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) December 23, 1998
-------------------------
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 7. Financial Statements
The following audited and pro forma financial information is
included as an amendment to the Form 8-K dated December 23, 1998, filed
on January 7, 1999 and incorporated herein by reference.
In assessing the acquisition of Halton Place 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 Halton Place Apartments by the Registrant. As the
Registrant used the proceeds of a mortgage note of $17,250,000 secured
by Cypress Key Apartments to make this purchase, the consolidated
balance sheet as of the last filing, September 30, 1998, 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 nine
months ended September 30, 1998 and the year ended December 31, 1997
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, as Cherry Hill Office Center was sold on April 16,
1998, Riverbend Apartments was sold on June 30, 1998, and Cypress Key
Apartments was acquired on August 20, 1998, the consolidated statements
of operations for the periods ended September 30, 1998 and December 31,
1997 have been restated to reflect the results of operations of the
Registrant as if these transactions had been consummated at the
beginning of the periods presented. Furthermore, all items of income
and related expenses of Plantation Shopping Center, which was sold on
December 8, 1997, have been removed from the consolidated statement of
operations for the year ended December 31, 1997, to reflect the sale as
if it had occurred at the beginning of the year. 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 December 23, 1997, as amended, April 30, 1998, July 15,
1998, and September 4, 1998, as amended, filed in connection with these
transactions.
<PAGE>3
SB PARTNERS
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FORM 8-K/A
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INDEX TO FINANCIAL STATEMENTS
-----------------------------
Statement of Revenue and Certain Expenses
for the nine months ended September 30, 1998 (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 December 31, 1997 . . . . . . . . . . . . . . . . . 7
Notes to Statement of Revenue and Certain Expenses . . . . . . . . . . . . 8
Pro Forma Consolidated Balance Sheet
as of September 30, 1998 (Unaudited) . . . . . . . . . . . . . . . . . 9
Pro Forma Consolidated Statement of Operations
for the nine months ended September 30, 1998 (Unaudited) . . . . 10 - 11
Pro Forma Consolidated Statement of Operations
for the year ended December 31, 1997 (Unaudited) . . . . . . . . 12 - 14
Notes to Pro Forma Consolidated Financial Statements (Unaudited) . . 15 - 16
<PAGE>4
<TABLE>
<CAPTION>
HALTON PLACE APARTMENTS
----------------------
STATEMENT OF REVENUE AND CERTAIN EXPENSES
-----------------------------------------
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
--------------------------------------------
UNAUDITED
---------
<S> <C>
REVENUE:
Rental income $1,208,236
Other income 47,941
----------
Total revenue 1,256,177
- ----------
CERTAIN EXPENSES:
Repairs and maintenance 152,267
Real estate taxes 114,289
Utilities 76,775
General and administrative 70,828
Promotions and marketing 65,486
Management fees 52,861
Insurance 14,855
Professional services 779
----------
Total certain expenses 548,140
----------
REVENUE IN EXCESS OF CERTAIN EXPENSES $ 708,037
==========
The accompanying notes are an integral part of this financial statement.
</TABLE>
<PAGE>5
HALTON PLACE APARTMENTS
----------------------
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
--------------------------------------------------
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
--------------------------------------------
UNAUDITED
---------
1. BASIS OF PRESENTATION
The accompanying Statement of Revenue and Certain Expenses relates to the
operations of Halton Place Apartments, a 246 unit residential apartment
community located in Greenville, South Carolina.
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
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Owners of
Halton Place Apartments:
We have audited the statement of revenue and certain expenses of Halton Place
Apartments for the year ended December 31, 1997. 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 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 Halton Place
Apartments for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
/s/ Arthur Andersen LLP
Charlotte, North Carolina
December 23, 1998
<PAGE>7
<TABLE>
<CAPTION>
HALTON PLACE APARTMENTS
----------------------
STATEMENT OF REVENUE AND CERTAIN EXPENSES
-----------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
<S> <C>
REVENUE:
Rental income $1,582,657
Other income 101,282
----------
Total revenue 1,683,939
----------
CERTAIN EXPENSES:
Repairs and maintenance 176,608
General and administrative 173,872
Real estate taxes 143,666
Utilities 86,584
Management fees 86,261
Promotions and marketing 48,280
Insurance 17,140
Professional services 9,438
----------
Total certain expenses 741,849
----------
REVENUE IN EXCESS OF CERTAIN EXPENSES $ 942,090
==========
The accompanying notes are an integral part of this financial statement.
</TABLE>
<PAGE>8
HALTON PLACE APARTMENTS
-----------------------
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
--------------------------------------------------
DECEMBER 31, 1997
-----------------
1. BASIS OF PRESENTATION
The statement of revenue and certain expenses reflects the operations of
Halton Place Apartments (the Property), located in Greenville, South
Carolina. The Property was acquired by SB Partners (the Company) from
Archstone Communities on December 23, 1998. The Property was acquired by
Archstone Communities from Charter Properties Project Limited Partnership
#3 in May 1998. The Property has 246 units and was 84% leased as of
December 31, 1997. This 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 to be filed by the Company.
The accounting records of the Property are maintained on a modified cash
basis. Adjusting entries have been made to present the accompanying
financial statement 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. The accompanying financial statement
excludes certain expenses such as interest, depreciation and amortization,
professional fees and other costs not directly related to the future
operations of the Property.
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
The Property paid management fees of $86,261 to Charter Properties, Inc., a
related party, based on 5% of gross rental and other project income as
defined in the management agreement.
<PAGE>9
<TABLE>
SB PARTNERS
-----------
(a New York limited partnership)
------------------------------
PRO FORMA CONSOLIDATED BALANCE SHEET
------------------------------------
(UNAUDITED)
---------
<CAPTION>
SEPTEMBER 30, PRO FORMA PRO FORMA
1998 ADJUSTMENTS BALANCE
AS REPORTED (SEE NOTE 2) SHEET
------------- ----------- ---------
<S> <C> <C> <C>
Assets:
Investments -
Real estate, at cost
Land $ 5,184,653 $ 1,260,000 $ 6,444,653
Buildings, furnishings and improvements 49,986,165 11,367,843 61,354,008
Less - accumulated depreciation (14,185,104) 0 (14,185,104)
------------ ----------- ------------
40,985,714 12,627,843 53,613,557
Other assets-
Cash and cash equivalents 3,161,480 4,134,792 7,296,272
Other 1,164,860 520,189 1,685,049
------------ ----------- ------------
Total assets $ 45,312,054 $17,282,824 $ 62,594,878
============ =========== ============
Liabilities:
Mortgage notes payable $ 24,760,919 $17,250,000 $ 42,010,919
Accounts payable and accrued expenses 847,963 3,681 851,644
Tenant security deposits 120,909 29,143 150,052
------------ ----------- ------------
Total liabilities 25,729,791 17,282,824 43,012,615
------------ ----------- ------------
Partners' Capital:
Units of partnership interest without par value;
Limited partners - 7,753 units 19,598,172 0 19,598,172
General partner - 1 unit (15,909) 0 (15,909)
------------ ----------- ------------
Total partners' capital 19,582,263 0 19,582,263
------------ ----------- ------------
Total liabilities & partners' capital $ 45,312,054 $17,282,824 $ 62,594,878
============ =========== ============
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 NINE MONTHS ENDED SEPTEMBER 30, 1998
--------------------------------------------
PRO FORMA ADJUSTMENTS
(SEE NOTE 2)
---------------------
SALE OF
CHERRY HILL SALE OF RESTATED
AS OFFICE RIVERBEND FOR SALE
REPORTED CENTER APARTMENTS TRANSACTIONS
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Revenue:
Rental income $6,533,788 $(416,047) $(1,925,117) $4,192,624
Interest on short-term investments 248,693 0 0 248,693
Other 543,171 (1,069) (357,714) 184,388
---------- --------- ----------- ----------
Total revenue 7,325,652 (417,116) (2,282,831) 4,625,705
---------- --------- ----------- ----------
Expenses:
Real estate operating expenses 3,775,686 (250,472) (1,377,203) 2,148,011
Interest on mortgage notes payable 1,495,390 0 (96,430) 1,398,960
Depreciation and amortization 976,890 (4,873) 0 972,017
Real estate taxes 519,143 (49,380) (145,061) 324,702
Management fees 626,742 (19,000) (108,000) 499,742
Other 209,650 (17,216) (16,552) 175,882
---------- --------- ----------- ----------
Total expenses 7,603,501 (340,941) (1,743,246) 5,519,314
---------- --------- ----------- ----------
Net income (loss) from continuing operations (277,849) (76,175) (539,585) (893,609)
Net income (loss) from continuing operations
allocated to general partner (36) (10) (70) (116)
---------- --------- ----------- ----------
Net income (loss) from continuing operations
allocated to limited partners $ (277,813) $ (76,165) $ (539,515) $ (893,493)
========== ========= =========== ==========
Net income (loss) from continuing operations
per unit of limited partnership interest $ (35.83) $ (9.82) $ (69.59) $ (115.24)
========== ========= =========== ==========
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>11
<TABLE>
SB PARTNERS
------------
(a New York limited partnership)
------------------------------
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
----------------------------------------------
(UNAUDITED)
---------
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
--------------------------------------------
PRO FORMA ADJUSTMENTS
(SEE NOTE 2)
---------------------
PURCHASE AND
RESTATED FINANCING OF PURCHASE OF PRO FORMA
FOR SALE CYPRESS KEY HALTON PLACE INCOME
TRANSACTIONS APARTMENTS APARTMENTS STATEMENT
------------ ------------ ----------- ---------
<S> <C> <C> <C> <C>
Revenue:
Rental income $4,192,624 $1,830,358 $1,208,236 $7,231,218
Interest on short-term investments 248,693 0 0 248,693
Other 184,388 77,998 47,941 310,327
---------- ---------- ---------- ----------
Total revenue 4,625,705 1,908,356 1,256,177 7,790,238
---------- ---------- ---------- ----------
Expenses:
Real estate operating expenses 2,148,011 605,856 433,072 3,186,939
Interest on mortgage notes payable 1,398,960 851,000 0 2,249,960
Depreciation and amortization 972,017 433,923 284,000 1,689,940
Real estate taxes 324,702 195,112 114,289 634,103
Management fees 499,742 (18,000) 108,000 589,742
Other 175,882 4,112 779 180,773
---------- ---------- ---------- ----------
Total expenses 5,519,314 2,072,003 940,140 8,531,457
---------- ---------- ---------- ----------
Net income (loss) from continuing operations (893,609) (163,647) 316,037 (741,219)
Net income (loss) from continuing operations
allocated to general partner (116) (21) 41 (96)
---------- ---------- ---------- ----------
Net income (loss) from continuing operations
allocated to limited partners $ (893,493) $ (163,626) $ 315,996 $ (741,123)
========== ========== ========== ==========
Net income (loss) from continuing operations
per unit of limited partnership interest $ (115.24) $ (21.10) $ 40.76 $ (95.59)
========== ========== ========== ==========
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, 1997
------------------------------------
PRO FORMA ADJUSTMENTS
(SEE NOTE 2)
---------------------
SALE OF RESTATED
PLANTATION FOR SALE OF
AS SHOPPING PLANTATION
REPORTED CENTER SHOPPING CENTER
---------- ----------- ---------------
<S> <C> <C> <C>
Revenues:
Rental income $ 8,647,671 $(1,660,552) $ 6,987,119
Interest on short-term investments 110,680 0 110,680
Other 307,301 (38,856) 268,445
----------- ----------- -----------
Total revenues 9,065,652 (1,699,408) 7,366,244
----------- ----------- -----------
Expenses:
Real estate operating expenses 3,826,057 (309,882) 3,516,175
Interest on mortgage notes and other loans payable 2,213,440 (390,484) 1,822,956
Depreciation and amortization 1,723,683 (391,992) 1,331,691
Management fees 1,196,611 (160,000) 1,036,611
Real estate taxes 815,086 (245,724) 569,362
Write-off of uncollectible accounts 369,635 (328,615) 41,020
Other 241,951 (32,208) 209,743
----------- ----------- -----------
Total expenses 10,386,463 (1,858,905) 8,527,558
----------- ----------- -----------
Income (loss) from operations (1,320,811) 159,497 (1,161,314)
Equity in net income of joint venture 316,320 0 316,320
----------- ----------- -----------
Net income (loss) from continuing operations (1,004,491) 159,497 (844,994)
Net income (loss) from continuing operations
allocated to general partner (130) 21 (109)
----------- ----------- -----------
Net income (loss) from continuing operations
allocated to limited partners $(1,004,361) $ 159,476 $ (844,885)
=========== =========== ===========
Net income (loss) from continuing operations
per unit of limited partnership interest $ (129.54) $ 20.56 $ (108.98)
=========== =========== ===========
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.<PAGE>
</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, 1997
------------------------------------
PRO FORMA ADJUSTMENTS
(SEE NOTE 2)
RESTATED ---------------------
FOR SALE OF SALE OF SALE OF RESTATED
PLANTATION CHERRY HILL RIVERBEND FOR SALE
SHOPPING CENTER OFFICE CENTER APARTMENTS TRANSACTIONS
--------------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 6,987,119 $(1,496,841) $(151,705) $ 5,338,573
Interest on short-term investments 110,680 0 0 110,680
Other 268,445 (6,842) (32,193) 229,410
----------- ----------- --------- -----------
Total revenues 7,366,244 (1,503,683) (183,898) 5,678,663
----------- ----------- --------- -----------
Expenses:
Real estate operating expenses 3,516,175 (909,706) (104,496) 2,501,973
Interest on mortgage notes and other loans payable 1,822,956 (15,342) (17,778) 1,789,836
Depreciation and amortization 1,331,691 (174,406) 0 1,157,285
Management fees 1,036,611 (72,000) (331,000) 633,611
Real estate taxes 569,362 (168,971) (10,915) 389,476
Write-off of uncollectible accounts 41,020 0 0 41,020
Other 209,743 (3,421) (1,138) 205,184
----------- ----------- --------- -----------
Total expenses 8,527,558 (1,343,846) (465,327) 6,718,385
----------- ----------- --------- -----------
Income (loss) from operations (1,161,314) (159,837) 281,429 (1,039,722)
Equity in net income of joint venture 316,320 0 (316,320) 0
----------- ----------- --------- -----------
Net income (loss) from continuing operations (844,994) (159,837) (34,891) (1,039,722)
Net income (loss) from continuing operations
allocated to general partner (109) (21) (4) (134)
----------- ----------- --------- -----------
Net income (loss) from continuing operations
allocated to limited partners $ (844,885) $ (159,816) $ (34,887) $(1,039,588)
=========== =========== ========= ===========
Net income (loss) from continuing operations
per unit of limited partnership interest $ (108.98) $ (20.61) $ (4.50) $ (134.09)
=========== =========== ========= ===========
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>14
<TABLE>
SB PARTNERS
------------
(a New York limited partnership)
------------------------------
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
----------------------------------------------
(UNAUDITED)
---------
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
PRO FORMA ADJUSTMENTS
(SEE NOTE 2)
---------------------
PURCHASE AND
RESTATED FINANCING OF PURCHASE OF PROFORMA
FOR SALE CYPRESS KEY HALTON PLACE INCOME
TRANSACTIONS APARTMENTS APARTMENTS STATEMENT
------------ ------------ ------------ ---------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 5,338,573 $2,674,000 $1,582,657 $ 9,595,230
Interest on short-term investments 110,680 0 0 110,680
Other 229,410 101,966 101,282 432,658
----------- ---------- ---------- -----------
Total revenues 5,678,663 2,775,966 1,683,939 10,138,568
----------- ---------- ---------- -----------
Expenses:
Real estate operating expenses 2,501,973 1,095,546 588,745 4,186,264
Interest on mortgage notes and other loans payable 1,789,836 1,134,000 0 2,923,836
Depreciation and amortization 1,157,285 680,000 379,000 2,216,285
Management fees 633,611 62,000 144,000 839,611
Real estate taxes 389,476 303,319 143,666 836,461
Write-off of uncollectible accounts 41,020 0 0 41,020
Other 205,184 1,625 9,438 216,247
----------- ---------- ---------- -----------
Total expenses 6,718,385 3,276,490 1,264,849 11,259,724
----------- ---------- ---------- -----------
Income (loss) from operations (1,039,722) (500,524) 419,090 (1,121,156)
Equity in net income of joint venture 0 0 0 0
----------- ---------- ---------- -----------
Net income (loss) from continuing operations (1,039,722) (500,524) 419,090 (1,121,156)
Net income (loss) from continuing operations
allocated to general partner (134) (65) 54 (145)
----------- ---------- ---------- -----------
Net income (loss) from continuing operations
allocated to limited partners $(1,039,588) $ (500,459) $ 419,036 $(1,121,011)
=========== ========== ========== ===========
Net income (loss) from continuing operations
per unit of limited partnership interest $ (134.09) $ (64.55) $ 54.05 $ (144.59)
=========== ========== ========== ===========
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.<PAGE>
</TABLE>
<PAGE>15
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 December 23, 1997,
as amended, April 30, 1998, July 15, 1998, and September 4, 1998, as
amended.
(2) Pro Forma Adjustments
---------------------
The consolidated balance sheet as of the last filing date,
September 30, 1998, has been restated to reflect the addition of the
assets and liabilities related to Halton Place Apartments, and the
mortgage placed on Cypress Key Apartments, as if the transactions had
occurred on such date. The total costs to acquire Halton Place
Apartments, $12,627,843, have been added to the Registrant s portfolio
of investments in real estate properties. Liabilities assumed at the
time of the purchase, prepaid rents of $3,681 and tenant security
deposits of $29,143, were added to the Registrant s total liabilities.
The mortgage note of $17,250,000 secured by Cypress Key Apartments has
been added to the total of the Registrant s mortgage notes payable.
The increase in deferred costs related to the financing, $290,938, has
been added to the assets held by the Registrant and will be amortized
over the 10 year term of the mortgage note. Other assets have also
been increased $229,251 for the deposits held in escrow required by the
lender under the terms of the mortgage note. Cash held by the
Registrant has been increased by $4,134,792, the net cash provided by
the financing after making the acquisition of Halton Place Apartments
in an all cash transaction.
<PAGE>16
The accompanying pro forma consolidated statements of operations
for the nine months ended September 30, 1998, and the year ended
December 31, 1997, 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 statements of operations have been adjusted for these
recent events, as well as the acquisition of Cypress Key Apartments on
August 20, 1998, the sale of Riverbend Apartments on June 30, 1998, and
the sale of Cherry Hill Office Center on April 16, 1998, as if these
transactions had also occurred at the beginning of the periods
presented. Furthermore, all items of income and related expenses of
Plantation Shopping Center, which was sold on December 8, 1997, have
been removed from the consolidated statement of operations for the year
ended December 31, 1997. 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.
As previously reported, the Registrant purchased the forty percent
co-venturer's interest in Riverbend Apartments on December 15, 1997.
However, the pro forma effect on the consolidated statement of
operations of the Registrant as a result of this acquisition is negated
by the subsequent sale on June 30, 1998. Therefore, the net effect of
the transactions has been reflected in the pro forma consolidated
statement of operations for the year ended December 31, 1997. Please
refer to the Form 8-K filed December 23, 1997, and the 1997 annual
report on Form 10-K, for additional discussion regarding the
acquisition of the forty percent co-venturer's interest in Riverbend
Apartments.
The items of income of Halton Place 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 note placed on 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 periods presented, including rental and other income received
from tenants. All expenses relating to the property, 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.
Likewise, all items of income and expense of Plantation Shopping Center
have been removed from the consolidated statement of operations for the
year ended December 31, 1997. 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>17
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 March 8, 1999 /s/ George N. Tietjen III
------------------ ---------------------------------------
George N. Tietjen III
Vice-President
