SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1994 Commission File Number 0-8952
SB PARTNERS
New York 13-6294787
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1290 Avenue of the Americas, N.Y., N.Y. 10104
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 408-2900
NONE
Former name, former address and former fiscal year, of 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
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date
(applicable only to corporate issuers).
SB PARTNERS
INDEX
Part I Financial Information
Balance Sheets
September 30, 1994 and December 31, 1993 1
Statements of Operations
For the three and nine months ended September 30, 1994
and 1993 2
Statements of Changes in Partners' Capital
For the years ended December 31, 1993 and 1992
and the nine months ended September 30, 1994 3
Statements of Cash Flows
For the nine months ended September 30, 1994
and 1993 4
Notes to Financial Statements 5 - 6
Managements' Discussion and Analysis of
Financial Condition and Results of Operations 7 - 12
Part II Other Information 13
<TABLE>
SB PARTNERS
(a limited partnership)
BALANCE SHEETS
September 30, 1994 (Not Audited) and December 31, 1993
(Audited, but not covered by the report of independent accountants)
<CAPTION>
September 30, December 31,
1994 1993
<S> <C> <C>
Assets:
Investments -
Real Estate, at cost
Land $13,697,284 $16,226,405
Buildings, furnishings
and improvements 147,500,294 164,919,564
Less - accumulated depreciation (40,133,843) (44,396,664)
-------------- --------------
121,063,735 136,749,305
Real property held for sale 6,762,886 0
-------------- --------------
127,826,621 136,749,305
-------------- --------------
Mortgage notes receivable, net of allowance for possible
loan losses of $0 and $4,512,780 respectively and
deferred gains of $0 and $5,178,632 respectively 0 5,933,929
Investment in joint venture 11,246,382 11,635,207
-------------- --------------
139,073,003 154,318,441
Other assets:
Cash and cash equivalents 1,477,309 423,262
Accounts receivable, accrued interest and other 7,179,312 8,628,406
-------------- --------------
Total assets $147,729,624 $163,370,109
============== ==============
Liabilities:
Mortgage notes payable, net of unamortized discount
of $401,987 and $654,764 respectively $118,219,977 $136,003,934
Accounts payable and accrued expenses 7,437,334 3,826,033
Tenants security deposits 1,171,022 1,163,546
-------------- --------------
Total liabilities 126,828,333 140,993,513
-------------- --------------
Partners' Capital:
Units of partnership interest without par value;
Limited partner - 7,753 units 20,917,030 22,392,145
General partner - 1 unit (15,739) (15,549)
-------------- --------------
20,901,291 22,376,596
-------------- --------------
Total liabilities & partners' capital $147,729,624 $163,370,109
============== ==============
The accompanying notes are an integral part of these balance sheets.
</TABLE>
<TABLE>
SB PARTNERS
(a limited partnership)
STATEMENTS OF OPERATIONS (Unaudited)
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1994 1993 1994 1993
------------ ------------ ------------ --------------
<S> <C> <C> <C> <C>
Revenues:
Rental and other income $5,875,200 $5,407,207 $18,693,200 $18,797,009
Interest on mortgage notes receivable 0 295,749 496,834 877,944
Interest on short-term investments 13,156 101,650 106,144 121,938
------------ ------------ ------------ --------------
Total revenues 5,888,356 5,804,606 19,296,178 19,796,891
------------ ------------ ------------ --------------
Expenses
Interest on mortgage notes payable 3,055,004 3,601,146 9,843,154 9,873,009
Real estate operating expenses 3,295,360 2,467,786 9,269,212 7,591,571
Depreciation and amortization 1,192,907 1,298,505 3,784,841 3,906,361
Recovery of mortgage note receivable fully
reserved for possible loan loss 0 (725,000) 0 (725,000)
Real estate taxes 618,271 555,015 1,850,232 1,585,361
Management fees 537,173 490,273 1,581,722 1,470,273
Other 141,318 215,958 495,395 607,344
------------ ------------ ------------ --------------
Total expenses 8,840,033 7,903,683 26,824,556 24,308,919
------------ ------------ ------------ --------------
Loss (2,951,677) (2,099,077) (7,528,378) (4,512,028)
Equity in net loss of joint venture (75,719) (193,863) (388,825) (431,164)
Gain (loss) on sale of investments in real estate 0 (71,655) 6,441,898 (71,655)
------------ ------------ ------------ --------------
Net Loss (3,027,396) (2,364,595) (1,475,305) (5,014,847)
Less - Net loss allocated to general partner (390) (305) (190) (647)
------------ ------------ ------------ --------------
Net loss allocated to limited partners ($3,027,006) ($2,364,290) ($1,475,115) ($5,014,200)
============ ============ ============ ==============
Net Loss Per Unit of Limited Partnership Interest:
Net loss ($390.43) ($304.95) ($190.26) ($646.74)
============ ============ ============ ==============
Weighted Average Number of Units of Limited
Partnership Interest Outstanding 7,753 7,753 7,753 7,753
============ ============ ============ ==============
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
SB PARTNERS
(a limited partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the nine months ended September 30, 1994 (Not Audited) and
for the years ended December 31, 1993 and 1992 (Audited, but not
covered by the report of independent public accountants)
<CAPTION>
Limited Partners:
Units of
Partnership Cumulative
Interest Cash Accumulated
Number Amount Distributions Earnings Total
------ ------ -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1991 7,753 $119,968,973 ($97,728,323) $18,544,277 $40,784,927
Net loss for the period - - - (9,415,946) (9,415,946)
---------- -------------- -------------- ------------- -------------
Balance, December 31, 1992 7,753 119,968,973 (97,728,323) 9,128,331 31,368,981
Net loss for the period - - - (8,976,836) (8,976,836)
---------- -------------- -------------- ------------- -------------
Balance, December 31, 1993 7,753 119,968,973 (97,728,323) 151,495 22,392,145
Net loss for the period - - - (1,475,115) (1,475,115)
---------- -------------- -------------- ------------- -------------
Balance, September 30, 1994 7,753 $119,968,973 ($97,728,323) ($1,323,620) $20,917,030
========== ============== ============== ============= =============
</TABLE>
<TABLE>
<CAPTION>
General Partner:
Units of
Partnership Cumulative
Interest Cash Accumulated
Number Amount Distributions Earnings Total
------ ------ -------- -------- ------
<C> <C> <C> <C> <C>
Balance, December 31, 1991 1 $10,000 ($24,559) $1,383 ($13,176)
Net loss for the period - - - (1,215) (1,215)
---------- -------------- -------------- ------------- -------------
Balance, December 31, 1992 1 10,000 (24,559) 168 (14,391)
Net loss for the period - - - (1,158) (1,158)
---------- -------------- -------------- ------------- -------------
Balance, December 31, 1993 1 10,000 (24,559) (990) (15,549)
Net loss for the period - - - (190) (190)
---------- -------------- -------------- ------------- -------------
Balance, September 30, 1994 1 $10,000 ($24,559) ($1,180) ($15,739)
========== ============== ============== ============= =============
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
SB PARTNERS
(a limited partnership)
STATEMENTS OF CASH FLOWS (Not Audited)
<CAPTION>
For the Nine Months Ended September 30,
1994 1993
-------------- --------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss) ($1,475,305) ($5,014,847)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
(Gain) loss on sale of investment in real estate (6,441,898) 71,655
Equity in net loss of joint venture 388,825 431,164
Depreciation and amortization 3,784,841 3,906,361
Amortization of discount on mortgage notes payable 252,777 221,134
(Increase) decrease in other assets 663,102 (912,061)
Increase in other liabilities 3,618,777 2,774,396
-------------- --------------
Net cash provided by operating activities 791,119 1,477,802
-------------- --------------
Cash Flows From Investing Activities:
Proceeds from sale of real estate 3,578,075 500,000
Net principal collections on mortgage notes receivable 0 300,000
Cash paid on real estate acquisition (710,384) 0
Capital additions to real estate (1,930,391) (1,769,911)
Additional advances under guarantees (113,651) (404,036)
Proceeds received from joint venture 0 53,661
-------------- --------------
Net cash provided by (used in) investing activities 823,649 (1,320,286)
-------------- --------------
Cash Flows From Financing Activities:
Principal payments on mortgage notes payable (560,721) (844,618)
-------------- --------------
Net cash used in financing activities (560,721) (844,618)
-------------- --------------
Net increase (decrease) in cash and cash equivalents 1,054,047 (687,102)
Cash and cash equivalents at beginning of period 423,262 1,937,778
-------------- --------------
Cash and cash equivalents at end of period $1,477,309 $1,250,676
-------------- --------------
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $7,109,714 $7,937,886
============== ==============
Supplemental disclosures of non-cash investing
and financing activities:
See Note 3 to Financial Statements
The accompanying notes are an integral part of these statements.
</TABLE>
SB PARTNERS
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(1) Accounting and Financial Reporting
The financial statements included herein are unaudited;
however, the information reflects all adjustments (consisting
solely of normal recurring adjustments) that are, in the
opinion of management, necessary to a fair presentation of the
financial position, results of operations and cash flows for
the interim periods. Certain information and footnote
disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and
regulations, although the Registrant believes that the
disclosures are adequate to make the information presented not
misleading. It is suggested that these financial statements
be read in conjunction with the financial statements and the
notes thereto included in the Registrant's latest annual
report on Form 10-K.
The results of operations for the three and nine month
periods ended September 30, 1994 and 1993 are not necessarily
indicative of the results to be expected for the full year.
(2) Commitments and Contingencies
In connection with the sale of one property, the
Registrant entered into a management agreement whereby it was
obligated to advance funds to the buyer, on a secured basis,
to fund cash flow deficits, as defined. On July 7, 1994, such
property was reacquired by the Registrant (refer to Note 3).
The Registrant has secured irrevocable letters of credit
of approximately $1,643,000 which primarily serve as
additional collateral securing certain financing, and utility
and tenant security deposit bonds. A formal request has been
made to a lender which would result in the release of a letter
of credit in the amount of $568,000.
5
(3) Real Estate Investment Sales and Acquisitions
On June 2, 1994, the Registrant sold Woodlake Apartments
for $22,055,000. In connection with the sale the buyer
assumed the existing first mortgage secured by the property in
the amount of $ 17,476,000. For the three and nine months
ended September 30, 1994, the Registrant recognized a gain on
sale of real estate investment of $6,442,000.
On July 7, 1994, the Registrant reacquired Nob Hill
Apartments for $700,000 cash subject to an existing first
lien. Prior to the reacquisition, the Registrant owned
junior liens secured by Nob Hill with a carrying amount of
$5,772,000 net of deferred gain of $5,179,000 and allowance
for possible loan losses of $5,212,000. In connection with
this transaction, these liens were extinguished. No gain or
loss was recognized on this transaction. On October 4, 1994
the Registrant entered into a contract a sell Nob Hill
Apartments for $ 7,200,000.
In September 1993, the Registrant sold 400 Office Park
for $500,000 all cash resulting in a loss on sale of $71,655.
(4) Other Matters
Due to the continuing decline in commercial office rents
in the downtown Los Angeles office market, cash flow generated
by the International Jewelry Center has not been sufficient to
carry debt service on the mortgage encumbering the property.
Discussions with the lender on restructuring the terms of the
mortgage note are on going and during this time, the
Registrant has only been paying debt service based on
available cash flow from the building to be applied to debt
service and ground rent. Although discussions with the lender
have been open and cooperative, the lender declared the loan
in default in November 1993. The lender has not taken any
action to accelerate the mortgage debt or foreclose upon the
property, however, there can be no assurance that a permanent
restructuring will be agreed upon or that the rental market
will stabilize or improve so that the Registrant will be able
to perform such a restructuring and allow the Registrant to
continue to hold this property.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1994
General
The financial statements as of and for the three and nine
month period ended September 30, 1994 reflect the operations
of three office properties, one shopping center, four
residential garden apartment properties and two joint
ventures, although one of the garden apartment properties was
sold in June 1994 (as referred to in the notes to the
Financial Statements).
Changes in Total Income and Net Loss are in part
attributable to the sale of 400 Office Park office building
and Oakwood mortgage note, and the reacquisition of Cherry
Hill Office Center in the third quarter of 1993, the sale of
Woodlake Village Apartments in June 1994, and acquisition of
Nob Hill Apartments in July 1994.
Total revenue for the three months ended September 30,
1994 increased to approximately $5,888,000 from approximately
$5,804,000 for the three months ended September 30, 1993
and there was a net loss after gain (loss) on sale of
investments in real estate of approximately $3,027,000 for the
three months ended September 30, 1994 compared with a net loss
of $2,365,000 for the three months ended September 30, 1993.
Total revenue for the nine months ended September 30,
1994 decreased to approximately $19,296,000 from approximately
$19,797,000 for the nine months ended September 30, 1993.
There was a net loss after gain (loss) on sale of investments
in real estate of approximately $1,475,000 for the nine months
ended September 30, 1994 compared with a net loss of
$5,014,000 for the nine months ended September 30, 1993.
Holiday Park Apartments
Total revenue for the three months ended September 30,
1994 increased to $265,000 from $252,000 for the three
months ended September 30, 1993. There was an increase in net
loss after depreciation and mortgage interest expense for the
three months ended September 30, 1994 of $37,000 compared
with net loss of $27,000 for the three months ended September
30, 1993. The increase in net loss is due to an increase in
repair and maintenance costs ($10,000) and real estate taxes
($6,000), partially offset by the revenue increase.
7
Total revenue for the nine months ended September 30,
1994 increased to $803,000 from $753,000 for the nine months
ended September 30, 1993. Net loss after mortgage interest
and depreciation expense increased to $67,000 for the nine
months ended September 30, 1994 compared with a net loss of
$33,000 for the nine months ended September 30, 1993.
The increase in revenue is due to increases in base
rents charged to tenants. The decrease in net income is due
to increases in repairs, maintenance and utility costs
($54,000), partially offset by the increase in revenues.
Meadow Wood Apartments
Total revenue for the three months ended September 30,
1994 increased $62,000 to $1,100,000 from $1,038,000 for
the three months ended September 30, 1993. There was an
increase in net loss after depreciation and mortgage interest
expense of $13,000 for the three months ended September 30,
1994 of $71,000 compared with a net loss of $58,000 for the
three months ended September 30, 1993.
The increase in revenues of $62,000 for the three months
ended September 30, 1994 is due to an increase in base rents
charged to tenants ($50,000) and a decrease in vacancy
($12,000). The increase in net loss is due to increases in
utility expenses ($32,000), repair and maintenance costs
($20,000) and other expenses ($25,000).
Total revenues for the nine months ended September 30,
1994 increased to $3,208,000 from $3,084,000 for the nine
months ended September 30, 1993. Net loss after mortgage
interest and depreciation expense decreased $28,000 to
$148,000 for the nine months ended September 30, 1994
compared with a net loss of $176,000 for the nine months
ended September 30, 1993.
The increase in revenue for the nine months ended
September 30, 1994 is primarily is due to an increase in base
rent charged to tenants. The decrease in net loss for the nine
months ended September 30, 1994 is due primarily to the
increase in revenue, partially offset by increases in
utilities ($60,000), and repair and maintenance costs
($40,000).
Sahara Palms Apartments
Total revenues for the three months ended September 30,
1994 increased $32,000 to $498,000 from $466,000 for the
three months ended September 30, 1993. There was an increase
in net loss after depreciation and mortgage interest expense
of $12,000 for the three months ended September 30, 1994 of
$58,000 compared with a net loss of $46,000 for the three
months ended September 30, 1993.
8
Total revenue increased primarily due to slight increases
in base rents charged to tenants ($10,000) and a reduction in
vacancy ($12,000). The increase in net loss is primarily due
to increases in depreciation expense ($20,000) and payroll
expenses ($20,000).
Total revenue for the nine months ended September 30,
1994 increased $167,000 to $1,482,000 from $1,315,000 for
the nine months ended September 30, 1993. Net loss after
mortgage interest and depreciation expense decreased
$91,000 to $142,000 for the nine months ended September 30,
1994 compared with a net loss of $233,000 for the nine months
ended September 30, 1993.
The increase in revenues is dues to an increase in
occupancy during the nine months ($126,000) and an increase in
base rents charged to tenants ($28,000). The decrease in net
loss is due to the increase in revenues, partially offset by
an increase in contractual repair and maintenance
costs ($23,000).
Woodlake Village / Redwood Village
As mentioned in the footnotes to the Financial
Statements, the Registrant sold Woodlake Village/ Redwood
Village Apartments on September 1, 1994 for $22,055,000. A
gain on sale of investments in real estate of $6,442,000 was
reported for the three and nine months ended September 30,
1994.
Total revenues for the three and nine months ended
September 30, 1993 were $923,000 and $2,832,000,
respectively, and net loss after depreciation and interest
expense, excluding the gain on sale, was $184,000 and
$ 413,000 respectively. Revenues and net loss after
depreciation and interest from January 1, 1994 through June 1,
1994 (date of sale) were $1,530,000 and $215,000,
respectively.
International Jewelry Center
Total revenue for the three months ended September 30,
1994 of $1,644,000 was $98,000 more than total revenue of
$1,546,000 for the three months ended June 30, 1993. Net
loss after mortgage interest expense and depreciation for the
three months ended September 30, 1994 of $861,000 was an
increase of $119,000 compared with $742,000 for the three
months ended September 30, 1993.
The increase in total revenues is due to an increase in
escalation and other income. The increase in net loss was due
to an increase in real estate taxes from higher tax rates and
assessments ($62,000), security costs ($53,000), and repair
and maintenance expenses ($99,000).
9
Total revenue for the nine months ended September 30,
1994 decreased $304,000 to $4,899,000 from $5,203,000 for
the nine months ended September 30, 1993. Net loss after
mortgage interest and depreciation expense increased
$825,000 to $2,465,000 for the nine months ended September 30,
1994 compared with $1,604,000 for the nine months ended
September 30, 1993.
The decrease in total revenue was due primarily to
decrease in occupancy and base rents from renewal and
restructured leases ($760,000) and a decrease in escalation
income ($115,000), partially offset by the receipt of a
settlement of $500,000 from a bankrupt tenant during the nine
months ended September 30, 1993. In addition to the reduction
in total revenues, the increase in net loss was primarily due
to an increase in real estate and other taxes from higher tax
rates and assessments ($143,000), an increase in security
costs ($125,000) and increases in repairs and maintenance
costs ($194,000).
Plantation Shopping Center
Total revenue for the three months ended September 30,
1994 of $283,000 was $3,000 more than total revenue of
$280,000 for the three months ended September 30, 1993. Net
loss for the three months ended September 30, 1994 of
$324,000 was an increase of $59,000 over a net loss of
$265,000 for the three months ended September 30, 1993.
Total revenue for the nine months ended September 30,
1994 increased $23,000 to $951,000 from $928,000 for the
nine months ended September 30, 1993. Net loss after mortgage
interest and depreciation expense increased $168,000 to
$ 855,000 for the nine months ended September 30, 1994
compared with a net loss of $688,000 for the nine months
ended September 30, 1993.
The increases in net loss for the three and nine months
ended September 30, 1994 over comparable periods in 1993 are
due to legal and professional fees incurred in connection with
a tenant collection matter.
1010 Market Street
Total revenue for the three months ended September 30,
1994 of $1,385,000 was $58,000 lower than total income of
$1,444,000 for the three months ended September 30, 1993.
Net loss after mortgage interest expense and depreciation for
the three months ended September 30, 1994 of $384,000 was
$70,000 lower than net loss of $ 314,000 for the three months
ended September 30, 1993.
10
The decrease in total revenue is due primarily to a
decrease in operating expense and real estate tax escalations
and other income. The decrease in net loss was due primarily
to decreases in repairs, maintenance and janitorial costs
($41,000), depreciation expense ($43,000) and insurance
expense ($ 15,000), partially offset by the decrease in total
revenue.
Total revenue for the nine months ended September 30,
1994 increased $305,000 to $4,304,00 from $3,999,000 for
the nine months ended September 30, 1993. Net loss after
mortgage interest and depreciation expense decreased
$199,000 to $943,000 for the nine months ended September 30,
1994 compared with a net loss of $1,142,000 for the nine
months ended September 30, 1993.
The increase in total revenue is due to an increase in
property occupancy ($235,000) and increases in real estate tax
and operating expense escalation income charged to tenants
($58,000). The decrease in net loss is due to the revenue
increase described, partially offset by increases in insurance
expense ($21,000), payroll ($33,000) and repairs and
maintenance ($22,000).
Cherry Hill Office Center
Cherry Hill Office Center was reacquired by the
Registrant by credit bid of its mortgage, such bid approved
by the bankruptcy court, in September 1993. Total revenue
was $362,000 and $1,132,000 for the three and nine months
ended September 30, 1994; and $140,000 for the three and nine
months ended September 30, 1993. Net income after interest
expense and depreciation was $70,000 and $203,000 for the
three and nine months ended September 30, 1994, respectively,
and $31,000 for the three and nine months ended September 30,
1993. The three and nine month periods ended September 30,
1993 reflect only one month of operation as compared with
three and nine months for comparable periods in 1994.
Mortgage Notes Receivable Portfolio
Interest income from the mortgage notes receivable
portfolio decreased to $-0- and $497,000 for the three and
nine months ended September 30, 1994 as compared with $296,000
and $878,000 for the three and nine months ended September 30,
1993 and acquisition of Nob Hill Apartments in July 1994. The
decrease reflects the acquisitions of Cherry Hill Office
Center through foreclosure in September 1993 and Nob Hill
Apartments in July 1994. Interest income for the three and
nine months ended September 30, 1993 includes only amounts
received from the former Cherry Hill borrower as that entity
was operating under bankruptcy court protection at that time.
11
Investment in Joint Venture
Equity in loss of joint venture decreased $118,000 from
$194,000 for the three months ended September 30, 1993 to
$76,000 for the three months ended September 30, 1994.
Equity in loss of joint venture decreased $42,000 from
$431,000 for the nine months ended September 30, 1993 to
$389,000 for the nine months ended September 30, 1994.
The decrease in net loss for the three and nine month
period is due primarily to the recent improvement in occupancy
at Riverbend Apartments ($59,000 and $60,000 respectively)
and increases in base rents charged to tenants ($30,000 and
$122,000 respectively). Revenue increases for the nine month
period ended September 30, 1994 compared with September 30,
1993 were partially offset by slight increases in repair and
maintenance costs ($126,000)
Liquidity and Capital Resources
As of September 30, 1994, the Registrant had cash and
cash equivalents of $1,477,000 in addition to $1,400,000 of
deposits held in escrow by certain lenders for the payment of
insurance, real estate taxes and certain capital and
maintenance costs. These balances are approximately
$400,000 more than cash and deposits held in escrow on
December 31, 1993.
As referred to in the Notes to the Financial
Statements, the Registrant reacquired Nob Hill Apartments on
July 7, 1994. As a result of the acquisition, all of the
mortgage notes receivable secured by liens on the property
have been extinguished. There are no other mortgage notes
owned by the Registrant. On October 4, 1994 the Registrant
entered into a contract a sell Nob Hill Apartments for
$ 7,200,000.
Debt at September 30, 1994 consisted of approximately
$118,200,000 of first mortgage notes payable secured by
real estate owned by the Registrant. The reduction in the
balance of mortgage notes payable since December 31, 1993 is
substantially due to the sale of Woodlake Apartments in June
1994. In that sale, the buyer assumed the mortgage note
secured by Woodlake with an outstanding balance of
$17,476,000 on the transaction date. Scheduled principal
payments will approximate $ 375,000 for the balance of 1994
and the terms of certain mortgage notes require monthly
escrow of estimated annual real estate tax ,insurance and
reserves for repairs, maintenance and improvements to the
secured property in addition to the payments of principal and
interest. The Registrant has no other debt except normal
trade accounts payable and expenses.
12
Rental revenue from the Registrant's apartment and retail
properties has been stable. Cash flow from all sources is
projected to be sufficient to cover operating, financing and
improvement costs in the near future at such properties.
Office markets where the Registrant owns properties, have
experienced extended periods of high vacancy rates,
significantly lower effective rental rates, reduced demand,
and high risks of tenant failures and overbuilding. Terms of
new and renewals of existing leases are being made that are
significantly more in favor of tenants with reduced rental
rates, period of free or reduced rent and costs of altering
and improving rented premises being borne by the landlord.
All of the Registrant's mortgage obligations are without
recourse to the Registrant and are limited to the encumbered
property. Accordingly, the Registrant has the power to limit
the effect of the negative cash flow of a particular property
to that property and, if the Registrant is unable to
restructure the terms of the mortgage indebtedness or
otherwise to cure the cause of the cash flow deficit, may
choose to turn over such property to its mortgagee. As noted
in the notes to the Financial Statements, the Registrant is
currently undertaking negotiations with respect to the
International Jewelry Center for the restructuring of the
indebtedness secured by that property, and if the results of
those negotiations do not produce a debt service consistent
with the rental income and capital expenditures required by
that property, the Registrant may turn over that property to
the mortgage lender.
13
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
All other item numbers are not submitted
because they are not applicable.
14
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SB PARTNERS
(Registrant)
By: SB PARTNERS REAL ESTATE CORPORATION
General Partner
Dated: November 11, 1994 By: /s/ John H. Streicker
John H. Streicker
President
Dated: November 11, 1994 By: /s/ Elizabeth B. Longo
Elizabeth B. Longo
Chief Financial Officer
Dated: November 11, 1994 By: /s/ George N. Tietjen
George N. Tietjen III
Vice President and Controller
15
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