, most recently as Senior Vice
President. While with R.M. Bradley & Co., Inc., Mr. Ingram was primarily
involved in management of the Bradley Real Estate Trust, a real estate
investment trust, and in office, retail and commercial brokerage.
ITEM 11: EXECUTIVE COMPENSATION
- ----------------------------------
Gregory J. Nooney, Jr. was Chief Executive Officer from January 1, 1998
through February 28, 1998. He did not receive any direct compensation from
the Registrant for his services as Chief Executive Officer. (See Part III,
Item 13 below). William J. Carden became Chief Executive Officer of the
Registrant on March 1, 1998.
-10-
<PAGE> 11
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------------------------
Annual Compensation<F1> Long-Term Compensation<F1>
----------------------------------------------------------------------------
Awards Payouts
----------------------------------------------------------------------------
Securities
Other Under-
Annual Restricted Lying All Other
Compen- Stock Options/ LTIP Compen-
Name and Principal Salary Bonus sation Award(s) SARs Payouts sation
Position Year ($) ($) ($) ($) (#) ($) ($)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William J. Carden, CEO 1998 $166,667<F2> N/A N/A N/A 50,000 N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Mr. Carden's Employment Agreement and Stock Option Agreement provide for
acceleration of deferral or vesting in the event the Registrant is
liquidated or his employent is terminated except for cause.
<F2> $141,667 was deferred until a later date pursuant to his employment
agreement described below.
</TABLE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- -------------------------------------------------------------------------------------------------------------
Potential Realizable
Value At Assumed
Annual Rates of Stock
Individual Grants Price Appreciation For
Option Term
- -------------------------------------------------------------------------------------------------------------
Percent Of
Number Of Total
Securities Options/
Underlying SARs Granted Exercise of ------------------------
Option/SARs To Employees Base Price Expiration
Name Granted (#) In Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William J. Carden, CEO 10,000 13.33% $10<F1> 3/1/04 $34,000 $ 77,200
- -------------------------------------------------------------------------------------------------------------
William J. Carden, CEO 10,000 13.33% $10<F2> 3/1/05 $40,700 $ 94,900
- -------------------------------------------------------------------------------------------------------------
William J. Carden, CEO 10,000 13.33% $10<F3> 3/1/06 $47,700 $114,400
- -------------------------------------------------------------------------------------------------------------
William J. Carden, CEO 10,000 13.33% $10<F4> 3/1/07 $55,100 $135,800
- -------------------------------------------------------------------------------------------------------------
William J. Carden, CEO 10,000 13.33% $10<F5> 3/1/08 $62,900 $159,400
- -------------------------------------------------------------------------------------------------------------
<FN>
<F1> Became exercisable on March 1, 1999. <F4> Becomes exercisable on March 1, 2002.
<F2> Becomes exercisable on March 1, 2000. <F5> Becomes exercisable on March 1, 2003
<F3> Becomes exercisable on March 1, 2001.
</TABLE>
On March 1, 1998, the Registrant entered into an employment agreement with
William J. Carden, as Chief Executive Officer, for a five-year period. The
base compensation is to be $16,666.67 per month, of which $2,500.00 shall be
payable and $14,166.67 shall be payable on a deferred basis without interest
at the end of the term.
The independent directors were entitled to receive the following fees during
1998: (a) $500 for each meeting attended in person; (b) $250 for each meeting
conducted by telephone conference at which a vote was taken; and (c) an
annual fee of $1,000. In addition, the directors were reimbursed by the
Trust for their expenses and other out-of-pocket expenses incurred in
connection with attending meetings of the Trust and carrying on the business
of the Trust.
-11-
<PAGE> 12
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
- ---------------------------------------------------------------
MANAGEMENT
----------
On or about February 3, 1998, Amendment No. 3 to Schedule 13D ("Amendment No.
3") setting forth the following information was filed with the SEC by KelCor,
Inc., a Missouri corporation ("KelCor"), David L. Johnson, Sandra L.
Casetetter, Daniel W. Pishney and John W. Alvey. Amendment No. 3 indicates
that KelCor is the beneficial owner of 41,113 shares of the Trust's common
stock, or approximately 4.74% of the total outstanding shares, and has shared
voting power and shared dispositive power with respect to all of such shares.
Amendment No. 3 further indicates that Mr. Johnson and Ms. Casetetter, who
are husband and wife and the sole shareholders of KelCor, are each the
beneficial owners of 80,682 shares of the Trust's common stock (which number
of shares includes the 41,113 shares of the Trust's common stock of which
KelCor is a beneficial owner), or approximately 9.31% of the total
outstanding shares, and each have shared voting power and shared dispositive
power with respect to all of such shares. Amendment No. 3 also indicates
that Mr. Pishney, who is the President and Chief Operating Officer of Maxus
Properties, Inc., a Missouri corporation of which Mr. Johnson is the
Chairman, Chief Executive Officer and majority shareholder, is the beneficial
owner of 4,100 shares of the Trust's common stock, or approximately 0.47% of
the total outstanding shares, and has sole voting power and sole dispositive
power with respect to all of such shares. Amendment No. 3 indicates that Mr.
Alvey, who is the President and a director of KelCor, is the beneficial owner
of 18,000 shares of the Trust's common stock, or approximately 2.08% of the
total outstanding shares, and has sole voting power and sole dispositive
power with respect to all of such shares. Amendment No. 3 indicates that
KelCor, Mr. Johnson, Ms. Casetetter, Mr. Pishney and Mr. Alvey are each
members of a "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Section
13(d)(3) of the Exchange Act provides that when two or more persons act as a
partnership, limited partnership, syndicate or other group for the purpose of
acquiring, holding, or disposing of securities of an issuer, such syndicate
or group shall be deemed a "person" for purposes of filing Schedule 13D. The
principal business address of each of KelCor, Mr. Johnson, Mr. Pishney and
Mr. Alvey is 1100 Main, Suite 2100, Kansas City, Missouri 64105. The
personal address of Ms. Casetetter is 4617 NW Normandy Lane, Kansas City,
Missouri 64116. The foregoing information is based solely on Amendment No. 3
and is included herein only for the purpose of complying with Item 12 of Form
10-K.
On or about January 20, 1999, Amendment No. 2 to Schedule 13D ("Amendment No.
2") setting forth the following information was filed with the SEC by William
J. Carden (a director and executive officer of the Trust), Kissimee Sq.
Assoc., Ltd., a Texas limited partnership and No.-So., Inc., a Texas
corporation. Amendment No. 2 indicates that Mr. Carden is the beneficial
owner of 79,150 shares of the Trust's common stock, or approximately 9.0% of
the total outstanding shares, and has shared voting power and shared
dispositive power with respect to 69,150 of such shares and sole voting power
and sold dispositive power with respect to 10,000 of such shares, which
10,000 shares Mr. Carden has the right to acquire pursuant to a stock option
which became exercisable on March 1, 1999. Amendment No. 2 further indicates
that each of Kissimee Sq. Assoc., Ltd., and No.-So., Inc. is the beneficial
owner of 69,150 shares of the Trust's common stock, or approximately 8.0% of
the total outstanding shares, and each has shared voting power and shared
dispositive power with respect to all of such shares. Each of Kissimee Sq.
Assoc., Ltd., No.-So., Inc., and Mr. Carden have a principal business address
of 5850 San Felipe, Suite 450, Houston, Texas 77057.
There are several lawsuits currently on file, see Item 3 herein, which
contest the ownership of certain shares of the Registrant.
-12-
<PAGE> 13
The table below sets forth information as of February 1, 1999, regarding the
number of shares of the Trust beneficially owned by each of the directors and
executive officers of the Trust and by all directors and officers as a group:
<TABLE>
<CAPTION>
NAME OF NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED <F1> CLASS <F2>
---------------- ----------------------- ----------
<S> <C> <C>
Gregory J. Nooney, Jr 8,022 <F3> *
William J. Carden 79,150 <F4> 9.0%
Lawrence Fiedler 0 *
William Geary 0 *
James P. Ingram 50 *
Patricia A. Nooney 5,165 *
Thomas N. Thurber 5,000 <F5> *
Directors and officers as a group 97,387 11.05%
<FN>
- ----------
<F1> Under the rules of the Securities and Exchange Commission, persons who
have power to vote or dispose of securities, either alone or jointly
with others, are deemed to be the beneficial owners of such securities.
Accordingly, shares owned separately by spouses or other family members
are not included. Except as described in the footnotes below, the
director has both sole voting power and sole investment power with
respect to the shares set forth in the table.
<F2> An asterisk indicates that the number of shares beneficially owned does
not exceed one percent of the Trust's common stock issued and
outstanding.
<F3> Includes 3,031 shares owned by Brooklyn Street Properties, Inc. (f/k/a
Nooney Company), of which Gregory J. Nooney, Jr. is a director and
shareholder. Includes 3,535 shares held as co-trustee of a trust, as to
which Mr. Nooney shares voting and investment power.
<F4> 69,150 of the shares are owned by Kissimee Sq. Assoc., Ltd., a Texas
limited partnership, the general partner of which is No.-So., Inc., a
Texas corporation, of which Mr. Carden is the President. As the general
partner of Kissimee Sq. Assoc., Ltd., No.-So., Inc. has the power to
control the voting and disposition of these 69,150 shares, and as the
president of No.-So., Inc., Mr. Carden may be deemed to have control
over the manner in which No.-So., Inc. exercises its power to vote and
dispose of these shares. As such, Mr. Carden may be deemed to share
voting power and investment power with Kissimee Sq. Assoc., Ltd. and
No.-So., Inc. with respect to 69,150 of the shares. Mr. Carden has the
right to acquire beneficial ownership of up to 10,000 of the shares by
exercise of a stock option, which stock option became exercisable on
March 1, 1999.
<F5> Mr. Thurber has the right to acquire beneficial ownership of all of such
shares by exercise of a stock option which became exercisable on
March 1, 1999.
</TABLE>
-13-
<PAGE> 14
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ----------------------------------------------------------
Prior to October 31, 1997, Gregory J. Nooney, Jr. served as a General Partner
of Nooney Advisors Ltd., L.P., the advisor to the Trust. Nooney Advisors
Ltd., L.P., was entitled to receive regular monthly compensation from the
Trust for rendering advisory services to the Trust. During 1997 the Trust
paid advisory fees of $118,906 to Nooney Advisors Ltd., L.P. The Board of
Directors had renewed the Advisory Agreement between the Trust and Nooney
Advisors Ltd., L.P. for the period April 1, 1997 to March 31, 1998. (See
below). Gregory J. Nooney, Jr. and Patricia A. Nooney, who are father and
daughter, are officers and directors of Nooney Krombach Company, a
wholly-owned subsidiary of Nooney Company, who served as manager of the
Trust's properties. Nooney Krombach Company was entitled to receive monthly
compensation from the Trust for property management and leasing plus
reimbursement of expenses. During 1997, the Trust paid property management
fees of $98,558 to Nooney Krombach Company.
On October 31, 1997, Nooney Company sold its property management business
operated through its wholly-owned subsidiary, Nooney Krombach Company, to
Nooney Real Estate Company D/B/A Nooney, Inc., an indirect wholly-owned
subsidiary of CGS Real Estate Company, Inc., a Texas corporation.
Simultaneously Nooney Company, Gregory J. Nooney, Jr. and PAN, Inc. sold
their general and limited partnership interest in Nooney Advisors Ltd., L.P.,
the external advisor to the Registrant to S-P Properties, Inc., a California
corporation, which also is a wholly-owned subsidiary of CGS Real Estate
Company. Prior to the sale, the independent Directors of the Registrant
approved the change in control of the Advisor and authorized a new management
contract for the Registrant's properties with Nooney, Inc., with the same
terms and expiration dates as the existing advisory and management contracts.
In 1997 lease commissions of $8,266 were paid by the Trust to Nooney, Inc.
for period from November 1, 1997, to December 31, 1997. In the same period,
the Trust paid Nooney, Inc. management fees of $19,711.
On December 10, 1997, at a Special Board meeting, all of the Independent
Directors voted unanimously to change the governance and management of the
Trust to that of an internally self-managed Trust. The remaining two
Directors abstained from voting.
On December 10, 1997, letters were sent to Nooney Advisors Ltd., L.P., the
current Advisor to the Trust, and Nooney, Inc., the property manager,
notifying them that their contracts would be canceled in 60 days (on February
9, 1998) in accordance with the terms of the respective agreements. During
1998 the Registrant paid advisory fees of $13,368 to Nooney Advisors, L.P.
for the period January 1 through February 9, 1999.
In 1998 lease commissions of $102,229 were paid by the Registrant to Nooney,
Inc. and property management fees of $10,160 were paid.
Effective February 10, 1998, the Trust reimburses Nooney, Inc., a
wholly-owned subsidiary of CGS Real Estate Company, for various salary
(including salary for Gregory J. Nooney, Jr.) and overhead expenses. During
1998 such reimbursements amounted to $188,100.
-14-
<PAGE> 15
PART IV
-------
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
- ----------------------------------------------------
AND REPORTS ON FORM 8-K
-----------------------
(a) The following documents are filed as a part of this report:
1. Financial Statements:
The financial statements of the Registrant are incorporated
by reference to the Registrant's 1998 Annual Report to
Shareholders.
2. Financial Statement Schedules (filed herewith as Exhibit 99.1):
Schedule III - Real Estate and Accumulated Depreciation
All other schedules are omitted because they are
inapplicable or not required under the instructions.
3. Exhibits:
See Exhibit Index on Page 18.
(b) Reports on Form 8-K:
During the last quarter of the period covered by this report, the
Registrant filed no reports on Form 8-K.
(c) Exhibits:
See Exhibit Index on Page 18.
(d) Not Applicable.
-15-
<PAGE> 16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 REALTY TRUST, INC.
Date: March 25, 1999 By: /s/ William J. Carden
-------------------- -----------------------------------------------
William J. Carden
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 25, 1999, by the following persons on
behalf of the Registrant and in the capacities indicated.
/s/ William J. Carden
-----------------------------------------------------
William J. Carden
Chief Executive Officer
and Director
/s/ Patricia A. Nooney
-----------------------------------------------------
Patricia A. Nooney
President and Secretary
/s/ Thomas N. Thurber
-----------------------------------------------------
Thomas N. Thurber
Treasurer and Chief Financial Officer
-16-
<PAGE> 17
/s/ Gregory J. Nooney, Jr.
-----------------------------------------------------
Gregory J. Nooney, Jr.
Director
/s/ James P. Ingram
-----------------------------------------------------
James P. Ingram
Director
/s/ Lawrence E. Fiedler
-----------------------------------------------------
Lawrence E. Fiedler
Director
/s/ William W. Geary, Jr.
-----------------------------------------------------
William W. Geary, Jr.
Director
-17-
<PAGE> 18
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
3.1 Articles of Incorporation dated June 12, 1984, are
incorporated by reference to Exhibit 3(a) to the
Registration Statement on Form S-11 under the Securities
Act of 1933 (File No. 2-91851).
3.2 Bylaws of the Registrant, as amended, are incorporated
by reference to Exhibit 3.2 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31,
1987, as filed pursuant to Rule 13a-1 under The Securities
Exchange Act of 1934 (File No. 0-13754).
10.1 Dividend Reinvestment Agreement between Mellon
Bank, N.A. and the Registrant is incorporated
by reference to Exhibit 10(d) to Amendment No. 1 to the
Registration Statement on Form S-11 under the Securities
Act of 1933 (File No. 2-91851).
10.2 Dividend Reinvestment Plan is incorporated by reference
to pages A-1 - A-3 of the Prospectus of the Registrant
dated September 25, 1984, as supplemented and filed
pursuant to Rule 424(c) under the Securities Act of 1933
(File No. 2-91851).
10.3 Employment Agreement and Exhibit A for William J. Carden, dated as
of March 1, 1998, is incorporated by reference to Exhibit 10.5 to
the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, as filed pursuant to Rule 13a-1 under The
Securities Exchange Act of 1934 (File No. 0-13754).
10.4 Stock Option Agreement for William J. Carden, dated as of March 1,
1998, is incorporated by reference to Exhibit 10.6 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, as filed pursuant to Rule 13a-1 under The
Securities Exchange Act of 1934 (File No. 0-13754).
10.5 Employment Agreement and Exhibit A for Thomas N. Thurber, dated as
of March 1, 1998, is incorporated by reference to Exhibit 10.7 to
the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, as filed pursuant to Rule 13a-1 under The
Securities Exchange Act of 1934 (File No. 0-13754).
-18-
<PAGE> 19
10.6 Stock Option Agreement for Thomas N. Thurber,
dated as of March 1, 1998, is incorporated
by reference to Exhibit 10.8 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31,
1997, as filed pursuant to Rule 13a-1 under The Securities
Exchange Act of 1934 (File No. 0-13754).
10.7 Filed herewith. Amendment No. 1 to Nonqualified Stock
Option Agreement for William J. Carden, dated as of May 28, 1998.
10.8 Filed herewith. Amendment No. 1 to Nonqualified Stock
Option Agreement for Thomas N. Thurber dated as of May 28, 1998.
10.9 Filed herewith. Landlord's Exclusive Commercial Listing
Agreement between the Registrant and Nooney, Inc.
dated as of February 10, 1998.
10.10 Filed herewith. Management Contract between the Registrant and
Nooney, Inc. dated as of November 1, 1997.
13 1998 Annual Report to Shareholders. Except for those
portions expressly incorporated by reference in this
Form 10-K, the 1998 Annual Report to Shareholders is
furnished for the information of the Commission and is
not to be deemed "filed" as part of this Form 10-K.
27 Financial Data Schedule (provided for the information of the
Securities and Exchange Commission only)
99.1 Financial Statement Schedules.
</TABLE>
-19-
<PAGE> 1
EXHIBIT NO. 10.7
AMENDMENT NO. 1 TO
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AMENDMENT, made as of the 28th day of May, 1998, by and
between NOONEY REALTY TRUST, INC., a Missouri corporation (hereinafter called
the "Company"), and WILLIAM J. CARDEN (hereinafter called "Optionee"),
WITNESSETH THAT:
WHEREAS, Optionee is serving as Chief Executive Officer of the
Company and, in connection therewith, the Board of Directors of the Company
("Board of Directors") have heretofore granted to Optionee a stock option
pursuant to the terms of that certain Nonqualified Stock Option Agreement
dated as of March 1, 1998 by and between the Company and Optionee (the
"Nonqualified Stock Option Agreement"),
WHEREAS, Optionee and the Company desire to amend such
Nonqualified Stock Option Agreement as of the date hereof in the manner set
forth below.
NOW, THEREFORE, in consideration of the premises, and of the
mutual agreements hereinafter set forth, it is covenanted and agreed as
follows:
1. The parties hereto agree to add a new Paragraph 9 to the
Nonqualified Stock Option Agreement as follows:
"9. Certain Limitations. Notwithstanding anything to the
--------------------
contrary contained herein or elsewhere, the option granted to Optionee
pursuant to Paragraph 1 hereof shall automatically become void ab initio
---------
(from the beginning) without any further action on the part of any party
whatsoever to the extent, and only to the extent, that the existence of such
option or the exercise of such option with respect to any given share of
Common stock on the
<PAGE> 2
terms set forth herein by the Optionee would violate or would result in the
violation of any of the terms and conditions of the Bylaws of the Company,
including, without limitation, the provisions of Section 8.8(a) of the Bylaws
relating to the 9.8% ownership limitation set forth therein. This provision
shall not affect the option in any manner whatsoever to the extent that the
existence or exercise of such option will not or will not result in a
violation of the terms of the Bylaws of the Company."
2. This Amendment may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which taken together
shall constitute one and the same instrument.
3. Except as specifically amended hereby, the terms and
conditions of the Nonqualified Stock Option Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed on its behalf by its President, pursuant to due authorization, and
Optionee has signed this Agreement to evidence his agreement to the foregoing
Amendment, all as of the date first above written.
NOONEY REALTY TRUST, INC.
By /s/ Patricia A. Nooney
----------------------------------------------
President
/s/ William J. Carden
----------------------------------------------
WILLIAM J. CARDEN
<PAGE> 1
EXHIBIT NO. 10.8
AMENDMENT NO. 1 TO
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AMENDMENT, made as of the 28th day of May, 1998, by and
between NOONEY REALTY TRUST, INC., a Missouri corporation (hereinafter called
the "Company"), and THOMAS N. THURBER (hereinafter called "Optionee"),
WITNESSETH THAT:
WHEREAS, Optionee is serving as Chief Financial Officer and
Treasurer of the Company and, in connection therewith, the Board of Directors
of the Company ("Board of Directors") have heretofore granted to Optionee a
stock option pursuant to the terms of that certain Nonqualified Stock Option
Agreement dated as of March 1, 1998 by and between the Company and Optionee
(the "Nonqualified Stock Option Agreement"),
WHEREAS, Optionee and the Company desire to amend such
Nonqualified Stock Option Agreement as of the date hereof in the manner set
forth below.
NOW, THEREFORE, in consideration of the premises, and of the
mutual agreements hereinafter set forth, it is covenanted and agreed as
follows:
1. The parties hereto agree to add a new Paragraph 9 to the
Nonqualified Stock Option Agreement as follows:
"9. Certain Limitations. Notwithstanding anything to the
--------------------
contrary contained herein or elsewhere, the option granted to Optionee
pursuant to Paragraph 1 hereof shall automatically become void ab initio
---------
(from the beginning) without any further action on the part of any party
whatsoever to the extent, and only to the extent, that the existence of such
option or the exercise of such option with respect to any given share of
Common stock on the
<PAGE> 2
terms set forth herein by the Optionee would violate or would result in the
violation of any of the terms and conditions of the Bylaws of the Company,
including, without limitation, the provisions of Section 8.8(a) of the Bylaws
relating to the 9.8% ownership limitation set forth therein. This provision
shall not affect the option in any manner whatsoever to the extent that the
existence or exercise of such option will not or will not result in a
violation of the terms of the Bylaws of the Company."
2. This Amendment may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which taken together
shall constitute one and the same instrument.
3. Except as specifically amended hereby, the terms and
conditions of the Nonqualified Stock Option Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed on its behalf by its President, pursuant to due authorization, and
Optionee has signed this Agreement to evidence his agreement to the foregoing
Amendment, all as of the date first above written.
NOONEY REALTY TRUST, INC.
By /s/ Patricia A. Nooney
----------------------------------------------
President
/s/ Thomas N. Thurber
----------------------------------------------
THOMAS N. THURBER
<PAGE> 1
EXHIBIT No. 10.9
LANDLORD'S EXCLUSIVE COMMERCIAL LISTING AGREEMENT
This Agreement is made this 10th day of February , by and
------------- -----------------
between Nooney, Inc. ("Broker") and Nooney Realty Trust
------------------------------------------
("Client"). Broker hereby designates Patricia A. Nooney
----------------------------------------
as Broker's agent to perform all of the duties and obligations of Broker
under this Agreement.
1. Client represents that it is the owner of the following described real
property ("Property"), and/or that Client has the requisite authority to
engage Broker to lease the Property.
PROPERTY ADDRESS AND DESCRIPTION: ACI Building, 330 S. 108th Ave.,
--------------------------------------------
Omaha, NE 68154; Atrium @ Alpha Business Center, 2626 E. 82nd St.,
----------------------------------------------------------------------------
Bloomington, MN; Franklin Park Warehouse, 3431 Powell, Franklin Park, IL
----------------------------------------------------------------------------
2. Client hereby appoints Broker as its sole and exclusive agent to lease
the Property. All references herein to "Property" shall include,
without limitation, any partial or undivided interests, underlying
ground leases, and/or any improvements or portions of space therein; all
references to "lease" shall include, without limitation, the sublease,
master lease, license, rental, possession, or any other agreement,
whether verbal or written, to use or occupy the Property; all references
to "Client" shall include, without limitation, any related person or
affiliated entity of Client, or any successor in interest to either
Client or any related or affiliated person or entity of Client; and all
references to "tenant" shall include, without limitation, any related
person or affiliated entity of such tenant, or any successor in interest
to either such tenant or any related or affiliated person or entity of
such tenant.
3. The term of this Agreement shall commence on February 10, 1998 ,
--------------------------
and shall terminate on December 31, 1999 .
------------------------------------------------
4. Broker shall use good faith efforts to endeavor to procure one (1) or
more tenants for the Property, pursuant to the general Terms of Leasing
set forth on Exhibit "A" attached hereto. To this end, Broker may use
all reasonable professional practices including, without limitation,
associations and cooperation with other brokers and any multi-listing
organizations, mediums and the Internet. Broker may use reasonable
means to advertise the Property including placing one or more signs upon
the Property, preparing and distributing brochures, and placing
advertisements in local newspapers and trade journals. All advertising
and other expenses by Broker shall be reimbursable by Client to Broker
in addition to Broker's leasing commission. Such costs shall be payable
to Broker pursuant to Section 7 below; however, Client acknowledges that
such costs shall be payable to Broker whether or not any lease is
ultimately consummated. Notwithstanding the aforesaid, Broker reserves
the right to require Client to advance to Broker any anticipated
advertising or other out of pocket expenses to market the Property.
5. Client shall cooperate with Broker to effect all leases of the Property,
and shall immediately refer to Broker all offers and inquiries of anyone
interested in leasing the Property. Broker shall have access to the
Property at all reasonable times to show the Property to any cooperating
brokers, subagents and prospective tenants. All lease negotiations
shall be through Broker; however, Broker shall not have the authority to
execute any lease agreement or bind Client in any transaction.
6. Client and Broker shall market and offer the Property in compliance with
all applicable federal, state and municipal laws. Client shall disclose
to Broker all adverse material information regarding the Property
including, without limitation, all zoning, physical conditions, defects,
environmental, building equipment/systems, condemnation, structural and
substructural conditions and matters of the Property of which Client has
actual knowledge or which should be known to Client; and Client hereby
authorizes Broker to disclose such information to any cooperating
brokers, subagents and prospective tenants. Client shall indemnify,
defend and hold Broker harmless from all claims made by any tenant or
third person arising from any condition on the Property or Client's
failure to disclose any material information regarding the Property.
Client shall also hold Broker harmless for any theft or damage to the
Property caused by any persons other than Broker.
7. Client shall pay Broker a leasing commission pursuant to the Schedule of
Commissions attached hereto as Exhibit "A". Such commission shall be
deemed earned and shall be payable to Broker, along with all expenses
incurred by Broker, upon any of the following occurrences: (a) a tenant
is procured by Client, Broker or any third person, and such tenant
enters into a written lease with Client, or such tenant takes possession
of the Property under any verbal agreement with Client; (b) a ready,
willing and able tenant is procured by Client, Broker or any third
person upon the Terms of Leasing set forth on Exhibit "A", and Client
refuses to enter into a lease; (c) Client enters into any corporate,
partnership, joint venture or other business entity agreement with a
third person, the end result of which is that such person (or such
corporation, partnership, joint venture or other business entity) takes
possession of the Property; or (d) Client by whatever means removes the
Property from the market during the term of this Agreement.
8. Broker's leasing commission shall also be deemed earned and shall be
payable to Broker if within one hundred eighty (180) days after the
termination of this Agreement the Property is leased to (or negotiations
continue, resume, commence or thereafter result in the consummation of a
lease with) any person or entity, or any affiliate or successor in
interest to any person or entity, to whom the Property was submitted
during the term of this Agreement. Broker shall submit a list of all
known persons or entities to whom the Property was submitted within
fifteen (15) days after Client's request.
9. Broker is authorized to offer subagency and may cooperate with subagents
and other brokers in the marketing and leasing of the Property, and all
authorizations of Broker herein shall include such subagents and other
brokers. However, Client acknowledges and understands (and Missouri law
presumes) that, absent some other relationship established between
Client and any such other subagents or brokers, it is deemed that all
such other subagents and brokers working with a prospective tenant
represent that tenant; that any such other subagents or brokers showing
the Property may represent a prospective tenant; and that any such other
subagents or brokers working with a prospective tenant may be required
to disclose to such tenant any information given to them by Broker.
Broker shall be solely liable for all brokers fees payable to any other
subagents and brokers; provided, however, Broker shall not be required
to pay to such persons any monies unless and until Broker has received
the applicable leasing commission for the transaction.
10. In the event this Agreement must be enforced through litigation, the
non-prevailing party shall be liable for all costs and expenses,
including reasonable attorneys fees, of the prevailing party.
/X/ Client acknowledges that Client has read the "Duties and Obligations of
Limited Agency" on the reverse side of this form.
/X/ Client acknowledges that Client has read the "Disclosed Dual Agency"
provisions on the reverse side of this form.
/X/ Client acknowledges that Client has read the Missouri Real Estate
Commission "Broker Disclosure Form".
Nooney, Inc. Client:
By: /s/ Patricia A. Nooney By: /s/ Gregory J. Nooney, Jr.
----------------------------- ------------------------------
Title: President Title: Chairman
--------------------------- -----------------------------
Date: February 10, 1998 Date: February 10, 1998
---------------------------- -----------------------------
<PAGE> 2
LICENSEE REPRESENTING SELLER OR LANDLORD DUTIES AND OBLIGATIONS OF LIMITED
AGENCY AS ADAPTED FROM SECTION 339.730 RSMo
1. A licensee representing a seller or landlord as a seller's agent or a
landlord's agent shall be a limited agent with the following duties and
obligations:
(1) To perform the terms of the written agreement made with the
client;
(2) To exercise reasonable skill and care for the client;
(3) To promote the interests of the client with the utmost good faith,
loyalty, and fidelity, including:
(a) Seeking a price and terms which are acceptable to the
client, except that the licensee shall not be obligated to
seek additional offers to purchase property while the
property is subject to a contract for sale or to seek
additional offers to lease the property while the property
is subject to a lease or letter of intent to lease;
(b) Presenting all written offers to and from the client in a
timely manner regardless of whether the property is subject
to a contract for sale or lease or a letter of intent to
lease;
(c) Disclosing to the client all adverse material facts actually
known or that should have been known by the licensee; and
(d) Advising the client to obtain expert advice as to the
material matters about which the licensee knows but the
specifics of which are beyond the expertise of the licensee;
(4) To account in a timely manner for all money and property received;
(5) To comply with all requirements of sections 339.710 to 339.860
RSMo, subsection 2 of section 339.100 RSMo, and any rules and
regulations promulgated pursuant to those sections; and
(6) To comply with any applicable federal, state, and local laws,
rules, regulations, and ordinances, including fair housing and
civil rights statutes and regulations.
2. A licensee acting as a seller's or landlord's agent shall not disclose
any confidential information about the client unless disclosure is
required by statute, rule or regulation or failure to disclose the
information would constitute a misrepresentation or unless disclosure
is necessary to defend the affiliated licensee against an action of
wrongful conduct in an administrative or judicial proceeding or before a
professional committee. No cause of action shall arise against a
licensee acting as a seller's or landlord's agent for making any
required or permitted disclosure.
3. A licensee acting as a seller's or landlord's agent owes no duty or
obligation to a customer, except that a licensee shall disclose to any
customer all adverse material facts actually known or that should have
been known by the licensee. The adverse material facts may include
facts pertaining to:
(1) Environmental hazards affecting the property;
(2) The physical condition of the property;
(3) Material defects in the property;
(4) Material defects in the title to the property;
(5) Material limitation on the client's ability to perform under the
terms of the contract.
A seller's or landlord's agent owes no duty to conduct an independent
inspection of the property for the benefit of the customer and owes no
duty to independently verify the accuracy or completeness of any
statement made by the client or any independent inspector.
4. A seller's or landlord's agent may show alternative properties not owned
by the client to prospective buyers or tenants and may list competing
properties for sale or lease without breaching any duty or obligation to
the client.
5. A seller or landlord may agree in writing with a seller's or landlord's
agent that other designated brokers may be retained and compensated as
subagents. Any designated broker acting as a subagent on the seller's
or landlord's behalf shall be a limited agent with the obligations and
responsibilities set forth in subsections 1 to 4 of this section.
DISCLOSED DUAL AGENCY AS ADAPTED FROM SECTION 339.750 RSMo
1. A licensee may act as a dual agent only with the consent of all parties
to the transaction. Consent shall be presumed by a written agreement pursuant
to section 339.780 RSMo.
2. A dual agent shall be a limited agent for both the seller and buyer or
the landlord and tenant and shall have the duties and obligations required by
sections 339.730 and 339.740 RSMo unless otherwise provided for herein.
3. Except as provided in subsections 4 and 5 below, a dual agent may
disclose any information to one client that the licensee gains from the other
client if the information is material to the transaction unless it is
confidential information as defined in section 339.710 RSMo.
4. The following information shall not be disclosed by a dual agent without
the consent of the client to whom the information pertains:
(1) That a buyer or tenant is willing to pay more than the purchase
price or lease rate offered for the property;
(2) That a seller or landlord is willing to accept less than the
asking price or lease rate for the property;
(3) What the motivating factors are for any client buying, selling, or
leasing the property;
(4) That a client will agree to financing terms other than those
offered; and
(5) The terms of any prior offers or counter offers made by any party.
5. A dual agent shall not disclose to one client any confidential
information about the other client unless the disclosure is required by
statute, rule or regulation or failure to disclose the information would
constitute a misrepresentation or unless disclosure is necessary to defend the
affiliated licensee against an action of wrongful conduct in an administrative
or judicial proceeding or before a professional committee. No cause of action
or any person shall arise against a dual agent for making any required or
permitted disclosure. A dual agent does not terminate the dual agency
relationship by making any required or permitted disclosure.
6. In a dual agency relationship there shall be no imputation of knowledge
or information between the client and the dual agent or among persons within an
entity engaged as a dual agent.
<PAGE> 3
EXHIBIT "A"
TERMS OF LEASING AND SCHEDULE OF COMMISSIONS
--------------------------------------------
TERMS FOR LEASING: As agreed by owner.
-----------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
LEASING COMMISSIONS:
a. New leases and lease renewals
negotiated directly by Agent Commissions charged by Agent shall
not exceed the compensation
customarily charged in arm's length
transactions by others rendering
similar services as an ongoing
public activity in the same
geographical location. Such
leasing fees shall be payable upon
execution of a lease agreement by
both parties.
b. Outside Brokers When lease is negotiated in
conjunction with an outside broker
(the Cooperating Broker), Owner
will pay a commission equivalent to
one and one half (1-1/2) times the
rate schedule above to Nooney, Inc.
directly. Nooney, Inc. shall then
pay the Cooperating Broker its
share of said commission.
<PAGE> 1
EXHIBIT NO. 10.10
- ------------------------------------------------------------------------------
NOONEY, INC.
STANDARD MANAGEMENT AGREEMENT
- ------------------------------------------------------------------------------
THIS STANDARD MANAGEMENT AGREEMENT made and entered into this 1ST Day
--------
of NOVEMBER , 1997 , by and between NOONEY REALTY TRUST, INC.
-------------------- -- --------------------------------
, (hereinafter referred to as "Owner") and Nooney, Inc. (hereinafter
- ---------
referred to as "Agent").
WITNESSETH: In consideration of the mutual promises and covenants
herein contained, Owner and Agent agree as follows:
- ------------------------------------------------------------------------------
ARTICLE I
- ------------------------------------------------------------------------------
EXCLUSIVE AGENCY: Owner hereby appoints Agent as the sole and exclusive
leasing and management agent of certain real properties now owned or to be
acquired by Owner as listed in Exhibit "A" attached hereto which will be
revised from time-to-time to reflect all properties owned at any given time.
Agent may in Agent's sole discretion employ other management firms as
sub-agents to operate any specific property; however, the fee for such
sub-agent shall be at the expense of Agent.
If Exhibit "A" lists more than one property, the Owner may at any time
withdraw any Property listed on Exhibit "A" by giving to Agent at least
thirty (30) days' notice in writing. Such withdrawal shall not affect or
impair any right which has accrued to either party prior to the date such
withdrawal becomes effective. However, termination of this entire Agreement,
as provided in Article V, shall be distinguished from the withdrawal of
individual properties.
<PAGE> 2
- ------------------------------------------------------------------------------
ARTICLE II
- ------------------------------------------------------------------------------
LEASING: Agent shall use its best efforts in supervising the leasing of
vacant space within the Property and in keeping the Property rented to
desirable tenants; and to this end, Agent is hereby authorized by Owner to
enlist the services of other such real estate brokers as Agent shall deem
necessary. Payment of any commissions due such brokers shall be paid in
accordance to Exhibit "B" attached to this Agreement. All requests and
inquiries received by Owner for any leases, renewals or agreements for the
rental or operation of the property, or portions thereof, shall be referred
by Owner to Agent; and all negotiations connected therewith shall be
conducted solely by or under the supervision of Agent. In addition thereto,
Agent is authorized in the name of Owner to set rental rates and negotiate
(including without limitation, setting rental abatements, construction
allowances, parking, and other amenities), execute, renew and/or cancel
leases for the Property or portions thereof, as well as hold security
deposits, serve notices, and distribute funds on Owner's behalf, as Agent
deems advisable for the benefit of Owner and/or the Property.
Notwithstanding the foregoing, Agent shall not enter into any of the
aforesaid without the prior consent of Owner.
ADVERTISING: Agent is authorized, in the name of and at the expense of
Owner, to advertise the Property or portions thereof; and, with respect
thereto, Agent may prepare and secure renting signs, renting plans, circular
matter, display the Property, and perform or secure any other advertising as
Agent deems advisable for the expedient leasing of the Property.
COLLECTION OF RENT: Agent shall use its best efforts in the management
of the Property; and Agent shall use due diligence in collecting and
enforcing the collection of all rents and other charges due Owner from any
tenant(s), pursuant to the terms and conditions of said tenant(s)' respective
lease(s).
LEGAL PROCEEDINGS: Agent may, in the name of and at the expense of
Owner, engage legal counsel to institute any and all legal actions or
proceedings for the collection or enforcement of rents or other charges due
Owner from the Property; institute and prosecute actions to evict tenants
and/or dispossess tenants and recover possession of the premises; and, when
expedient, settle, compromise and release such actions or proceedings.
However, Agent shall in no event institute, dismiss or settle any suit or
proceeding without the prior consent of Owner. Further, Agent may also
2
<PAGE> 3
employ legal counsel for advice with respect to existing tenancies and for
preparation of leases, lease amendments, and other necessary instruments to
carry out the intent of this Agreement. Owner shall reimburse Agent, in the
manner herein provided, for all expenses incurred by Agent hereunder for the
reasonable fees and expenses of such counsel.
REPAIRS: Agent is authorized, in the name of and at the expense of
Owner, to make or cause to be made such ordinary repairs, alterations and/or
decorations to the Property as may be advisable or necessary in the opinion
of Agent. The expense to be incurred for any one item of repair, alteration
or decoration shall not exceed the sum of TEN THOUSAND AND 00/100---------
------------------------------------
($10,000.00 ) Dollars, unless first authorized by Owner. Notwithstanding
- ---------------
the aforesaid, Agent shall be authorized to make all necessary repairs and/or
alterations to the Property in the event Agent deems such repairs and/or
alterations to be an emergency; however in such event, Agent shall thereafter
notify Owner immediately as to the nature and extent of said emergency and the
monies expended to remedy same. Agent shall allow to Owner any rebate or
discount which Agent shall obtain in connection with any repairs, alterations,
or decorations to the Property.
SERVICE CONTRACTS: Agent is authorized, in the name of and at the
expense of Owner, to make contracts for electricity, gas, water, telephone,
elevator, maintenance, janitorial services, window cleaning, vermin
extermination, and other services or such of them as Agent shall deem
advisable. In the event any such contracts extend beyond the termination of
this Agreement, Owner shall assume and honor all obligations of said
contracts, and shall defend and hold Agent harmless against any liability
therefor.
EMPLOYEES: Agent is an independent contractor and is not an employee
of Owner. All persons engaged in the servicing, operation, or maintenance of
the Property shall be the employees of Agent or its sub-contractor, and not
of Owner. Agent agrees on behalf of Owner to supervise the work of all
employees, and to hire and discharge such employees, from time to time, who
are performing work or services for and on behalf of Owner and/or the
Property. Agent agrees to use reasonable care in the hiring of such
employees; and Agent shall not be liable for the negligent or intentional
acts of any such employee unless Agent was negligent in such hiring. Agent
shall cover, or cause to be covered, all employees by Worker's Compensation
policies and any other policies which now or hereafter may be required by any
governmental agency. Agent shall cover, or cause to be covered, all
employees by Federal and State Unemployment Insurance, and shall make all
wage
3
<PAGE> 4
and salary deductions properly applicable thereto. Agent shall pay all
applicable taxes incurred in connection with the wages, salaries, or
employment of all employees; and Agent shall, by withholding a portion of
such wages and salaries, make all necessary deductions or payments as
required or may hereafter be required by any governmental law or regulation
applicable to the same. Agent shall reimburse itself out of the rentals from
the Property for: (a) salaries and/or wages and other charges paid to, or
for the benefit of, such employees, including but not limited to any amount
which may be paid for hospitalization or group life insurance on account of
such employees; (b) the cost of such Workers' Compensation and Unemployment
Insurance; (c) Social Security or old age Benefits; (d) all aforesaid taxes
paid by Agent; and (e) all other charges incurred by Agent in connection with
any of the foregoing matters.
Agent is also authorized, in the name of and at the expense of Owner, to
directly hire, contract for, and engage independent contractors for the
performance of any work or service on or about the Property; and Owner shall
assume and honor all such hiring, contracts and engagements through their
respective terms notwithstanding the termination of this Agreement.
EXPENSES: Agent is authorized, in the name of and at the expense of
Owner, to make payments of all expenses for and on behalf of the Property,
including but not limited to: taxes and other assessments, salaries,
insurance, mortgage payments, attorney and other professional fees, and
any and all other expenses which are necessary or advisable, in Agent's
discretion, for and on behalf of Owner and the Property. All such expenses
incurred by Agent in connection with the operation and management of the
Property and the performance of this Agreement shall be paid out of the sums
collected by Agent from the Property. In the event the sums collected are
insufficient to reimburse Agent for said expenses, Agent shall submit an
invoice to Owner for same, either before or after Agent expends such sums,
and Owner shall thereafter make payment to Agent within thirty (30) days of
receipt of such invoice.
All expenses shall be paid by Agent from a bank account established and
maintained at NATIONSBANK . Owner shall initially fund
---------------------------------
said account with ONE HUNDRED AND 00/100 ($ 100.00 ) Dollars, and shall
------------------------ ------------
periodically replenish said account to adequately meet the costs and expenses
of Agent, as set forth in this Agreement.
AGENT REIMBURSEMENT: Owner shall promptly reimburse Agent for any
monies that Agent shall elect to advance for and on account of Owner and/or
the Property. Said reimbursement
4
<PAGE> 5
shall survive the termination of this Agreement. Notwithstanding such right
of reimbursement, nothing herein shall be construed to obligate Agent to make
any such advances.
MAINTENANCE OF RECORDS: Agent shall maintain accurate records of all
monies received and disbursed in connection with the operation and management
of the Property, and such records shall be available for inspection by Owner
at Agent's office during normal business hours. Agent shall render to Owner
a monthly statement of receipts and disbursements, remitting any balance due
Owner. The disbursements shall include the compensation of Agent on the
basis set forth herein. All employees of Agent who handle or who are
responsible for Owner's monies shall be bonded by a fidelity bond.
SPECIAL SERVICES: In the event Agent is called upon by Owner to make
extraordinary repairs, or engage in extensive reconstruction or
rehabilitation of the Property of any portion thereof; or in the event Agent
is called upon by Owner to perform any other extraordinary services not
customarily a part of the usual services performed by a managing agent, it is
agreed by the parties that Agent shall receive an additional fee in an amount
to be agreed upon between the parties, but in each instance where Agent is to
receive such additional fee, the amount of such fee shall be agreed upon
prior to the commencement of such extraordinary work or service.
- ------------------------------------------------------------------------------
ARTICLE III
- ------------------------------------------------------------------------------
INSURANCE: Owner agrees to carry commercial general liability
insurance (including contractual liability and personal injury), all-risk
property and casualty insurance (including theft), loss of rents insurance,
and all other insurance that may be necessary for the protection of the
Property and both Owner and Agent, as their interests may appear. In each
such policy or policies of insurance, Owner agrees that Agent shall be
designated as a party insured with Owner. All such policies shall be
endorsed to be primary and non-contributory with or in excess of any
insurance carried by Agent. Owner's policies shall be with companies
licensed to do business in the State of Missouri, and Owner shall provide
Agent with certificates thereof. Such certificates shall specifically
provide that not less than thirty (30) days written notice be given to Agent
before any such policies are cancelled or not renewed.
5
<PAGE> 6
Owner and Agent hereby mutually waive any and all right of recovery
against one another, directly, by way of subrogation, or otherwise, for real
or personal property damage occurring to the Property, or resulting in any
loss of income, or to any personal property of either party, arising from any
occurrence, including negligence, whether or not such party is required to
carry, or actually carries, insurance for such damage. Each party shall have
the affirmative duty to inform its respective insurance carrier of this
provision and the mutual waiver of subrogation herein contained.
Notwithstanding anything to the contrary in this Agreement, Owner shall
hold Agent harmless, and indemnify and defend Agent, from claims for damages
or injuries to persons or property when Agent is carrying out the provisions
of this Agreement or acting under the express or implied directions of Owner.
The provisions and protections provided in this Article shall survive the
termination of this Agreement.
- ------------------------------------------------------------------------------
ARTICLE IV
- ------------------------------------------------------------------------------
AGENT'S COMPENSATION: The management fee and leasing commission rates
for Agent shall be based on the schedule attached hereto, marked Exhibit "B".
- ------------------------------------------------------------------------------
ARTICLE V
- ------------------------------------------------------------------------------
TERM: The term of this Agreement shall be for ten (10) months,
commencing on NOVEMBER 7 , 19 97 , and expiring on AUGUST 31,
-------------------- -------- --------------
19 98 , unless cancelled as hereinafter provided.
-------
Notwithstanding the aforesaid, this Agreement is subject to cancellation
without penalty, by either party, upon sixty (60) days prior written notice.
In the event a petition in bankruptcy is filed by or against either
Owner or Agent, or in the event either party shall make an assignment for the
benefit of creditors or take advantage of any insolvency act, the other party
may terminate this Agreement without notice at any time thereafter, but shall
give notice to the other party no later than ten (10) days after such
termination.
6
<PAGE> 7
- ------------------------------------------------------------------------------
ARTICLE VI
- ------------------------------------------------------------------------------
NOTICES: All notices required by this Agreement shall be in writing,
and shall be deemed served, if delivered in person or mailed by United States
Registered or Certified Mail, return receipt requested, postage prepaid to:
OWNER: NOONEY REALTY TRUST, INC.
--------------------------------------------------------
7701 FORSYTH BOULEVARD
--------------------------------------------------------
ST. LOUIS, MO 63105
--------------------------------------------------------
ATTENTION: PATRICIA A. NOONEY, PRESIDENT
--------------------------------------------------------
AGENT: Nooney, Inc.
7701 Forsyth Boulevard
St. Louis, Missouri 63105
Attention: Patrick A. Byrne, Executive Vice President
Either party may designate a different address by giving notice to the
other party of same at the address set forth above.
SALE OF PREMISES: In the event Owner desires to sell the Property,
Agent shall have the exclusive right to act as Broker for and on behalf of
Owner. Brokerage commissions for such sale shall be agreed upon between the
parties prior to the property being offered for sale.
CODE COMPLIANCE: Agent does not assume any responsibility for the
compliance of any building on the Property, or any equipment thereon, as same
relates to the requirements of any statute, ordinance, law or regulation of
any government body or of any public authority or official thereon. However,
Agent shall promptly notify Owner of any complaints, warnings, notices or
summonses received by Agent relating to such matters.
ASSIGNMENT: This Agreement shall be binding upon the parties their
heirs, executors, administrators, successors, and assigns, and may not be
changed verbally, but only in writing, signed
7
<PAGE> 8
by both of the parties hereto. This Agreement shall not be assigned by any
party without the prior written consent of the other party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
OWNER: Nooney Realty Trust, Inc.
By: /s/ Patricia A. Nooney
---------------------------------------------
Title: President
------------------------------------------
AGENT: Nooney, Inc.
By: /s/ Patrick A. Byrne
---------------------------------------------
Title: Executive Vice President
------------------------------------------
<PAGE> 9
- ------------------------------------------------------------------------------
EXHIBIT "A" TO AGREEMENT
DATED NOVEMBER 1, 1997 BETWEEN
NOONEY REALTY TRUST, INC.
AND NOONEY, INC.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIST OF PROPERTIES MANAGEMENT FEE
- ------------------ --------------
<S> <C>
The Atrium at Alpha Business Center Four percent (4%) of gross revenues
2626 East 82nd Street
Bloomington, Minnesota
Franklin Park Distribution Center Three percent (3%) of gross revenues
3431 North Powell
Franklin Park, Illinois
Applied Communications Building Four percent (4%) of gross revenues
330 South 108th Street
Omaha, Nebraska
</TABLE>
<PAGE> 10
- ------------------------------------------------------------------------------
EXHIBIT "B" TO AGREEMENT
DATED NOVEMBER 1, 1997 BETWEEN
NOONEY REALTY TRUST, INC.
AND NOONEY, INC.
- ------------------------------------------------------------------------------
MANAGEMENT AND LEASING FEE STRUCTURE
------------------------------------
<TABLE>
<CAPTION>
<C> <S>
1. MANAGEMENT AGREEMENT Nooney, Inc.'s Standard Agreement
will serve as the document for
management of the property.
2. TERM OF AGREEMENT The Management Agreement shall be
for ten (10) months, effective upon
execution of the Agreement and may
be terminated by either party upon
sixty (60) days prior written
notice. Notwithstanding the
aforesaid, this Agreement shall
automatically terminate in the event
of a sale of the property.
3. MANAGEMENT FEE Owner agrees to pay as compensation
for management services, a
management fee equal to the lessor
----------
of 5% of the gross revenues of the
----------------------------------
properties or the compensation
------------------------------
customarily charged in arm's length
-----------------------------------
transactions by others rendering
--------------------------------
similar services as an ongoing
------------------------------
public activity in the same
---------------------------
geographical location. Gross
-----------------------------
revenues shall include all rents
--------------------------------
collected, utility charges,
---------------------------
escalation charges, tax
-----------------------
reimbursements and common area
------------------------------
charges collected and all items of
----------------------------------
miscellaneous income such as sale of
------------------------------------
waste paper, vending machine
----------------------------
receipts, etc.
--------------
4. LEASING COMMISSIONS
a. New leases and lease renewals
negotiated directly by Agent Commissions charged by Agent shall
not exceed the compensation
customarily charged in arm's length
transactions by others rendering
similar services as an ongoing
public activity in the same
geographical location. Such leasing
fees shall be payable upon execution
of a lease agreement by both
parties.
b. New Properties When each new Property is added to
Exhibit A, an exhibit will be
attached to this Agreement
describing the specific compensation
to be paid to the Agent for
management and leasing services
provided under this Agreement. Said
fees shall be reviewed once each
year for their applicability to the
city in which the Property is
located, and said fees shall be
increased or decreased based on this
review for the next one (1) year
period.
c. Outside Brokers When lease is negotiated in
conjunction with an outside broker
(the Cooperating Broker), Owner will
pay a commission equivalent to one
and one half (1-1/2) times the rate
schedule above to Nooney, Inc.
directly. Nooney, Inc. shall then
pay the Cooperating Broker its share
of said commission.
5. SPECIAL SERVICES If Nooney, Inc. is called upon to
make extraordinary repairs or engage
in any extensive reconstruction or
rehabilitation, Nooney, Inc. shall
receive an additional fee to the
Management Fee agreed upon by both
parties before commencing work or
services.
</TABLE>
<PAGE> 1
=========================================
NOONEY
-----------------------------------------
REALTY
-----------------------------------------
TRUST
=========================================
A Real Estate Investment Trust
1998
ANNUAL
REPORT
<PAGE> 2
================================================================================
NOONEY LOGO
NOONEY REALTY TRUST, INC.
1998 ANNUAL REPORT
<TABLE>
<CAPTION>
CONTENTS PAGE
- -------- ----
<S> <C>
Financial Highlights........................................ Inside
Front Cover
The Trust................................................... 1
Market Information.......................................... 1
Dividends................................................... 1
Letter to Shareholders...................................... 2
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 3
Financial Statements and Notes.............................. 8
Directors and Officers...................................... 21
Shareholder Information..................................... 22
</TABLE>
------------------------------------
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------
FOR THE YEAR: 1998 1997 1996 1995 1994
- ------------- ---- ---- ---- ---- ----
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<S> <C> <C> <C> <C> <C>
Rental and other income....................... $ 3,161,030 $ 3,101,871 $ 3,017,982 $ 2,861,293 $ 2,719,324
Net income/(loss)............................. (490,059) (125,363) 216,538 185,597 42,217
Per share................................. (0.57) (0.14) 0.25 0.21 0.05
Funds from operations<F1>..................... 250,146 604,961 974,476 906,637 749,211
Distributions declared........................ -- 381,314 693,299 563,307 424,646
Per share................................. -- 0.44 0.80 0.65 0.49
Paid in current year:
Taxable to shareholders............... -- 0.09 0.40 0.31 0.22
Return of capital..................... -- 0.35 0.40 0.34 0.37
Declared 1993, paid in January 1994..... (0.10)
AT YEAR END:
- ------------
Total assets.................................. $14,557,537 $14,926,763 $15,481,638 $16,009,017 $16,504,068
Investment property - net..................... 13,355,053 13,769,633 14,214,620 14,811,351 15,219,284
Mortgage note payable......................... 4,643,712 4,740,875 4,830,236 4,912,421 4,988,006
Shareholders' equity.......................... 9,247,719 9,737,778 10,244,455 10,721,216 11,098,926
Number of shares outstanding.................. 866,624<F2> 866,624 866,624 866,624 866,624
<FN>
- --------
<F1> Represents net income adjusted for depreciation and amortization.
<F2> Currently in dispute. For more information see Note 7 to the Financial
Statements for the year ended December 31, 1998.
</TABLE>
See Management's Discussion and Analysis for discussion of comparability of
items.
<PAGE> 3
================================================================================
THE TRUST
Nooney Realty Trust, Inc. (the "Trust") is a corporation formed on June 14,
1984, to make equity investments in income-producing real properties, primarily
commercial and light industrial properties. The Trust has invested in three
properties: The Atrium at Alpha Business Center, an office building in
Bloomington, Minnesota; the Applied Communications, Inc. Building, an office
building in Omaha, Nebraska; and the Franklin Park Distribution Center, a
warehouse and distribution facility in suburban Chicago, Illinois. Since 1985
the Trust has qualified as a real estate investment trust ("REIT") under the
Internal Revenue Code.
------------------------------------
MARKET INFORMATION
The Company's common stock trades on The Nasdaq Stock Market under the
symbol NRTI. The Nasdaq high and low prices for the shares during 1997 and 1998
were as follows:
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1998
First Quarter................................. $ 11.00 $ 9.00
Second Quarter................................ $ 11.00 $ 8.375
Third Quarter................................. $ 9.875 $ 8.00
Fourth Quarter................................ $ 8.750 $ 7.25
1997
First Quarter................................. $ 10.75 $ 9.75
Second Quarter................................ $ 10.875 $ 9.50
Third Quarter................................. $ 11.625 $10.00
Fourth Quarter................................ $ 11.75 $ 9.875
</TABLE>
As of February 1, 1999, there were 500 shareholders of record.
DIVIDENDS
The following cash dividends were paid to shareholders during 1997 and 1998:
<TABLE>
<CAPTION>
1ST QTR. 2ND QTR. 3RD QTR. 4TH QTR.
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1997.......................... $.22 $.22 -0- -0-
1998.......................... -0- -0- -0- -0-
</TABLE>
ONE
----------------
<PAGE> 4
================================================================================
March 24, 1999
To Our Shareholders:
Applied Communications, Inc., the single occupant of the office building in
Omaha, Nebraska, renewed their lease in 1998 for ten years with annual rent
increases of 3%.
The negotiation of a renewal of the Kerry Foods lease in the Franklin Park
Distribution Center was almost completed when Kerry Foods purchased another
company, substantially increasing their space needs beyond the 70,000 square
feet they currently occupied in our project, and vacated the premises in
October, 1998. The Chicago area industrial market is active and several
prospects have toured the space, however, a replacement tenant has not been
secured as of this date.
The Atrium At Alpha Business Center, a multi-tenant office building in
Bloomington, Minnesota, had average occupancy of 93% during the year until a
14,000 square foot tenant vacated in the fourth quarter pursuant to a mutual
cancellation agreement. However, a new lease for 14,000 square feet was executed
for a rental rate which is 20% higher than what the previous tenant was paying.
The Atrium At Alpha Business Center has been included in the Minneapolis
Airport Committee's "Safety Zone A" for future expansion of the Minneapolis
airport. The Trust is continuing to monitor the effect this may have on the
property, however, there were no significant developments during 1998.
For the fiscal year ended December 31, 1998, the Trust's earnings (losses)
were ($490,061) or ($.57) per share. Funds from operations, which adds
depreciation and amortization to net income computed in accordance with
generally accepted accounting principals, were $251,332 or $.29 per share. Funds
from operations decreased $355,305 or $.41 per share compared to fiscal 1997.
This decrease is attributable to the litigation the Trust is involved in as
explained below.
During 1998 the Trust successfully completed litigation brought by KelCor,
Inc. which filed a Petition for Mandamus relief against the Trust to compel the
holding of an annual meeting prior to the resolution of the "excess share"
issue. While the lower court entered an Order of Mandamus against the Trust on
April 14, 1998, the Court of Appeals reversed and remanded the cause to the
trial court with directions to Quash the Writ of Mandamus, finding that KelCor
had attempted "to play fast and loose with the court." The Trust filed a lawsuit
on August 14, 1997, seeking to resolve the "excess share" issue. This lawsuit
has been placed on the March 29, 1999, docket call. Both sides have filed
Motions for Summary Judgment which have not been ruled on to date by the court.
The Board of Directors intends for the validity and status of the excess
shares to be finally determined pursuant to this suit.
In the meantime, the Directors and management will continue to aggressively
manage the individual Trust's properties with a goal of maximizing shareholder
value.
Sincerely,
NOONEY REALTY TRUST, INC.
William J. Carden
Chairman and Chief Executive Officer
TWO
- ----------------
<PAGE> 5
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash reserves on hand as of December 31, 1998, were $505,365, a decrease of
$152,105 from year ended December 31, 1997. The decrease in cash is attributable
mainly to high legal fees incurred by the Trust. The Trust's current cash
position and the properties' ability to provide operating cash flow should
enable the Trust to fund anticipated capital expenditures in 1999. Expenditures
for leasing capital are dependent on the timing and actual dollars negotiated
for leases. If cash reserves decrease substantially through the year, the Trust
will defer some of the Other Capital budgeted until the following year. The
anticipated capital expenditures by property are as follows:
<TABLE>
<CAPTION>
OTHER LEASING
CAPITAL CAPITAL TOTAL
------- ------- -----
<S> <C> <C> <C>
Atrium at Alpha......................... $242,150 $ 397,425 $ 639,575
Franklin Park Dist. Center.............. 22,345 266,524 288,869
Applied Communications Inc. Bldg........ 0 350,000 350,000
-------- ---------- ----------
$264,495 $1,013,949 $1,278,444
</TABLE>
The capital expenditures at Atrium at Alpha Business Center include leasing
capital for tenant alterations and lease commissions for new and renewal
tenants. In addition, the Registrant anticipates spending capital funds for
renovation and refurbishing of the common areas of the building. The plans
include renovations to the restrooms, lobby area, common corridors, and
elevators. In addition, new tenant signage and exterior monument sign are
planned. At Franklin Park Distribution Center, painting of the exterior metal
panels of the building is planned. Leasing capital for tenant alterations and a
lease commission upon the leasing of the vacant space is budgeted. At The
Applied Communications, Inc. building, the single occupant in the building
renewed their lease in 1998. The funds to reimburse the tenant for certain
tenant alterations may be paid during 1999 or deferred until 2000 or 2001
depending on when the tenant elects to perform the work.
The Trust's multi-tenant office building located in Bloomington, Minnesota
has been classified in the Minneapolis Airport Committee's (the "MAC") Safety
Zone A in the future expansion of the Minneapolis Airport. The expansion runway
is anticipated to be completed in 2003. The MAC will be buying out impacted
buildings during 1999. Safety Zone A is adjacent to the Federal Aviation
Authority's noise buy out zone. The MAC has not indicated whether or not it will
buy out the Trust's building. The Trust is monitoring whether the increased
noise from the new runway will have an impact on future leasing of the building.
If the Trust determines there is a negative impact, the Trust will petition the
MAC to buy the building. If the building continues to be classified in Safety
Zone A, it will be classified as nonconforming use. Given the preliminary state
of the future expansion, management is unable at this time to determine what
impact, if any, this matter will have on the Trust.
RESULTS OF OPERATIONS
The results of operations for the Trust's properties for the years ended
December 31, 1998, 1997 and 1996 are detailed in the schedule below.
Administrative expenses of the Trust are excluded.
THREE
----------------
<PAGE> 6
================================================================================
FUNDS FROM OPERATIONS
The white paper on Funds from Operations approved by the board of governors
of NAREIT in March 1995 defines funds from operations as net income (loss)
(computed in accordance with GAAP), excluding gains (or losses) from debt
restructuring and sales of property, plus real estate related depreciation and
amortization and after adjustments for unconsolidated partnership and joint
ventures. The Trust computes Funds from Operations in accordance with the
standards established by the white paper which may differ from the methodology
for calculating Funds from Operations utilized by other equity REITs, and,
accordingly, may not be comparable to such other REITs. Funds from Operations do
not represent amounts available for management's discretionary use because of
needed capital replacement or expansion, debt service obligations,
distributions, or other commitments and uncertainties. Funds from Operations
should not be considered as an alternative to net income (determined in
accordance with GAAP) as an indication of the Trust financial performance or to
cash flows from operating activities (determined in accordance with GAAP) as a
measure of the Trust liquidity, nor is it indicative of funds available to fund
the Trust cash needs including its ability to make distributions. The Trust
believes Funds from Operations are helpful to investors as measures of the
performance of the Trust because along with cash flows from operating
activities, financing activities and investing activities, they provide
investors with an understanding of the ability of the Trust to incur and service
debt and make capital expenditures.
<TABLE>
<CAPTION>
ATRIUM AT FRANKLIN PARK APPLIED COMM.
ALPHA DIST. CENTER INC. BLDG.
--------- ------------- -------------
<S> <C> <C> <C>
1998
Revenues................................ $1,341,760 $780,954 $1,111,684
Expenses................................ 1,110,703 648,049 924,891
---------- -------- ----------
Net Income.............................. $ 231,057 $132,905 $ 186,793
Depreciation and Amortization........... 352,271 163,151 208,054
---------- -------- ----------
Funds from Operations................... $ 583,328 $296,056 $ 394,847
1997
Revenues................................ $1,289,077 $755,679 $1,081,276
Expenses................................ 1,051,050 582,497 897,735
---------- -------- ----------
Net Income.............................. $ 238,027 $173,182 $ 183,541
Depreciation and Amortization........... 352,248 178,182 183,164
---------- -------- ----------
Funds from Operations................... $ 590,275 $351,364 $ 366,705
1996
Revenues................................ $1,211,306 $770,247 $1,035,582
Expenses................................ 1,020,102 604,580 909,586
---------- -------- ----------
Net Income.............................. $ 191,204 $165,667 $ 125,996
Depreciation and Amortization........... 362,549 182,374 196,529
---------- -------- ----------
Funds from Operations................... $ 553,753 $348,041 $ 322,525
</TABLE>
1998 COMPARISONS BY PROPERTY
Operating results at the Atrium at Alpha Business Center remained steady
during 1998. Revenues increased slightly, primarily due to increases in the base
rental rates from tenants renewing and the receipt of early cancellation fees
from some tenants electing to vacate their space early. Operating expenses
increased due to an increase in real estate taxes, common area maintenance, and
professional services.
FOUR
- ----------------
<PAGE> 7
================================================================================
At Franklin Park Distribution Center, revenues increased due to an increase
in rental income, common area maintenance reimbursements, and real estate tax
reimbursements. Operating expenses increased due to one tenant vacating their
space and the costs associated with the cleanup and preparation of the space for
re-leasing.
At the Applied Communications, Inc. building, operating results were steady
when compared to the prior year. Rental revenues increased due to a built-in
step-up rent in the building's only tenant, and the fact that the tenant renewed
its lease during the year at a slight increase in the base rental rate.
Operating expenses increased slightly due to a number of different expense
categories, none of which are significant in and of themselves, as well as an
increase in amortization.
The occupancy levels at December 31 are as follows:
<TABLE>
<CAPTION>
OCCUPANCY LEVELS AT DECEMBER 31,
------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Atrium at Alpha................................... 76% 98% 95%
Franklin Park Dist. Center........................ 57% 100% 100%
Applied Communications Inc. Bldg.................. 100% 100% 100%
</TABLE>
During the fourth quarter, the occupancy level at Atrium at Alpha decreased
to 76%. During the quarter, one of the major tenants of the building vacated
pursuant to a mutual cancellation agreement. This tenant occupied 13,998 square
feet as well as a 600 square foot storage space. Simultaneously, the Trust
executed a new lease with a tenant to occupy this space beginning in 1999. As of
January 1999, occupancy has increased back up to 92%. During 1998 new leases
were signed with 3 tenants occupying 2,574 square feet. Renewal leases were
signed with 3 tenants occupying 7,334 square feet and 6 tenants vacated, which
occupied 21,997 square feet. The property has one major tenant on two leases
occupying 11% of the building. The two leases expire in May 1999 and October
1999. The Registrant is in discussion with the tenant on renewals of their
leases.
Franklin Park Distribution Center was fully leased by two tenants through
October 1998. In October, the tenant occupying 43% of the building vacated as
the building did not have expansion space which the tenant needed. The other
tenant occupying 57% of the building is on a lease which expires in December
1999. The Registrant is negotiating with the tenant on a renewal lease.
The Applied Communications, Inc. building has a single tenant who has
occupied the building throughout 1998. During 1998, this tenant and the
Registrant negotiated a new ten-year renewal of the tenant's lease. The lease
now expires in August 2008.
The Trust 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 Trust 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 estimate 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 judgment is necessary to
estimate fair value. Accordingly, actual results could vary significantly from
such estimates.
FIVE
----------------
<PAGE> 8
================================================================================
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.
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
the elevators, heating, ventilating, 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 not 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 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 reasonably 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 their financial service
providers') computer systems 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 system 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 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 Registrant'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 condition 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 items such 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 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
SIX
- ----------------
<PAGE> 9
================================================================================
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 failures 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.
1998 COMPARISONS
For the year ended December 31, 1998, the Trust's consolidated revenues were
$3,189,510 compared to $3,110,120 for the year ended December 31, 1997. Thus,
revenues increased 3% or $79,390. The increase in consolidated revenues relates
mainly to increases in base rental rates at the Atrium at Alpha Business Center
and the Applied Communications Inc. building, as well as the early termination
fees received at The Atrium at Alpha Business Center.
The Trust's consolidated expenses were $3,679,569 compared to $3,235,483 for
the year ended December 31, 1997. The increase in expense is due to the high
cost of the two lawsuits which the Trust was involved in during 1998, as well as
the salaries for two of the Trust's officers. The net loss for the year ended
December 31, 1998, was ($490,059) or ($.57) per share. The net loss for the year
ended December 31, 1997, was ($125,363) or ($.14) per share. The high cost of
the lawsuits negatively impacted the operations of the Trust in both years.
Cash flow provided by operating activities was $168,949 for 1998. The Trust
paid capital expenditures of $223,891 and reduced the principal on the mortgage
note by $97,163 during 1998.
1997 COMPARISONS
For the year ended December 31, 1997, the Trust's consolidated revenues were
$3,110,120 compared to $3,033,511 for the year ended December 31, 1996. Thus,
revenues increased 3% or $76,609. The increase in consolidated revenues relates
mainly to increases in base rental rates at the Atrium at Alpha Business Center
and the Applied Communications Inc. building.
The Trust's consolidated expenses for the year ended December 31, 1997, were
$3,235,483 compared to $2,816,973 for the year ended December 31, 1996. The
increase in expenses is due primarily to the high cost of the two lawsuits and a
related proxy contest that the Trust has been involved in during 1997.
The net loss for the year ended December 31, 1997, was ($125,363) or ($.14)
per share. Net income in 1996 was $216,538 or $.25 per share. The high cost of
the two lawsuits and a related proxy contest negatively impacted the operations
of the Trust in 1997.
Cash flow provided by operating activities was $669,835 for 1997. The Trust
paid capital expenditures of $182,817, paid dividends to shareholders of
$381,314, and reduced the principal on the mortgage notes by $89,361 during
1997.
INFLATION
The effects of inflation did not have a material impact upon the Trust's
operation in fiscal 1996, 1997 and 1998.
SEVEN
----------------
<PAGE> 10
================================================================================
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Nooney Realty Trust, Inc.:
We have audited the accompanying balance sheets of Nooney Realty Trust, Inc.
(the "Trust") as of December 31, 1998 and 1997, and the related statements of
operations, shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 1998. These financial statements are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Nooney Realty Trust, Inc. as of December 31,
1998 and 1997, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1998 in conformity with
generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
January 22, 1999
EIGHT
- ----------------
<PAGE> 11
<TABLE>
================================================================================================================
NOONEY REALTY TRUST, INC.
BALANCE SHEETS
<CAPTION>
DECEMBER 31,
------------------------
1998 1997
---- ----
<S> <C> <C>
ASSETS
CASH....................................................................... $ 505,365 $ 657,470
ACCOUNTS RECEIVABLE--no allowance for doubtful accounts considered
necessary................................................................ 174,231 260,085
PREPAID EXPENSES........................................................... 31,908 28,560
INVESTMENT PROPERTY--at cost:
Land.................................................................. 2,568,955 2,568,955
Buildings and improvements............................................ 17,616,281 17,739,921
----------- -----------
20,185,236 20,308,876
Less accumulated depreciation......................................... (6,830,183) (6,539,243)
----------- -----------
13,355,053 13,769,633
DEFERRED EXPENSES--at amortized cost....................................... 490,980 211,015
----------- -----------
TOTAL...................................................................... $14,557,537 $14,926,763
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Mortgage note payable................................................. $ 4,643,712 $ 4,740,875
Accounts payable and accrued expenses................................. 461,939 448,110
Deferred compensation................................................. 204,167
----------- -----------
Total liabilities.............................................. 5,309,818 5,188,985
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, $1 par value--Authorized, 5,000,000 shares; issued and
outstanding, 866,624 shares (Note 7)................................ 866,624 866,624
Additional paid-in capital............................................ 14,252,532 14,252,532
Distributions in excess of net income................................. (5,871,437) (5,381,378)
----------- -----------
Total shareholders' equity..................................... 9,247,719 9,737,778
----------- -----------
TOTAL...................................................................... $14,557,537 $14,926,763
=========== ===========
See notes to financial statements.
</TABLE>
NINE
----------------
<PAGE> 12
<TABLE>
==================================================================================================================
NOONEY REALTY TRUST, INC.
STATEMENTS OF OPERATIONS
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
REVENUES:
Rental and other income................................................ $3,161,030 $3,101,871 $3,017,982
Interest income........................................................ 28,480 8,249 15,529
---------- ---------- ----------
Total revenues..................................................... 3,189,510 3,110,120 3,033,511
---------- ---------- ----------
EXPENSES:
Depreciation and amortization.......................................... 740,205 730,324 757,938
Real estate taxes...................................................... 637,630 564,132 579,305
Professional fees (Note 7)............................................. 522,217 431,825 49,836
Interest on mortgage note.............................................. 394,549 402,351 411,220
Officers' compensation................................................. 250,000
Utilities.............................................................. 242,667 288,553 280,400
Property management and advisory fees and general and administrative
reimbursements--related party........................................ 211,627 237,175 230,846
Repairs and maintenance................................................ 122,767 98,217 89,299
Trustee fees and expenses.............................................. 34,430 37,868 18,323
Other operating expenses............................................... 523,477 445,038 399,806
---------- ---------- ----------
Total expenses..................................................... 3,679,569 3,235,483 2,816,973
---------- ---------- ----------
NET INCOME (LOSS).......................................................... $ (490,059) $ (125,363) $ 216,538
========== ========== ==========
PER SHARE DATA (BASIC AND DILUTED):
Net income (loss) (Note 7)............................................. $ (0.57) $ (0.14) $ 0.25
========== ========== ==========
Distributions:
Paid in current year:
Taxable to shareholders........................................ $ -- $ 0.09 $ 0.40
Return of capital.............................................. 0.35 0.40
---------- ---------- ----------
Total paid in current year......................................... $ -- $ 0.44 $ 0.80
========== ========== ==========
Weighted average shares outstanding (Note 7)........................... 866,624 866,624 866,624
========== ========== ==========
See notes to financial statements.
</TABLE>
TEN
- ----------------
<PAGE> 13
<TABLE>
========================================================================================================
NOONEY REALTY TRUST, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<CAPTION>
COMMON STOCK
--------------------- ADDITIONAL DISTRIBUTIONS
NUMBER PAID-IN IN EXCESS OF
OF SHARES AMOUNT CAPITAL NET INCOME
--------- ------ ---------- -------------
(NOTE 7)
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996.......................... 866,624 $866,624 $14,252,532 $(4,397,940)
Net income.................................... 216,538
Dividends paid................................ (693,299)
------- -------- ----------- -----------
BALANCE, DECEMBER 31, 1996........................ 866,624 866,624 14,252,532 (4,874,701)
Net loss...................................... (125,363)
Dividends paid................................ (381,314)
------- -------- ----------- -----------
BALANCE, DECEMBER 31, 1997........................ 866,624 866,624 14,252,532 (5,381,378)
Net loss...................................... (490,059)
------- -------- ----------- -----------
BALANCE, DECEMBER 31, 1998........................ 866,624 $866,624 $14,252,532 $(5,871,437)
======= ======== =========== ===========
See notes to financial statements.
</TABLE>
ELEVEN
----------------
<PAGE> 14
<TABLE>
=============================================================================================================
NOONEY REALTY TRUST, INC.
STATEMENTS OF CASH FLOWS
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income from operations..................................... $(490,059) $(125,363) $ 216,538
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Depreciation..................................................... 638,471 627,804 626,300
Amortization of deferred expenses................................ 101,734 102,520 131,638
Changes in accounts affecting operations:
Accounts receivable......................................... 85,854 93,534 (91,647)
Prepaid expenses............................................ (3,348) 706 55,537
Deferred expenses........................................... (381,699) (70,529) (41,070)
Accounts payable and accrued expenses....................... 13,829 41,163 31,567
Deferred compensation....................................... 204,167
--------- --------- -----------
Net cash provided by operating activities.................. 168,949 669,835 928,863
--------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net additions to investment property................................... (223,891) (182,817) (29,569)
--------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to shareholders......................................... -- (381,314) (693,299)
Payments on mortgage note payable...................................... (97,163) (89,361) (82,185)
--------- --------- -----------
Net cash used in financing activities...................... (97,163) (470,675) (775,484)
--------- --------- -----------
NET INCREASE (DECREASE) IN CASH............................................ (152,105) 16,343 123,810
CASH, BEGINNING OF YEAR.................................................... 657,470 641,127 517,317
--------- --------- -----------
CASH, END OF YEAR.......................................................... $ 505,365 $ 657,470 $ 641,127
========= ========= ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest................................. $ 394,549 $ 402,351 $ 411,220
========= ========= ===========
See notes to financial statements.
</TABLE>
TWELVE
- ----------------
<PAGE> 15
================================================================================
NOONEY REALTY TRUST, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
NOTE 1--BUSINESS:
Nooney Realty Trust, Inc. (the "Trust"), a Missouri corporation, was formed
on June 14, 1984 for the purpose of making equity investments in
income-producing real properties, primarily commercial and light industrial
properties. The Trust's portfolio is comprised of a multi-tenant office building
located in Bloomington, Minnesota ("Atrium at Alpha") (Note 9); a single-tenant
office building located in Omaha, Nebraska ("ACI Building"); and a warehouse and
distribution facility in Franklin Park, Illinois ("Franklin Park"). These
properties generated 41.4%, 34.2% and 24.4% of rental and other income,
respectively, for the year ended December 31, 1998.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Trust has qualified and elected to be taxed as a real estate investment
trust (REIT) under the Internal Revenue Code. The Trust intends to continue to
qualify as a REIT and to distribute substantially all of its taxable income to
its shareholders (See Note 7). Accordingly, no provision for income taxes is
reflected in the financial statements. At December 31, 1998, the Trust has net
operating loss carryforwards of approximately $1,208,000 for tax purposes which
expire in various amounts from 2000 through 2013.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Investment property is recorded at the lower of cost or net realizable
value. The Trust 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 Trust considers a history of operating losses or a change in
occupancy to be primary indicators of potential impairment. The Trust 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 estimate 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 judgment is necessary to estimate
fair value. Accordingly, actual results could vary significantly from such
estimates.
Buildings and improvements are depreciated over their estimated useful lives
(35 years) using the straight-line method. Tenant improvements are depreciated
over the term of the lease.
Deferred expenses consist of lease fees and financing costs and are
amortized over the terms of the respective leases or notes.
Lease agreements are accounted for as operating leases and rentals from such
leases are reported as revenues ratably over the terms of the leases. Certain
lease agreements provide for
THIRTEEN
----------------
<PAGE> 16
================================================================================
NOONEY REALTY TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
rent concessions. At December 31, 1998 and 1997, accounts receivable include
approximately $65,000 and $140,000, respectively, of accrued rent concessions
which is not yet due under the terms of the various lease agreements.
Included in rental and other income are amounts received from tenants under
provisions of lease agreements which require the tenants to pay additional rent
equal to specified portions of certain expenses such as real estate taxes,
insurance, utilities and common area maintenance. The income is recorded in the
same period that the related expense is incurred.
Net income (loss) per share was computed based upon the weighted average
number of shares of common stock outstanding during each year. Basic and diluted
weighted average shares outstanding are the same as the impact of the options
outstanding is antidilutive. Distributions per share are stated at the amount
per share declared by the Directors. The taxability of all distributions paid is
based upon earnings and profits as defined by the Internal Revenue Code. The
taxability of distributions declared but unpaid is determined in the year the
dividend is paid.
The Trust adopted SFAS No. 130, Reporting Comprehensive Income, which
requires entities to report changes in equity that result from transactions and
economic events other than those with shareholders. The Trust had no other
comprehensive income items, accordingly net income and other comprehensive
income are the same.
Certain reclasses have been made to the prior year amounts to conform to the
current year presentation.
NOTE 3--MORTGAGE NOTE PAYABLE:
Mortgage note payable at December 31 consists of the following:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
8.4%, due in monthly installments of $40,976 including interest to
November 2001 when remaining principal payment of $4,330,508 is
due.................................................................. $4,643,712 $4,740,875
========== ==========
</TABLE>
The mortgage note is collateralized by deeds of trust and assignments of
rents on all investment properties. Principal payments required are as follows:
<TABLE>
<S> <C>
1999.................................................... $ 105,646
2000.................................................... 114,870
2001.................................................... 4,423,196
----------
Total............................................... $4,643,712
==========
</TABLE>
In accordance with Statement of Financial Accounting Standards No. 107,
Disclosures about Fair Value of Financial Instruments, the estimated fair value
of mortgage notes payable with maturities greater than one year is determined
based on rates currently available to the Trust for
FOURTEEN
- ----------------
<PAGE> 17
================================================================================
NOONEY REALTY TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
mortgage notes with similar terms and remaining maturities. The carrying amount
and estimated fair value of the Trust's debt at December 31, 1998 and 1997 are
summarized as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------- ---------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Mortgage notes payable............................ $4,643,712 $4,707,000 $4,740,875 $4,802,000
</TABLE>
Fair value estimates are made at a specific point in time, are subjective in
nature and involve uncertainties and matters of significant judgment. Settlement
of the Trust's debt obligation at fair value may not be possible and may not be
a prudent management decision. The potential loss on extinguishment at December
31, 1998 does not take into consideration expenses that would be incurred to
settle the debt obligation at fair value.
NOTE 4--RENTAL REVENUES UNDER OPERATING LEASES:
Minimum future rental revenues under noncancelable operating leases in
effect as of December 31, 1998 are as follows:
<TABLE>
<S> <C>
1999.............................................. $ 2,103,000
2000.............................................. 1,412,000
2001.............................................. 1,232,000
2002.............................................. 1,152,000
2003.............................................. 1,136,000
Thereafter........................................ 5,645,000
-----------
Total......................................... $12,680,000
===========
</TABLE>
In addition, certain lease agreements require tenant participation in
certain operating expenses and additional contingent rentals based upon
percentages of tenant sales in excess of minimum amounts. Tenant participation
in expenses included in revenues approximated $391,000 for the year ended
December 31, 1998, $403,000 in 1997, and $417,000 in 1996. Contingent rentals
were not significant for the years ended December 31, 1998, 1997 and 1996.
NOTE 5--RELATED PARTY TRANSACTIONS:
The Trust had entered into an agreement with Nooney Advisors Ltd., L.P. (the
"Advisor"), a Missouri limited partnership, to advise the Trust with respect to
the Trust's investments and investment policies and to administer the operations
of the Trust. This advisory agreement was renewable annually by a vote of the
Directors. A notice to terminate the contract effective February 9, 1998 was
approved on December 10, 1997. An Officer and Director of the Trust was a
general partner of Nooney Advisors Ltd., L.P. The Advisor received a fee for its
services based upon net invested assets or net operating income as defined in
the agreement. The fees were $13,367, $118,906 and $117,864 for the years ended
December 31, 1998, 1997 and 1996, respectively. Effective February 10, 1998, the
Trust became self-advised. The Trust reimburses an
FIFTEEN
----------------
<PAGE> 18
================================================================================
NOONEY REALTY TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
affiliate, Nooney, Inc. for certain general and administrative fees. The Trust
reimbursed Nooney, Inc. $188,100 in general and administrative fees for the year
ended December 31, 1998.
Certain other affiliates of the Advisor received lease commissions and
property management fees in connection with the operation of investment real
estate owned by the Trust. In 1997, lease commissions of $41,330 were paid by
the Trust to Nooney Krombach Company, an affiliate of the Advisor. Lease
commissions were capitalized as deferred expenses and amortized over the life of
the lease. Additionally, property management fees paid to Nooney Krombach
Company were $98,558 for the period January 1, 1997 through October 31, 1997 and
$112,982 for the year ended December 31, 1996.
On October 31, 1997, Nooney Company sold its property management business
operated through its wholly-owned subsidiary, Nooney Krombach Company, to Nooney
Real Estate Company D/B/A Nooney Inc., an indirect wholly-owned subsidiary of
CGS Real Estate Company, Inc., a Texas corporation. Simultaneously Nooney
Company, Gregory J. Nooney, Jr. and PAN, Inc. sold their general and limited
partnership interest in Nooney Advisors Ltd., L.P., the external advisor to the
Trust to S-P Properties, Inc., a California corporation, which also is a
wholly-owned subsidiary of CGS Real Estate Company. Prior to the sale, the
independent Directors of the Trust approved the change in control of the Advisor
and authorized a new management contract for the Trust's properties with Nooney
Inc., with the same terms and expiration dates as the existing advisory and
management contracts. Lease commissions of $102,229 and $8,266 were paid by the
Trust to Nooney Inc. for the years ended December 31, 1998 and 1997,
respectively. Lease commissions are capitalized as deferred expenses and
amortized over the life of the lease. Additionally, the Trust paid Nooney Inc.
property management fees of $10,160 and $19,711 for the years ended December 31,
1998 and 1997, respectively.
NOTE 6--MAJOR TENANTS:
A substantial amount of the Trust's revenue in 1998 was derived from three
major tenants, whose rentals amounted to $1,096,366, $435,016 and $323,195 or
34.4%, 13.6% and 10.1%, respectively, of total revenues. A substantial amount of
the Trust's revenue in 1997 was derived from three major tenants whose rentals
amounted to $1,093,649, $418,928 and $337,813 or 35.2%, 13.5% and 10.9%,
respectively, of total revenues. A substantial amount of the Trust's revenue in
1996 was derived from three major tenants whose rentals amounted to $1,035,600,
$463,000 and $343,900 or 34.3%, 15.4% and 11.4%, respectively, of total
revenues.
NOTE 7--LEGAL PROCEEDINGS:
During 1998, the Trust successfully completed litigation of State of
Missouri ex rel. KelCor, Inc. v. Nooney Realty Trust, Inc. On August 7, 1997,
KelCor, Inc., a shareholder of the Trust, filed a Petition for mandamus relief
against the Trust. KelCor's Petition sought a writ of mandamus compelling the
Trust to hold an Annual Meeting of shareholders by October 31, 1997. The Trust
opposed KelCor's Petition on the basis that the Trust was unable to hold a valid
meeting because of uncertainty over the validity of certain shares of the Trust
and that the determination of the validity of those shares needed to first be
determined. The case was tried before the Court on December 1, 1997, on which
date the Court entered a permanent order of mandamus requiring
SIXTEEN
- ----------------
<PAGE> 19
================================================================================
NOONEY REALTY TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
the Trust to hold an Annual Meeting by January 15, 1998. The Trust appealed the
Court's order to the Missouri Court of Appeals for the Eastern District. On
April 14, 1998, the Court of Appeals reversed and remanded the cause to the
trial court with directions to quash the writ of mandamus, finding that KelCor
had attempted "to play fast and loose with the court." The trial court quashed
the writ of mandamus and entered judgment for the Trust on October 22, 1998.
The Trust is a party to a lawsuit entitled Nooney Realty Trust, Inc. v.
David L. Johnson, et al. This lawsuit has been filed in the Circuit Court of
Jackson County, Missouri. On August 18, 1997, the Trust filed a petition for
declaratory judgment against certain individuals and entities who claim to hold
shares of the Trust. The Trust initiated the suit to obtain a judicial
determination of the validity and status of some of the Trust's shares (known as
"Excess Shares") which Defendants claim to have purchased as a group on August
26, 1997. The Defendants moved to dismiss the suit and/or to stay the suit
pending resolution of a mandamus suit filed by KelCor, Inc. against the Trust on
August 7, 1997, in St. Louis County, Missouri. On December 9, 1997, the Court
denied Defendant's motion to dismiss the suit but stayed the case pending
disposition of the mandamus action. The mandamus action has been resolved in
favor of the Trust (see preceding paragraph). On July 10, 1998, pursuant to a
motion made by Defendants on June 25, 1998, the Court ordered that the December
9, 1997 order staying the proceedings was lifted and that the case should be
placed on the active trial docket. On July 7, 1998, the Trust filed an Amended
Petition to add two additional Defendants to the case and to add additional
claims against the Defendants for malicious prosecution and abuse of process.
The Defendants, on August 3, 1998, filed a Motion for Summary Judgment to
dismiss the Trust's count for declaratory judgment. On December 11, 1998, the
Trust filed its cross-motion for summary judgment on the declaratory judgment
count and the parties' cross-motions are currently pending before the Court. The
case has been placed on the March 29, 1999, trial docket call. The Board of
Directors intends for the validity and status of the Excess Shares to be finally
determined pursuant to this suit.
While the results of such litigation cannot be predicted with certainty,
management, after discussion with counsel, believes the final outcome will not
have a material adverse effect on the financial position and results of
operations reflected in the financial statements presented herein. In addition,
a determination in the lawsuit that the Trust's shares at issue are Excess
Shares may result in these shares being returned to the Trust's treasury without
compensation, thus reducing the number of shares outstanding and increasing
shareholders' equity per outstanding share. At this point, however, management
cannot predict with certainty whether such shares will be deemed to be Excess
Shares or how such shares will be treated if they are deemed to be Excess
Shares. Once the validity and status of the Excess Shares can be determined, the
Trust will be in a position to hold an Annual Meeting. Until the validity of the
Excess Shares is known, the payment of dividends has been suspended. In order
for the Trust to continue to qualify as a REIT, substantially all of the Trust's
taxable income must be distributed to its shareholders. Accordingly, lack of
resolution of the status of the Excess Shares could affect the Trust's ability
to continue to qualify as a REIT under the Internal Revenue Code in the future.
The cost of these lawsuits negatively impacted earnings during 1998 and 1997.
SEVENTEEN
----------------
<PAGE> 20
================================================================================
NOONEY REALTY TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
NOTE 8--EMPLOYMENT AGREEMENTS:
Effective March 1, 1998, the Trust entered into two five-year employment
agreements that are cancelable after three years subject to certain performance
criteria as defined in the employment agreements. Annual compensation
recognizable under the agreements total $300,000 and include options to purchase
an aggregate of 75,000 shares of the Trust's Common Stock at $10.00 per share.
No options may be exercised during 1998. The options vest at a rate of 20% each
anniversary date. The Trust applies APB Opinion 25, Accounting for Stock Issued
to Employees and related interpretations in accounting for its plan. Had
compensation cost for the Trust's stock-based compensation plans been determined
based on the fair value at the grant dates for awards under the Fixed Stock
Option Plan consistent with the method of FASB 123, Accounting for Stock-based
Compensation, the Trust's net loss and loss per share would have been reduced to
the pro forma amounts indicated below:
<TABLE>
<S> <C>
Net loss:
As reported................................... $(490,059)
Pro forma..................................... (504,328)
Loss per share:
As reported................................... (0.57)
Pro forma..................................... (0.58)
</TABLE>
The fair value of the option grant has been estimated on the date of grant
using the Black-Sholes option pricing model with the following assumptions:
dividend yield of 9.7%, expected volatility of 27%, risk-free interest rate of
7%, and expected life of 5 years.
On August 20, 1998, the Trust granted 12,500 stock appreciation rights to
the three outside Directors to be paid in cash to the extent the Trust's Common
Stock price exceeds eight dollars and thirty seven and one-half cents at the
time of election. The rights vest 20% per year and expire five years after
vesting. No amounts were required to be accrued in connection with these rights
in 1998.
NOTE 9--CONTINGENCY:
The Trust's multi-tenant office building located in Bloomington, Minnesota
has been classified in the Minneapolis Airport Committee's (the "MAC") Safety
Zone A in the future expansion of the Minneapolis Airport. The expansion runway
is anticipated to be completed in 2003. The MAC will be buying out impacted
buildings during 1999. Safety Zone A is adjacent to the Federal Aviation
Authority's noise buyout zone. The MAC has not indicated whether or not it will
buyout the Trust's building. The Trust is monitoring whether the increased noise
from the new runway will have an impact on future leasing of the building. If
the Trust determines there is a negative impact, the Trust will petition the MAC
to buy the building. If the building continues to be classified in Safety Zone
A, it will be classified as nonconforming use. Given the preliminary stage of
the future expansion, management is unable at this time to determine what
impact, if any, this matter will have on the Trust.
EIGHTEEN
- ----------------
<PAGE> 21
================================================================================
NOONEY REALTY TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
NOTE 10--BUSINESS SEGMENTS (IN THOUSANDS):
The Trust has three reportable operating segments: Atrium at Alpha, Franklin
Park, and ACI Building. The Trust's management evaluates performance of each
segment based on profit or loss from operations before allocation of general and
administrative expenses, unusual and extraordinary items, and interest. The
accounting policies of the segments are the same as those described in the
summary of significant accounting policies (see Note 2).
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Atrium at Alpha........................................................ $ 1,341.8 $ 1,289.1 $ 1,211.3
Franklin Park.......................................................... 781.0 755.7 770.2
ACI Building........................................................... 1,111.7 1,081.3 1,035.6
--------- --------- ---------
$ 3,234.5 $ 3,126.1 $ 3,017.1
========= ========= =========
Operating Profit:
Atrium at Alpha........................................................ $ 231.1 $ 238.0 $ 191.2
Franklin Park.......................................................... 132.9 173.2 165.7
ACI Building........................................................... 186.8 183.5 126.0
--------- --------- ---------
$ 550.8 $ 594.7 $ 482.9
========= ========= =========
Capital Expenditures:
Atrium at Alpha........................................................ $ 146.6 $ 182.8 $ 29.6
Franklin Park.......................................................... 11.9
ACI Building........................................................... 65.4
--------- --------- ---------
$ 223.9 $ 182.8 $ 29.6
========= ========= =========
Depreciation and Amortization:
Atrium at Alpha........................................................ $ 352.3 $ 352.2 $ 362.5
Franklin Park.......................................................... 163.2 178.2 182.4
ACI Building........................................................... 208.1 183.2 196.5
--------- --------- ---------
$ 723.6 $ 713.6 $ 741.4
========= ========= =========
Assets:
Atrium at Alpha........................................................ $ 5,682.1 $ 5,882.9
Franklin Park.......................................................... 4,912.4 4,745.9
ACI Building........................................................... 3,320.6 3,413.9
--------- ---------
$13,915.1 $14,042.7
========= =========
</TABLE>
NINETEEN
----------------
<PAGE> 22
<TABLE>
==================================================================================================================
NOONEY REALTY TRUST, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Reconciliations of segment data to the Trust's consolidated data follow:
<CAPTION>
1998 1997 1996
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Segments............................................................... $ 3,234.5 $ 3,126.1 $ 3,017.1
Corporate and other.................................................... (45.0) (16.0) 16.4
--------- --------- ---------
$ 3,189.5 $ 3,110.1 $ 3,033.5
========= ========= =========
Operating Profit:
Segments............................................................... $ 550.8 $ 594.7 $ 482.9
General and administrative expenses.................................... (1,040.9) (720.1) (266.4)
--------- --------- ---------
$ (490.1) $ (125.4) $ 216.5
========= ========= =========
Depreciation and Amortization:
Segments............................................................... $ 723.6 $ 713.6 $ 741.4
Corporate and other.................................................... 16.6 16.7 16.5
--------- --------- ---------
$ 740.2 $ 730.3 $ 757.9
========= ========= =========
Assets:
Segments............................................................... $13,915.1 $14,042.7
Corporate and other.................................................... 642.4 884.1
--------- ---------
$14,557.5 $14,926.8
========= =========
</TABLE>
TWENTY
- ----------------
<PAGE> 23
<TABLE>
============================================================================================================
<CAPTION>
DIRECTORS AND OFFICERS
<S> <C>
Board of Directors
William J. Carden...... Founder and Chief Executive Officer of CGS Real Estate Company, Newport Beach,
California. CGS is a diversified real estate investment management company.
Lawrence E. Fiedler.... Real estate owner, consultant and educator.
William W. Geary, Jr... President, Carlsberg Management Company, Santa Monica, California.
James P. Ingram........ President, Cambridge Savings Bank, Cambridge, Massachusetts.
Gregory J. Nooney, Jr.. Chairman of the Board and Chief Executive Officer, Nooney, Inc. Nooney Inc. is a
real estate investment management firm, and a wholly-owned subsidiary of CGS Real
Estate Company.
Officers
William J. Carden...... Chief Executive Officer and Chairman of the Board
Gregory J. Nooney, Jr.. Vice Chairman
Patricia A. Nooney..... President and Secretary
Thomas N. Thurber...... Treasurer and CFO
</TABLE>
TWENTY-ONE
----------------
<PAGE> 24
================================================================================
NOONEY LOGO
SHAREHOLDER INFORMATION
Transfer Agent:
ChaseMellon Shareholder Services
P.O. Box 3316
South Hackensack, NJ 07606-1916
Legal Counsel:
Bryan Cave LLP
St. Louis, Missouri
Independent Accountants:
Deloitte & Touche LLP
St. Louis, Missouri
The following information is available to shareholders without charge upon
written request to Patricia A. Nooney, Secretary, Nooney Realty Trust, Inc., 500
N. Broadway, St. Louis, Missouri 63102:
Annual Report on Form 10-K filed with the Securities and Exchange Commission.
Form 10-K is available in April.
Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission.
Forms 10-Q are available in May, August and November.
Nooney Realty Trust, Inc. Dividend Reinvestment Plan and Enrollment Card
TWENTY-TWO
- ----------------
<PAGE> 25
INVESTMENT PROPERTIES
THE ATRIUM
AT ALPHA BUSINESS CENTER
BLOOMINGTON, MINNESOTA
APPLIED COMMUNICATIONS, INC. BUILDING
OMAHA, NEBRASKA
FRANKLIN PARK DISTRIBUTION CENTER
FRANKLIN PARK, ILLINOIS
NOONEY REALTY TRUST
500 N. BROADWAY
ST. LOUIS, MISSOURI 63102
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FINANCIAL STATEMENTS FOR NOONEY REALTY TRUST, INC. AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000748580
<NAME> NOONEY REALTY TRUST, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 505,365
<SECURITIES> 0
<RECEIVABLES> 174,231
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 711,504
<PP&E> 20,185,236
<DEPRECIATION> 6,830,183
<TOTAL-ASSETS> 14,557,537
<CURRENT-LIABILITIES> 461,939
<BONDS> 4,643,712
<COMMON> 866,624
0
0
<OTHER-SE> 9,247,719
<TOTAL-LIABILITY-AND-EQUITY> 14,557,537
<SALES> 3,161,030
<TOTAL-REVENUES> 3,189,510
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,285,020
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 394,549
<INCOME-PRETAX> (490,059)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (490,059)
<EPS-PRIMARY> (.57)
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
[Letterhead of Deloitte & Touche LLP]
EXHIBIT 99.1
INDEPENDENT AUDITORS' REPORT ON
FINANCIAL STATEMENT SCHEDULE
To the Shareholders of Nooney Realty Trust, Inc.
St. Louis, Missouri:
We have audited the financial statements of Nooney Realty Trust, Inc. as of
December 31, 1998 and 1997, and for each of the three years in the period
ended December 31, 1998, and have issued our report thereon dated January 22,
1999. Such financial statements and report are included in your 1998 Annual
Report to Shareholders and are incorporated herein by reference. Our audits
also included the financial statement schedule of Nooney Realty Trust, Inc.,
listed in Item 14. This financial statement schedule is the responsibility
of the Trust's management. Our responsibility is to express an opinion based
on our audits. In our opinion, such financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ Deloitte & Touche LLP
January 22, 1999
[LOGO]
<PAGE> 2
NOONEY REALTY TRUST, INC.
<TABLE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
-------- -------- -------- --------
COSTS
CAPITALIZED
SUBSEQUENT TO
INITIAL COST TO TRUST ACQUISITION
------------------------------------------- ------------
BUILDINGS AND COSTS OF
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS TOTAL IMPROVEMENTS
<S> <C> <C> <C> <C> <C>
Atrium at Alpha Business Center
Bloomington, Minnesota $ -- $ 822,526 $ 7,571,190 $ 8,393,716 $ 512,365
Applied Communications, Inc.
Office Building
Omaha, Nebraska 1,257,655 5,143,353 6,401,008 215,427
Franklin Park Distribution Center
Franklin Park, Illinois 488,774 3,812,720 4,301,494 361,226
All properties 4,643,712
---------- ---------- ----------- ----------- ----------
Total $4,643,712 $2,568,955 $16,527,263 $19,096,218 $1,089,018
========== ========== =========== =========== ==========
<CAPTION>
COLUMN A COLUMN E
-------- --------
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
----------------------------------------------------------
BUILDINGS AND
DESCRIPTION LAND IMPROVEMENTS TOTAL
<S> <C> <C> <C>
Atrium at Alpha Business Center
Bloomington, Minnesota $ 822,526 $ 8,083,555 $ 8,906,081
Applied Communications, Inc.
Office Building
Omaha, Nebraska 1,257,655 5,358,780 6,616,435
Franklin Park Distribution Center
Franklin Park, Illinois 488,774 4,173,946 4,662,720
All properties
---------- ----------- -----------
Total $2,568,955 $17,616,281 $20,185,236
========== =========== ===========
<CAPTION>
COLUMN F COLUMN G COLUMN H COLUMN I
-------- -------- -------- --------
LIFE ON WHICH
DEPRECIATION
IN LATEST INCOME
ACCUMULATED DATE OF DATE STATEMENT
DEPRECIATION CONSTRUCTION ACQUIRED IS COMPUTED
<S> <C> <C> <C> <C>
Atrium at Alpha Business Center
Bloomington, Minnesota $3,368,610 1981 March 28, 1985 35 years
Applied Communications, Inc.
Office Building
Omaha, Nebraska 2,045,570 1984 January 22, 1986 35 years
Franklin Park Distribution Center
Franklin Park, Illinois 1,416,003 1972 December 16, 1986 35 years
-----------
Total $6,830,183
===========
(Continued)
</TABLE>
<PAGE> 3
NOONEY REALTY TRUST, INC.
<TABLE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1998 1997 1996
<S> <C> <C> <C>
(A) Reconciliation of amounts in Column E:
Balance at beginning of period $20,308,876 $20,162,786 $20,156,116
Add - Cost of improvements 223,891 182,817 29,569
Less - Cost of disposals (347,531) (36,727) (22,899)
----------- ----------- -----------
Balance at end of period $20,185,236 $20,308,876 $20,162,786
=========== =========== ===========
(B) Reconciliation of amounts in Column F:
Balance at beginning of period $ 6,539,243 $ 5,948,166 $ 5,344,765
Add - Provision during the period 638,471 627,804 626,300
Less - Depreciation on disposals (347,531) (36,727) (22,899)
----------- ----------- -----------
Balance at end of period $ 6,830,183 $ 6,539,243 $ 5,948,166
=========== =========== ===========
(C) The aggregate cost of real estate owned for
federal income tax purposes $20,185,236 $20,308,876 $20,162,786
=========== =========== ===========
(Concluded)
</TABLE>
