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 March 31, 1999
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the transition period from ______________________to_________________________
Commission file number 0-14360
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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 North Broadway, St. Louis, Missouri 63102
- --------------------------------------- -------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 206-4600
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- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes ___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date _______.
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<PAGE>
PART I
ITEM 1 - Financial Statements:
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NOONEY INCOME FUND LTD. II, L.P.
--------------------------------
(A LIMITED PARTNERSHIP)
-----------------------
BALANCE SHEETS
--------------
March 31, December 31,
1999 1998
(Unaudited)
ASSETS: ----------- ------------
Cash and cash equivalents $ 1,176,439 $ 1,249,605
Accounts receivable 151,516 205,323
Prepaid expenses and deposits 20,081 21,505
Investment property, at cost:
Land 2,618,857 2,618,857
Buildings and Improvements 13,653,961 13,618,572
----------- -----------
16,272,818 16,237,429
Less accumulated depreciation 4,823,060 4,691,263
----------- -----------
11,449,758 11,546,166
Investment property-held for sale 2,820,320 2,826,591
----------- -----------
14,270,078 14,372,757
Deferred expenses - At amortized cost 265,129 280,805
----------- -----------
$15,883,243 $16,129,995
=========== ===========
LIABILITIES AND PARTNERS' EQUITY:
Liabilities:
Accounts payable and accrued expenses $ 58,439 $ 160,061
Accrued real estate taxes 400,392 499,728
Refundable tenant deposits 212,850 211,787
Mortgage note payable 6,969,093 6,995,876
----------- -----------
7,640,774 7,867,452
Partners' Equity 8,242,469 8,262,543
----------- -----------
$15,883,243 $16,129,995
=========== ===========
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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<PAGE>
NOONEY INCOME FUND LTD. II, L.P.
--------------------------------
(A LIMITED PARTNERSHIP)
-----------------------
STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY
---------------------------------------------
(UNAUDITED)
-----------
Three Months Ended
March 31, March 31,
1999 1998
----------- -----------
REVENUES:
Rental and other income $ 855,615 $ 875,317
Interest 0 0
----------- -----------
855,615 875,317
EXPENSES:
Interest Expense 134,088 146,020
Depreciation and amortization 181,040 194,876
Real estate taxes 139,025 160,757
Property management fees paid to
Nooney Inc. 50,896 51,257
Reimbursement to Nooney Inc.
for partnership management
services and indirect expenses 10,000 10,000
Repairs & Maintenance 60,508 44,277
Professional Services 46,680 22,199
Utilities 40,340 37,771
Payroll 30,676 22,583
Cleaning 30,645 40,868
Insurance 17,772 15,463
Snow Removal 36,698 17,918
Other operating expenses 97,321 50,812
----------- -----------
875,689 814,801
----------- -----------
NET (LOSS) INCOME $ (20,074) $ 60,516
=========== ===========
NET (LOSS) INCOME PER LIMITED
PARTNERSHIP UNIT $ (1.03) $ 3.12
=========== ===========
PARTNERS' EQUITY:
Beginning of Period $ 8,262,543 $ 8,280,887
Net (Loss) Income (20,074) 60,516
----------- -----------
End of Period $ 8,242,469 $ 8,341,403
=========== ===========
SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
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<PAGE>
NOONEY INCOME FUND LTD. II, L.P.
--------------------------------
(A LIMITED PARTNERSHIP)
-----------------------
STATEMENTS OF CASH FLOWS
------------------------
(UNAUDITED)
-----------
Three Months Ended
March 31, March 31,
1999 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) Income $ (20,074) $ 60,516
Adjustments to reconcile net (loss) income to
net cash provided by (used in) operating
activities:
Depreciation and amortization 181,040 194,876
Changes in assets and liabilities:
Decrease in accounts receivable 53,807 45,359
Decrease in prepaid expenses & deposits 1,424 1,337
Increase in deferred assets (5,497) (38,137)
Decrease in accounts payable (101,622) (361,411)
Decrease in accrued real estate taxes (99,336) (110,214)
Increase in refundable tenant deposits 1,063 47,775
----------- -----------
Total Adjustments 30,879 (220,415)
----------- -----------
Net cash provided by (used in)
operating activities 10,805 (159,899)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES -
Additions to investment property (57,188) (64,736)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES -
Payments on mortgage notes payable (26,783) (25,164)
----------- -----------
NET DECREASE IN CASH (73,166) (249,799)
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, beginning of period 1,249,605 1,378,138
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,176,439 $ 1,128,339
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION - Cash paid during year for interest $ 134,088 $ 146,020
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
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THREE MONTHS ENDED MARCH 31, 1999 AND 1998
------------------------------------------
NOTE A:
Refer to the Registrant's financial statements for the year ended December 31,
1998, 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 periods.
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 financial position at March 31, 1999 and for all periods presented
have been made. The results of operations for the three-month period ended March
31, 1999 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 months ended March 31,
1999 and 1998 was computed based on 19,221 units, the number of units
outstanding during the periods.
NOTE E:
The Registrant has no items of other comprehensive income, accordingly, net
income and other comprehensive income are the same.
-5-
<PAGE>
NOTE F:
The partnership has five reportable operating segments: Leawood Fountain Plaza,
Tower Industrial, Countryside Executive Center, Northeast Commerce Center, and
Northcreek Office Park. The Partnership's management evaluates performance of
each segment based on profit or loss from operations before allocation of
property writedowns, general and administrative expenses, unusual and
extraordinary items, and interest.
Three Months Ended
March 31, March 31,
(In thousands) 1999 1998
---- ----
Revenues:
Leawood Fountain Plaza (24%) $ 84,311 $ 66,590
Tower Industrial 50,450 50,153
Countryside Executive Center 260,579 221,282
Northeast Commerce Center 92,178 165,800
NorthCreek Office Park 359,666 347,904
--------- ---------
847,184 851,729
========= =========
Operating Profit:
Leawood Fountain Plaza (24%) $ 15,871 $ 3,188
Tower Industrial 23,722 23,968
Countryside Executive Center 20,080 (38,641)
Northeast Commerce Center (114,091) (4,605)
NorthCreek Office Park 46,168 49,713
--------- ---------
(8,250) 33,623
========= =========
Capital Expenditures:
Leawood Fountain Plaza (24%) $ 4,160 $ 2,822
Tower Industrial 3,850 0
Countryside Executive Center 16,374 27,112
Northeast Commerce Center 5,860 0
NorthCreek Office Park 26,944 34,802
--------- ---------
57,188 64,736
========= =========
Depreciation and Amortization:
Leawood Fountain Plaza (24%) $ 23,892 $ 22,960
Tower Industrial 10,411 10,402
Countryside Executive Center 32,183 47,245
Northeast Commerce Center 62,738 66,258
NorthCreek Office Park 90,185 86,380
--------- ---------
219,409 233,245
========= =========
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<PAGE>
Assets:
Leawood Fountain Plaza (24%) $ 209,494 $ 143,127
Tower Industrial 1,187,588 1,094,185
Countryside Executive Center 1,814,384 1,796,204
Northeast Commerce Center 2,712,568 2,933,822
NorthCreek Office Park 5,569,761 5,455,325
----------- -----------
11,493,795 11,422,663
=========== ===========
Reconciliation of segment data to the Trust's consolidated data follow:
Three Months Ended
March 31, March 31,
1999 1998
---- ----
Revenues:
Segments $ 847,184 $ 851,729
Corporate and other 8,431 23,588
------------ ------------
855,615 875,317
============ ============
Operating Profit:
Segments $ (8,250) $ 33,623
Corporate and other income 8,430 23,588
General and administrative expenses (20,254) 3,305
------------ ------------
20,074 60,516
============ ============
Depreciation and Amortization
Segments $ 219,409 $ 233,245
Corporate and other (38,369) (38,369)
------------ ------------
181,040 194,876
============ ============
Assets:
Segments $ 11,493,795 $ 11,422,663
Corporate and other 4,388,548 4,752,543
------------ ------------
15,883,243 16,175,206
============ ============
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<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- ------ -----------------------------------------------------------------------
OF OPERATIONS
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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 the Registrant. Actual
results could differ materially from those contemplated by such statements.
Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalents on hand as of March 31, 1999, is $1,176,439, a
decrease of ($73,166) when compared to year end December 31, 1998. During the
quarter, net cash provided by operating activities was $10,805. Cash was used
for payment of capital additions in the amount of $57,188 and payments on
mortgage notes payable of $26,783. The Registrant expects cash flow and cash on
hand to fund the properties anticipated capital expenditures for the remainder
of 1999. The anticipated capital expenditures by property are as follows:
Leasing Capital Other Capital Total
--------------- ------------- -----
NorthCreek Office Park $ 24,900 $ 0 $ 24,900
Tower Industrial Building 0 210,000 210,000
Northeast Commerce Center 52,301 36,900 89,201
Countryside Executive Center 177,495 39,000 216,495
Leawood Fountain Plaza (24%) 41,912 21,022 62,934
-------- -------- --------
$296,608 $306,922 $603,530
======== ======== ========
Leasing Capital at all of the partnership's properties relates to tenant
improvements and lease commissions for new and renewal tenants. Other Capital at
Leawood Fountain Plaza includes an overlay of the parking lot, carpet
replacement in three building hallways, and new exterior lighting. At Tower
Industrial Building Other Capital includes a new roof for the property. At
Northeast Commerce Center Other Capital includes parking lot patching and
striping, in addition to separating utilities for lease availability. At
Countryside Executive Center, Other Capital relates to the replacement of
bathroom counters, a new heating and air conditioning unit 'HVAC', and the
installation of new light fixtures. The Registrant reviews cash reserves on a
regular basis prior to beginning scheduled capital improvements. In the event
there is not adequate funds, the capital improvement will be postponed until
such funds are available.
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 have remained relatively consistent 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 at all of the properties. Until such time as the real estate market
recovers and profitable sale of the properties is feasible, the Registrant will
continue to manage the properties to achieve its investment objectives.
-8-
<PAGE>
Results of Operations by Property
- ---------------------------------
The results of operations for the Registrant's properties for the quarters ended
March 31, 1999 and 1998 are detailed in the schedule below. Expenses and
revenues of the Registrant are excluded.
Tower Northeast Countryside Leawood
NorthCreek Industrial Commerce Executive Fountain
Office Park Building Center Center Plaza (24%)
----------- -------- ------ ------ -----------
1999
----
Revenues $ 359,666 $ 50,450 $ 92,178 $ 260,579 $ 84,311
Expenses 313,498 26,728 206,269 240,499 68,440
--------- --------- --------- --------- ---------
Net Income (Loss) $ 46,168 $ 23,722 $(114,091) $ 20,080 $ 15,871
========= ========= ========= ========= =========
1998
----
Revenues $ 347,904 $ 50,153 $ 165,800 $ 221,282 $ 66,590
Expenses 298,191 26,185 170,405 259,923 63,402
--------- --------- --------- --------- ---------
Net Income (Loss) $ 49,713 $ 23,968 $ (4,605) $ (38,641) $ 3,188
========= ========= ========= ========= =========
Revenues at NorthCreek Office Park increased $11,762 when comparing quarter end
March 31, 1999 to the first quarter ended March 31, 1998. This increase can be
primarily attributed to an increase in rental income ($29,427) due to the
increase in the occupancy level when compared to that of prior year. This
increase was partially offset by a decrease in escalation income ($17,577) due
to a reduction in the amount of 1998 reimbursable expenses. Expenses increased
from $298,191 for the quarter ended March 31, 1998 to $313,498 for the quarter
ended March 31, 1999. This increase of $15,307 is mainly attributable to
increases in amortization expense ($3,733), repairs and maintenance related
expenses ($7,209), snow removal ($5,356), professional services ($3,925), and
other operating expenses ($1,646). These increases were partially offset by a
decrease in interest expense ($6,562). The increase in repairs and maintenance
related expenses is primarily due to the installation of new electrical
lighting. The decrease in interest expense is due to increased principal
payments per current mortgage agreement and a lower principal balance
outstanding. The increase in snow removal was due to a more severe winter during
1999.
Operating results at Tower Industrial Building for the quarter ended March 31,
1999 and 1998 remained stable with minimal fluctuations.
Revenues at Northeast Commerce Center were $92,178 at the quarter ended March
31, 1999 and $165,800 for the quarter ended March 31, 1998. This decrease in
revenue of $73,622 is due to the significant decrease in occupancy when compared
to that of prior year. This affected both rental and recovery revenues for the
first quarter. A major tenant vacated in fourth quarter 1998.
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<PAGE>
Expenses for the quarters ending March 31, 1999 and March 31, 1998 were $206,269
and $170,405, respectively. The increase of $35,864 can primarily be
attributable to increases in snow removal ($5,582) and vacancy expense
($45,518), partially offset by decreases in amortization expense ($3,553),
interest expense ($3,340), and cleaning services ($9,115). The increase in
vacancy expense is due to the costs of rehabilitating the vacant space mentioned
previously. The decrease in cleaning services is also due to the suite vacated
in 1998. All cleaning bills for this unit were previously paid by the
Registrant.
At Countryside Executive Center, revenues were $260,579 and $221,282 for the
quarters ended March 31, 1999 and March 31, 1998, respectively. Revenues
increased $39,297 primarily due to increases in miscellaneous income ($20,257)
which can be attributable to a prior year tax refund, and rental income
($60,829) due to an increase in occupancy and rental rates. These increases were
partially offset by decreases in cross easement income ($2,675) and an increase
in bad debt expense ($39,114). The amount wrote off to bad debt was per the
property manager and was for former tenant balances considered uncollectible.
Operating expenses decreased $19,424 when comparing the two years. The expenses
which decreased include amortization ($15,062), interest expense ($2,028), and
real estate tax expense ($15,847). These increases were partially offset by
increases in snow removal ($9,061) and payroll expense ($4,158). The decrease in
amortization expense is due to the amount of fully amortized assets which were
amortized in the prior year and not current year. The decrease in real estate
tax expense is due to lower annual taxes as a result of an appeal. This relates
to the prior year tax refund mentioned earlier. The increase in payroll is due
to additional office staff.
At Leawood Fountain Plaza, revenues increased $17,721. The increase in income
can be attributable to increases in escalation income ($3,951) and rental income
($13,770) due to a higher occupancy level than that of prior year. Operating
expenses increased $5,038 when comparing the two periods. The increase in
expenses is mainly due to increases in repairs and maintenance related expenses
($4,245) and various other operating expenses ($793).
The occupancy levels at the Registrant's properties are listed below:
Occupancy levels as of March 31,
--------------------------------
Property 1999 1998 1997
-------- ---- ---- ----
NorthCreek Office Park 100% 95% 98%
Tower Industrial Building 100% 100% 100%
Northeast Commerce Center 50% 94% 87%
Countryside Executive Center 74% 69% 59%
Leawood Fountain Plaza (24%) 98% 90% 88%
During the first quarter of 1999, leasing activity at NorthCreek Office Park
consisted of one tenant signing a lease for 1,340 square feet, three tenants
renewing their leases for a total of 8,570 square feet and one tenant vacating
1,238 square feet. The property remained at 100% occupied from the beginning of
the quarter. NorthCreek Office Park has one major tenant which occupies spaces
under two leases which together comprise 33% of the available space. These
leases expire in December 2003.
Tower Industrial Building is leased to a single tenant whose lease expires on
April 30, 2000.
-10-
<PAGE>
At Northeast Commerce Center, occupancy remained at 50% during the quarter.
During the quarter, a major tenant which previously occupied 19% of the
available space, downsized to 11%. The Registrant has signed a new lease
effective April 1999 for this 8% square footage that became available as a
result of the downsizing. Overall, there was no change in the percentage
occupied for the quarter. The property has two major tenants who occupy 23% and
11% of the available space. Their leases expire September 2003 and October 1999,
respectively. The Registrant is working with a local Cincinnati brokerage firm
to find replacement tenant(s) or to sell the one building that is vacant. The
tenant occupying 11% of the available space has notified the Registrant they
will be vacating. The Registrant's brokerage company is working on releasing
that space.
At Countryside Executive Center, occupancy decreased 3%to 74% from the rate at
the beginning of the quarter. Leasing activity during the first quarter
consisted of one tenant occupying 3,823 square feet renewing their lease and two
tenants vacating 3,224 square feet. There is one major tenant at Countryside
Executive Center who occupies 14% of the available space with a lease which
expires in 2005. The Registrant continues to work with the local brokerage firm
to market the property and improve the occupancy.
During the first quarter of 1999, occupancy at Leawood Fountain Plaza increased
to 98%. Leasing activity consisted of one new tenant occupying 737 square feet.
There was no other leasing activity. The property has two major tenants, one who
occupies 14% of the available space whose lease expires in October 2001 and a
second major tenant who occupies 10% of the available space whose lease expires
in July 1999. The Registrant is currently working with the tenant whose lease
expires in July 1999 and anticipates a long term renewal.
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
elevators, heating, ventilation, 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 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 systems 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.
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<PAGE>
Material Third Parties' Systems Failures
- ----------------------------------------
The most reasonable 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 other financial service providers')
computer 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
systems 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 the 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 Registrants'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 conditions 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 such items 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 systems 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
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 failure 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.
-12-
<PAGE>
Results of Consolidated Operations 1999
- ---------------------------------------
For the quarter ended March 31, 1999, consolidated revenues are $855,615
compared to $875,317 for the quarter ended March 31, 1998. Revenues decreased
$19,702 primarily due to an increase in bad debt expense ($39,114), partially
offset by an increase in miscellaneous income ($20,696) due to the receipt of a
prior year tax refund. Both the bad debt expense and the prior year tax refund
were addressed in the property comparisons. Consolidated expenses for the
quarters ended March 31, 1999 and 1998 are $875,689 and $814,801, respectively.
This $60,888 increase in expenses is a result of significant increases in
repairs and maintenance related expenses ($16,231), professional fees ($24,481),
payroll expenses ($8,093), snow removal ($18,780), and other operating expenses
($46,514). There were also less significant increases in utility expense
($2,569) and insurance ($2,309). These increases were partially offset by
decreases in interest expense ($11,932), depreciation and amortization expense
($13,836), real estate tax expense ($21,732), and cleaning services ($10,223).
The increase in professional fees is due to appraisal fees. The increase in
other operating expense is primarily due to the increase in vacancy expenses for
1st quarter 1999 at Northeast Commerce Center. The decrease in interest expense
can be attributed to increased principal payments made per mortgage agreement.
Discussed in the property comparisons, are the increases in repairs and
maintenance, payroll, and snow removal and the decreases in real estate tax and
cleaning expense.
Results of Consolidated Operations 1998
- ---------------------------------------
For the quarter ended March 31, 1998, consolidated revenues are $875,317
compared to $879,396 for the quarter ended March 31, 1997. Revenues at a
consolidated level remained relatively stable with less than a 1% decrease.
Consolidated expenses for the quarters ending March 31, 1998 and March 31, 1997
are $814,801 and $863,405, respectively. The $48,604 decrease in expenses is a
result of a combination of factors. Significant decreases occurred in
depreciation and amortization expense, repairs and maintenance expense, and snow
removal. These decreases were partially offset by consolidated increases in real
estate tax expense and other operating expenses as explained individually by
property above.
Inflation
- ---------
The effects of inflation did not have a material impact upon the Registrant's
operation in fiscal l998 and are not expected to materially affect the
Registrant's operation in l999.
-13-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits
See Exhibit Index on Page 11
(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.
Date: May 14, 1999 By: 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
-14-
<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
13a-1 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)
-15-
<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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,176,439
<SECURITIES> 0
<RECEIVABLES> 151,516
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,348,036
<PP&E> 16,272,818
<DEPRECIATION> 4,823,060
<TOTAL-ASSETS> 15,883,243
<CURRENT-LIABILITIES> 458,831
<BONDS> 6,969,093
<COMMON> 0
0
0
<OTHER-SE> 8,242,469
<TOTAL-LIABILITY-AND-EQUITY> 15,883,243
<SALES> 855,615
<TOTAL-REVENUES> 855,615
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 741,601
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 134,088
<INCOME-PRETAX> (20,074)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,074)
<EPS-PRIMARY> (1.03)
<EPS-DILUTED> 0
</TABLE>
