UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 22, 1996
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SB Partners
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(Exact name of registrant as specified in its charter)
New York 000-08952 13-6294787
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
666 Fifth Avenue, New York, NY 10103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 408-2929
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(Former name or former address, if changed since last report.)
Item 2. Disposition of Assets
As previously reported, cash flow generated by International
Jewelry Center, located in Los Angeles, California, had 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 had been paying debt service based on available
cash flow from the building. The loan was declared in default by the
lender in November 1993, and the lender filed a Notice of Default and
Election to Sell on March 3, 1995 and a Notice of Trustee's Sale on
April 24, 1996. Under the Agreement for Conveyance of Real Property
dated as of May 22, 1996 (the "Agreement"), International Jewelry
Associates, LLC, (the "Seller"), the limited liability company wholly
owned by the Registrant and formed to hold title to the real property
known as International Jewelry Center (the "Property"), conveyed its
right, title and interests to the Property to a designee of Teachers
Insurance and Annuity Association of America, the lender.
Consideration under the Agreement for this conveyance was $238,000,
subject to the first leasehold note and deed of trust, the balance of
which was $33,898,520, and the designee's assumption of Seller's
interest in a ground lease. The Registrant had a gain of
approximately $7,530,000 associated with the disposition of the
property. This transaction will result in unfavorable tax
consequences for some investors.
<PAGE>
Item 7. Financial Statements
The following pro forma financial statements reflect the
disposition of the International Jewelry Center by the Registrant.
The balance sheet as of the last filing, March 31, 1996 has been
restated to reflect the removal of the assets and liabilities of the
International Jewelry Center, and the Statements of Operations for
both the three months ended March 31, 1996 and the year ended December
31, 1995 have been restated to reflect the results of operations of
the Registrant as if the disposition had been consummated at the
beginning of the periods presented.
<PAGE>2
<TABLE>
SB PARTNERS
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(a New York limited partnership)
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PRO FORMA BALANCE SHEET
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<CAPTION>
MARCH 31, PRO FORMA RESTATED
1996 ADJUSTMENTS BALANCE
AS REPORTED (SEE NOTES 2 AND 3) SHEET
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<S> <C> <C> <C>
Assets:
Investments -
Real Estate, at cost
Land $ 12,092,365 $ -0- $12,092,365
Buildings, furnishings and improvements 140,798,188 56,085,787 84,712,401
Less - accumulated depreciation and valuation allowance (46,699,900) (18,418,866) (28,281,034)
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106,190,653 37,666,921 68,523,732
Investment in joint venture 10,647,788 -0- 10,647,788
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116,838,441 37,666,921 79,171,520
Other assets-
Cash and cash equivalents 1,196,203 495,131 701,072
Accounts receivable, accrued interest and other 5,876,779 1,750,684 4,126,095
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Total assets $123,911,423 $39,912,736 $83,998,687
============ =========== ===========
Liabilities:
Mortgage notes payable $101,713,725 $33,898,520 $67,815,205
Accounts payable and accrued expenses 11,312,517 10,012,376 1,300,141
Tenants security deposits 1,315,555 1,017,390 298,165
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Total liabilities 114,341,797 44,928,286 69,413,511
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Partners' Capital:
Units of partnership interest without par value;
Limited partners - 7,753 units 9,586,826 (5,014,903) 14,601,729
General partner - 1 unit (17,200) (647) (16,553)
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9,569,626 (5,015,550) 14,585,176
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Total liabilities & partners' capital $123,911,423 $39,912,736 $83,998,687
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See accompanying notes to pro forma financial statements.
</TABLE>
<PAGE>3
<TABLE>
SB PARTNERS
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(a New York limited partnership)
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PRO FORMA STATEMENT OF OPERATIONS
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<CAPTION>
For the Three Months Ended March 31, 1996
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PRO FORMA RESTATED
AS ADJUSTMENTS INCOME
REPORTED (SEE NOTES 2 AND 3) STATEMENT
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<S> <C> <C> <C>
Revenues:
Rental income $ 5,288,589 $ 1,756,047 $ 3,532,542
Interest on short-term investments 20,858 -0- 20,858
Other 131,473 2,720 128,753
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Total revenues 5,440,920 1,758,767 3,682,153
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Expenses
Interest on mortgage notes payable 2,379,543 1,062,530 1,317,013
Real estate operating expenses 2,583,677 1,007,504 1,576,173
Depreciation and amortization 1,217,969 502,021 715,948
Real estate taxes 445,330 145,680 299,650
Management fees 484,750 122,000 362,750
Other 220,112 67,670 152,442
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Total expenses 7,331,381 2,907,405 4,423,976
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Loss from operations (1,890,461) (1,148,638) (741,823)
Equity in net income of joint venture 185,457 -0- 185,457
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Net loss (1,705,004) (1,148,638) (556,366)
Loss allocated to general partner (220) (148) (72)
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Loss allocated to limited partners $(1,704,784) $(1,148,490) $(556,294)
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Net Loss Per Unit of Limited Partnership Interest $(219.89) $(148.13) $(71.75)
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Weighted Average Number of Units of Limited
Partnership Interest Outstanding 7,753 7,753 7,753
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See accompanying notes to pro forma financial statements.
</TABLE>
<PAGE>4
<TABLE>
SB PARTNERS
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(a New York limited partnership)
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PRO FORMA STATEMENT OF OPERATIONS
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<CAPTION>
For the Year Ended December 31, 1995
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PRO FORMA RESTATED
AS ADJUSTMENTS INCOME
REPORTED (SEE NOTES 2 AND 3) STATEMENT
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<S> <C> <C> <C>
Revenues:
Rental income $22,618,843 $ 6,769,633 $15,849,210
Interest on short-term investments 73,984 9,518 64,466
Other 631,381 9,038 622,343
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Total revenues 23,324,208 6,788,189 16,536,019
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Expenses
Interest on mortgage notes payable 11,462,066 4,261,797 7,200,269
Real estate operating expenses 10,307,816 3,251,448 7,056,368
Depreciation and amortization 5,176,543 1,827,830 3,348,713
Real estate taxes 1,936,253 692,359 1,243,894
Management fees 1,929,127 450,000 1,479,127
Other 544,592 141,458 403,134
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Total expenses 31,356,397 10,624,892 20,731,505
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Loss from operations (8,032,189) (3,836,703) (4,195,486)
Equity in net income of joint venture 725,118 -0- 725,118
Gain on sale of investment in real estate 3,963,791 -0- 3,963,791
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Net income (loss) (3,343,280) (3,836,703) 493,423
Income (loss) allocated to general partner (431) (495) 64
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Income (loss) allocated to limited partners $(3,342,849) $(3,836,208) $ 493,359
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Net Income (Loss) Per Unit of Limited Partnership Interest $(431.17) $(494.80) $63.63
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Weighted Average Number of Units of Limited
Partnership Interest Outstanding 7,753 7,753 7,753
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See accompanying notes to pro forma financial statements.
</TABLE>
<PAGE>5
SB PARTNERS
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(a New York limited partnership)
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NOTES TO PRO FORMA FINANCIAL STATEMENTS
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(1) Accounting and Financial Reporting
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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 and results
of operations for the periods presented. 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
quarterly report on Form 10-Q and annual report on Form 10-K.
(2) Pro Forma Adjustments
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All the assets and related liabilities of the International
Jewelry Center have been removed from the historical financial
statements to reflect the disposition of the property. Assets removed
include the building and related accumulated depreciation and
valuation allowance, and amounts recorded as receivable from tenants.
Liabilities removed include the first mortgage secured by the property
and the related accrued interest payable, and amounts recorded as
tenant security deposits. A receivable for the $238,000 consideration
for the transfer of title has been included in the restated balance
sheet. The partners' capital accounts are adjusted accordingly.
All items of income of the property have been removed from the
statements of operations for the periods presented, including rental
and other income received from tenants and interest earned on short
term investments. All expenses relating to the property, including
interest accrued on the mortgage, real estate operating expenses and
taxes, depreciation, and other expenses have also been removed from
the statements of operations. In addition, management fees have been
reduced to reflect the disposition of the property. The
aforementioned income and expense adjustments have been prepared as if
the disposition had taken place at the beginning of the periods
presented.
(3) Gain on Disposition of Investment in Real Estate
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The disposition of investment in real estate resulted in a gain of
approximately $7,530,000. This gain is not reflected in the pro forma
statements of operations. The gain for tax purposes will be computed
using the tax basis of the asset disposed, and will differ from the
gain reported on the financial statements.<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
SB Partners
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(Registrant)
By: SB PARTNERS REAL ESTATE CORPORATION
GENERAL PARTNER
Date June 6, 1996 /s/ George N. Tietjen III
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George N. Tietjen III
Vice-President and Controller
