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, 1995 Commission File Number 0-8952
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SB PARTNERS
- -------------------------------------------------------------------------------
New York 13-6294787
- -------------------------------- ----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
666 Fifth Avenue N.Y., N.Y. 10103
- --------------------------------------- ------------------------
(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, 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
--- ---
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).
Not Applicable
<PAGE>
SB PARTNERS
INDEX
Part I Financial Information
Balance Sheets
September 30, 1995 and December 31, 1994 1
Statements of Operations
For the three and nine months ended September 30,
1995 and 1994 2
Statements of Cash Flows
For the nine months ended September 30, 1995
and 1994 3
Statements of Changes in Partners' Capital
For the years ended December 31, 1994 and 1993
and nine months ended September 30, 1995 4
Notes to Financial Statements 5 - 6
Managements' Discussion and Analysis of
Financial Condition and Results of Operations 7 - 14
Part II Other Information 15
<PAGE>1
<TABLE>
SB PARTNERS
(a limited partnership)
BALANCE SHEETS
September 30, 1995 (Not Audited) and
December 31, 1994 (Audited, but not covered by the report of independent accountants)
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
Assets:
Investments -
Real Estate, at cost
Land $ 13,697,284 $ 13,697,284
Buildings, furnishings and improvements 150,131,429 148,151,143
Less - accumulated depreciation and valuation allowance (48,902,520) (45,595,714)
------------ ------------
114,926,193 116,252,713
Investment in joint venture 10,890,002 11,133,621
------------ ------------
125,816,195 127,386,334
Other assets-
Cash and cash equivalents 608,288 1,074,985
Accounts receivable, accrued interest and other 6,691,543 6,776,434
------------ ------------
Total assets $133,116,026 $135,237,753
============ ============
Liabilities:
Mortgage notes payable, net of unamortized discount
of $21,661 and $310,904, respectively $112,017,486 $112,253,778
Accounts payable and accrued expenses 10,629,565 7,179,185
Tenants' security deposits 1,330,434 1,186,880
------------ ------------
Total liabilities 123,977,485 120,619,843
------------ ------------
Partners' Capital:
Units of partnership interest without par value;
Limited partner - 7,753 units 9,155,798 14,634,460
General partner - 1 unit (17,257) (16,550)
------------ ------------
9,138,541 14,617,910
------------ ------------
Total liabilities & partners' capital $133,116,026 $135,237,753
============ ============
The accompanying notes are an integral part of these balance sheets.
</TABLE>
<PAGE>2
<TABLE>
SB PARTNERS
(a limited partnership)
STATEMENTS OF OPERATIONS (Unaudited)
<CAPTION>
For the Three Months Ended For the Nine Months
September 30, Ended September 30,
--------------------- -------------------------
1995 1994 1995 1994
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Rental income $5,528,258 $5,447,145 $16,814,973 $17,358,908
Interest on mortgage notes receivable 0 0 0 496,834
Interest on short-term investments 3,230 13,156 32,054 106,144
Other 153,558 428,055 485,199 1,334,292
----------- ----------- ----------- -----------
Total revenues 5,685,046 5,888,356 17,332,226 19,296,178
----------- ----------- ----------- -----------
Expenses:
Interest on mortgage notes payable 2,911,148 3,055,004 8,656,154 9,843,154
Real estate operating expenses 2,720,011 3,295,360 7,834,844 9,269,212
Depreciation and amortization 1,192,966 1,192,907 3,586,184 3,784,841
Real estate taxes 490,251 618,271 1,449,571 1,850,232
Management fees 487,463 537,173 1,457,567 1,581,722
Other 51,180 141,318 358,747 495,395
----------- ----------- ----------- -----------
Total expenses 7,853,019 8,840,033 23,343,067 26,824,556
----------- ----------- ----------- -----------
Loss from operations (2,167,973) (2,951,677) (6,010,841) (7,528,378)
Equity in net income (loss) of joint venture 281,109 (75,719) 531,472 (388,825)
Gain on sale of investments in real estate 0 0 0 6,441,898
----------- ----------- ----------- -----------
Net Loss (1,886,864) (3,027,396) (5,479,369) (1,475,305)
Loss allocated to general partner (243) (390) (707) (190)
----------- ----------- ----------- -----------
Loss allocated to limited partners ($1,886,621) ($3,027,006) ($5,478,662) ($1,475,115)
=========== =========== =========== ===========
Net Loss Per Unit of Limited Partnership Interest:
Net Loss ($243.34) ($390.43) ($706.65) ($190.26)
============ =========== =========== ===========
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>
<PAGE>3
<TABLE>
SB PARTNERS
(a limited partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the nine months ended September 30, 1995 (Not Audited) and
for the years ended December 31, 1994 and 1993 (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, 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 - - - (7,757,685) (7,757,685)
----- ------------ ------------ ------------ -----------
Balance, December 31, 1994 7,753 119,968,973 (97,728,323) (7,606,190) 14,634,460
Net loss for the period - - - (5,478,662) (5,478,662)
----- ------------ ------------ ------------ -----------
Balance, September 30, 1995 7,753 $119,968,973 ($97,728,323) ($13,084,852) $9,155,798
===== ============ ============ ============ ===========
General Partner:
Units of
Partnership Cumulative
Interest Cash Accumulated
Number Amount Distributions Earnings Total
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 - - - (1,001) (1,001)
----- ------- -------- ------- --------
Balance, December 31, 1994 1 10,000 (24,559) (1,991) (16,550)
Net loss for the period - - - (707) (707)
----- ------- -------- ------- --------
Balance, September 30, 1995 1 $10,000 ($24,559) ($2,698) ($17,257)
===== ======= ======== ======= ========
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>4
<TABLE>
SB PARTNERS
(a limited partnership)
STATEMENTS OF CASH FLOWS (Not Audited)
<CAPTION>
For the Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash Flows From Operating Activities:
Net Loss ($5,479,369) ($1,475,305)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Gain on sale of investment in real estate 0 (6,441,898)
Equity in net (income) loss of joint venture (531,472) 388,825
Depreciation and amortization 3,586,184 3,784,841
Amortization of discount on mortgage notes payable 289,243 252,777
Decrease (increase) in other assets (194,487) 663,102
Increase in other liabilities 3,593,934 3,618,777
----------- -----------
Net cash provided by operating activities 1,264,033 791,119
----------- -----------
Cash Flows From (Used In) Investing Activities:
Proceeds from sale of real estate 0 3,578,075
Cash paid on real estate acquisition 0 (710,384)
Capital additions to real estate (1,980,286) (1,930,391)
Payments and distributions received from joint venture 775,091 0
Additional advances under guarantees 0 (113,651)
----------- -----------
Net cash provided by (used in) investing activities (1,205,195) 823,649
----------- -----------
Cash Flows Used In Financing Activities:
Principal payments on mortgage notes payable (525,535) (560,721)
----------- -----------
Net cash used in financing activities (525,535) (560,721)
----------- -----------
Net increase (decrease) in cash and cash equivalents (466,697) 1,054,047
Cash and cash equivalents at beginning of period 1,074,985 423,262
----------- -----------
Cash and cash equivalents at end of period $ 608,288 $1,477,309
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $6,058,623 $7,109,714
=========== ===========
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>5
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.
Certain prior year amounts have been reclassified to make them
comparable with the current year presentation.
The results of operations for the three and nine month periods
ended September 30, 1995 and 1994 are not necessarily indicative of
the results to be expected for the full year.
(2) Commitments and Contingencies
-----------------------------
The Registrant has secured irrevocable letters of credit of
approximately $1,038,000 which primarily serve as additional collateral
securing financing for the 1010 Market Street office building.
(3) Other Matters
-------------
During 1993, the Partnership stopped making regular monthly
payments of debt service to its lender on the mortgage note secured by
the International Jewelry Center. In the interim, the Partnership has
paid available cash flow from the building to the lender under an
informal agreement. In November 1993, the lender declared the loan in
default and on March 3, 1995, filed a Notice of Default and Election
to Sell. It is presently uncertain whether the Partnership will be
able to successfully continue to hold the property or obtain some
other resolution that would be beneficial to it. (Please refer also
to the Liquidity and Capital Resources section of the Management
Discussion and Analysis.)
<PAGE>6
The Partnership is a party to certain actions directly related
to its normal business operations. While the ultimate outcome is not
presently determinable with certainty, the partnership believes that
the resolution of these matters will not have a material effect on its
financial position and operations.
<PAGE>7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995
----------------------------------------------
General
-------
The financial statements as of and for the three and nine
months ended September 30, 1995 reflect the operations of three office
properties, one shopping center, three residential garden apartment
properties and two joint ventures. The financial statements for the
three and nine months 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 apartment properties was sold in June, 1994.
Total revenues for the three months ended September 30, 1995
decreased $203,000 to approximately $5,685,000 from approximately
$5,888,000 for the three months ended September 30, 1994. Net loss
for the three months ended September 30, 1995 decreased $1,140,000 to
approximately $1,887,000 from a net loss of $3,027,000 for the three
months ended September 30, 1994.
Total revenues for the nine months ended September 30, 1995
decreased $1,964,000 to approximately $17,332,000 from approximately
$19,296,000 for the nine months ended September 30, 1994. Net loss
for the nine months ended September 30, 1995 increased $4,004,000 to
approximately $5,479,000 from a net loss of approximately $1,475,000
for the nine months ended September 30, 1994. Net loss for the nine
months ended September 30, 1994 included a gain on sale of investment
in real estate of approximately $6,442,000.
Changes in total revenues and net loss are in part
attributable to the sale of Woodlake Village/Redwood Village in June
of 1994, and the reacquisition and sale of Nob Hill Apartments during
1994.
Holiday Park Apartments
-----------------------
Total revenues for the three months ended September 30, 1995
remained unchanged from the total revenues of $265,000 for the three
months ended September 30, 1994. Net loss after depreciation and
mortgage interest expense for the three months ended September 30,
1995 decreased $2,000 to $35,000 from the net loss of $37,000 for the
three months ended September 30, 1994. The decrease in net loss was
primarily due to a decrease in payroll and related costs of $4,000
partially offset by minor increases in other costs.
<PAGE>8
Total revenues for the nine months ended September 30, 1995
decreased $7,000 to $796,000 from $803,000 for the nine months ended
September 30, 1994. Net loss after depreciation and mortgage interest
expense for the nine months ended September 30, 1995 increased $38,000
to $105,000 from a net loss of $67,000 for the nine months ended
September 30, 1994. The increase in net loss was primarily due to the
decreased revenue and increases in repairs and maintenance costs of
$19,000, utilities of $3,000 and insurance of $3,000.
Meadow Wood Apartments
----------------------
Total revenues for the three months ended September 30, 1995
increased $4,000 to $1,104,000 from $1,100,000 for the three months
ended September 30, 1994. Net loss after depreciation and mortgage
interest expense for the nine months ended September 30, 1995
decreased $50,000 to $21,000 from the net loss of $71,000 for the
three months ended September 30, 1994. The increase in revenues is
primarily due to the implementation of increased rental rates at the
property. The decrease in net loss is primarily due to the increased
revenues and decreases in repairs and maintenance costs of $19,000,
utilities expense of $13,000, administrative expenses of $7,000, and
professional fees of $4,000.
Total revenues for the nine months ended September 30, 1995
increased $122,000 to $3,330,000 from $3,208,000 for the nine months
ended September 30, 1994. Net loss after depreciation and mortgage
interest expense for the nine months ended September 30, 1995
decreased $113,000 to $35,000 from a net loss of $148,000 for the nine
months ended September 30, 1994. The increase in revenues and
decrease in net loss are primarily the result of a strong apartment
market as evidenced by increases in rental rates implemented at the
property during the last year which increased revenues by $101,000,
and increased occupancy which increased revenues by $20,000, partially
offset by an increase in payroll and related costs of $7,000.
Sahara Palms Apartments
-----------------------
Total revenues for the three months ended September 30, 1995
decreased $11,000 to $487,000 from $498,000 for the three months ended
September 30, 1994. Net loss after depreciation and mortgage interest
expense for the three months ended September 30, 1995 increased
$15,000 to $73,000 from $58,000 for the three months ended September
30, 1994. The decrease in total revenues is primarily due to an
increase in concessions allowed to tenants which decreased revenues
$7,000, and a decrease in incidental income of $3,000. The decrease
in net loss is primarily due to the decrease in revenues and an
increase in advertising and promotion expense of $6,000.
<PAGE>9
Total revenue for the nine months ended September 30, 1995
increased $16,000 to $1,498,000 from $1,482,000 for the nine months
ended September 30, 1994. Net loss after depreciation and mortgage
interest expense for the nine months ended September 30, 1995
increased $17,000 to $159,000 from a net loss of $142,000 for the nine
months ended September 30, 1994. The increase in revenue is primarily
due to rental increases implemented at the property during the year.
The increase in net loss is primarily due to increases in repairs and
maintenance costs of $9,000, advertising and promotion costs of
$7,000, insurance expense of $3,000, and real estate taxes of $2,000.
International Jewelry Center
----------------------------
Total revenues for the three months ended September 30, 1995
increased $58,000 to $1,702,000 from $1,644,000 for the three months
ended September 30, 1994. Net loss for the three months ended
September 30, 1995 decreased $21,000 to $840,000 from $861,000 for the
three months ended September 30, 1994. The increase in revenues is
primarily due to increased occupancy at the property which increased
revenues $75,000, and increases in rental rates charged at the
property which increased revenues $73,000. These increases were
partially offset by decreases in escalation income of $65,000 and
other income of $24,000. The decrease in net loss was primarily due
to the increased revenue for the period, partially offset by an
increase in overall expenses of $62,000, which was primarily due to an
increase in janitorial expense of $75,000.
Total revenues for the nine months ended September 30, 1995
increased $256,000 to $5,155,000 from $4,899,000 for the nine months
ended September 30, 1994. Net loss after depreciation and mortgage
interest expense for the nine months ended September 30, 1995
decreased $124,000 to $2,341,000 from $2,465,000 for the nine months
ended September 30, 1994. The increase in total revenues was
primarily due to a significant increase of 7% in average occupancy to
71% for the nine months ended September 30, 1995 from 64% for the
comparable period in 1994. The increased occupancy added $422,000 to
total revenues, which was partially offset by decreases in escalation
income of $79,000 and other income of $87,000. The decrease in net
loss was primarily due to the increase in revenues, partially offset
by increased depreciation expense of $209,000, which was partially
offset by decreases in operating expenses totalling approximately
$77,000.
<PAGE>10
During 1993, the Partnership stopped making regular monthly
payments of debt service to its lender on the mortgage note secured by
the International Jewelry Center. In the interim, the Partnership has
paid available cash flow from the building to the lender under an
informal agreement. In November 1993, the lender declared the loan in
default and on March 3, 1995, filed a Notice of Default and Election
to Sell. It is presently uncertain whether the Partnership will be
able to successfully continue to hold the property or obtain some
other resolution that would be beneficial to it. (Please refer also
to Footnote 3 of the accompanying financial statements.)
Plantation Shopping Center
--------------------------
Total revenues for the three months ended September 30, 1995
increased $51,000 to $334,000 from $283,000 for the three months ended
September 30, 1994. Net loss after depreciation and mortgage interest
expense for the three months ended September 30, 1995 decreased
$148,000 to $176,000 from $324,000 for the three months ended
September 30, 1994. The increase in total revenues was primarily due
to increases in rental rates at the property which increased revenues
$75,000, but was partially offset by decreases in escalation income of
$31,000. The decrease in net loss is primarily due to the increase in
revenues, and decreases in professional fees expense of $61,000.
Total revenue for the nine months ended September 30, 1995
increased $147,000 to $1,098,000 from $951,000 for the nine months
ended September 30, 1994. Net loss after depreciation and mortgage
interest expense for the nine months ended September 30, 1995
decreased $452,000 to $403,000 from $855,000 for the nine months ended
September 30, 1994. The increase in total revenues was primarily due
to increases in rental rates charged at the property which increased
revenues $100,000, increases in average occupancy which increased
income $13,000, and increases in escalation income which increased
income $26,000. The decrease in net loss is primarily due to the
increased revenues, and decreases in professional fees expense of
$225,000 and real estate taxes of $55,000. Legal fees incurred in the
prior year pertained to a tenant collection matter which has since
been resolved.
<PAGE> 11
1010 Market Street
------------------
Total revenues for the three months ended September 30, 1995
increased $62,000 to 1,447,000 from $1,385,000 for the three months
ended September 30, 1994. Net loss after depreciation and mortgage
interest expense for the three months ended September 30, 1995
decreased $186,000 to $199,000 from $384,000 for the three months
ended September 30, 1994. The increase in revenues was primarily due
to increases in rental rates charged at the property which increased
income $39,000, and increases in miscellaneous income of $22,000. The
decrease net loss was primarily due to the increase in revenues, and
decreases in depreciation expense of $104,000 and utilities expense of
$13,000.
Total revenue for the nine months ended September 30, 1995
increased $68,000 to $4,372,000 from $4,304,000 for the nine months
ended September 30, 1994. Net loss after depreciation and mortgage
interest expense for the nine months ended September 30, 1995
decreased $415,000 to $528,000 from $943,000 for the nine months ended
September 30, 1994. The increase in revenues was primarily due to
increases in rental rates charged at the property which increased
income $42,000, and increases in miscellaneous income of $28,000. The
decrease in net loss was primarily due to the increase in revenues,
and decreases in depreciation expense of $270,000, utilities expense
of $25,000, janitorial expense of $21,000, and repairs and maintenance
of $20,000.
Cherry Hill Office Center
-------------------------
Total revenues for the three months ended September 30, 1995
decreased $20,000 to $342,000 from $362,000 for the three months ended
September 30, 1994. Net income after depreciation and mortgage
interest expense decreased $58,000 to $12,000 from $70,000 for the
three months ended September 30, 1994. The decrease in revenues was
primarily due to a decrease in average occupancy of 5% to 73% for the
quarter ended September 30, 1995 from 78% for the comparable period in
1994. The decrease in net income was primarily due to the decreased
revenues and increased utilities expense of $28,000.
Total revenues for the nine months ended September 30, 1995
decreased $123,000 to $1,009,000 from $1,132,000 for the nine months
ended September 30, 1994. Net income after depreciation and mortgage
interest expense decreased $120,000 to $83,000 from $203,000 for the
nine months ended September 30, 1994. The decrease in total revenues
was primarily due to decreases in base rent charged to tenants which
decreased revenues by $93,000, decreased occupancy which decreased
revenues $18,000, and decreased escalation income of $12,000. The
decrease in net income is directly attributable to the decreased
revenues as overall expenses remained relatively constant while the
revenues decreased.
<PAGE 12>
Mortgage Notes Receivable Portfolio
-----------------------------------
There was no interest income from the mortgage receivable
portfolio in the quarter ended September 30, 1995 or 1994.
Interest income from the mortgages receivable portfolio for
the nine months ended September 30, 1995 decreased to $-0- from
$497,000 for the nine months ended September 30, 1994.
The decreases were caused by the reacquisition of Nob Hill
Apartments in July, 1994.
Investment in Joint Venture
---------------------------
Equity in net income (loss) of joint venture for the three
months ended September 30, 1995 increased $357,000 to income of
$281,000 from a loss of $76,000 for the three months ended September
30, 1994. The increase in net income is primarily due to increased
occupancy rates of approximately 6% to approximately 95% during the
quarter ended September 30, 1995 from approximately 89% during the
quarter ended September 30, 1994. In addition to increased occupancy,
increases in base rentals charged to tenants accounted for $92,000 of
the increase in net income.
Equity in net income (loss) of joint venture for the nine
months ended September 30, 1995 increased $920,000 to income of
$531,000 from a net loss of $389,000 for the three months ended
September 30, 1994. The increase in net income was primarily due to
increases in average occupancy of approximately 7% to approximately
93% during the nine months ended September 30, 1995 from 86% during
the nine months ended September 30, 1994. In addition to increased
occupancy, increases in base rentals charged to tenants accounted for
$178,000 of the increase in net income.
Liquidity and Capital Resources
-------------------------------
As of September 30, 1995, the Registrant had cash and cash
equivalents of $608,000 in addition to $1,419,000 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 $351,000 less than cash, cash equivalents, and deposits
held in escrow on December 31, 1994.
<PAGE>13
Debt at September 30, 1995 consisted of approximately
$112,000,000 of nonrecourse first mortgage notes payable secured by
real estate owned by the Registrant. The holder of the mortgage note
secured by Plantation Shopping Center in the amount of $6,793,000 has
extended the maturity of the loan from October 31 to December 31,
1995. The Registrant has entered into negotiations to sell the
property, although there can be no assurances that such a sale will
close prior to the extended maturity, or at all. Other scheduled
maturities through regularly scheduled monthly payments of principal
and interest will be approximately $100,000 for the last fiscal
quarter of 1995. 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.
As of September 30, 1995, the Registrant has issued
irrevocable letters of credit in the amount of $1,038,000 which
primarily serve as additional collateral securing financing for 1010
Market Street office building. The Registrant has no other debt
except normal trade accounts payable and expenses, and accrued
interest on previously discussed mortgage notes payable.
Cash flow from the Registrant's apartment properties has been
stable and in certain cases increasing moderately, reflecting an
improvement in many apartment submarkets. 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. New leases and renewals of existing leases are being
made on terms that are significantly more in favor of tenants with
reduced rental rates, periods of free or reduced rent, and costs of
altering and improving rented premises being borne by the landlord.
Consequently, rental revenues have in recent years, for certain
properties, been insufficient to cover operating costs, tenant
improvement costs and other capital expenditures and scheduled debt
service payments. Funds generated from other sources, including, but
not limited to, sales or joint venturing of real estate investments or
additional secured or unsecured borrowing, have at times been utilized
to offset cash flow deficits resulting from operating these
properties. The Registrant projects that it will be able to generate
sufficient cash flow from all sources to meet working capital
requirements in 1995.
<PAGE>14 Due to the impact of the conditions discussed above
and the continuing decline in commercial office rents in the
downtown Los Angeles office market, cash flow generated by
International Jewelry Center has not been sufficient to carry
debt service on the mortgage encumbering the property. The
Registrant ceased paying scheduled debt service in May 1993
and since then has only been paying debt service based on
available cash flow from the building. The loan was declared
in default by the lender in November 1993. The lender filed a
Notice of Default and Election to Sell on March 3, 1995. It
is uncertain whether the Registrant will be able to
successfully continue to hold the property or obtain some
other resolution that would be beneficial to it. The
Registrant recorded a reserve for real estate losses of
$4,162,000 for the year ended December 31, 1994 in connection
with this property.
<PAGE>15
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.<PAGE>
<PAGE>16
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 10, 1995 By: /s/ John H. Streicker
-----------------------------------
John H. Streicker
President
Dated: November 10, 1995 By: /s/ Elizabeth B. Longo
-----------------------------------
Elizabeth B. Longo
Chief Financial Officer
Dated: November 10, 1995 By: /s/ George N. Tietjen
-----------------------------------
George N. Tietjen III
First Vice President/Controller<PAGE>
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
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<SECURITIES> 0
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<DEPRECIATION> (48,902,520)
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0
0
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