SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarter period ended September 30, 1998
-------------------------------------------------
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
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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.)
500 N. Broadway, Suite 1200, St. Louis, MO 63102-2124
- ------------------------------------------ -------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 206-4600
-----------------------------
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes ___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date _______.
<PAGE>
PART I
ITEM 1 - Financial Statements:
- -----------------------------
NOONEY INCOME FUND LTD. II, L.P.
--------------------------------
(A LIMITED PARTNERSHIP)
-----------------------
BALANCE SHEETS
--------------
September 30, December 31,
1998 1997
ASSETS: (Unaudited)
------------ ------------
Cash and cash equivalents $ 1,032,365 $ 1,378,138
Accounts receivable 150,588 152,950
Prepaid expenses and deposits 54,492 17,052
Investment property, at cost:
Land 2,618,857 2,618,857
Buildings and Improvements 13,588,507 13,517,224
------------ ------------
16,207,364 16,136,081
Less accumulated depreciation (4,593,778) (4,194,255)
------------ ------------
11,613,586 11,941,826
Investment property-held for sale 2,838,413 2,802,714
------------ ------------
14,451,999 14,744,540
Prepaid and Deferred expenses - At
amortized cost 278,110 271,024
------------ ------------
$ 15,967,554 $ 16,563,704
============ ============
LIABILITIES AND PARTNERS' EQUITY:
Liabilities:
Accounts payable and accrued expenses $ 102,055 $ 480,609
Accrued real estate taxes 615,056 556,902
Refundable tenant deposits 203,422 148,774
Mortgage note payable 7,021,040 7,096,532
------------ ------------
7,941,573 8,282,817
Partners' Equity 8,025,981 8,280,887
------------ ------------
$ 15,967,554 $ 16,563,704
============ ============
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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<PAGE>
<TABLE>
NOONEY INCOME FUND LTD. II, L.P.
--------------------------------
(A LIMITED PARTNERSHIP)
-----------------------
STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY
---------------------------------------------
(UNAUDITED)
-----------
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Rental and other income $ 892,677 $ 817,791 $ 2,667,034 $ 2,589,785
Interest 0 585 0 1,509
----------- ----------- ----------- -----------
892,677 818,376 2,667,034 2,591,294
EXPENSES:
Interest expense 149,553 151,324 444,079 446,064
Depreciation and amortization 189,415 118,812 568,159 495,035
Real estate taxes 151,095 168,892 458,583 441,708
Property management fees paid to
Nooney, Inc. 53,170 49,261 157,829 156,839
Reimbursement to Nooney, Inc.
for partnership management
services and indirect expenses 10,000 10,000 30,000 30,000
Repairs and maintenance 89,124 59,632 199,756 146,108
Professional services 27,070 27,892 71,897 150,031
Utilities 42,150 35,019 114,392 104,578
Payroll 26,590 23,302 73,312 74,771
Cleaning 40,871 34,800 123,821 114,015
Insurance 17,307 15,768 51,353 47,294
Parking lot / landscaping expenses 23,027 36,253 70,062 77,814
Other operating expenses 32,057 40,753 176,257 147,943
----------- ----------- ----------- -----------
851,429 771,708 2,539,500 2,432,200
----------- ----------- ----------- -----------
NET INCOME $ 41,248 $ 46,668 $ 127,534 $ 159,094
=========== =========== =========== ===========
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 2.12 $ 2.40 $ 6.57 $ 8.19
=========== =========== =========== ===========
PARTNERS' EQUITY:
Beginning of Period $ 8,112,216 $ 8,457,209 $ 8,280,887 $ 8,472,267
Net Income 41,248 46,668 127,534 159,094
Cash Distribution to Partners (127,484) (127,484) (382,440) (254,968)
----------- ----------- ----------- -----------
End of Period $ 8,025,981 $ 8,376,393 $ 8,025,981 $ 8,376,393
=========== =========== =========== ===========
<FN>
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
</FN>
</TABLE>
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<PAGE>
NOONEY INCOME FUND LTD. II, L.P.
--------------------------------
(A LIMITED PARTNERSHIP)
-----------------------
STATEMENTS OF CASH FLOWS
------------------------
(UNAUDITED)
-----------
Nine Months Ended
Sept. 30, Sept. 30,
1998 1997
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 127,534 $ 159,094
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization 568,159 495,035
Changes in assets and liabilities:
Decrease in accounts receivable 2,362 51,974
Increase in prepaid expenses (37,440) (21,665)
Increase in deferred assets (94,333) (73,809)
Decrease in accounts payable (378,554) (49,221)
Increase (Decrease) in accrued real estate
taxes 58,154 (143,349)
Increase in refundable tenant deposits 54,648 10,402
----------- -----------
Total Adjustments 172,996 269,367
----------- -----------
Net cash provided by operating
activities 300,530 428,461
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES -
Additions to investment property (188,371) (165,174)
----------- -----------
Net cash from investing activities (188,371) (165,174)
CASH FLOWS FROM FINANCING ACTIVITIES -
Cash distributions to partners (382,440) (254,968)
Payments on mortgage notes payable (75,492) (70,101)
----------- -----------
Net cash from financing activities (457,932) (325,069)
----------- -----------
NET DECREASE IN CASH
AND CASH EQUIVALENTS (345,773) (61,782)
CASH AND CASH EQUIVALENTS, beginning of period 1,378,138 1,323,026
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,032,365 $ 1,261,244
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION - Cash paid during year for interest $ 444,079 $ 446,064
=========== ===========
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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<PAGE>
NOONEY INCOME FUND LTD. II, L.P.
--------------------------------
(A LIMITED PARTNERSHIP)
-----------------------
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
THREE AND NINE MONTHS ENDED September 30, 1998 AND 1997
-------------------------------------------------------
NOTE A:
Refer to the Registrant's financial statements for the year ended December 31,
1997, which are contained in the Registrant's Annual Report on Form 10-K, for a
description of the accounting policies which have been continued without change.
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 individual partners. In the opinion of the general
partners, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
changes in cashflows at September 30, 1998 and for all periods presented have
been made. The results of operations for the three and nine month periods ended
September 30, 1998, are not necessarily indicative of the results which may be
expected for the entire year.
NOTE C:
The Registrant's properties are managed by Nooney, Inc., a wholly-owned
subsidiary of CGS Real Estate Company. Nooney Income Investments Two, Inc., a
general partner, is a 75% owned subsidiary of S-P Properties, Inc. S-P
Properties, Inc. Is a wholly-owned subsidiary of CGS Real Estate Company.
NOTE D:
The earnings per limited partnership unit for the three and nine months ended
September 30, 1998 and 1997 was computed based on 19,221 units, the number of
units outstanding during the periods.
NOTE E:
Effective January 1, 1998, the Registrant adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income," which
established standards for the reporting and display of comprehensive income and
its components. The adoption of this statement did not affect the Registrant's
financial statements for the three and nine month periods ended September 30,
1998 and 1997.
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<PAGE>
ITEM 7: MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
---------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
It should be noted that this 10-Q contains forward-looking information (as
defined in the Private Securities Litigation Reform Act of 1995) that involves
risk and uncertainty, including trends in the real estate investment market,
projected leasing and sales, and the future prospects for Registrant. Actual
results could differ materially from those contemplated by such statements.
Liquidity and Capital Resources
- -------------------------------
Cash on hand as of September 30, 1998 is $1,032,365 a decrease of $345,773 when
compared to the year end December 31, 1997. During the nine month period ending
September 30, 1998, net cash provided by operating activities was $300,530. Cash
was used for capital and tenant improvements in the amount of $188,371 and
payment on mortgage notes payable in the amount of $75,492. Cash distributions
paid to partners during the nine month period was $382,440. Based on the current
cash balances and the properties' ability to provide operating cash flow, the
Registrant expects the properties to fund anticipated capital expenditures for
the remainder of 1998. These anticipated capital expenditures by property are as
follows:
Other Leasing
Capital Capital Total
------- ------- -----
NorthCreek Office Park $ 0 $ 48,825 $ 48,825
Tower Industrial Building 0 0 0
Northeast Commerce Center 0 72,130 72,130
Countryside Executive Center 35,799 7,252 43,051
Leawood Fountain Plaza (24%) 4,416 16,637 21,053
-------- -------- --------
$ 40,215 $144,844 $185,059
======== ======== ========
Leasing capital at the Registrant's properties include funds for tenant
alterations and lease commissions for new and renewal leases. Other capital at
Countryside Executive Center is for new property signage and a new heating and
air conditioning unit. Other capital at Leawood Fountain Plaza is for sidewalk
and curb replacement and new carpet in building three building hallways.
As previously disclosed, the Registrant feels that the market conditions exist
whereby Countryside Executive Center should be sold. As previously reported,
management is currently working on leasing additional space so that occupancy is
at a higher level which will command a higher sale price when the property is
ultimately sold. Occupancy levels continue to increase and the Registrant will
continue to update any progress regarding the sale in future quarters.
The future liquidity of the Registrant is dependent on its ability to fund
future capital expenditures from operations and cash reserves and maintain
occupancy. Until such time as the real estate market recovers and profitable
sale of the properties is feasible, the Registrant will continue to manage their
properties to achieve its investment objectives.
-6-
<PAGE>
Results of Operations by Property
- ---------------------------------
The results of operations for the Registrant's properties for the quarters ended
September 30, 1998 and 1997 are detailed in the schedule below. Revenues and
expenses of the Registrant are excluded.
Tower Northeast Countryside Leawood
NorthCreek Industrial Commerce Executive Fountain
Office Park Building Center Center Plaza (24%)
----------- ---------- --------- ----------- -----------
1998
- ----
Revenues $ 343,094 $ 50,206 $ 178,701 $ 235,719 $ 78,435
Expenses 297,502 25,732 209,804 253,960 67,886
--------- --------- --------- --------- ---------
Net Income (Loss) $ 45,592 $ 24,474 $ (31,103) $ (18,241) $ 10,549
========= ========= ========= ========= =========
1997
- ----
Revenues $ 344,538 $ 50,929 $ 175,346 $ 178,449 $ 71,804
Expenses 302,749 27,954 175,861 243,115 67,531
--------- --------- --------- --------- ---------
Net Income (Loss) $ 41,789 $ 22,975 $ (515) $ (64,666) $ 4,273
========= ========= ========= ========= =========
At NorthCreek Office Park net income for the quarter ended September 30, 1998
was $45,592 compared to net income of $41,789 in 1997. Revenues remained stable
with a slight decrease of $1,444. This decrease can be attributed to a decrease
in escalation income, partially offset by an increase in rental income. Expenses
decreased $5,247 when comparing the two quarters. This decrease can primarily be
attributed to decreases in depreciation and amortization expense.
Operating results at Tower Industrial Building remained relatively stable when
comparing the quarter ended September 30, 1998 to the quarter ended September
30, 1997. The increase in net income of $1,499, when comparing the two quarters,
is primarily due to a decrease in repairs and maintenance expense (1,348). The
property continues to operate as anticipated.
At Northeast Commerce Center the net loss for the quarter ended September 30,
1998 was $(31,103) compared to the net loss of $(515) in 1997. Revenues were
$178,701 and $175,346 for the third quarters ended September 30, 1998 and 1997,
respectively. The increase in revenues of $3,355 can be attributed to increases
in rental income ($6,222) and miscellaneous income ($3,295), partially offset by
a decrease in escalation income ($6,162). The property's expenses for the
quarter ended September 30, 1998 and 1997, were 209,804 and $175,861,
respectively. The increase in expenses of $33,943 is attributable to increases
in amortization expense ($11,676), fire/crime prevention ($2,664), repairs and
maintenance ($9,498), real estate taxes ($4,153), and professional services
($5,695). The repairs and maintenance increase can be attributed to extensive
heating, ventilation, and air-conditioning repairs and replacement.
At Countryside Executive Center the net loss for the quarter ended September 30,
1998 was $(18,241) compared to the net loss of $(64,666) in 1997. Revenues were
$235,719 for the quarter ended September 30, 1998 and $178,449 for the quarter
ended September 30, 1997. The increase in revenue of $57,270 when comparing the
two periods, is attributable to increases in base rental income ($74,127) and
miscellaneous income ($2,576), partially offset by an increase in bad debt
expense ($19,409). The increase in rental income is due to a 26% increase in the
occupancy level when compared to same period last year. The increase in bad debt
-7-
<PAGE>
expense is due to the write off of old receivable considered uncollectible by
the property manager. Expenses at Countryside Executive Center were $253,960 and
$243,115 for the quarters ended September 30, 1998 and 1997, respectively. This
increase in expenses of $10,485 can be attributable to increases in amortization
expense ($18,090), cleaning ($2,943), management fees ($3,439), repairs and
maintenance ($21,068), water ($3,510), and payroll ($2,734). These increases
were partially offset by decreases in the upkeep of tenant common areas
($15,415), parking lot/landscaping ($14,598), and real estate tax expense
($10,897). The increase in amortization is due to additional tenant alterations
and lease commissions attributable to occupancy status. The increase in repairs
and maintenance is primarily due to extensive heating, ventilation, and air
conditioning repairs and replacements. The decreases in common area upkeep and
parking lot/landscaping are due to a lower amount of replacement and repair
costs necessary in 1998 as in 1997.
At Leawood Fountain Plaza, net income for the quarter ended September 30, 1998
and the quarter ended September 30, 1997 was $10,549 and $4,273, respectively,
resulting in an increase in net income of $6,276. Revenues for the quarter ended
September 30, 1998 and 1997 were $78,435 and $71,804, resulting in an increase
of $6,631. This increase can primarily be attributed to an increase in base
rental income ($9,500), partially offset by a decrease in escalation income
($3,057). Expenses remained relatively stable, with a minimal increase of $355
when comparing the two quarters.
The occupancy levels at September 30 are as follows:
Occupancy Levels at September 30,
---------------------------------
PROPERTY 1998 1997 1996
- -------- ---- ---- ----
NorthCreek Office Park 96% 92% 98%
Tower Industrial Building 100% 100% 100%
Northeast Commerce Center 94% 94% 87%
Countryside Executive Center 75% 49% 74%
Leawood Fountain Plaza (24%) 95% 87% 90%
At NorthCreek Office Park occupancy increased during the quarter from 95% to
96%. Leasing activity consisted of one new tenant signing a lease for 2,135
square feet, five tenants signing renewal leases who occupy 6,606 square feet,
and one tenant vacating 639 square feet. The Office Park has one major tenant
with two leases that comprise approximately 26% and 7% of the available space.
These two leases expire December 2003 and December 1998, respectively. The lease
expiring in December 1998 is currently being finalized to renew through December
2003.
The Tower Industrial Building is leased to a single tenant whose lease expires
on April 30, 2000.
At Northeast Commerce Center, there was no leasing activity during the third
quarter and the property remains 94% occupied. The property has three major
tenants who occupy 50%, 18%, and 11% of the property with leases that expire
December 1998, October 1999, and June 2001, respectively. The tenant whose lease
expires December 1998 has notified the Registrant that they will be vacating as
of November 1998 pursuant to an early cancellation option they have exercised.
The Registrant is working closely with the Cincinnati brokerage firm hired to
handle the leasing of the property to market the 50,000 square feet which will
be vacated. Effective October 1, 1998, the tenant who occupied 11% of the
property expanded their suite to include an additional 5,878 square feet,
signing a new lease expiring September 2003.
-8-
<PAGE>
Occupancy at Countryside Executive Center increased from 71% to 75% during the
third quarter 1998. Leasing activity during the quarter consisted of the
Registrant signing two new leases totaling 6,342 square feet and three tenants
vacating who occupied 2,397 square feet. The property has one major tenant who
occupies 14% of the available space with a lease that expires February 2005.
During the third quarter of 1998 occupancy at Leawood Fountain Plaza increased
from 94% at the beginning of the quarter to 95% at the quarter's end. Leasing
activity during the quarter consisted of the Registrant signing one new lease
for 3,036 square feet, two tenants renewing their leases for 5,991 square feet,
and two tenants vacating their leases which occupied 2,067 square feet. The
property has two major tenants who occupy approximately 10% and 15% of the
available space with leases which expire in July 1999 and expired in July 2001,
respectively.
Each quarter, the General Partners assess the properties for impairment. If
conclusive evidence of an impairment is found in any particular quarter, further
valuation procedures would be performed. Additionally, as a matter of policy,
the Registrant has each of its properties appraised on an annual basis by an
independent appraisal firm. It is difficult to pinpoint an exact time or event
to which impairment of a real estate investment can be attributed. Reductions in
value are usually recognized on an annual basis at the time the appraisals are
completed.
Year 2000 Issues
- ----------------
The Registrant believes that the impact of the year 2000 will not cause the
Registrant to incur a future expense that will have a material impact on future
results. The management company employed by the Registrant utilizes various
software packages as tools in running its accounting operations. The
Registrant's properties are maintained on software provided by a third party.
The management company has received information from that company indicating
that the main software program has all its core products already compatible with
2000 dates and that these have been tested in the field for over five years. A
few of the add on products that are not crucial to the management company's
business are in the process of being updated and the third party vendor
anticipates compliance by the end of 1998.
Results of Consolidated Operations 1998
- ---------------------------------------
For the quarter ended September 30, 1998 and September 30, 1997 consolidated
revenues were $892,677 and $818,376, respectively. Consolidated revenues
increased $74,301 when comparing quarter ended September 30, 1998 to the same
period in the prior year. This increase in revenues is primarily due to an
increase in base rental income ($111,092) and a decrease in the amount of rent
concessions posted ($10,136). These positive income results were offset by a
decrease in escalation income (30,636) and an increase in bad debt expense
($19,409). The increase in rental income is primarily due to higher occupancy
levels at Countryside Executive Center, Northcreek Office Park, and Leawood
Fountain Plaza. The decrease in escalation income is primarily due to decreases
at Northcreek Office Park ($22,583) and Northeast Commerce Center ($6,161). The
bad debt increase is due to the amount recorded by Countryside Executive Center
as mentioned in the property comparisons. For the nine month period ended
September 30, 1998 and 1997, consolidated revenues were $2,667,034 and
$2,591,294, respectively. Consolidated revenues for the nine month period
increased $75,740 when compared to prior year. This increase in revenues is
primarily due to increases in rental income at Coutryside Executive Center.
Leawood, Northcreek, and Northeast Commerce also had increased rental revenues
when compared to third quarter 1997. In addition, the amount of rent concessions
was less in 1998 due to new lease negotiations. These increases were offset by
significant decreases in escalation income at Northeast Commerce and Leawood and
an increase in bad debt expense at Countryside, as mentioned in the three month
period comparison.
-9-
<PAGE>
Consolidated expenses for the three months ended September 30, 1998 and
September 30, 1997 were $851,429 and $771,708, respectively. Consolidated
expenses increases $79,721 when comparing third quarter of 1998 to the same
period in prior year. The increase in expenses occurred due to increases in
depreciation and amortization ($70,603), management fees ($3,909), repairs and
maintenance ($29,492), utilities ($7,131), and cleaning expense ($6,071). These
increases were partially offset by decreases in real estate taxes ($17,797),
parking lot ($13,226), and other operating expenses ($8,696). The repairs and
maintenance increase can primarily be attributed to heating, ventilation, and
air-conditioning costs at Northeast Commerce and Countryside, as mentioned in
the property comparisons. Consolidated expenses for the nine month period ended
September 30, 1998 and 1997 were $2,539,500 and $2,432,200, respectively.
Consolidated expenses increased $107,300 when comparing the nine months ended
September 30, 1998 to the similar period of the prior year. The increase in
consolidated expenses was due to increases in depreciation and amortization
($73,124), real estate taxes ($16,875), repairs and maintenance ($53,648),
utilities ($9,814), cleaning ($9,806) and other operating expenses ($28,314).
These increases were partially offset by decreases in professional services
($78,134) and parking lot ($7,752). The increase in repairs and maintenance is
primarily due to the heating/air- conditioning costs, as mentioned in the three
month comparison, and increased exterior building repairs. The other operating
expense increase for the nine month period is due to significant increases in
fire and crime prevention, promotional, and travel expense. The sizeable
decrease in professional services can be attributed to the amount of legal and
other professional services rendered in 1998 being less than 1997.
Results of Consolidated Operations 1997
- ---------------------------------------
For the quarter ended September 30, 1997 and September 30, 1996, consolidated
revenues were $818,376 and $868,743, respectively. Consolidated revenues
decreased $50,367 when comparing quarter ended September 30, 1997 to the same
period in the prior year. This decrease in revenues is due to a decrease in
rental income ($68,081) at Countryside Executive Center.
For the nine month period ended September 30, 1997 and September 30, 1996
consolidated revenues were $2,591,294 and $2,525,121, respectively. Consolidated
revenues for the nine months ended September 30, 1997 increased $66,171 when
compared to the prior year. This increase in revenues for the nine month period
ended is due primarily to the major tenant at Countryside who occupied space on
a holdover lease paying double rent from January through June 30 of 1997. This
tenant paid $177,700 during 1997 compared to $126,686 for the nine months ended
September 30, 1996.
Consolidated expenses for the three months ended September 30, 1997 and
September 30, 1996 were $771,708 and $894,289, respectively. Consolidated
expenses decreased $122,581 when comparing the quarter ended September 30, 1997
to the same period in the prior year. The decrease in expenses occurred due to
decreases in depreciation and amortization ($50,361), parking lot/landscaping
expenses ($16,033), and other operating expenses ($127,634), partially offset by
increases in real estate taxes ($60,015) and professional services ($17,221).
Consolidated expenses for the nine months ended September 30, 1997 and September
30, 1996 were $2,433,200 and $2,607,401, respectively. Consolidated expenses
decreased $175,201 when comparing the nine months ended September 30, 1997 to
the similar period of the prior year. The decrease in consolidated expenses was
due to a decrease in interest expense ($17,694), utilities ($9,817), parking
lot/landscaping expenses ($15,471), and other operating expenses ($174,796),
partially offset by an increase in professional services ($34,794). The decrease
in other operating expenses is due to the fact that in 1996 a real estate tax
consultant's fee was paid for an appeal of the real estate taxes. This fee only
-10-
<PAGE>
occurs once every three years at the tri-annual assessment. The decrease in
interest expense is due to the pay down of the debt during the year. Other
operating expenses decreased primarily due to the 1996 real estate tax
consultant fee of $130,267 discussed above and a decrease of ($25,000) in
vacancy related expenses because in 1996 there was a larger volume of costs
incurred to ready vacant units for leasing.
Inflation
- ---------
The effects of inflation did not have a material impact upon the Registrant's
operations.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits
See Exhibit Index
(b) Reports on Form 8-K
None
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOONEY INCOME FUND LTD. II, L.P.
Dated: November 13, 1998 Nooney Income Investments Two, Inc.
-------------------
General Partner
By: /s/ Gregory J. Nooney, Jr.
------------------------------
Gregory J. Nooney, Jr.-Director
Chairman of the Board and
Chief Executive Officer
By: /s/ Patricia A. Nooney
--------------------------
Patricia A. Nooney-Director
Senior Vice President and Secretary
BEING A MAJORITY OF THE DIRECTORS
-11-
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
3 Amended and Restated Agreement and Certificate of
Limited Partnership, dated February 3, 1986, is
incorporated by reference to the Registrant's
Annual Report on Form 10-K for the fiscal year
ended October 31, 1986, as filed pursuant to Rule
13-a1 of the Securities Exchange Act of 1934 (File
No. 0-14360)
27 Financial Data Schedule (provided for the
information of the U.S. Securities and Exchange
Commission only)
-12-
<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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,032,365
<SECURITIES> 0
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0
0
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</TABLE>
