UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 29, 1999
-------------------------
SB Partners
- -------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 000-08952 13-6294787
- -------------------------------------------------------------------------
(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
-----------------------
- -------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
Item 7. Financial Statements
The following audited and pro forma financial information is included
as an amendment to the Form 8-K dated September 29, 1999, filed on
October 14, 1999 and incorporated herein by reference.
In assessing the acquisition of Le Coeur du Monde Apartments, the
Registrant considered historical and estimates of future cash flows,
physical condition, location, the competitive nature of the market,
existing tenancies and opportunities to retain and attract additional
tenants. Furthermore, current and anticipated maintenance and repair
costs, real estate taxes and capital improvement requirements were
evaluated. After reasonable inquiry, the Registrant is not aware of any
material factors that would cause the reported financial information in
the accompanying Statements of Revenue and Certain Expenses not to be
indicative of future operating results, although no assurance can be
given that the historical financial information will be representative
of future results.
<PAGE>2
The following pro forma consolidated financial statements reflect
the acquisition of Le Coeur du Monde Apartments by the Registrant. As
the Registrant used the proceeds of a mortgage note of $10,303,000
secured by the property to make this purchase, the consolidated balance
sheet as of the last filing, June 30, 1999, has been adjusted to
reflect the inclusion of the assets and liabilities of the newly
acquired apartment community, as well as the new mortgage note, as if
the acquisition and financing had occurred at the end of the period.
The consolidated statements of operations for both the six months ended
June 30, 1999 and the year ended December 31, 1998 have been restated
to reflect the results of operations of the Registrant as if the
acquisition and financing had been consummated at the beginning of the
periods presented.
In addition, the consolidated statement of operations for the year
ended December 31, 1998 has been restated to reflect the results of
operations of the Registrant as if the real estate sales and purchases
consummated during 1998 had taken place at the beginning of the year.
Those transactions include the sales of Cherry Hill Office Center on
April 16 and Riverbend Apartments on June 30, and the purchases of
Cypress Key Apartments and Halton Place Apartments on August 20,and
December 23, respectively. The Registrant is reflecting these
transactions in accordance with the rules and regulations regarding the
filing of Form 8-K, as the transactions were consummated during the
fiscal periods presented. Please refer to the Forms 8-K filed April 30,
1998, July 15, 1998, September 4, 1998 and January 7, 1999, as amended,
filed in connection with these transactions.
<PAGE>3
SB PARTNERS
-----------
FORM 8-K/A
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INDEX TO FINANCIAL STATEMENTS
-----------------------------
Statement of Revenue and Certain Expenses
for the six months ended June 30, 1999 (Unaudited)..................4
Notes to Statement of Revenue and Certain Expenses (Unaudited)...........5
Report of Independent Public Accountants.................................6
Statement of Revenue and Certain Expenses
for the year ended October 31, 1998.................................7
Notes to Statement of Revenue and Certain Expenses.......................8
Pro Forma Consolidated Balance Sheet
as of June 30, 1999 (Unaudited).....................................9
Pro Forma Consolidated Statement of Operations
for the six months ended June 30, 1999 Unaudited)..................10
Pro Forma Consolidated Statement of Operations
for the year ended December 31, 1998 (Unaudited)..............11 - 13
Notes to Pro Forma Consolidated Financial Statements (Unaudited)...14 - 15
<PAGE>4
<TABLE>
<CAPTION>
LE COEUR DU MONDE APARTMENTS
----------------------------
STATEMENT OF REVENUE AND CERTAIN EXPENSES
-----------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 1999
--------------------------------------
UNAUDITED
---------
<S> <C>
REVENUE:
Rental income $876,175
Other income 37,186
--------
Total revenue 913,361
--------
CERTAIN EXPENSES:
Repairs and maintenance 112,580
General and administrative 63,277
Real estate taxes 54,547
Property management fees 44,673
Utilities 28,779
Promotions and marketing 16,883
Insurance 7,636
--------
Total certain expenses 328,375
--------
REVENUE IN EXCESS OF CERTAIN EXPENSES $584,986
========
The accompanying notes are an integral part of this financial statement.
</TABLE>
<PAGE>5
LE COEUR DU MONDE APARTMENTS
----------------------------
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
--------------------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 1999
--------------------------------------
UNAUDITED
---------
1. BASIS OF PRESENTATION
The accompanying Statement of Revenue and Certain Expenses relates to the
operations of Le Coeur du Monde Apartments, a 192 unit residential
apartment community located in St. Louis, Missouri.
The accompanying financial statement has been prepared for the purpose of
complying with Rule 3-14 of Regulation S-X of the Securities and Exchange
Commission and thus excludes certain expenses, such as depreciation and
amortization, not related to the future operations of the property.
Management is not aware of any material factors relating to the property
which would cause the reported financial information not to be indicative
of future operating results.
2. SIGNIFICANT ACCOUNTING POLICIES
The accompanying Statement of Revenue and Certain Expenses was prepared
using the accrual basis of accounting in accordance with generally accepted
accounting principles. Rental income is recorded as earned pursuant to the
terms of leases entered into with tenants, generally for periods not longer
than a year. The preparation of financial statements in conformity with
generally accepted accounting principles requires the use of certain
estimates in determining the reported amounts of revenues and expenses.
Actual results could differ from those estimates.
<PAGE>6
INDEPENDENT AUDITOR'S REPORT
To the Owners of
Le Coeur du Monde Apartments:
We have audited the accompanying statement of revenue and certain expenses of Le
Coeur du Monde Apartments for the year ended October 31, 1998. This financial
statement is the responsibility of the Property's management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a current report on Form 8-K of SB
Partners, as described in Note 1, and is not intended to be a complete
presentation of the Property's revenue and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenue and certain expenses of Le Coeur du Monde
Apartments for the year ended October 31, 1998, in conformity with generally
accepted accounting principles.
/s/ Beatty, Schival & Associates, LLC
Alpharetta, GA
December 18, 1998
<PAGE>7
<TABLE>
<CAPTION>
LE COEUR DU MONDE APARTMENTS
----------------------------
STATEMENT OF REVENUE AND CERTAIN EXPENSES
-----------------------------------------
FOR THE YEAR ENDED OCTOBER 31, 1998
-----------------------------------
<S> <C>
REVENUE:
Rental income $1,744,252
Other income 54,984
----------
Total revenue 1,799,236
----------
CERTAIN EXPENSES:
Repairs and maintenance 241,155
General and administrative 138,677
Real estate taxes 111,335
Property management fees 88,926
Utilities 61,529
Promotions and marketing 25,446
Insurance 18,498
----------
Total certain expenses 685,566
----------
REVENUE IN EXCESS OF CERTAIN EXPENSES $1,113,670
==========
The accompanying notes are an integral part of this financial statement.
</TABLE>
<PAGE>8
LE COEUR DU MONDE APARTMENTS
----------------------------
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
--------------------------------------------------
FOR THE YEAR ENDED OCTOBER 31, 1998
-----------------------------------
1. BASIS OF PRESENTATION
The accompanying statement of revenue and certain expenses reflects the
operations of Le Coeur du Monde Apartments (the Property), a 192-unit
residential apartment community located in St. Louis, Missouri. The
Property was acquired by SB Partners (the Company) from Le Coeur du Monde
Limited Partnership on September 29, 1999. The accompanying statement has
been prepared for the purpose of complying with Rule 3-14 of Regulation S-X
of the Securities and Exchange Commission and thus excludes certain
expenses, such as mortgage interest, depreciation, amortization, and
certain professional fees not related to the future operations of the
property.
The accompanying financial statement has been prepared using the accrual
basis of accounting in accordance with generally accepted accounting
principles. Rental income is recorded as it is earned pursuant to the terms
of leases entered into with tenants, generally for periods not longer than
a year. Rent concessions granted to tenants are not material to the
financial statements.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions affecting the reported amounts of revenue and expenses during
the reporting period. The ultimate results could differ from those
estimates.
2. RELATED-PARTY TRANSACTIONS
An affiliate of the general partner of the seller, Le Coeur du Monde
Limited Partnership, oversaw the management and operations of the apartment
community. For these services, the former owner paid a property management
fee equal to 5% of gross rental and other project income, as defined in the
management agreement. During the year ended October 31, 1998, the Property
paid $89,307 of such fees.
<PAGE>9
<TABLE>
SB PARTNERS
-----------
(a New York limited partnership)
------------------------------
PRO FORMA CONSOLIDATED BALANCE SHEET
------------------------------------
(UNAUDITED)
---------
<CAPTION>
JUNE 30, PRO FORMA PRO FORMA
1999 ADJUSTMENTS BALANCE
AS REPORTED (SEE NOTE 2) SHEET
------------- ----------- ---------
<S> <C> <C> <C>
Assets:
Investments -
Real estate, at cost
Land $ 6,444,653 $ 1,332,500 $ 7,777,153
Buildings, furnishings and improvements 62,728,853 12,001,627 74,730,480
Less - accumulated depreciation (15,568,772) 0 (15,568,772)
------------ ----------- ------------
53,604,734 13,334,127 66,938,861
Other assets-
Cash and cash equivalents 5,178,155 (3,296,311) 1,881,844
Other 1,971,905 433,650 2,405,555
------------ ----------- ------------
Total assets $ 60,754,794 $10,471,466 $ 71,226,260
============ =========== ============
Liabilities:
Mortgage notes payable $ 41,633,103 $10,303,000 $ 51,936,103
Accounts payable and accrued expenses 636,322 102,376 738,698
Tenant security deposits 250,235 66,090 316,325
------------ ----------- ------------
Total liabilities 42,519,660 10,471,466 52,991,126
------------ ----------- ------------
Partners' Capital:
Units of partnership interest without par value;
Limited partners - 7,753 units 18,251,217 0 18,251,217
General partner - 1 unit (16,083) 0 (16,083)
------------ ----------- ------------
Total partners' capital 18,235,134 0 18,235,134
------------ ----------- ------------
Total liabilities & partners' capital $ 60,754,794 $10,471,466 $ 71,226,260
============ =========== ============
See accompanying notes to pro forma consolidated financial statements.
</TABLE>
<PAGE>10
<TABLE>
SB PARTNERS
------------
(a New York limited partnership)
------------------------------
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
----------------------------------------------
(UNAUDITED)
---------
<CAPTION>
For the Six Months Ended June 30, 1999
--------------------------------------
PRO FORMA ADJUSTMENTS
(SEE NOTE 2)
---------------------
PURCHASE OF PRO FORMA
AS LE COEUR DU MONDE INCOME
REPORTED APARTMENTS STATEMENT
------------ ----------- ------------
<S> <C> <C> <C>
Revenue:
Rental income $4,811,121 $876,175 $5,687,296
Interest on short-term investments 137,330 0 137,330
Other 229,683 37,186 266,869
---------- -------- ----------
Total revenue 5,178,134 913,361 6,091,495
---------- -------- ----------
Expenses:
Real estate operating expenses 2,097,479 273,828 2,371,307
Interest on mortgage notes payable 1,483,237 401,367 1,884,604
Depreciation and amortization 996,241 156,000 1,152,241
Real estate taxes 474,990 54,547 529,537
Management fees 359,063 19,000 378,063
Other 157,277 0 157,277
---------- -------- ----------
Total expenses 5,568,287 904,742 6,473,029
---------- -------- ----------
Net income (loss) from operations (390,153) 8,619 (381,534)
Net income (loss) from operations
allocated to general partner (50) 1 (49)
---------- -------- -----------
Net income (loss) from operations
allocated to limited partners $ (390,103) $ 8,618 $ (381,485)
========== ======== ==========
Net income (loss) per unit of
limited partnership interest $ (50.32) $ 1.11 $ (49.21)
========== ======== ==========
Weighted average number of Units of limited
partnership interest outstanding 7,753 7,753 7,753
========== ======== ==========
See accompanying notes to pro forma consolidated financial statements.
</TABLE>
<PAGE>11
<TABLE>
SB PARTNERS
------------
(a New York limited partnership)
------------------------------
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
----------------------------------------------
(UNAUDITED)
---------
<CAPTION>
For the Year Ended December 31, 1998
------------------------------------
PRO FORMA ADJUSTMENTS
(SEE NOTE 2)
---------------------
SALE OF SALE OF RESTATED
AS CHERRY HILL RIVERBEND FOR SALE
REPORTED OFFICE CENTER APARTMENTS TRANSACTIONS
--------------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $8,541,709 $(416,047) $(1,925,117) $ 6,200,545
Interest on short-term investments 331,210 0 0 331,210
Other 638,662 (1,069) (357,714) 279,879
---------- ---------- ----------- -----------
Total revenues 9,511,581 (417,116) (2,282,831) 6,811,634
---------- ---------- ----------- -----------
Expenses:
Real estate operating expenses 4,578,613 (250,472) (1,377,203) 2,950,938
Interest on mortgage notes and other loans payable 2,041,952 0 (96,430) 1,945,522
Depreciation and amortization 1,425,744 (4,873) 0 1,420,871
Real estate taxes 698,144 (49,380) (145,061) 503,703
Management fees 835,502 (25,000) (142,000) 668,502
Other 391,101 (17,216) (16,552) 357,333
---------- ---------- ----------- -----------
Total expenses 9,971,056 (346,941) (1,777,246) 7,846,869
---------- ---------- ----------- -----------
Net income (loss) from operations (459,475) (70,175) (505,585) (1,035,235)
Net income (loss) from operations
allocated to general partner (59) (9) (65) (133)
---------- ---------- ----------- -----------
Net income (loss) from operations
allocated to limited partners $ (459,416) $ (70,166) $ (505,520) $(1,035,102)
========== ========= =========== ===========
Net income (loss) from operations
per unit of limited partnership interest $ (59.26) $ (9.05) $ (65.21) $ (133.52)
========== ========= =========== ===========
Weighted average number of Units of limited
partnership interest outstanding 7,753 7,753 7,753 7,753
========== ========= =========== ===========
See accompanying notes to pro forma consolidated financial statements.
</TABLE>
<PAGE>12
<TABLE>
SB PARTNERS
------------
(a New York limited partnership)
------------------------------
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
----------------------------------------------
(UNAUDITED)
---------
<CAPTION>
For the Year Ended December 31, 1998
------------------------------------
PRO FORMA ADJUSTMENTS
(SEE NOTE 2)
---------------------
PURCHASE AND
RESTATED FINANCING OF PURCHASE OF RESTATED
FOR SALE CYPRESS KEY HALTON PLACE FOR 1998
TRANSACTIONS APARTMENTS APARTMENTS TRANSACTIONS
------------ ------------ ---------- ---------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 6,200,545 $1,703,180 $1,528,462 $ 9,432,187
Interest on short-term investments 331,210 0 0 331,210
Other 279,879 79,640 79,698 439,217
----------- ---------- ---------- -----------
Total revenues 6,811,634 1,782,820 1,608,160 10,202,614
----------- ---------- ---------- -----------
Expenses:
Real estate operating expenses 2,950,938 530,840 602,168 4,083,946
Interest on mortgage notes and other loans payable 1,945,522 1,041,927 0 2,987,449
Depreciation and amortization 1,420,871 373,730 260,717 2,055,318
Real estate taxes 503,703 206,135 144,511 854,349
Management fees 668,502 (23,000) 144,000 789,502
Other 357,333 10,645 4,320 372,298
----------- ---------- ---------- -----------
Total expenses 7,846,869 2,140,277 1,155,716 11,142,862
----------- ---------- ---------- -----------
Net income (loss) from operations (1,035,235) (357,457) 452,444 (940,248)
Net income (loss) from operations
allocated to general partner (133) (46) 58 (121)
----------- ---------- ---------- -----------
Net income (loss) from operations
allocated to limited partners $(1,035,102) $ (357,411) $ 452,386 $ (940,127)
=========== ========== ========== ===========
Net income (loss) from operations
per unit of limited partnership interest $ (133.52) $ (46.10) $ 58.36 $ (121.26)
=========== ========== ========== ===========
Weighted average number of Units of limited
partnership interest outstanding 7,753 7,753 7,753 7,753
=========== ========== ========== ===========
See accompanying notes to pro forma consolidated financial statements.
</TABLE>
<PAGE>13
<TABLE>
SB PARTNERS
------------
(a New York limited partnership)
------------------------------
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
----------------------------------------------
(UNAUDITED)
---------
<CAPTION>
For the Year Ended December 31, 1998
------------------------------------
PRO FORMA ADJUSTMENTS
(SEE NOTE 2)
---------------------
RESTATED PURCHASE OF RESTATED
FOR 1998 LE COEUR DU MONDE INCOME
TRANSACTIONS APARTMENTS STATEMENT
---------- ----------- ---------------
<S> <C> <C> <C>
Revenues:
Rental income $ 9,432,187 $1,744,252 $11,176,439
Interest on short-term investments 331,210 0 331,210
Other 439,217 54,984 494,201
----------- ---------- -----------
Total revenues 10,202,614 1,799,236 12,001,850
----------- ---------- -----------
Expenses:
Real estate operating expenses 4,083,946 574,231 4,658,177
Interest on mortgage notes and other loans payable 2,987,449 800,994 3,788,443
Depreciation and amortization 2,055,318 311,765 2,367,083
Real estate taxes 854,349 111,335 965,684
Management fees 789,502 38,000 827,502
Other 372,298 0 372,298
----------- ---------- -----------
Total expenses 11,142,862 1,836,325 12,979,187
----------- ---------- -----------
Net income (loss) from operations (940,248) (37,089) (977,337)
Net income (loss) from operations
allocated to general partner (121) (5) (126)
----------- ---------- -----------
Net income (loss) from operations
allocated to limited partners $ (940,127) $ (37,084) $ (977,211)
=========== ========== ===========
Net income (loss) from operations
per unit of limited partnership interest $ (121.26) $ (4.78) $ (126.04)
=========== ========== ===========
Weighted average number of Units of limited
partnership interest outstanding 7,753 7,753 7,753
=========== ========== ===========
See accompanying notes to pro forma consolidated financial statements.
</TABLE>
<PAGE>14
SB PARTNERS
-----------
(a New York limited partnership)
--------------------------------
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(UNAUDITED)
-----------
(1) Accounting and Financial Reporting
----------------------------------
The consolidated 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 annual report on Form 10-K,
quarterly report on Form 10-Q, and Forms 8-K filed April 30, 1998, July
15, 1998, September 4, 1998 and January 7, 1999, as amended.
(2) Pro Forma Adjustments
---------------------
The consolidated balance sheet as of the last filing date, June
30, 1999, has been restated to reflect the addition of the assets and
liabilities related to Le Coeur du Monde Apartments, and the related
mortgage note payable, as if the transactions had occurred on such
date. The total costs to acquire Le Coeur du Monde Apartments,
$13,334,127, have been added to the Registrant's portfolio of
investments in real estate properties. Liabilities assumed at the time
of the purchase, accrued real estate taxes of $92,376, prepaid rents of
$10,000 and tenant security deposits of $66,090, were added to the
Registrant's total liabilities. The mortgage note of $10,303,000
secured by the property has been added to the total of the Registrant's
mortgage notes payable. The increase in deferred costs related to the
financing, $127,246, has been added to the assets held by the
Registrant. Other assets have also been increased $306,404 for the
deposits held in escrow required by the lender under the terms of the
mortgage note. Cash held by the Registrant has been decreased by
$3,296,311, the net cash required for the acquisition of Le Coeur du
Monde Apartments.
<PAGE>15
The accompanying pro forma consolidated statements of
operations for the six months ended June 30, 1999, and the year ended
December 31, 1998, have been adjusted to reflect the results of
operations of the Registrant as if the acquisition and financing had
been consummated at the beginning of the periods presented. The
consolidated statement of operations for the year ended December 31,
1998 has also been adjusted for the purchases and sales that took place
during that year, as if those transactions had occurred at the
beginning of the year. Those transactions include the sales of Cherry
Hill Office Center on April 16 and Riverbend Apartments on June 30, and
the purchases of Cypress Key Apartments and Halton Place Apartments on
August 20,and December 23, respectively. The Registrant is reflecting
these transactions in accordance with the rules and regulations
regarding the filing of Form 8-K, as all were consummated during the
fiscal periods presented. Please refer also to the Forms 8-K, as
amended, filed in connection with these transactions.
The items of income of Le Coeur du Monde Apartments, Halton Place
Apartments and Cypress Key Apartments that have been added to the
consolidated statement of operations for the periods presented include
rental and other income received from tenants. All expenses relating to
the properties, including real estate operating expenses, interest on
mortgage notes payable, taxes, depreciation, and other expenses have
also been included. Management fees have been adjusted to reflect the
investments in the properties, net of the proceeds of the mortgage
notes placed on Le Coeur du Monde Apartments and Cypress Key
Apartments.
All items of income of Riverbend Apartments and Cherry Hill Office
Center have been removed from the consolidated statements of operations
for the year ended December 31, 1998, including rental and other income
received from tenants. All expenses relating to the properties,
including interest accrued on the mortgage, real estate operating
expenses, taxes, depreciation as applicable, and other expenses have
also been removed from the statements of operations. In addition,
management fees have been reduced to reflect the sales of the
properties. In accordance with the rules and regulations regarding the
filing of Form 8-K, no gains or losses from the sales of the real
estate are reflected in the pro forma statements of operations.
<PAGE>16
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
---------------------------------------
(Registrant)
By: SB PARTNERS REAL ESTATE CORPORATION
GENERAL PARTNER
Date December 13, 1999 /s/ George N. Tietjen III
------------------- --------------------------------------
George N. Tietjen III
Vice-President
