<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 0-14360
NOONEY INCOME FUND LTD. II, L.P.
- -------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Missouri 43-1357693
- ------------------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7701 Forsyth Boulevard, St. Louis, Missouri 63105
- ------------------------------------------- ----------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 863-7700
- -------------------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12,13, or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes ___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date _______________.
Page 1 of 11 Pages
<PAGE> 2
PART I
ITEM 1 - FINANCIAL STATEMENTS:
<TABLE>
NOONEY INCOME FUND LTD. II, L.P.
--------------------------------
(A LIMITED PARTNERSHIP)
----------------------
BALANCE SHEETS
--------------
(UNAUDITED)
-----------
<CAPTION>
March 31, December 31,
1995 1994
(Unaudited)
------------ ------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 1,142,753 $1,118,033
Accounts receivable 89,856 108,832
Prepaid expenses 84,469 29,472
Investment property, at cost:
Land and improvements 1,674,836 1,674,836
Buildings 10,261,598 10,260,354
------------ ------------
11,936,434 11,935,190
Less accumulated depreciation 4,232,123 4,131,718
------------ ------------
7,704,311 7,803,472
Deferred expenses - At amortized cost 85,223 58,643
------------ ------------
$ 9,106,611 $ 9,118,452
============ ============
LIABILITIES AND PARTNERS' EQUITY:
Liabilities:
Accounts payable and accrued expenses $ 309,369 $ 365,747
Refundable tenant deposits 63,325 63,619
------------ ------------
372,694 429,366
Partners' Equity 8,733,918 8,689,038
------------ ------------
$ 9,106,611 $ 9,118,452
============ ============
</TABLE>
<PAGE> 3
<TABLE>
NOONEY INCOME FUND LTD. II, L.P.
--------------------------------
(A LIMITED PARTNERSHIP)
----------------------
STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY
----------------------------------------------
(UNAUDITED)
----------
<CAPTION>
Three Months Ended
March 31, March 31,
1995 1994
------------ ------------
<S> <C> <C>
REVENUES:
Rental and other income $ 450,131 $ 429,266
Interest 9,498 4,624
------------ ------------
459,629 433,890
EXPENSES:
Depreciation and amortization 112,788 108,854
Real estate taxes 89,248 98,683
Property management fees paid to
Nooney Krombach Company 27,589 26,166
Reimbursement to Nooney Krombach Company
for partnership management services and
indirect expenses 6,250 6,250
Other operating expenses 178,922 159,127
------------ ------------
414,797 399,080
------------ ------------
NET INCOME $ 44,832 $ 34,810
============ ============
NET INCOME PER LIMITED PARTNERSHIP UNIT $ 2.31 $ 1.79
============ ============
PARTNERS' EQUITY:
Beginning of Period $ 8,689,086 $ 8,817,462
Net Income 44,832 34,810-
----------- ------------
End of Period $ 8,733,918 $ 8,852,272
============ ============
</TABLE>
<PAGE> 4
<TABLE>
NOONEY INCOME FUND LTD. II, L.P.
--------------------------------
(A LIMITED PARTNERSHIP)
----------------------
STATEMENTS OF CASH FLOWS
------------------------
(UNAUDITED)
----------
<CAPTION>
Three Months Ended
March 31, March 31,
1995 1994
------------ ------------
<S> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net Income $ 44,832 $ 34,810
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 112,788 108,854
Changes in assets and liabilities:
Increase in accounts receivable 18,976 2,436
Increase in prepaid expenses and deposits (61,640) (15,887)
Increase in deferred assets
at amortized cost (26,580) (24,255)
(Decrease) in accounts payable and
accrued expenses (56,378) (54,627)
(Decrease) Increase in refundable tenant
deposits (294) 196
------------ ------------
Total Adjustments (13,128) 16,717
------------ ------------
Net cash provided by operating activities 31,704 51,527
------------ ------------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Additions to investment property (6,984) (4,329)
------------ ------------
Net cash used in investing activities (6,984) (4,329)
------------ ------------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Cash distributions to partners -0- -0-
------------ ------------
Net cash used in financing activities -0- -0-
------------ ------------
NET INCREASE IN CASH 24,720 47,198
CASH AND CASH EQUIVALENTS, beginning of period 1,118,033 1,046,208
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $1,142,753 $1,093,406
============ ============
</TABLE>
<PAGE> 5
NOONEY INCOME FUND LTD.II, L.P.
-------------------------------
(A LIMITED PARTNERSHIP)
-----------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
THREE MONTHS ENDED MARCH 31 1995 AND 1994
-----------------------------------------
NOTE A:
Refer to the Registrant's financial statements for the year ended December 31,
1994, which are contained in the Registrant's Annual Report on Form 10-K, for a
description of the accounting policies which have been continued without
change. Also, refer to the footnotes to those statements for additional details
of the Registrant's financial condition. The details in those notes have not
changed except as a result of normal transactions in the interim or as noted
below.
NOTE B:
The financial statements include only those assets, liabilities, and results of
operations of the partners which relate to the business of Nooney Income Fund
Ltd. II, L.P. The statements do not include assets, liabilities, revenues or
expenses attributable to the partners' individual activities. No provision has
been made for federal and state income taxes since these taxes are the
responsibility of the partners. In the opinion of the general partners, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and changes in
financial position at March 31, 1995 and for all periods presented have been
made.
NOTE C:
The Registrant's properties are managed by Nooney Krombach Company, a wholly-
owned subsidiary of Nooney Company. Certain general partners of the Registrant
are officers and directors of Nooney Company. Nooney Income Investments Two,
Inc., a general partner, is a 75% owned subsidiary of Nooney Company.
NOTE D:
The earnings per limited partnership unit for the three months ended March 31,
1995 and 1994 was computed based on 19,221 units, the number of units
outstanding during the periods.
<PAGE> 6
ITEM :7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
The Registrant's cash and cash equivalents at March 31, 1995 increased slightly
when compared to the previous year-end due to an increase in cash flow from
operations partially offset by an increase in capital expenditures.
The Registrant expects the properties to provide adequate cash flow from
operations and available cash to fund capital expenditures during 1995. (See
Expected Capital Expenditures).
As previously disclosed, the Registrant owned three properties jointly with
Nooney Income Fund Ltd. III, L.P. ("NIF III"). NIF III was unable to service
its debt, and its percentage interests in the jointly held properties were
transferred to a subsidiary of the mortgage lender, St. Louis Investment
Properties, Inc.("SLIP"), in lieu of foreclosure. The Registrant believes SLIP
could attempt to partition those properties and force their sale at auction for
what the Registrant believes could be a very low price. This would likely
reduce the amount of any cash available for distribution to the partners when
the Registrant is dissolved. The Registrant has successfully negotiated a
contract with SLIP to purchase the partial interests ("Acquisition Interests")
in the jointly held properties (Wards Corner, Countryside, and NorthCreek).
The purchase price is $7,190,000, of which the mortgage lender will finance
100%. This transaction is subject to the approval of the limited partners. A
preliminary consent statement seeking the limited partners' approval of the
purchase was filed with the Securities and Exchange Commission on October 18,
1994. The General Partners subsequently decided to postpone seeking the
limited partners' approval pending completion of the 1994 audited financial
statements. It is now anticipated the consent statement will be sent to the
limited partners in June, 1995. The purchase of the Acquisition Interests from
SLIP will enable the Partnership to fully control its own destiny with respect
to the improvement, management and sale of its properties. The General
Partners' goal is to attempt to enhance the value of the Registrant's
properties, with the exception of Countryside, over the next several years in
order to increase the amount of any cash available for distribution to the
partners when the Partnership is dissolved. Due to market conditions, tax
burdens and other factors relating to Countryside, the Registrant intends to
attempt to sell Countryside by July 1996 if the limited partners vote in favor
of the purchase of the Acquisition Interests. The General Partners believe
that now is not the time to sell NorthCreek, Wards Corner, Leawood or Tower
Industrial, since the General Partners believe that the commercial real estate
markets in those areas will improve over the next several years. Registrant's
management is unable to predict whether the limited partners will approve the
transaction or whether SLIP would be successful in an attempt to force a
partition and sale of Countryside, NorthCreek and Wards Corner.
The future liquidity of the Registrant is dependent on its ability to fund
future capital expenditures from operations and cash reserves, maintain
occupancy and contend with the ownership issues of the jointly held properties.
Until such time as market conditions may improve and the profitable sale of the
properties may be feasible, the Registrant will continue to manage its
properties.
<PAGE> 7
Results of Operations
- ---------------------
During the quarters ended March 31, 1995, 1994 and 1993 the Registrant's
properties cash flows (excluding any partnership expenses) were as follows:
<TABLE>
<CAPTION>
Tower Ind. Leawood Countryside Wards NorthCreek
Building Fountain Exec. Center Corner Office Park
(100%)<F1> (24%)<F1> (50%) <F1> (45%) <F1> (45%) <F1>
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1995
- ----
Net Operating Cash Income<F2> $ 32,000 $ 34,000 $ 45,000 $ 19,000 $107,000
Capital Expenditures (-0-) (3,000) (-0-) (-0-) (4,000)
Tenant Alterations (-0-) (-0-) (-0-) (-0-) (3,000)
Lease Commissions (32,000) (1,000) (-0-) (-0-) (-0-)
----------- ----------- ----------- ----------- -----------
Net Property Cash Flow $ -0- $ 30,000 $ 45,000 $ 19,000 $100,000
=========== =========== =========== =========== ===========
1994
- ----
Net Operating Cash Income<F2> $ 33,000 $ 33,000 $ 28,000 $ 31,000 $ 85,000
Capital Expenditures (-0-) (2,000) (1,000) (-0-) (-0-)
Tenant Alterations (-0-) (1,000) (-0-) (-0-) (-0-)
Lease Commissions (-0-) (5,000) ( -0-) (2,000) (9,000)
----------- ----------- ----------- ----------- -----------
Net Property Cash Flow $ 33,000 $ 25,000 $ 27,000 $ 29,000 $ 76,000
=========== =========== =========== =========== ===========
1993
- ----
Net Operating Cash Income<F2> $ 27,000 $ 24,000 $ 11,000 $ 28,000 $ 65,000
Capital Expenditures (-0-) (-0-) (21,000) (-0-) (-0-)
Tenant Alterations (-0-) (4,000) (37,000) (-0-) (43,000)
Lease Commissions (-0-) (-0-) (7,000) (-0-) (-0-)
----------- ----------- ----------- ----------- -----------
Net Property Cash Flow $ 27,000 $ 20,000 $(54,000) $ 28,000 $ 22,000
=========== =========== =========== =========== ===========
- ---------------
<FN>
<F1> Represents the percentage of the Registrant's ownership in the above mentioned properties.
<F2> Net Operating Cash Income represents Rental Revenue less Property Operating Expenses, excluding
depreciation and amortization and writedowns of investment property, less Debt Service. The
Registrant is not currently servicing any debt. Net Operating Cash Income (i) does not represent
cash flow from operations as defined by generally accepted accounting principles, (ii) is not
necessarily indicative of cash available to fund all cash flow needs and (iii) should not be
considered as an alternative to Net Income for purposes of evaluating the Partnership's operating
performance.
</TABLE>
<PAGE> 8
Expected Remaining 1995 Capital Expenditures:
- ---------------------------------------------
<TABLE>
<CAPTION>
Leasing Other
Capital Capital Total
----------- ----------- -----------
<S> <C> <C> <C>
Tower Industrial Bldg. (100%) <F1>* $ 12,000 $ -0- $ 12,000
Leawood Fountain Plaza (24%) <F1> 73,000 7,000 80,000
Countryside Exec. Center (50%) <F1> 23,000 46,000 69,000
Wards Corner (45%) <F1> 32,000 27,000 59,000
NorthCreek Office Park (45%) <F1> 20,000 21,000 41,000
----------- ----------- -----------
$160,000 $101,000 $261,000
=========== =========== ===========
- ---------------
<FN>
<F1> Represents the percentage of the Registrant's ownership in the above mentioned properties.
</TABLE>
During the remainder of 1995, approximately $261,000 of capital
expenditures are expected by the Registrant for its proportionate share of
ownership interest in the properties. At Countryside, brick planters will be
rebuilt and a portion of the parking lot will be resurfaced. NorthCreek is
scheduled for exterior painting of all buildings. Leawood Fountain Plaza is
currently undergoing minor roof repairs and is scheduled for sidewalk repairs.
At Wards Corner, existing interior improvements in the vacant space will be
demolished and refurbished for re-leasing purposes. Presently there are no
contracts in place for any other capital expenditures. The timing and cost of
these capital expenditures will vary.
The occupancy levels at the Registrant's properties are listed below:
<TABLE>
<CAPTION>
PROPERTY Occupancy Levels at March 31,
- -------- ----------------------------------------
1995 1994 1993
---------- ---------- ----------
<C> <C> <C> <C>
Tower Ind. Bldg. 100% 100% 100%
Leawood Fountain Pl. 92% 92% 90%
Countryside Exec. Center 83% 82% 82%
Wards Corner 56% 80% 52%
NorthCreek Office Park 97% 89% 89%
</TABLE>
Tower Industrial Building is leased by a single tenant whose lease
expires on April 30, 2000.
<PAGE> 9
At Leawood Fountain Plaza, the Registrant leased and renewed 6,736
square feet of space which increased occupancy by 2% during the first quarter
of 1995. Rental rates increased slightly with respect to this leasing
activity. The property has one major tenant who leases more than 10% of the
leasable area. This lease expires in 1999.
During the first quarter of 1995, the Registrant leased 2,333 square
feet of space at Countryside Executive Center. Rental rates remained flat
during the first quarter. The property has no major tenants who occupy greater
than 10% of the leasable area.
At Wards Corner, there was no leasing activity during the first
quarter of 1995. The Registrant is actively marketing the vacant space but has
no prospects for re-leasing the vacant space at this time. Wards Corner has
one major tenant who occupies 50% of the property. This lease expires in
December 1996.
During the first quarter of 1995, at NorthCreek Office Park, the
Registrant leased and renewed 5,283 square feet of space. Rental rates
remained flat for the quarter. NorthCreek Office Park has one major tenant,
with two leases that comprise 36% of the property. These two leases expire in
December 1998 and December 2003.
1995 Comparisons
- ----------------
The Registrant generated revenues of $459,629 during the first quarter
of 1995 compared to $433,890 in the same quarter of 1994. This 6% increase in
revenue is due to higher occupancy at NorthCreek Office Park and higher revenue
at Countryside Executive Center due to a termination fee. Partially offsetting
this increase in revenue is lower rental revenue at Wards Corner due to lower
occupancy.
Operating expenses, excluding depreciation and amortization, for the
first quarter increased from $290,226 in 1994 to $302,009 in 1995. This 4%
increase in expenses is primarily due to higher repairs and maintenance and
vacancy expense at Countryside Executive Center and Wards Corner. Partially
offsetting this increase were lower real estate tax expense at Countryside
Executive Center and Wards Corner. The operating expenses at the other
properties remained relatively flat.
Depreciation and amortization expense increased 4%, for the first
quarter of 1995 compared to the same quarter of 1994. This increase, during
the twelve month period, is a result of additional capital expenditures at
Countryside Executive Center and additional leasing capital expenditures (lease
commissions and tenant alterations) at Leawood Fountain Plaza, Countryside
Executive Center and NorthCreek Office Park.
<PAGE> 10
1994 Comparisons
- ----------------
The Registrant generated revenues of $433,890 during the first
quarter of 1994 compared to $475,018 in 1993. The 9% decrease in revenues is
largely due to a bad debt recovery at Wards Corner in the previous year,
partially offset by an increase in rental income associated with higher
occupancy at Wards Corner. Also, Countryside Executive Center experienced a
decrease in revenues due to a termination fee received in the previous year,
partially offset by an increase in rental income. NorthCreek Office Park
reflected a decrease in operating expense recovery.
First quarter operating expenses, excluding depreciation and
amortization, decreased from $317,447 in 1993 to $290,226 in 1994. The 9%
decrease in expenses is due primarily to a lower real estate tax expense and
repairs and maintenance at Countryside Executive Center, partially offset by an
increase in snow removal at the property. Wards Corner experienced lower bad
debt expense. Leawood Fountain Plaza reflected a net decrease due to lower
real estate taxes and snow removal expenses. Tower Industrial and NorthCreek
Office Park remained relatively unchanged.
1993 Comparisons
- ----------------
The Registrant generated revenues of $475,018 during the first quarter
of 1993 compared to $480,192 in 1992. The 1% decrease in revenues is due to
the departure of a major tenant at Wards Corner, and the vacancy and downsizing
of several minor tenants at NorthCreek. Also, at NorthCreek, expense
reimbursements for the first quarter 1993 decreased 10% over 1992 figures due
to the aforementioned vacancies. These are offset by higher rental revenues at
Countryside. Several minor tenants who paid partial rent in the first quarter
of 1992 are paying full rent in 1993. Also, at Countryside, termination fees
from two minor tenants were collected in 1993.
Operating expenses, excluding depreciation and amortization, increased
from $283,771 in 1992 to $317,447 in 1993. The 12% increase in expenses is due
primarily to higher real estate tax expense at Countryside, along with higher
maintenance and repairs. Expenses at Leawood increased in 1993 over 1992 due
to higher maintenance and utility expenses.
Inflation
- ---------
The effects of inflation did not have a material impact upon the
Registrant's operations in fiscal 1994, and are not expected to materially
affect the Registrant's operations in 1995.
<PAGE> 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27, Financial Data Schedule (provided for the
information of the Securities and Exchange Commission only)
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOONEY INCOME FUND LTD. II, L.P.
Dated: May 15, 1995 /S/ GREGORY J. NOONEY, JR.
-------------------------------------
Gregory J. Nooney, Jr.
General Partner
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR NOONEY INCOME FUND LTD. II, L.P. AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000757764
<NAME> NOONEY INCOME FUND LTD. II, L.P.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,142,753
<SECURITIES> 0
<RECEIVABLES> 89,856
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,232,609
<PP&E> 11,936,434
<DEPRECIATION> 4,232,123
<TOTAL-ASSETS> 9,106,611
<CURRENT-LIABILITIES> 372,694
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 8,733,918
<TOTAL-LIABILITY-AND-EQUITY> 9,106,611
<SALES> 459,629
<TOTAL-REVENUES> 459,629
<CGS> 414,797
<TOTAL-COSTS> 414,797
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 44,832
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,832
<EPS-PRIMARY> 2.31
<EPS-DILUTED> 0
</TABLE>
