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
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 2000
-------------------------------------------------
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ------------------- to --------------------------
(Amended by Exch Act Rel No. 312905. eff 4/26/93.)
Commission File Number: 0-8952
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SB PARTNERS
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 13-6294787
-------------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1251 Avenue of the Americas, N.Y., N.Y. 10020
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(Address of principal executive offices) (Zip Code)
(212) 408-2900
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(Registrant's telephone number, including area code)
666 Fifth Avenue, N.Y., N.Y 10103
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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. [X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. [ ] Yes [ ] No
Not Applicable
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Not Applicable
<PAGE>
SB PARTNERS
INDEX
Part I Financial Information
Consolidated Balance Sheets as of
June 30, 2000 and December 31, 1999.........................1
Consolidated Statements of Operations
for the three and six months ended
June 30, 2000 and 1999......................................2
Consolidated Statements of Changes in Partners' Capital
for the six months ended June 30, 2000
and the years ended December 31, 1999 and 1998..............3
Consolidated Statements of Cash Flows
for the six months ended June 30, 2000 and 1999.............4
Notes to Consolidated Financial Statements..................5 - 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations..........8 - 12
Quantitative and Qualitative Disclosures About
Market Risk................................................13
Part II Other Information..............................................13
<PAGE>1
<TABLE>
SB PARTNERS
(A New York Limited Partnership)
------------------------------
CONSOLIDATED BALANCE SHEETS
June 30, 2000 (Unaudited) and
December 31, 1999 (Audited, but not covered by the report of independent public accountants)
-------------------------------------------------------------------------------------------
<CAPTION>
June 30, December 31,
2000 1999
------------ ------------
<S> <C> <C>
Assets:
Investments -
Real estate, at cost
Land $ 7,777,153 $ 7,777,153
Buildings, furnishings and improvements 76,101,463 75,564,949
Less - accumulated depreciation (17,804,321) (16,654,948)
------------ ------------
66,074,295 66,687,154
Other assets -
Cash and cash equivalents 451,663 1,344,906
Cash held by lenders in escrow 1,481,107 1,362,890
Other 709,601 905,734
------------ ------------
Total assets $ 68,716,666 $ 70,300,684
============ ============
Liabilities:
Mortgage notes payable $ 51,276,438 $ 51,626,658
Accounts payable and accrued expenses 881,809 670,253
Tenant security deposits 252,955 292,723
------------ ------------
Total liabilities 52,411,202 52,589,634
------------ ------------
Partners' Capital:
Units of partnership interest without par value;
Limited partners - 7,753 units 16,321,796 17,727,201
General partner - 1 unit (16,332) (16,151)
------------ ------------
Total partners' capital 16,305,464 17,711,050
------------ ------------
Total liabilities and partners' capital $ 68,716,666 $ 70,300,684
============ ============
<FN>
The accompanying notes are an integral part of these consolidated balance sheets.
</FN>
</TABLE>
<PAGE>2
<TABLE>
SB PARTNERS
(A New York Limited Partnership)
------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
------------------------------------------------
<CAPTION>
For The Three Months For The Six Months
Ended June 30, Ended June 30,
------------------------- -------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Rental income $2,890,169 $2,415,272 $5,765,904 $4,811,121
Interest on short-term investments 14,743 63,167 26,726 137,330
Other 147,578 132,058 310,707 229,683
---------- ---------- ---------- ----------
Total revenues 3,052,490 2,610,497 6,103,337 5,178,134
---------- ---------- ---------- ----------
Expenses:
Real estate operating expenses 1,235,668 1,076,964 2,458,888 2,097,479
Interest on mortgage notes payable 929,795 740,338 1,862,777 1,483,237
Depreciation and amortization 595,285 511,623 1,192,590 996,241
Real estate taxes 276,910 239,553 557,980 474,990
Management fees 202,216 181,358 402,434 359,063
Other 40,083 96,492 142,601 157,277
---------- ---------- ---------- ----------
Total expenses 3,279,957 2,846,328 6,617,270 5,568,287
---------- ---------- ---------- ----------
Net loss (227,467) (235,831) (513,933) (390,153)
Loss allocated to general partner (29) (30) (66) (50)
---------- ---------- ---------- ----------
Loss allocated to limited partners $ (227,438) $ (235,801) $ (513,867) $ (390,103)
========== ========== ========== ==========
Net Loss Per Unit of Limited Partnership Interest $ (29.34) $ (30.42) $ (66.28) $ (50.32)
========== ========== ========== ==========
Weighted Average Number of Units of Limited
Partnership Interest Outstanding 7,753 7,753 7,753 7,753
========== ========== ========== ==========
<FN>
The accompanying notes are an integral part of these consolidated statements.
</FN>
</TABLE>
<PAGE>3
<TABLE>
SB PARTNERS
(A New York Limited Partnership)
------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the six months ended June 30, 2000 (Unaudited)
and for the years ended December 31, 1999 and 1998
(Audited, but not covered by the report of independent public accountants)
------------------------------------------------------------------------
<CAPTION>
Limited Partners:
Units of
Partnership
Interest Cumulative Accumulated
------------------------ Cash Earnings
Number Amount Distributions (Losses) Total
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 7,753 $119,968,973 $(97,728,323) $(6,237,898) $16,002,752
Net income for the period 0 0 0 3,413,818 3,413,818
----- ------------ ------------ ----------- -----------
Balance, December 31, 1998 7,753 119,968,973 (97,728,323) (2,824,080) 19,416,570
Cash distributions 0 0 (775,250) 0 (775,250)
Net loss for the period 0 0 0 (914,119) (914,119)
----- ------------ ------------ ----------- -----------
Balance, December 31, 1999 7,753 119,968,973 (98,503,573) (3,738,199) 17,727,201
Cash distributions 0 0 (891,538) 0 (891,538)
Net loss for the period 0 0 0 (513,867) (513,867)
----- ------------ ------------ ----------- -----------
Balance, June 30, 2000 7,753 $119,968,973 $(99,395,111) $(4,252,066) $16,321,796
===== ============ ============ =========== ===========
<CAPTION>
General Partner:
Units of
Partnership
Interest Cumulative Accumulated
------------------------ Cash Earnings
Number Amount Distributions (Losses) Total
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 1 $10,000 $(24,559) $(1,814) $(16,373)
Net income for the period 0 0 0 440 440
----- ------- -------- ------- --------
Balance, December 31, 1998 1 10,000 (24,559) (1,374) (15,933)
Cash distributions 0 0 (100) 0 (100)
Net loss for the period 0 0 0 (118) (118)
----- ------- -------- ------- --------
Balance, December 31, 1999 1 10,000 (24,659) (1,492) (16,151)
Cash distributions 0 0 (115) 0 (115)
Net loss for the period 0 0 0 (66) (66)
----- ------- -------- ------- --------
Balance, June 30, 2000 1 $10,000 $(24,774) $(1,558) $(16,332)
===== ======= ======== ======= ========
<FN>
The accompanying notes are an integral part of these consolidated statements.
</FN>
</TABLE>
<PAGE>4
<TABLE>
SB PARTNERS
(A New York Limited Partnership)
------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
------------------------------------------------
<CAPTION>
For the Six Months Ended
June 30,
-------------------------------
2000 1999
------------ -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Loss $ (513,933) $ (390,153)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization 1,192,590 996,241
(Increase) Decrease in other operating assets 34,699 (43,149)
Increase in other operating liabilities 171,788 116,262
----------- ----------
Net cash provided by operating activities 885,144 679,201
----------- ----------
Cash Flows Used In Investing Activities:
Capital additions to real estate owned (536,514) (995,216)
----------- ----------
Cash Flows Used In Financing Activities:
Principal payments on mortgage notes payable (350,220) (284,623)
Distributions paid to partners (891,653) (775,350)
Increase in deferred financing costs 0 (31,109)
----------- -----------
Net cash used in financing activities (1,241,873) (1,091,082)
----------- -----------
Net decrease in cash and cash equivalents (893,243) (1,407,097)
Cash and cash equivalents, beginning of period 1,344,906 6,585,252
----------- -----------
Cash and cash equivalents, end of period $ 451,663 $ 5,178,155
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 1,863,940 $ 1,484,314
=========== ===========
<FN>
The accompanying notes are an integral part of these consolidated statements.
</FN>
</TABLE>
<PAGE>5
SB PARTNERS
(A New York Limited Partnership)
------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
-----------------------------------------------------
FOR THE PERIODS ENDED JUNE 30, 2000
-----------------------------------
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
SB Partners, a New York limited partnership, and its subsidiaries
(collectively, the "Partnership"), have been engaged since April 1971 in
acquiring, operating and holding for investment a varying portfolio of
real properties. SB Partners Real Estate Corporation (the "General
Partner") serves as the general partner of the Partnership.
The consolidated financial statements as of and for the three and six
month periods ended June 30, 2000 and 1999 included herein are unaudited;
however, the information reflects all adjustments (consisting solely of
normal, recurring adjustments) that, in the opinion of management, are
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,
however, the Registrant believes that the disclosures are sufficient 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.
The results of operations for the three and six month periods ended June
30, 2000 and 1999 are not necessarily indicative of the results to be
expected for a full year.
The significant accounting and financial reporting policies of the
Partnership are as follows:
(a) The accompanying consolidated financial statements include
the accounts of SB Partners and its subsidiaries. All
significant intercompany accounts and transactions have been
eliminated. The consolidated financial statements are prepared
using the accrual basis of accounting under generally accepted
accounting principles. Revenues are recognized as earned and
expenses are recognized as incurred. The preparation of
financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statement and the reported amounts
of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Certain prior period
amounts have been reclassified to make them comparable to the
current period presentation.
(b) The Partnership is engaged in only one industry segment, real
estate investment, and therefore information regarding industry
segments is not applicable and is not included in these
consolidated financial statements.
<PAGE>6
(c) For financial reporting purposes, the Partnership considers all
highly liquid, short-term investments with maturities of three
months or less when purchased to be cash equivalents.
(d) Depreciation of buildings, furnishings and improvements is
computed using the straight-line method of depreciation, based
upon the estimated useful lives of the related properties, as
follows:
Buildings and improvements 5 to 40 years
Furnishings 5 to 7 years
Expenditures for maintenance and repairs are expensed as
incurred. Expenditures for improvements, renewals and
betterments, which increase the useful life of the real estate,
are capitalized. Upon retirement or sale of property, the
related cost and accumulated depreciation are removed from the
accounts. Amortization of deferred financing and refinancing
costs is computed by amortizing the costs on a straight-line
basis over the terms of the related mortgage notes.
(e) Net income (loss) per unit of partnership interest has been
computed based on the weighted average number of units of
partnership interest outstanding during each period. There were
no potentially dilutive securities outstanding during each
period.
(f) Each partner is individually responsible for reporting his
share of the Partnership's taxable income or loss. Accordingly,
no provision has been made in the accompanying financial
statements for Federal, state or local income taxes.
(2) INVESTMENTS IN REAL ESTATE
As of June 30, 2000, the Partnership owned apartment projects in St.
Louis, Missouri; Greenville, South Carolina; Reno, Nevada; and Holiday
and Orlando, Florida; as well as 13.9 acres of land in Holiday,
Florida. The following is the cost basis and accumulated depreciation
of the real estate investments owned by the Partnership at June 30,
2000 and December 31, 1999:
<TABLE>
<CAPTION>
Real Estate at Cost
No.of Year of ------------------------
Type Prop. Acquisition Description 6/30/00 12/31/99
---- ----- ----------- ----------- ------- --------
<S> <C> <C> <C> <C> <C>
Residential properties 5 1983-99 1,746 Apt. Units $ 83,834,229 $ 83,297,715
Undeveloped land 1 1978 13.9 Acres 44,387 44,387
------------ ------------
83,878,616 83,342,102
Less: Accumulated depreciation (17,804,321) (16,654,948)
------------ ------------
$ 66,074,295 $ 66,687,154
============ ============
</TABLE>
<PAGE>7
(3) REAL ESTATE TRANSACTIONS
On September 29, 1999, the Partnership purchased Le Coeur du Monde
Apartments, a 192-unit apartment community located in St. Louis,
Missouri, for $13,325,000. In connection with the purchase, the
partnership obtained a first mortgage loan of $10,303,000 from a FNMA
DUS program lender. The mortgage loan is secured by the property, bears
interest at 7.805% per annum and matures on October 1, 2009.
(4) MORTGAGE NOTES PAYABLE
Mortgage notes payable consist of the following first liens:
<TABLE>
<CAPTION>
Net Carrying Amount
Annual June 30, December 31,
Interest Maturity Installment Amount Due --------- ------------
Property Rate Date Payments(a) at Maturity 2000 1999
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Holiday Park 6.895% 2/08 $ 300,169 $ 3,277,785 $ 3,703,699 $ 3,725,654
Meadowwood 7.550% 1/04 1,914,996 18,979,461 20,366,868 20,551,431
Cypress Key 6.605% 1/09 1,322,707 14,772,418 16,961,730 17,061,002
Le Coeur du Monde(b) 7.805% 10/09 890,447 9,075,763 10,244,141 10,288,571
----------- -----------
$51,276,438 $51,626,658
=========== ===========
<FN>
(a) Annual installment payments include principal and interest.
(b) The mortgage note was placed on the property at date of purchase
(see Note 3).
</FN>
</TABLE>
(5) DISTRIBUTIONS
In March 2000, the Partnership paid a cash distribution of $115 per
weighted average unit outstanding, which totaled $891,653 based on
7,753.5 weighted average number of units outstanding.
<PAGE>8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
AS OF AND FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000
----------------------------------------------------------
General
-------
The consolidated financial statements as of and for the three and six
month periods ended June 30, 2000 reflect the operations of five residential
garden apartment properties. The consolidated financial statements for the three
and six month periods ended June 30, 1999 reflect the operations of four
residential garden apartment properties.
Total revenues for the three months ended June 30, 2000 increased $442,000
to approximately $3,052,000 from approximately $2,610,000 for the three month
period ended June 30, 1999. Net loss for the three months ended June 30, 2000
decreased $8,000 to approximately $228,000 from approximately $236,000 for the
three months ended June 30, 1999.
Total revenues for the six months ended June 30, 2000 increased $925,000
to approximately $6,103,000 from approximately $5,178,000 for the six months
ended June 30, 1999. The net loss for the six months ended June 30, 2000
increased $124,000 to approximately $514,000 from approximately $390,000 for the
six months ended June 30, 1999.
The increase in total revenues and changes in net loss are attributable
primarily to the revenues generated by and expenses attributable to Le Coeur du
Monde Apartments, the residential community purchased in September of 1999.
Please see Form 8-K, as amended on December 13, 1999, filed in connection with
this transaction. The three and six months ended June 30, 2000 include
additional revenues of $399,000 and $817,000, respectively, from Le Coeur du
Monde Apartments compared to the same periods in the prior year. Total expenses
for the three and six months ended June 30, 2000 increased $434,000 and
$1,049,000, respectively, from the same periods a year earlier, again, primarily
due to the acquisition of Le Coeur du Monde Apartments. This new acquisition
incurred real estate operating expenses of $128,000, interest expense of
$200,000, depreciation expense of $77,000 and real estate tax expense of $31,000
during the three months ended June 30, 2000. For the six months ended June 30,
2000, Le Coeur du Monde Apartments incurred real estate operating expenses of
$248,000, interest expense of $401,000, depreciation expense of $154,000 and
real estate tax expense of $63,000.
For additional analysis, please refer to the discussions of the individual
properties below.
This report on Form 10-Q includes statements that constitute "forward
looking statements" within the meaning of Section 27(A) of the Securities Act of
1933 and Section 21(E) of the Securities Exchange Act of 1934 and that are
intended to come within the safe harbor protection provided by those sections.
By their nature, all forward looking statements involve risks and uncertainties
as further described in the Registrant's latest annual report on Form 10-K.
Actual results may differ materially from those contemplated by the forward
looking statements.
<PAGE>9
Liquidity and Capital Resources
-------------------------------
As of June 30, 2000, the Registrant had cash and cash equivalents of
approximately $452,000 in addition to $1,481,000 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 $775,000 less
than cash, cash equivalents and deposits held in escrow on December 31, 1999.
After increasing deposits held in escrow by $118,000, operating activities for
the six months ended June 30, 2000 generated approximately $767,000 of cash
flow, of which, $537,000 was invested in capital additions to the properties and
$350,000 was used to make principal payments on mortgage notes payable. In
addition, cash distributions amounting to approximately $892,000, were paid
in March 2000 to Unitholders of record on December 31, 1999.
Total outstanding debt at June 30, 2000, consisted of approximately
$51,276,000 of nonrecourse first mortgage notes secured by real estate owned by
the Registrant (see Note 4 to the Consolidated Financial Statements). Scheduled
maturities through regularly scheduled monthly payments will be approximately
$363,000 for the remainder of 2000. 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 payment of principal and interest. The Registrant has no other debt except
normal trade accounts payable and accrued interest on mortgage notes payable.
Halton Place is currently unencumbered, however, a mortgage note may be
placed on the property with the proceeds used as additional working capital and
to continue the expansion of the portfolio through the acquisition of additional
investments in real estate properties. Investigations of appropriate new
acquisitions are underway.
Inflation and changing prices during the current period did not
significantly affect the markets in which the Registrant conducts its business,
or the Registrant's business overall.
The Registrant's properties are expected to generate sufficient cash flow
to cover operating, financing, capital improvement costs, and other working
capital requirements of the Registrant for the foreseeable future.
<PAGE>10
Meadowwood Apartments (Reno, Nevada)
---------------------
Total revenues for the three months ended June 30, 2000 increased $18,000
to $1,137,000 from $1,119,000 for the three months ended June 30, 1999. Net
income after depreciation and mortgage interest expense for the three months
ended June 30, 2000 increased $48,000 to net income of $8,000 from a net loss of
$40,000 for the three months ended June 30, 1999. Higher revenues were, in part,
the result of increases in rental rates implemented at the property on new and
renewing leases which added $29,000 to total revenues in the current year.
Reduced tenant concessions added an additional $7,000 of revenue. These
increases were partially offset by a modest decrease in the average occupancy
rate of .8%, to 90.2% from 91.0% for the same period a year earlier, which
lowered revenues $12,000. Miscellaneous income was also approximately $6,000
less in the current year. The increase in net income is attributable to the net
increase in revenues coupled with a decrease in expenses primarily due to a
decrease in repairs and maintenance expense of $38,000. Costs related to
turnover of tenants were reduced in the current year as the rate of turnover
declined.
Total revenues for the six months ended June 30, 2000 increased $46,000 to
$2,252,000 from $2,206,000 for the six months ended June 30, 1999. Net income
after depreciation and mortgage interest expense increased $72,000 to net income
of $10,000 from a net loss of $62,000 for the six months ended June 30, 1999.
The increase in revenues was primarily the result of higher rental rates
implemented at the property on new and renewing leases, which added $59,000 to
revenues. Lower tenant concessions also added approximately $9,000. The
additional revenue was partially offset by a decrease in the average occupancy
rate of 2.90%, to 89.8% from 92.7% for the same period last year which,
decreased revenues approximately $22,000. Higher net income was due primarily to
the increase in revenues and a decrease of approximately $26,000 in total
expenses. Operating expenses decreased approximately $34,000, primarily due to a
reduction in repairs and maintenance costs of $45,000 from the period a year
earlier. Interest expense decreased $13,000 as the cumulative payments on the
principal outstanding reduced the interest due on the loan. Real estate tax
expense was slightly lower, decreasing $4,000. Partially offsetting these
reduced expenses were increases in professional fees of $17,000, and
depreciation expense of $9,000.
<PAGE>11
Holiday Park Apartments (Holiday, Florida)
-----------------------
Total revenues for the three months ended June 30, 2000 increased $1,000
to $308,000 from $307,000 for the three months ended June 30, 1999. Net income
after depreciation and mortgage interest expense for the three months ended June
30, 2000 decreased $14,000 to $15,000 from $29,000 for the three months ended
June 30, 1999. Although total revenues remained relatively stable, an increase
in rental rates on new and renewing leases added approximately $7,000 to
revenues, partially offset by additional tenant concessions which reduced
revenues $5,000. The continuing phase-in of the water and sewer billback program
that began in mid-1999 added $4,000 to other income in 2000. A slight decrease
in average occupancy of 1.7%, to 90.4% from 92.1% for the period a year earlier,
reduced revenues $5,000. The decrease in net income was a result of higher
operating expenses. Payroll and related costs increased approximately $8,000
after a new part-time leasing consultant was added to the staff. To increase
occupancy, marketing and advertising efforts were intensified, which added
approximately $7,000 to the expenses of the current year.
Total revenues for the six months ended June 30, 2000 increased $8,000 to
$618,000 from $610,000 for the six months ended June 30, 1999. Net income after
depreciation and mortgage interest expense for the six month period ended June
30, 2000 decreased $22,000 to $37,000 from $59,000 for the six months period
ended June 30, 1999. Higher revenues were due primarily to an increase of $8,000
in other income from the utility billback program. The reduction in net income
was a result of higher operating costs of $30,000 which more than offset the
increase in revenues. As the Tampa area is experiencing significant growth, and
there are no new multifamily communities planned in Holiday Park's immediate
vicinity, the Registrant believes occupancy will improve in future periods.
Cypress Key Apartments (Orlando, Florida)
----------------------
Total revenues for the three months ended June 30, 2000 increased $37,000
to $752,000 from $715,000 for the three months ended June 30, 1999. Net loss
after depreciation and mortgage interest expense for the three months ended June
30, 2000 increased $17,000 to $101,000 from $84,000 for the three months ended
June 30, 1999. The increase in total revenues is primarily the result of lower
tenant concessions which added revenues of $33,000. Average occupancy was 2.3%
higher adding revenues of $6,000, offset partially by a decrease of $2,000 in
miscellaneous income. The increase in net loss was due to an increase in total
expenses of $54,000 as the property was operated at higher occupancy levels.
Additional costs included repairs and maintenance expense of $26,000, payroll of
$15,000, real estate tax of $8,000 and depreciation expense $5,000.
Total revenues for the six months ended June 30, 2000 increased $129,000
to $1,530,000 from $1,401,000 for the six months ended June 30, 1999. Net loss
after depreciation and mortgage interest expense for the six month period ended
June 30, 2000 decreased $39,000 to $163,000 from $202,000 for the six months
ended June 30, 1999. Higher revenues were primarily the result of an increase in
average occupancy at the property of 5.5%, to 94.1% for the six months ended
June 30, 2000, from 88.6% for the same period a year earlier. The higher average
occupancy increased revenues approximately $70,000. Reduced tenant concessions
added approximately $22,000 of revenues, and other income rose $37,000 as well,
due primarily to water and sewer income from the billback program that began in
early 1999. The decrease in net loss was primarily due to higher revenues,
partially offset by increases in expenses totaling $90,000. Operating expenses
increased approximately $58,000 as the property was operated at higher occupancy
levels. Real estate tax expense was $21,000 higher, and additional depreciation
expense of $11,000 resulted from the depreciation of furnishings and capital
improvements placed in service throughout 1999.
<PAGE>12
Halton Place Apartments (Greenville, South Carolina)
-----------------------
Total revenues for the three months ended June 30, 2000 increased $35,000
to $439,000 from $404,000 for the three months ended June 30, 1999. Net income
after depreciation expense for the three months ended June 30, 2000 increased
$26,000 to $153,000 from $127,000 for the three months ended June 30, 1999. The
increase in revenue is due primarily to lower tenant concessions which increased
revenues $17,000, and higher occupancy which increased revenues $12,000. There
was also a corresponding rise in other income of $6,000. The increase in net
income is primarily the result of higher revenues, offset by a small increase of
$2,000 in operating expenses, as well as an increase in depreciation expense of
$7,000 as new assets were placed in service and depreciated.
Total revenues for the six months ended June 30, 2000 increased $36,000 to
$857,000 from $821,000 for the six months ended June 30, 1999. Net income after
depreciation expense for the six months ended June 30, 2000 decreased $43,000 to
$256,000 from $299,000 for the six months ended June 30, 1999. The increase in
total revenues is primarily a result of fewer tenant concessions during the
current year which added $34,000 of revenues. The decrease in net income is
primarily due to increases in operating expenses from the same period a year
earlier. Repairs, maintenance and payroll costs were approximately $36,000
higher in the current year as apartments were prepared for new tenants.
Utilities expense was $16,000 higher due to the severe weather experienced
during the early part of 2000, while expenses for advertising and promotion rose
$8,000 as efforts to market the property and attract new tenants were
intensified. Depreciation expense increased $14,000 as new assets were placed in
service and depreciated, and real estate taxes increased $5,000.
Le Coeur du Monde Apartments (St. Louis, Missouri)
----------------------------
On September 29, 1999, the Registrant purchased Le Coeur du Monde
Apartments for $13,325,000. In connection with the purchase, the Registrant
obtained a first mortgage loan of $10,303,000 with a FNMA DUS program lender.
The mortgage loan is secured by the property, bears interest at 7.805% per annum
and matures on October 1, 2009. (Refer also to Footnote 3 of the Consolidated
Financial Statements, and Form 8-K as amended on December 13, 1999, in
connection with these transactions.)
Total revenues for the three months ended June 30, 2000 were$399,000. Net loss
after depreciation and mortgage interest expense was $41,000. Average occupancy
for the period was 85.7%. Total revenues for the six months ended June 30, 2000
were $817,000. Net loss after depreciation and mortgage interest expense was
$56,000 for the six months ended June 30, 2000. Average occupancy for the
period was 87.5%. Since acquisition, the resident profile has been improved
to conform to higher leasing standards. In an ongoing effort to increase
occupancy, the Registrant plans to paint the exterior walls, trim, railings and
balconies during the remainder of 2000. The Registrant also plans to upgrade
the signage for better drive-by visibility.
<PAGE>13
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2000
---------------------------------------------------
Not Applicable
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
None.
All other item numbers are omitted because
they are not applicable.
<PAGE>14
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 14, 2000 By: /s/ John H. Streicker
--------------------------
John H. Streicker
President
Dated: August 14, 2000 By: /s/ Elizabeth B. Longo
---------------------------
Elizabeth B. Longo
Chief Financial Officer
(Principal Financial Officer)
Dated: August 14, 2000 By: /s/ George N. Tietjen
---------------------------
George N. Tietjen III
Senior Vice President
(Principal Accounting Officer)
