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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 29, 1995
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NOONEY INCOME FUND LTD. II, L.P.
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(Exact Name of Registrant as specified in its charter)
Missouri 0-14360 43-1357693
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(State or other (Commission File No.) (IRS Employer
jurisdiction of File No.)
of incorporation)
7701 Forsyth Boulevard, St. Louis, Missouri 63105
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 863-7700
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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NOONEY INCOME FUND LTD. II, L.P.
PRO FORMA FINANCIAL INFORMATION
(Unaudited)
This unaudited pro forma consolidated statement of operations for the year
ended December 31, 1995 assumes completion of the transaction to purchase the
Acquisition Interests and related financing contemplated within this Form 8-K/A
and assumption of operations at that time. The pro forma consolidated
statement of operations was prepared as if the transaction occurred at the
beginning of the period presented.
The pro forma financial results are not necessarily indicative of what the
actual financial position of Nooney Income Fund Ltd. II, L.P. (the
"Partnership" or "NIF II") would have been as of the dates indicated, nor does
it purport to present the Partnership's future financial position. In
management's opinion, all adjustments necessary to reflect effects of the
purchase and related financing have been made.
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<TABLE>
NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP)
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995 (Unaudited)
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<CAPTION>
Year Ended December 31, 1995
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Pro Forma Adjustments
------------------------------ NIF II
NIF II Acquisition Consolidated
Historical Interests Other Pro Forma
(A) (B)
------------ ------------ ---------------- ------------
<S> <C> <C> <C> <C>
REVENUES:
Rental and other income $ 1,754,750 $ 1,458,977 $ -- $ 3,213,727
Interest 31,790 31,790
------------ ------------ ---------------- ------------
Total revenues 1,786,540 1,458,977 -- 3,245,517
EXPENSES:
Interest 1,134 1,387 688,202 (C) 690,723
Depreciation and amortization 450,319 274,622 (D) 724,941
Real estate taxes 366,762 314,395 681,157
Property management fees 107,060 89,345 196,405
Repairs and maintenance 123,167 111,016 234,183
Partnership management services 25,000 25,000
Professional services 156,461 12,945 15,000 (E) 184,406
Other operating expenses 347,120 281,963 629,083
------------ ------------ ---------------- ------------
Total expenses 1,577,023 811,051 977,824 3,365,898
------------ ------------ ---------------- ------------
NET INCOME (LOSS) $ 209,517 $ 647,926 $ (977,824) $ (120,381)
============ ============ ================ ============
NET INCOME (LOSS) ALLOCATION: (F)
General partners $ 13,989 $ 10,690
Limited partners $ 195,528 $ (131,071)
LIMITED PARTNERS DATA: (F)
Net income (loss) per unit $ 10.17 $ (6.82)
============ ============
Weighted average limited partnership units
outstanding 19,221 19,221
============ ============
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<FN>
See notes to pro forma consolidated statement of operations.
</TABLE>
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NOONEY INCOME FUND LTD. II, L.P.
(A LIMITED PARTNERSHIP
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995 (Unaudited)
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(A) Reflects the historical results of operations of Nooney Income Fund Ltd.
II, L.P. as of December 31, 1995.
(B) Reflects operations assuming the purchase of 50% of Countryside Executive
Center, 55% of NorthCreek Office Park, and 55% of Wards Corner Business
Center.
(C) Reflects interest on the new mortgage debt of $665,075 plus amortization
($23,127) of the new mortgage debt deferred financing costs. The mortgage
note interest rate is equal to the Lender's corporate base rate (CBR) plus
3/4%. Such rate will change simultaneously with any change in the CBR. A
CBR of 8.5% as of December 31, 1995 was used in this calculation. A 1/8%
change in the rate would change this amount by $8,988.
(D) Reflects additional depreciation ($253,809) attributable to the Acquisition
Interests and amortization ($20,813) of lease commissions.
(E) Represents additional professional expenses attributable to the cost of
owning the Acquisition Interests.
(F) Under the terms of the Partnership Agreement, Net Operating Cash Income (as
defined) is to be distributed quarterly as follows: (i) 90% to the limited
partners, (ii) 9% to the individual general partners as their annual
Partnership Management Fee and (iii) 1% to the individual general partners.
In the event it is determined after the close of a fiscal year that the
limited partners have not received their 7-1/2% non-cumulative preference
as defined in the Partnership Agreement, then the individual general
partners return to the partnership (for payment to the limited partners) a
portion of their distributions received as their 9% annual Partnership
Management Fee until the limited partners have received their 7-1/2% non-
cumulative preference. The individual general partners are not required to
return any amount in excess of 1/2 of the 9% Partnership Management Fee
received. If Net Operating Cash Income for any fiscal year is not
sufficient to pay the limited partners any portion of their 7-1/2% non-
cumulative preference, the unpaid amount does not accrue to future fiscal
years. The annual Partnership Management Fee is a cumulative preference.
The preferential return can be distributed only through cash distributed as
a result of a Major Capital Event (as defined) or cash distributed upon
dissolution of the partnership. Such preferred distribution is only
allowed after the general and limited partners receive amounts equal to
their adjusted capital accounts and the limited partners receive an 11%
cumulative return. Through December 31, 1995, Partnership Management Fees
totaling $237,429 have not been paid under the limitations stated above.
Based upon the priorities of cash to be distributed, management believes
that the likelihood of payment of the $237,429 is remote and therefore was
not accrued.
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The calculation of partnership management fees for the year ended
December 31, 1995 is as follows:
Unaccrued, unpaid partnership management fee as
of December 31, 1994 $ 225,415
Additional partnership management fees
(1/1/95 - 12/31/95):
NOC I distributed $ 266,975
9% x 50% 4.5 % 12,014
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Unaccrued, unpaid partnership management fee as
of December 31, 1995 $ 237,429
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Limited partnership per unit computations are based on the weighted average
number of limited partnership units outstanding during the period.
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INDEPENDENT AUDITORS' REPORT
To the Partners of
Nooney Income Fund Ltd. II, L.P.:
We have audited the accompanying combined Historical Summary of Revenues and
Certain Expenses (the Historical Summary) of the Acquisition Properties as
described in Note 1, for the year ended December 31, 1995. The Historical
Summary is the responsibility of the Nooney Income Fund Ltd. II, L.P.'s general
partners. Our responsibility is to express an opinion on the Historical
Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the accounting principles used and the significant
estimates made by the Nooney Income Fund Ltd. II, L.P.'s general partners, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission for
inclusion in Form 8-K/A of Nooney Income Fund Ltd. II, L.P. as described in
Note 1 and is not intended to be a complete presentation of the Acquisition
Properties' revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the combined revenue and certain expenses described in
Note 1 of the Acquisition Properties for the year ended December 31, 1995, in
conformity with generally accepted accounting principles.
/S/ DELOITTE & TOUCHE LLP
February 14, 1996
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<TABLE>
ACQUISITION PROPERTIES
COMBINED HISTORICAL SUMMARY OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1995
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<CAPTION>
Year Ended
December 31, 1995
----------------------------------------
Nooney Income
Fund Ltd. II, Total
Acquisition L.P. Acquisition
Interests Interests Properties
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES - Rental and other income $1,458,977 $1,231,437 $2,690,414
CERTAIN EXPENSES:
Real estate taxes 314,395 292,543 606,938
Property management fees 89,345 78,964 168,309
Repairs and maintenance 111,016 101,554 212,570
Other operating expenses 296,295 264,334 560,629
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Total certain expenses 811,051 737,395 1,548,446
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REVENUES IN EXCESS OF CERTAIN EXPENSES $ 647,926 $ 494,042 $1,141,968
============ ============ ============
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<FN>
See notes to historical summaries of revenues and certain expenses.
</TABLE>
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ACQUISITION PROPERTIES
NOTES TO COMBINED HISTORICAL SUMMARY OF REVENUES AND CERTAIN EXPENSES FOR THE
YEAR ENDED DECEMBER 31, 1995
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1. BASIS OF PRESENTATION
Nooney Income Fund Ltd. II, L.P., a limited partnership (the
"Partnership"), 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 ("Mortgage Lender") in lieu of
foreclosure. On December 29, 1995, the Partnership purchased the partial
interests of Countryside Executive Center, Wards Corner Business Center A &
B, and NorthCreek Office Park (the "Acquisition Properties") from the
subsidiary of the Mortgage Lender. The purchase price was $7,190,000 which
the Mortgage Lender financed 100%. The Partnership received authority to
complete the transaction through solicitation of the limited partners, with
a majority of the limited partnership units positively consenting to the
transaction.
The Partnership's interest in the Acquisition Properties prior to and after
the acquisition is as follows:
Prior to Post-
Acquisition Acquisition
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Countryside Executive Center 50 % 100 %
Wards Corner Business Center A & B 45 % 100 %
NorthCreek Office Park 45 % 100 %
Accordingly, the combined historical summary of revenues and certain
expenses reflect both the proportional share of the Acquisition Properties
owned by the Partnership prior to the acquisition and the remaining
percentage interest acquired ("Acquisition Interests"). The combined
summaries of revenues and certain expenses were prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in the Form 8-K/A of the Partnership.
The accompanying combined historical summary of revenues and certain
expenses are not representative of the actual operations for the periods
presented, as certain revenues and expenses, the amounts of which would not
be comparable to those resulting from the proposed future operations of the
Acquisition Properties, have been excluded. The expenses excluded consist
of interest, depreciation, amortization and fees for administrative and
auditing and legal services. The combined historical summaries of revenues
and certain expenses does incorporate rental revenues including that
attributable to expense reimbursements and other income reduced by certain
expenses defined to include real estate taxes, repairs and maintenance,
professional services, property management fees and other operating
expenses. The combined historical summaries of revenues and certain
expenses are prepared on the accrual basis.
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2. OPERATING LEASES
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 rent concessions. The aggregate
rental income increase resulting from recognition of rental income not yet
due under the terms of the lease for the year ended December 31, 1995 was
$57,727 ($30,879 for Acquisition Interests and $26,848 for Nooney Income
Fund Ltd. II, L.P. interests).
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.
Minimum future revenues under noncancelable leases for the Acquisition
Properties in effect as of December 31, 1995 are as follows:
Total
(In thousands)
--------------
1996 $ 2,214
1997 1,186
1998 729
1999 412
2000 308
Remainder 925
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Total $ 5,774
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3. PROPERTY MANAGEMENT FEES
Nooney Krombach Company, an affiliate of Nooney Income Fund Ltd. II, L.P.
general partners, manages the partnership's real estate for a management
fee. The general partners of Nooney Income Fund Ltd. II, L.P. intend to
modify the current management contract to include the new interests
acquired at the same rate currently charged to the Acquisition Interests
and to Nooney Income Fund Ltd. II, L.P.
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<TABLE>
ACQUISITION INTERESTS
ESTIMATED PRO FORMA STATEMENT OF TAX OPERATING LOSS AND
OF CASH USED IN OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995 (Unaudited)
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<CAPTION>
Acquisition
Interests
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<S> <C>
Estimated Pro Forma Statement of Tax Operating Loss
Revenues in excess of certain expenses for the year ended
December 31, 1995 (Note 2) $ 647,926
Pro forma adjustments (Note 3):
Less:
Tax depreciation and amortization 148,916
Mortgage interest 688,202
Professional fees 15,000
Prepaid rents not recognized for income tax purposes 3,402
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855,520
Add - rent concessions recognized for income tax purposes 30,879
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Pro forma tax operating loss $(176,715)
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Estimated Pro Forma Statement of Cash Provided by Operations
Pro forma tax operating loss, as above $(176,715)
Add - tax depreciation and amortization (Note 3) 148,916
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Pro forma cash used in operations $ (27,799)
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<FN>
See notes to estimated pro forma statement of tax operating loss and of cash
provided by operations.
</TABLE>
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ACQUISITION INTERESTS
NOTES TO ESTIMATED PRO FORMA STATEMENT OF TAX OPERATING LOSS AND
OF CASH USED IN OPERATIONS
FOR THE TWELVE MONTH PERIOD ENDED DECEMBER 31, 1995 (Unaudited)
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1. BASIS OF PRESENTATION
The Estimated Twelve-Month Pro Forma Statement of Tax Operating Loss and of
Cash Provided by Operations reflects amounts attributable to the
Acquisition Interests only and does not purport to estimate the tax
operating loss or cash provided by operations of the Acquisition Properties
as a whole or of Nooney Income Fund Ltd. II, L.P.
The Estimated Twelve-Month Pro Forma Statement of Tax Operating Loss and of
Cash Provided by Operations does not purport to forecast actual operating
results for any period in the future, and thus, there can be no assurance
that the assumptions are valid for future years, or that such results will
be obtained. These statements should be read in conjunction with the
Combined Historical Summaries of Revenues and Certain Expenses appearing
elsewhere in this Form 8-K/A.
2. REVENUES IN EXCESS OF CERTAIN EXPENSES
The revenues in excess of certain expenses is based upon the year ended
December 31, 1995 as contained in the Combined Historical Summaries of
Revenues and Certain Expenses appearing elsewhere in this Form 8-K/A.
3. PRO FORMA ADJUSTMENTS
Tax Depreciation and Amortization - Depreciation of investment property has
been determined using the Modified Accelerated Cost Recovery System as
amended by the Revenue Reconciliation Act of 1993. The computation of
depreciation is based upon the cost of the property (excluding land) to
Nooney Income Fund Ltd. II, L.P. of $4,996,000. Such depreciation will not
necessarily be the same as depreciation determined under generally accepted
accounting principles. Amortization of lease commissions of $20,813 has
been provided by amortizing ratably over the lease term. This method is
the same for financial statement and tax purposes.
Mortgage Interest and Principal Payments - Mortgage interest relates to the
$7,190,000 loan to be obtained to finance the purchase of the Acquisition
Interests and amortization of loan origination fees of $115,635 has been
provided using the straight-line method over the life of the related loan
which is five years. Such amortization will be the same under generally
accepted accounting principles. The mortgage note will provide for
interest at a rate equal to the lender's corporate base rate (CBR) plus
3/4%. Such rate will change simultaneously with any change in the CBR. A
CBR of 8.5% was used in this calculation. A 1/8% change in the rate would
change this amount by $8,988. Principal payments on the mortgage note will
begin January 1997; therefore, no principal payments have been provided for
in the estimate of cash used in operations.
Rent Concessions Recognized for Income Tax Purposes - Rent concessions are
includable in taxable income in the year rents are received. Such rents
are recognized ratably over the lease terms under generally accepted
accounting principals.
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Prepaid Rents not Recognized for Income Tax Purposes - Rents recorded in
advance of receipt are excluded from taxable income. They are recognized
ratably over the lease term for generally accepted accounting principles.
Professional Fees - Represents additional professional expenses
attributable to the cost of owning the Acquisition Interests.
* * * * * *
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SIGNATURES
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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.
Date: March 8, 1996 /S/ GREGORY J. NOONEY, JR.
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Gregory J. Nooney, Jr.
General Partner
