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 September 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
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(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)
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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
September 30, 2000 and December 31, 1999....................1
Consolidated Statements of Operations
for the three and nine months ended
September 30, 2000 and 1999.................................2
Consolidated Statements of Changes in Partners' Capital
for the nine months ended September 30, 2000
and the years ended December 31, 1999 and 1998..............3
Consolidated Statements of Cash Flows
for the nine months ended September 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
September 30, 2000 (Unaudited) and
December 31, 1999 (Audited, but not covered by the report of independent public accountants)
--------------------------------------------------------------------------------------------
<CAPTION>
September 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 76,292,860 75,564,949
Less - accumulated depreciation (18,391,112) (16,654,948)
------------ ------------
65,678,901 66,687,154
Other assets -
Cash and cash equivalents 500,509 1,344,906
Cash held by lenders in escrow 1,654,668 1,362,890
Other 719,478 905,734
------------ ------------
Total assets $ 68,553,556 $ 70,300,684
============ ============
Liabilities:
Mortgage notes payable $ 51,096,508 $ 51,626,658
Accounts payable and accrued expenses 1,062,422 670,253
Tenant security deposits 258,696 292,723
------------ ------------
Total liabilities 52,417,626 52,589,634
------------ ------------
Partners' Capital:
Units of partnership interest without par value;
Limited partners - 7,753 units 16,152,284 17,727,201
General partner - 1 unit (16,354) (16,151)
------------ ------------
Total partners' capital 16,135,930 17,711,050
------------ ------------
Total liabilities and partners' capital $ 68,553,556 $ 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 Nine Months
Ended September 30, Ended September 30,
------------------------- -------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Rental income $3,047,233 $2,529,822 $8,813,137 $7,340,943
Interest on short-term investments 7,607 60,003 34,332 197,333
Other 156,404 140,914 467,111 370,597
---------- ---------- ---------- ----------
Total revenues 3,211,244 2,730,739 9,314,581 7,908,873
---------- ---------- ---------- ----------
Expenses:
Real estate operating expenses 1,338,004 1,098,268 3,796,892 3,195,747
Interest on mortgage notes payable 926,553 742,196 2,789,330 2,225,433
Depreciation and amortization 608,399 503,141 1,800,989 1,499,382
Real estate taxes 280,105 239,881 838,085 714,871
Management fees 202,662 191,465 605,097 550,528
Other 25,054 94,398 167,654 251,675
---------- ---------- ---------- ----------
Total expenses 3,380,778 2,869,349 9,998,048 8,437,636
---------- ---------- ---------- ----------
Net loss (169,534) (138,610) (683,467) (528,763)
Loss allocated to general partner (22) (18) (88) (68)
---------- ---------- ---------- ----------
Loss allocated to limited partners $ (169,512) $ (138,592) $ (683,379) $ (528,695)
========== ========== ========== ==========
Net Loss Per Unit of Limited Partnership Interest $ (21.87) $ (17.88) $ (88.15) $ (68.20)
========== ========== ========== ==========
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 nine months ended September 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 (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 (683,379) (683,379)
----- ------------ ------------ ----------- -----------
Balance, September 30, 2000 7,753 $119,968,973 $(99,395,111) $(4,421,578) $16,152,284
===== ============ ============ =========== ===========
<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 (88) (88)
---- ------- -------- ------- --------
Balance, September 30, 2000 1 $10,000 $(24,774) $(1,580) $(16,354)
==== ======= ======== ======= ========
<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 Nine Months Ended
September 30,
-------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Loss $ (683,467) $ (528,763)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization 1,800,989 1,499,382
Increase in other operating assets (170,347) (507,490)
Increase in other operating liabilities 358,142 460,790
----------- ------------
Net cash provided by operating activities 1,305,317 923,919
----------- ------------
Cash Flows Used In Investing Activities:
Purchase of investment in real estate property 0 (13,334,127)
Capital additions to real estate owned (727,911) (1,492,996)
----------- ------------
Net cash used in investing activities (727,911) (14,827,123)
----------- ------------
Cash Flows Used In Financing Activities:
Proceeds from mortgage note payable 0 10,303,000
Distributions paid to partners (891,653) (775,350)
Principal payments on mortgage notes payable (530,150) (430,808)
Increase in deferred financing costs 0 (148,761)
----------- ------------
Net cash provided by (used in) financing activities (1,421,803) 8,948,081
----------- ------------
Net decrease in cash and cash equivalents (844,397) (4,955,123)
Cash and cash equivalents, beginning of period 1,344,906 6,585,252
----------- ------------
Cash and cash equivalents, end of period $ 500,509 $ 1,630,129
=========== ============
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 2,791,090 $ 2,227,164
=========== ============
<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 SEPTEMBER 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 nine
month periods ended September 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 nine month periods ended
September 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 September 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 September
30, 2000 and December 31, 1999:
<TABLE>
<CAPTION>
Real Estate at Cost
No.of Year of ------------------------
Type Prop. Acquisition Description 9/30/00 12/31/99
---- ----- ----------- ----------- ------- --------
<S> <C> <C> <C> <C> <C>
Residential properties 5 1983-99 1,746 Apt. Units $ 84,025,626 $ 83,297,715
Undeveloped land 1 1978 13.9 Acres 44,387 44,387
------------ ------------
84,070,013 83,342,102
Less: Accumulated depreciation (18,391,112) (16,654,948)
------------ ------------
$ 65,678,901 $ 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 September 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 $ 3,692,434 $ 3,725,654
Meadowwood 7.550% 1/04 1,914,996 18,979,461 20,271,949 20,551,431
Cypress Key 6.605% 1/09 1,322,707 14,772,418 16,910,855 17,061,002
Le Coeur du Monde(b) 7.805% 10/09 890,447 9,075,763 10,221,270 10,288,571
----------- -----------
$51,096,508 $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 NINE MONTHS ENDED SEPTEMBER 30, 2000
----------------------------------------------------------------
General
-------
The consolidated financial statements as of and for the three and nine
month periods ended September 30, 2000 reflect the operations of five
residential garden apartment properties. The consolidated financial statements
for the three and nine month periods ended September 30, 1999 reflect the
operations of four residential garden apartment properties.
Total revenues for the three months ended September 30, 2000 increased
$470,000 to approximately $3,211,000 from approximately $2,741,000 for the three
month period ended September 30, 1999. Net loss for the three months ended
September 30, 2000 increased $31,000 to approximately $170,000 from
approximately $139,000 for the three months ended September 30, 1999.
Total revenues for the nine months ended September 30, 2000 increased
$1,406,000 to approximately $9,315,000 from approximately $7,909,000 for the
nine months ended September 30, 1999. The net loss for the nine months ended
September 30, 2000 increased $154,000 to approximately $683,000 from
approximately $529,000 for the nine months ended September 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 nine month periods ended September 30, 2000
include additional revenues of $439,000 and $1,257,000, respectively, from
Le Coeur du Monde Apartments compared to the same periods in the prior year.
Total expenses for the three and nine months ended September 30, 2000 increased
$511,000 and $1,560,000, 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 $136,000, interest
expense of $200,000, depreciation expense of $79,000 and real estate tax expense
of $31,000 during the three months ended September 30, 2000. For the nine months
ended September 30, 2000, Le Coeur du Monde Apartments incurred real estate
operating expenses of $385,000, interest expense of $601,000, depreciation
expense of $233,000 and real estate tax expense of $94,000.
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 September 30, 2000, the Registrant had cash and cash equivalents of
approximately $501,000 in addition to $1,655,000 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 $553,000 less
than cash, cash equivalents and deposits held in escrow on December 31, 1999.
After increasing deposits held in escrow by $292,000, operating activities for
the nine months ended September 30, 2000 generated approximately $1,305,000 of
cash flow, of which, $728,000 was invested in capital additions to the
properties and $530,000 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 September 30, 2000, consisted of approximately
$51,097,000 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
$183,000 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 September 30, 2000 increased
$42,000 to $1,225,000 from $1,183,000 for the three months ended September 30,
1999. Net loss after depreciation and mortgage interest expense for the three
months ended September 30, 2000 increased $33,000 to a net loss of $17,000 from
net income of $16,000 for the three months ended September 30, 1999. Higher
revenues were primarily the result of higher occupancy levels in the current
year. Average occupancy increased 2.3%, to 96% from 93.7% for the same period a
year earlier, adding $40,000 to revenues. Increases in rental rates implemented
at the property on new and renewing leases added $19,000 to total revenues, and
reduced tenant rent concessions added an additional $5,000 of revenue. Partially
offsetting the additional revenues was a decrease in miscellaneous income of
$22,000, as income arising from corporate tenants in 1999 was not realized
in the current period. The increase in net loss is attributable to higher
expenses in the current year that more than offset the net increase in revenues
described above. Repairs and maintenance costs were $40,000 higher in the
current year as landscaping work was completed and additional costs were
incurred preparing apartments for new tenants. Depreciation expense was $11,000
higher, as were expenses for utilities. Advertising and promotion expenses
increased $8,000 as additional efforts were made to attract and retain
new tenants.
Total revenues for the nine months ended September 30, 2000 increased
$88,000 to $3,477,000 from $3,389,000 for the nine months ended September 30,
1999. Net loss after depreciation and mortgage interest expense decreased
$38,000 to $7,000 from $45,000 for the nine months ended September 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 $78,000 to revenues. An
increase in average occupancy added $13,000 of revenue as the average occupancy
rate increased 0.7%, to 92.0% from 91.3% for the same period last year. Lower
tenant rent concessions also added approximately $15,000 to total revenues. Net
loss was reduced primarily as a result of the additional revenues realized in
the current period, partially offset by increased expenses, including an
increase of $20,000 of depreciation expense, $14,000 in utilities expense,
$10,000 in professional fees, and $5,000 of insurance expense.
<PAGE>11
Holiday Park Apartments (Holiday, Florida)
-----------------------
Total revenues for the three months ended September 30, 2000 increased
$24,000 to $324,000 from $300,000 for the three months ended September 30, 1999.
Net income after depreciation and mortgage interest expense for the three months
ended September 30, 2000 increased $19,000 to $36,000 from $17,000 for the three
months ended September 30, 1999. Higher revenues were primarily due to an
increase of 1% in the average occupancy rate, to 91.4% from 90.4% for the period
a year earlier, which added $10,000 to revenues, while higher rental rates on
new and renewing leases added approximately $5,000 to revenues. Revenue from
miscellaneous items was $8,000 higher, in part as a result of the water and
sewer billback program that began in mid-1999. The increase in net income was
primarily a result of the increase in revenues, partially offset by a net
increase in operating expenses. Repairs and maintenance costs were $13,000
higher as more units were prepared for new tenants, however, utilities expense
was $8,000 lower.
Total revenues for the nine months ended September 30, 2000 increased
$31,000 to $941,000 from $910,000 for the nine months ended September 30, 1999.
Net income after depreciation and mortgage interest expense for the nine month
period ended September 30, 2000 decreased $3,000 to $73,000 from $76,000 for the
nine months period ended September 30, 1999. Higher revenues were due primarily
to increases in rental rates on new and renewing leases which added $18,000 of
revenues, and an increase of $13,000 in other income from the water and sewer
billback program. Net income was reduced as total expenses were $35,000 higher
in the current year as compared to the prior year, more than offsetting the
increase in revenues. Increased costs of operating the property at higher
occupancy levels included additional repairs and maintenance costs of $12,000
and payroll costs of $3,000. Advertising and promotion costs were $5,000 higher
as the property intensified efforts to maintain market share. Other increased
costs included insurance costs of $2,000 and depreciation expense of $3,000. 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 continue to improve in future periods.
Cypress Key Apartments (Orlando, Florida)
----------------------
Total revenues for the three months ended September 30, 2000 decreased
$11,000 to $765,000 from $776,000 for the three months ended September 30, 1999.
Net loss after depreciation and mortgage interest expense for the three months
ended September 30, 2000 increased $53,000 to $91,000 from $38,000 for the three
months ended September 30, 1999. While increases in rental rates implemented at
the property on new and renewing leases added $6,000 to revenues, additional
tenant rent concessions of $18,000 were made in the current period in order to
maintain market share. The increase in net loss was due, in part, to the lower
revenues, and to an increase in total expenses of $42,000. Additional costs
included repairs and maintenance expense of $23,000, payroll of $7,000, real
estate tax of $8,000 and depreciation expense $5,000.
Total revenues for the nine months ended September 30, 2000 increased
$118,000 to $2,295,000 from $2,177,000 for the nine months ended September 30,
1999. Net loss after depreciation and mortgage interest expense for the nine
month period ended September 30, 2000 increased $15,000 to $255,000 from
$240,000 for the nine months ended September 30, 1999. Higher revenues were
primarily the result of an increase in average occupancy at the property of
3.2%, to 93.8% for the nine months ended September 30, 2000, from 90.6% for the
same period a year earlier. The higher average occupancy increased revenues
approximately $59,000. Other income rose $45,000, due primarily to water and
sewer income from the billback program that began in early 1999. The increase in
net loss was primarily due to increases in expenses totaling $132,000, which
more than offset the additional revenues. Operating expenses increased
approximately $125,000 as the rate of turnover of tenants accelerated in the
current year, and the property was operated at higher occupancy levels. Repairs
and maintenance costs were $68,000 higher as apartments were made ready for new
tenants, payroll costs increased $14,000, and there were additional expenses of
$6,000 for advertising and promotion. Real estate tax expense was $29,000
higher, and additional depreciation expense of $16,000 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 September 30, 2000 increased
$40,000 to $439,000 from $399,000 for the three months ended September 30, 1999.
Net income after depreciation expense for the three months ended September 30,
2000 increased $61,000 to $157,000 from $96,000 for the three months ended
September 30, 1999. The increase in revenue is due primarily to fewer tenant
rent concessions which increased revenues $21,000, and higher occupancy which
increased revenues $18,000. Average occupancy increased 2.6%, to 92.8% for the
three months ended September 30, 2000, from 90.2% for the same period a year
earlier. The increase in net income is primarily the result of higher revenues,
augmented by lower operating expenses. Repairs and maintenance costs were
reduced $11,000 as the rate of turnover and the resulting turnover expenses
slowed, and expenses for advertising and promotion were reduced $10,000 as the
need for promotion eased in the current period.
Total revenues for the nine months ended September 30, 2000 increased
$76,000 to $1,296,000 from $1,220,000 for the nine months ended September 30,
1999. Net income after depreciation expense for the nine months ended September
30, 2000 increased $17,000 to $413,000 from $396,000 for the nine months ended
September 30, 1999. The increase in total revenues is primarily a result of
lower tenant rent concessions during the current period which added $55,000 of
revenues, and an increase in average occupancy of 1.2%, to 92.3% from 91.1% for
the same period a year earlier, which added $15,000 to revenues. The increase in
net income is primarily due to the additional revenues realized in the current
year, partially offset by higher operating expenses. Repairs and maintenance
costs were $16,000 higher in the current year as more apartments were prepared
for new tenants. Utilities expense was $17,000 higher, primarily due to the
severe weather experienced in the region during the early part of 2000, and
depreciation expense increased $22,000 as new assets were placed in service and
depreciated.
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 September 30, 2000 were
$449,000. Net loss after depreciation and mortgage interest expense was $1,000.
Average occupancy for the period was 91.6%. Total revenues for the nine months
ended September 30, 2000 were $1,267,000. Net loss after depreciation and
mortgage interest expense was $57,000. Average occupancy for the nine month
period was 89.3%. Since acquisition, the resident profile has been improved to
conform to higher leasing standards. Efforts to raise the average occupancy
level are showing results as the occupancy rate continues to rise. 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 NINE MONTHS ENDED SEPTEMBER 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: November 14, 2000 By: /s/ John H. Streicker
--------------------------
John H. Streicker
President
Dated: November 14, 2000 By: /s/ Elizabeth B. Longo
---------------------------
Elizabeth B. Longo
Chief Financial Officer
(Principal Financial Officer)
Dated: November 14, 2000 By: /s/ George N. Tietjen
---------------------------
George N. Tietjen III
Senior Vice President
(Principal Accounting Officer)
