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 June 30, 1995 Commission File Number 0-8952
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SB PARTNERS
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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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 408-2900
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NONE
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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
--- ---
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
June 30, 1995 and December 31, 1994 1
Statements of Operations
For the three and six months ended June 30, 1995
and 1994 2
Statements of Cash Flows
For the six months ended June 30, 1995
and 1994 3
Statements of Changes in Partners' Capital
For the years ended December 31, 1994 and 1993
and six months ended June 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
June 30, 1995 (Not Audited) and
December 31, 1994 (Audited, but not covered by the report of independent accountants)
<CAPTION>
June 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 149,292,880 148,151,143
Less - accumulated depreciation and valuation allowance (47,802,087) (45,595,714)
------------ ------------
115,188,077 116,252,713
Investment in joint venture 10,953,213 11,133,621
------------ ------------
126,141,290 127,386,334
Other assets-
Cash and cash equivalents 332,880 1,074,985
Accounts receivable, accrued interest and other 6,536,581 6,776,434
------------ ------------
Total assets $133,010,751 $135,237,753
============ ============
Liabilities:
Mortgage notes payable, net of unamortized discount
of $122,415 and $310,904, respectively $112,094,475 $112,253,778
Accounts payable and accrued expenses 8,647,590 7,179,185
Tenants' security deposits 1,243,281 1,186,880
------------ ------------
Total liabilities 121,985,346 120,619,843
------------ ------------
Partners' Capital:
Units of partnership interest without par value;
Limited partner - 7,753 units 11,042,418 14,634,460
General partner - 1 unit (17,013) (16,550)
------------ ------------
11,025,405 14,617,910
------------ ------------
Total liabilities & partners' capital $133,010,751 $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 For the Six Months
Ended June 30, Ended June 30,
--------------------- -------------------------
1995 1994 1995 1994
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Rental income $5,619,631 $6,021,531 $11,286,715 $12,458,723
Interest on mortgage notes receivable 0 249,334 0 496,834
Interest on short-term investments 8,706 77,902 28,824 92,988
Other 117,061 180,491 331,641 359,277
----------- ----------- ----------- -----------
Total revenues 5,745,398 6,529,258 11,647,180 13,407,822
----------- ----------- ----------- -----------
Expenses:
Interest on mortgage notes payable 2,873,632 3,331,763 5,745,006 6,788,150
Real estate operating expenses 2,567,535 2,974,472 5,114,833 5,973,852
Depreciation and amortization 1,198,667 1,263,500 2,393,218 2,591,934
Real estate taxes 462,387 581,383 959,320 1,231,961
Management fees 486,387 512,779 970,104 1,044,549
Other 179,758 129,762 307,567 354,077
----------- ----------- ----------- -----------
Total expenses 7,768,366 8,793,659 15,490,048 17,984,523
----------- ----------- ----------- -----------
Income (loss) from operations (2,022,968) (2,264,401) (3,842,868) (4,576,701)
Equity in net income (loss) of joint venture 296,036 (108,319) 250,363 (313,106)
Gain on sale of investments in real estate 0 6,441,898 0 6,441,898
----------- ----------- ----------- -----------
Net Income (loss) (1,726,932) 4,069,178 (3,592,505) 1,552,091
Income (loss) allocated to general partner (223) 525 (463) 200
----------- ----------- ----------- -----------
Income (loss) allocated to limited partners ($1,726,709) $4,068,653 ($3,592,042) $1,551,891
=========== =========== =========== ===========
Net Income (Loss) Per Unit of Limited Partnership Interest:
Net income (loss) ($222.71) $524.78 ($463.31) $200.17
============ ========== =========== ===========
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 six months ended June 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 - - - (3,592,042) (3,592,042)
----- ------------ ------------ ----------- -----------
Balance, June 30, 1995 7,753 $119,968,973 ($97,728,323) ($11,198,232) $11,042,418
===== ============ ============ =========== ===========
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 - - - (463) (463)
----- ------- -------- ------- --------
Balance, June 30, 1995 1 $10,000 ($24,559) ($2,454) ($17,013)
===== ======= ======== ======= ========
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 Six Months Ended
June 30,
1995 1994
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss) ($3,592,505) $1,552,091
Adjustments to reconcile net income (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 (250,363) 313,106
Depreciation and amortization 2,393,218 2,591,934
Amortization of discount on mortgage notes payable 188,488 164,747
Decrease (increase) in other assets 53,009 (66,527)
Increase in other liabilities 1,524,806 2,171,238
----------- -----------
Net cash provided by operating activities 316,653 284,691
----------- -----------
Cash Flows From Investing Activities:
Proceeds from sale of real estate 0 4,337,423
Capital additions to real estate (1,141,737) (1,391,604)
Payments and distributions received from joint venture 430,771 0
Additional advances under guarantees 0 (113,651)
----------- -----------
Net cash provided by (used in) investing activities (710,966) 2,832,168
----------- -----------
Cash Flows From Financing Activities:
Principal payments on mortgage notes payable (347,792) (382,240)
----------- -----------
Net cash used in financing activities (347,792) (382,240)
----------- -----------
Net increase (decrease) in cash and cash equivalents (742,105) 2,734,619
Cash and cash equivalents at beginning of period 1,074,985 423,262
----------- -----------
Cash and cash equivalents at end of period $ 332,880 $3,157,881
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $4,018,476 $5,074,576
=========== ===========
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 six month periods ended
June 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 SIX MONTHS ENDED JUNE 30, 1995
----------------------------------------
General
-------
The financial statements as of and for the three and six months ended
June 30, 1995 reflect the operations of three office properties, one
shopping center, three residential garden apartment properties and two
joint ventures. The financial statements as of and for the three and six
months ended June 30, 1994 reflect the operations of three office
properties, one shopping center, four residential garden apartment
properties and two joint ventures.
Total revenues for the three months ended June 30, 1995 decreased
$784,000 to approximately $5,745,000 from approximately $6,529,000 for the
three months ended June 30, 1994. Net income decreased $5,796,000 to a
loss of approximately $1,727,000 from net income after gain on sale of
investments in real estate of approximately $4,069,000 for the three months
ended June 30, 1994.
Total revenues for the six months ended June 30, 1995 decreased
$1,761,000 to approximately $11,647,000 from approximately $13,408,000 for
the six months ended June 30, 1994. Net income decreased $5,144,000 to a
loss of approximately $3,593,000 from net income after sale of investments
in real estate of approximately $1,552,000 for the six months ended June
30, 1994.
Changes in total income 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 June 30, 1995 decreased
$3,000 to $266,000 from $269,000 for the three months ended June 30, 1994.
Net loss after depreciation and mortgage interest expense for the three
months ended June 30, 1995 increased $10,000 to $29,000 from the net loss
of $19,000 for the three months ended June 30, 1994. The increase in net
loss is primarily due to the decrease in revenues and an increase of
repairs and maintenance costs of $8,000.
<PAGE>8
Total revenues for the six months ended June 30, 1995 decreased $7,000
to $531,000 from $538,000 for the six months ended June 30, 1994. Net loss
after depreciation and mortgage interest expense increased $40,000 to
$70,000 from $30,000 for the six months ended June 30, 1994. The increase
in net loss was primarily due the decrease in revenues and increases in
repair and maintenance costs of $15,000, and an increase in apartment
turnover costs of $6,000.
Meadow Wood Apartments
----------------------
Total revenues for the three months ended June 30, 1995 increased
$59,000 to $1,106,000 from $1,047,000 for the three months ended June 30,
1994. Net loss after depreciation and mortgage interest expense for the
three months ended June 30, 1995 decreased $65,000 to $7,000 from $72,000
for the three months ended June 30, 1994. The increase in revenues and
decrease in net loss are primarily a result of a strong apartment market as
evidenced by increases in rental rates implemented at the property during
the past year which increased revenues by $32,000, and decreases in
vacancies which increased revenues by $24,000.
Total revenues for the six months ended June 30, 1995 increased
$119,000 to $2,227,000 from $2,108,000 for the six months ended June 30,
1994. Net loss after depreciation and mortgage interest expense for the
six months ended June 30, 1995 decreased $63,000 to $14,000 from $77,000
for the six months ended June 30, 1994. The increase in revenues is the
result of increased rental rates implemented at the property, which
increased revenues by $84,000, and decreased vacancies, which increased
revenues by $30,000. The decrease in net loss is a result of the increased
revenues offset by increases in property operating costs, primarily
increases in repairs and maintenance of $21,000, in utilities of $19,000,
and in payroll and related costs of $8,000.
Sahara Palms Apartments
-----------------------
Total revenues for the three months ended June 30, 1995 increased
$11,000 to $501,000 from $490,000 for the three months ended June 30, 1994.
Net loss after depreciation and mortgage interest expense for the three
months ended June 30, 1995 decreased $14,000 to $40,000 from $54,000 for
the three months ended June 30, 1994. The increase in revenues is due to
the implementation of rental increases at the property which increased
revenues by $22,000, but were partially offset by slight increases in
vacancies and credit losses totalling $11,000. The decrease in net loss
was due to the increase in revenues and a decrease in operating expenses,
primarily a decrease in payroll and related expenses of $5,000.
<PAGE>9
Total revenues for the six months ended June 30, 1995 increased
$26,000 to $1,011,000 from $985,000 for the six months ended June 30, 1994.
Net loss after depreciation and mortgage interest expense increased $2,000
to $86,000 from $84,000 for the six months ended June 30, 1994. The
increase in revenues is primarily due to rental increases at the property
which increased revenues by $43,000, but were partially offset by slight
increases in vacancy and credit losses of $18,000. The increase in net
loss was the result of increased operating expenses, primarily increased
repairs and maintenance costs of $10,000, offset by the increases in
revenues.
International Jewelry Center
----------------------------
Total revenues for the three months ended June 30, 1995 increased
$188,000 to $1,794,000 from $1,606,000 for the three months ended June 30,
1994. Net loss after depreciation and mortgage interest expense for the
three months ended June 30, 1995 decreased $135,000 to $659,000 from
$794,000 for the three months ended June 30, 1994. The increase in
revenues is primarily due to an increase in rental rates on new and renewal
leases, increasing income $129,000, and increased average occupancy rates
which increased income $67,000. The increase in revenue was partially
offset by increased operating costs, primarily increases in professional
fees of $28,000, security costs of $20,000, and payroll and related costs
of $11,000.
Total revenues for the six months ended June 30, 1995 increased
$198,000 to $3,453,000 from $3,255,000 for the six months ended June 30,
1994. Net loss after depreciation and mortgage interest expense for the
six months ended June 30, 1995 decreased $128,000 to $1,476,000 from
$1,604,000 for the six months ended June 30, 1994. The increase in
revenues is due to increases in rental rates on new and renewal leases,
which increased income $139,000, and increases in average occupancy rates
which increased income $130,000. These increases were partially offset by
decreases in miscellaneous income of $59,000, and escalation income of
$11,000. The increased revenues were partially offset by increased costs,
primarily an increase in depreciation expense of $139,000, payroll and
related costs of $56,000, and an increase in security costs of $25,000,
offset by decreases in real estate tax expense of $69,000, janitorial
expense of $44,000, repairs and maintenance of $19,000, and insurance
expense of $17,000.
<PAGE>10
Plantation Shopping Center
--------------------------
Total revenues for the three months ended June 30, 1995 increased
$41,000 to $367,000 from $326,000 for the three months ended June 30, 1994.
Net loss after depreciation and mortgage interest expense for the three
months ended June 30, 1995 decreased $254,000 to $132,000 from $386,000 for
the three months ended June 30, 1994. The increase in revenues was
primarily due to an increase in escalation income of $50,000. The decrease
in net loss was due to the increase in revenues and a decrease in operating
expenses, primarily professional fees of $80,000 and real estate taxes of
$18,000, and a decrease in interest expense of $41,000.
Total revenues for the six month ended June 30, 1995 increased $96,000
to $764,000 from $668,000 for the three months ended June 30, 1994. Net
loss after depreciation and mortgage interest expense for the six months
ended June 30, 1995 decreased $304,000 to 227,000 from $531,000 for the six
months ended June 30, 1994. The increased revenues were primarily the
result of an increase in escalation income of $55,000 and an increase in
rental rates at the property which increased revenues $25,000. The
decrease in net loss was due to increased revenues and a decrease in
professional fees of $165,000. The legal fees incurred in the prior year
were incurred in connection with a tenant collection matter which has since
been resolved.
1010 Market Street
------------------
Total revenues for the three months ended June 30, 1995 decreased
$17,000 to $1,429,000 from $1,446,000 for the three months ended June 30,
1994. Net loss after depreciation and mortgage interest expense decreased
$210,000 to $180,000 from $390,000 for the three months ended June 30,
1994. The decrease in revenues was primarily due to a decrease in rental
rates negotiated on new and renewal leases at the property, which reduced
revenues by $39,000, offset by an increase in miscellaneous income of
$21,000. The decrease in net loss was primarily due to decreases in
depreciation expense of $107,000, interest expense of $104,000 and repairs
and maintenance of $17,000, which were offset by the decreased revenue.
<PAGE>11
Total revenues for the six months ended June 30, 1995 increased $6,000
to $2,925,000 from $2,919,000 for the six months ended June 30, 1994. Net
loss after depreciation and mortgage interest expense decreased $229,000 to
$330,000 from $559,000 for the six months ended June 30, 1994. The
increase in revenues was due to increases in rental rates at the property
which increased revenues $24,000, an increase in real estate tax income of
$17,000, and an increase of $6,000 in miscellaneous income, which were
partially offset by a decrease of $24,000 in escalation income, and a
decrease in average occupancy which reduced income $18,000. The decrease
in net loss was primarily due to the increased revenue and decreases in
depreciation expense of $160,000, janitorial expense of $30,000, interest
expense of $16,000, and utilities of $11,000.
Cherry Hill Office Center
-------------------------
Total revenues for the three months ended June 30, 1995 decreased
$66,000 to $324,000 from $390,000 for the three months ended June 30, 1994.
Net income decreased $29,000 to $15,000 from $44,000 for the three months
ended June 30, 1994. The decrease in revenues was primarily due to a
decrease in average occupancy of 8.9% from 78.4% to 69.5%, which decreased
revenues by $41,000, a decrease in rental rates offered on new and renewal
leases at the property which decreased revenues by $12,000, and a decrease
in escalations of $5,000. The decrease in net income was due to the
decrease in revenues and an increase in repairs and maintenance of $14,000,
offset by decreases in other operating expenses, primarily a decrease in
real estate taxes of $50,000.
Total revenues for the six months ended June 30, 1995 decreased
$103,000 to $667,000 from $770,000 for the six months ended June 30, 1994.
Net income for the six months ended June 30, 1995 decreased $62,000 to
$71,000 from $133,000 for the six months ended June 30, 1994. The decrease
in revenues was primarily due to a decrease in average occupancy of 7.8%
from 80.3% to 72.5%, which reduced income by $84,000, and a decrease in
escalation income of $11,000. The decrease in net income was due to the
decrease in revenues, offset by decreases in other operating expenses,
primarily a decrease in real estate taxes of $46,000.
<PAGE>12
Mortgage Notes Receivable Portfolio
-----------------------------------
Interest income from the mortgage notes receivable portfolio decreased
to $-0- for the three months ended June 30, 1995 as compared with $249,000
for the three months ended June 30, 1994.
Interest income from the mortgages receivable portfolio decreased to
$-0- for the six months ended June 30, 1995 as compared to $496,000 for the
six months ended June 30, 1994.
The decrease was 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 June 30, 1995 increased $404,000 to income of $296,000 from a loss of
$108,000 for the three months ended June 30, 1994. The increase in net
income is primarily due to a significant increase in the property occupancy
rate of 8% to 93% at June 30, 1995 as compared to 85% at June 30, 1994.
Equity in net income (loss) of joint venture for the six months ended
June 30, 1995 increased $563,000 to income of $250,000 from a net loss of
$313,000 for the six months ended June 30, 1994. Revenue at the property
increased $234,000 due to the increase in occupancy and $86,000 due to
rental increases implemented at the property during the last year, while
expenses were virtually unchanged from the preceding year.
Liquidity and Capital Resources
-------------------------------
As of June 30, 1995, the Registrant had cash and cash equivalents of
$333,000 in addition to $1,313,000 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 $732,000
less than cash, cash equivalents, and deposits held in escrow on December
31, 1994.
<PAGE>13
Debt at June 30, 1995 consisted of approximately $112,100,000 of
nonrecourse first mortgage notes payable secured by real estate owned by
the Registrant. The mortgage note secured by Plantation Shopping Center in
the amount of $6,793,000 is scheduled to mature in the last quarter of
1995. Other scheduled maturities through regularly scheduled monthly
payments of principal and interest will be approximately $300,000 for the
last two fiscal quarters 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 June 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 the 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 apartments 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, although it
anticipates postponing the payment of management fees during the third and
early part of the fourth quarter to cover a possible temporary shortfall
caused by capital improvements to one of the properties. The fees will be
paid as cash from all sources becomes available to do so.
<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 fault 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. 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>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: August 8, 1995 By: /s/ John H. Streicker
-------------------------------
John H. Streicker
President
Dated: August 8, 1995 By: /s/ Elizabeth B. Longo
-------------------------------
Elizabeth B. Longo
Chief Financial Officer
Dated: August 8, 1995 By: /s/ George N. Tietjen
-------------------------------
George N. Tietjen III
Vice President and Controller<PAGE>
<TABLE> <S> <C>
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