-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vit+dsyKXDmFRbRscEEwfq0y7ohzNWbNs3/zGMyg2HA6x6tXSM2RWroRacphxUtR CT6gS1K6HGYYQozqqEfisg== 0000948524-97-000009.txt : 19970303 0000948524-97-000009.hdr.sgml : 19970303 ACCESSION NUMBER: 0000948524-97-000009 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961130 FILED AS OF DATE: 19970228 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOONEY REAL PROPERTY INVESTORS FOUR L P CENTRAL INDEX KEY: 0000700720 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 431250566 STATE OF INCORPORATION: MO FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-11023 FILM NUMBER: 97546801 BUSINESS ADDRESS: STREET 1: 7701 FORSYTH BLVD CITY: ST LOUIS STATE: MO ZIP: 63105 BUSINESS PHONE: 3148637700 MAIL ADDRESS: STREET 1: 7701 FORSYTH BLVD CITY: ST LOUIS STATE: MO ZIP: 63105 10-K405 1 ANNUAL REPORT 11/30/96 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - --- EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended November 30, 1996 ------------------------------------------------------- OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - --- EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to --------------------- --------------------------- Commission file number 0-11023 ------- NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Missouri 43-1250566 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer) incorporation or organization) Identification No.) 7701 Forsyth Boulevard, St. Louis, Missouri 63105 - ------------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (314) 863-7700 ------------------------------ - -------------------------------------------------------------------------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered ------------------- -------------------------------------------- None Not Applicable - ---------------------------- -------------------------------------------- Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Interests ----------------------------- (Title of Class) 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. Yes X No . --- --- Page 1 of 32 Pages Exhibit Index located on Page 17 X Indicate by check mark if disclosure of delinquent filers pursuant to - --- Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. As of February 1, 1997, the aggregate market value of the Registrant's units of limited partnership interest (which constitute voting securities under certain circumstances) held by non-affiliates of the Registrant was $13,529,000. (The aggregate market value was computed on the basis of the initial selling price of $1,000 per unit of limited partnership interest, using the number of units not beneficially owned on February 1, 1997 by the General Partners or holders of 10% or more of the Registrant's limited partnership interests. The initial selling price of $1,000 per unit is not the current market value. Accurate pricing information is not available because the value of the units of limited partnership interests is not determinable since no active secondary market exists. The characterization of such General Partners and 10% holders as affiliates is for the purpose of this computation only and should not be construed as an admission for any purpose that any such persons are, or other persons not so characterized are not, in fact, affiliates of the Registrant). Documents incorporated by reference: Portions of the Prospectus of the Registrant dated April 8, l982, as supplemented and filed pursuant to Rule 424(c) of the Securities Act of 1933, are incorporated by reference in Part III of this Annual Report on Form 10-K. -2- PART I ITEM 1: BUSINESS It should be noted that this 10-K contains forward-looking information (as defined in the Private Securities Litigation Reform Act of 1995) that involves risk and uncertainty, including trends in the real estate investment market, projected leasing and sales, and the future prospects for the Registrant. Actual results could differ materially from those contemplated by such statements. Nooney Real Property Investors-Four, L.P. (the "Registrant") is a limited partnership formed under the Missouri Uniform Limited Partnership Law on February 9, 1982, to invest, on a leveraged basis, in income-producing real properties such as shopping centers, office buildings, apartment complexes, office/warehouses and other commercial properties. The Registrant originally invested in five real property investments. During fiscal 1990, one of the Registrant's properties, Yankee Square I Office Building in Eagan, Minnesota, was sold to an individual unaffiliated with the Registrant. During fiscal 1991, one of the Registrant's properties, Courtyard Office Building in Creve Coeur, Missouri, was conveyed by deed in lieu of foreclosure to Courtyard Office Building, Inc., the assignee of Courtyard Associates, in order to satisfy the default that existed under the mortgage note held by Courtyard Associates. On December 22, l983, the Registrant purchased the Quad I Office/Warehouse Building ("Quad I") located at 1680- 1758 Westbelt Drive in Columbus, Ohio. During fiscal 1993, Quad I Warehouse was sold to a party unaffiliated with the Registrant. The Registrant's primary investment objectives are to preserve and protect the Limited Partners' capital and obtain long-term appreciation in the value of its properties. The term of the Registrant is until December 31, 2082. It was originally anticipated that the Registrant would sell or refinance its properties within approximately five to ten years after their acquisition. The depression of real estate values experienced nationwide from 1988 to 1993 lengthened this time frame in order to achieve the goal of capital appreciation. The real estate investment market began to improve in 1994, continued this improvement in 1995 and 1996, and is expected to further continue its improvement over the next several years. Management believes this trend should increase the value of Woodhollow in the future. The sale value of Cobblestone Court will be dependent on the Registrant's ability to obtain financing to re- roof the property and re-lease its vacant spaces as discussed later. The Registrant is intended to be self-liquidating and proceeds, if any, from the sale or refinancing of the Registrant's real property investments will not be invested in new properties but will be distributed to the Partners or, at the discretion of the General Partners, applied to capital improvements to, or the payment of indebtedness with respect to, existing properties, the payment of other expenses or the establishment of reserves. (See Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations.) -3- The business in which the Registrant is engaged is highly competitive. The Registrant's investment properties are located in or near major urban areas and are subject to competition from other similar types of properties in such areas. The Registrant competes for tenants for its properties with numerous other real estate limited partnerships, as well as with individuals, corporations, real estate investment trusts and other entities engaged in real estate investment activities. Such competition is based on such factors as location, rent schedules and services and amenities provided. The Registrant has no employees. Property management services for the Registrant's investment properties are provided by Nooney Krombach Company, an affiliate of the General Partners. ITEM 2: PROPERTIES On February 16, l982, the Registrant purchased the Cobblestone Court Shopping Center ("Cobblestone"), located at 14150 Nicollet Avenue South in Burnsville, Minnesota, a suburb of Minneapolis. Cobblestone, which contains approximately 98,000 net rentable square feet, was constructed in l980 of brick and concrete with a wood facade covering a portion of an enclosed pedestrian walkway. Cobblestone is located on an 11 acre site which provides paved parking for 605 cars. The purchase price of Cobblestone was $5,882,318. Cobblestone was 84% leased by 16 tenants at year end. On July 28, l982, the Registrant purchased the Woodhollow Apartments ("Woodhollow"), a 402- unit garden apartment complex located on Dorsett Road in west St. Louis County, Missouri. The complex, which was constructed in phases in l971 and l972, consists of 17 buildings containing one, two and three bedroom apartments. The complex is located on a 26 acre site which provides paved parking for 707 cars. The purchase price of Woodhollow was $12,665,147. Woodhollow was 95% occupied at year end. Reference is made to Note 3 to Notes to Financial Statements filed herewith as Exhibit 99.3 in response to Item 8 for a description of the mortgage indebtedness secured by the Registrant's real property investments. -4- The following table sets forth certain information as of November 30, 1996, relating to the properties owned by the Partnership.
AVERAGE ANNUALIZED EFFECTIVE TOTAL BASE RENT PRINCIPAL TENANTS SQUARE ANNUALIZED PER SQUARE PERCENT OVER 10% OF PROPERTY LEASE PROPERTY FEET BASE RENT FOOT LEASED BASE RENT REVENUES (%) EXPIRATION - ----------------- --------- ---------- ----------- ------- ------------------------ ---------- Cobblestone Court 97,718 $ 650,860 $7.91 84% T.J. Maxx (20%) 2001 Shopping Center Old Country Buffet (14%) 2000 Touch of Countree (11%) 1997 Woodhollow 402 Units $2,202,012 $6,478/unit 95% None Apartments
ITEM 3: LEGAL PROCEEDINGS The Registrant is not a party to any material pending legal proceedings. ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the fourth quarter of fiscal 1996. PART II ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS As of February 1, 1997, there were 1,354 record holders of Interests in the Registrant. There is no public market for the Interests, and it is not anticipated that a public market will develop. There were no cash distributions paid to the Limited Partners during fiscal 1995 or fiscal 1996. -5- ITEM 6: SELECTED FINANCIAL DATA
Year Ended November 30, ----------------------------------------------------------------------- 1996 1995 1994 1993 1992 (Not covered by independent auditors' report) Rental and other income $ 3,505,163 $ 3,391,439 $ 3,281,516 $ 3,345,802 $ 3,385,187 Net loss (18,733) (151,835) (405,172) (324,856) (771,085) Data per limited partnership unit - net loss (1.36) (11.03) (29.43) (23.60) (56.01) Weighted average limited partnership units outstanding 13,529 13,529 13,529 13,529 13,529 At year-end: Total assets 11,211,633 11,322,989 11,789,994 12,303,761 14,790,938 Investment property - net 10,678,208 10,705,962 11,170,661 11,750,886 14,054,978 Mortgage notes payable 12,529,484 12,628,720 12,721,302 12,850,500 14,846,620 Partners' deficiency in assets (1,494,197) (1,475,464) (1,323,629) (918,457) (593,601)
See Item 7: Management's Discussion and Analysis for discussion of comparability of items. -6- ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources Cash reserves as of November 30, 1996 are $211,840, a decrease of $63,983 from the year ended November 30, 1995. The decrease in cash from year end 1995 to 1996 is attributable to the decrease in revenues produced from Cobblestone Court Shopping Center. The anticipated capital expenditures during 1997 are: Leasing Operating Other Capital Capital Capital Total ------- ------- ------- ----- Woodhollow Apartments $ 0 $61,352 $390,972 $452,324 Cobblestone Court 85,512 0 425,000 510,512 ------------------------------------------------ $85,512 $61,352 $815,972 $962,836 At Woodhollow Apartments, operating capital will be spent for carpet and vinyl replacement, hot water heaters and other appliances. In 1997, the Registrant anticipates spending $314,443 from the capital reserve escrow for Phase II of the renovation program. The remainder of the other capital expenditures ($76,529) will be for the cost of replacing air conditioning units, signage, tie wall and concrete replacement. Forecasted capital expenditures at Cobblestone Court relate to building out tenant spaces, brokerage lease commissions and replacement of the roof which is in serious disrepair. Due to the roof leaks, several tenants are threatening to or have ceased making rental payments. In addition, several tenants have indicated they plan to implement a lawsuit against the Registrant for damages. Subsequent to year-end, one tenant has filed a lawsuit. The Registrant is currently working with the holder of the mortgages for an increase in the balance of the second mortgage, sufficient to cover the cost of the re-roofing once spring arrives in Minnesota. The outcome of any lawsuits cannot be determined at this time. During 1994, the Registrant negotiated with the first mortgage lender on Woodhollow Apartments an extension of the maturity of its note which matured August 1, 1994. Under the modification, the note, with a principal balance of $8,276,961, was extended for an additional seven years reducing the interest rate from 10-3/8% to 9-1/8%. During the first three years, the payments are interest only, thereafter the Registrant will pay principal based on a 15-year amortization schedule. Principal payments will commence September 1, 1997. In connection with the refinancing, the Registrant was required to establish a capital reserve escrow account to fund certain deferred capital improvements including new siding, parking lot upgrades and common area renovations estimated to cost approximately $900,000. In 1996, Phase I of the capital renovation program was completed and $283,483 of the capital reserve escrow was spent. During 1996, the first mortgage holder on Cobblestone Court agreed to extend the first mortgage several times on a short term basis while the Registrant attempted to sell the property. In the fall of 1996, the first mortgage holder indicated they were unwilling to extend the loan any further and demanded a payment in full. The holder of the second mortgage agreed to pay off the first mortgage holder and enter into a new first mortgage with the Registrant. This transaction was completed -7- subsequent to year-end in December 1996. The new first mortgage is for a balance of $2,603,049. The note requires interest only payments at LIBOR plus 2.75% commencing February 1, 1997 to May 1, 1997 when the entire principal balance is due. Upon sale of the property, the note also requires a payment of $100,000 as a loan fee to the first mortgage holder. In December 1996, the holder of the second mortgage on Cobblestone Court and the second mortgage on Woodhollow Apartments also extended those notes until May 1, 1997. The note secured by Cobblestone Court Shopping Center is at an interest rate of LIBOR plus 2.75% and requires interest only payments. The note secured by Woodhollow Apartments is at 1% over the banks prime rate and also requires monthly principal payments of $1,000 per month. The future liquidity of the Registrant is dependent on its ability to fund future capital expenditures and mortgage payments from operations and cash reserves, maintain occupancy and negotiate with lenders the refinancing of mortgage debt as it matures, and the sale of Cobblestone Court at a price sufficient to cover required obligations. Until such time as the real estate market recovers, the Registrant will continue to manage the properties to achieve its investment objectives. Results of Operations The results of operations for the Registrant's properties for the year ended November 30, 1996, 1995 and 1994 are detailed in the schedule below. The information contained in the schedule are the results of operations for each property. Expenses of the Registrant are excluded. Woodhollow Cobblestone Court Apartments Shopping Center ---------- --------------- 1996 ---- Revenues $2,368,763 $1,125,543 Expenses 2,397,699 1,043,807 ------------------------------------ Net Income (Loss) $ (28,936) $ 81,736 ==================================== 1995 ---- Revenues $2,161,325 $1,230,146 Expenses 2,307,419 1,179,866 ------------------------------------ Net Income (Loss) $ (146,094) $ 50,280 ==================================== 1994 ---- Revenues $2,059,244 $1,209,300 Expenses 2,422,264 1,164,660 ------------------------------------ Net Income (Loss) $ (363,020) $ 44,640 ==================================== -8- At Cobblestone Court, revenues decreased ($104,604) from 1995 to 1996 consisting of a decrease in base rent revenues ($48,610), percentage rent ($14,473), common area maintenance income ($25,568) and real estate tax reimbursements ($12,017). The revenues decreased due to the decrease in occupancy from one year to the next. Expenses at Cobblestone Court decreased significantly due substantially to a decrease in depreciation expense ($149,424) as Cobblestone Court was held for sale during all of 1996, no depreciation was taken, as the property is recorded below its net realizable value. In addition, parking lot expenses decreased ($8,648) and administrative expenses decreased ($6,276). These decreases in expenses were offset by increases in repairs and maintenance ($4,200), snow removal ($10,617), real estate taxes ($16,784), and vacancy expense ($9,025). The property was under contract for sale from June through November of 1996. During this time, no attempt was made to lease the vacant space as the prospective purchaser had plans to do a reconfiguration and renovation of the Center. The purchaser exercised its right to cancel the contract during the due diligence period. The property was then placed back on the market and attempts were made to get the property under contract again. Another prospective purchaser went through substantial due diligence measures in December 1996 and January 1997 before ultimately deciding in February 1997 to not pursue purchasing the center. The Registrant is currently working with a new local brokerage firm in Minneapolis to sell the Center. The Registrant will need to re-roof the Center before it will be able to successfully complete a sale. The operating results at Woodhollow Apartments continue to improve. The increased revenue over the past three years can be attributable to an overall improvement of the apartment market in the St. Louis Metropolitan area. The improved market has allowed rent rates to increase year-by-year while occupancies remain at high levels. Expenses at Woodhollow Apartments increased from 1995 to 1996 due mainly to increases in depreciation expense ($49,173) due to the capital renovation program getting under way, cleaning ($19,520), administrative expenses ($7,355), corporate unit expenses ($37,994), repairs and maintenance ($24,227). These increases in expenses were offset by decreases in electric for corporate units ($7,717), fire and crime prevention ($6,933), payroll maintenance ($12,958), and painting ($9,266). The occupancy levels at the Registrants properties as of November 30 were: Occupancy rates at November 30 1996 1995 1994 ------------------------------------- Woodhollow Apartments 95% 93% 93% Cobblestone Court 84% 92% 99% At Woodhollow Apartments, the occupancy increased during 1996 due to the beginning of the capital renovation program and the overall improvement in the appearance of the property as well as overall generally favorable apartment market conditions. The Registrant expects this trend to continue in the future years. Occupancy at Cobblestone Court remained at 84% during the fourth quarter. As previously indicated no leasing activity occurred as the property was under contract for sale and the prospective purchaser did not wish any new leasing to be performed. The center has one major tenant who occupies -9- approximately 26% of the available space under a lease which expires in January 2001. Another major tenant occupies approximately 7 1/2% of the available space under a lease which expires April 2000. The final major tenant occupies approximately 10% of the available space and is on a month-to-month lease. The tenant has indicated that they wish to downsize from 10,000 square feet to 7,000 square feet and the Registrant is working with them on a renewal lease. 1996 Comparisons As of November 30, 1996, the Registrants consolidated revenues are $3,512,832 compared to $3,395,026 for the year-ended November 30, 1995. This increase in revenues is $117,806 or 3.5%. The increase in revenues is attributable to Woodhollow Apartments where increases were $207,438 versus a decrease in revenue at Cobblestone Court of $104,603. Woodhollow Apartments revenues increased due to the strengthening market and the Registrant's ability to increase rental rates throughout the year. The Registrant's consolidated expenses for the year-ended November 30, 1996 and 1995 were $3,531,565 and $3,546,861 respectively. The decrease in expenses from 1995 to 1996 was $15,296 or less than 1% and was attributable to a decrease in depreciation and amortization expense of $151,820 and offset by an increase in other operating expenses of $131,147. The decrease in depreciation expense is attributable to Cobblestone Court. As previously indicated, since the property has been held for sale during all of 1996, no depreciation was taken. Other operating expenses increased mainly at Woodhollow Apartments for expenses in cleaning, repairs and maintenance, administrative and corporate units. The increase in consolidated revenue combined with the relatively flat consolidated expenses produced the Registrants net loss of $18,733 for the year-ended November 30, 1996 versus a net loss of $151,835 for the year-ended November 30, 1995. The net loss per limited partnership unit improved to $1.36 in 1996 compared to a loss of $11.03 in 1995. Cash flow provided by operating activities was $440,657 in 1996 compared to $158,363 in 1995. The increase is mainly attributable to the discontinuation of taking depreciation on Cobblestone Court. Operating cash flow, along with the capital reserve escrows for Woodhollow Apartments enable the Registrant to fund capital expenditures of $405,409 and reduce the balances of notes payable by $99,236. 1995 Comparisons As of November 30, 1995, the Registrant's consolidated revenues are $3,395,026 compared to $3,285,389 for the year ended November 30, 1994. The increase in revenues are $109,637 or 3.34%. The increase in revenues is attributable to both Cobblestone Court and Woodhollow Apartments where increases were $20,846 and $82,985, respectively. Cobblestone Court's revenues increased due to a strengthening market and the Registrant's ability to negotiate increases in rental rates on lease renewals. Additionally, percentage rent income increased due to better than expected performance from various tenants' business operations. Woodhollow Apartments had the largest revenue increase of the two properties and this also can be attributed to a strengthening market and the Registrant's ability to negotiate rental rate increases. Along with increased rental revenues, the property had an increase in furniture rental income due to a corporate user renting several apartments and furniture for their employees. The Registrant's consolidated expenses for the year ended November 30, 1995 and 1994 are -10- $3,546,861 and $3,690,561, respectively. The decrease of $143,700 or 3.89% is attributable to decreases in interest, depreciation and amortization, and real estate taxes, offset by an increase in repairs and maintenance expenses. The decrease in interest expense relates to the refinancing of Woodhollow Apartments first deed of trust in August 1994 which reduced the interest rate from 10.375% to 9.125%. Offsetting the $66,072 decrease was an increase in interest expense relating to Cobblestone Court and its floating rate debt. Depreciation and amortization expenses decreased by $115,328 with Woodhollow Apartments comprising $104,844 of the total. The decrease in depreciation and amortization relate to certain capital expenditures at Woodhollow Apartments becoming fully depreciated and/or amortized. The decrease in real estate taxes also relates to Woodhollow Apartments. As previously discussed, the State of Missouri passed a law that affected the classification of apartment and nursing home properties. Woodhollow Apartments was affected and their assessment rate decreased from 32% to 19% resulting in a real estate tax reduction of approximately 38%. Repairs and maintenance expense increased by $63,414 when comparing November 30, 1995 to year ended November 30, 1994. The components of the increase are landscaping, plumbing, and apartment turnover expenses at Woodhollow Apartments along with parking lot maintenance and landscaping at Cobblestone Court. With the increase in consolidated revenues and the decrease in consolidated expenses, the Registrant's net loss decreased from ($405,172) to ($151,835) for the years ended November 30, 1994 and 1995, respectively. Net loss per limited partnership unit improved to ($11.03). Cash flow provided by operating activities for the year ended November 30, 1995 is $158,363. Operating cash flow along with prior year reserve capital enabled the Registrant to fund capital expenditures of $153,607 and reduced the note payable by $92,582. Inflation The effects of inflation did not have a material impact upon the Registrant's operation in fiscal l996 and are not expected to materially affect the Registrant's operation in l997. Interest Rates Interest rates on floating rate debt increased in 1995 and remained flat in 1996. Future increases in the prime interest rate can adversely affect the operations of the Registrant. -11- ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Financial Statements of the Registrant are filed herewith as Exhibit 99.3 and are incorporated herein by reference (see Item 14(a)(1)). The supplementary financial information specified by Item 302 of Regulation S-K is provided in Item 7. ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None PART III ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The General Partners of the Registrant responsible for all aspects of the Registrant's operations are Gregory J. Nooney, Jr., age 66, and Nooney Capital Corp., a Missouri corporation. Gregory J. Nooney, Jr. is a senior officer of Nooney Company, the sponsor of the Registrant. The background and experience of the General Partners are as follows: Gregory J. Nooney, Jr. joined Nooney Company in 1954 and is currently Chairman of the Board and Chief Executive Officer. John J. Nooney is a Special General Partner of the Partnership and as such, does not exercise control of the affairs of the Partnership. John J. Nooney joined Nooney Company in 1958 and was President and Treasurer until he resigned in 1992. Mr. Nooney is currently Chairman of the Board of Dalton Investments, a real estate asset management firm. Nooney Capital Corp. was formed in February 1982 for the purpose of being a general and/or limited partner in the Registrant and other limited partnerships. Gregory J. Nooney, Jr. is a director of Nooney Capital Corp. Gregory J. Nooney, Jr. and John J. Nooney are brothers. Gregory J. Nooney, Jr. and Faith L. Nooney (wife of John J. Nooney) are stockholders of Nooney Company, with Gregory J. Nooney, Jr. controlling all voting stock of Nooney Company. The General Partners will continue to serve as General Partners until their withdrawal or their removal from office by the Limited Partners. -12- Certain of the General Partners act as general partners of limited partnerships and hold directorships of companies with a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934 or subject to the requirements of Section 15(d) of the Act. A list of such directorships, and the limited partnerships for which the General Partners serve as general partners, is filed herewith as Exhibit 99.1 and incorporated herein by reference. During 1993 Lindbergh Boulevard Partners, L.P. filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code. Gregory J. Nooney, Jr. is the general partner of Nooney Ltd. II, L.P, which in turn is the general partner of Nooney Development Partners, L.P., which in turn is the general partner of Nooney-Hazelwood Associates, L.P., which is the general partner of Lindbergh Boulevard Partners, L.P. Lindbergh Boulevard Partners, L.P. emerged from bankruptcy on May 17, 1994, when its Plan of Reorganization was confirmed. ITEM 11: EXECUTIVE COMPENSATION The General Partners are entitled to a share of distributions and a share of profits and losses as more fully described under the headings "Compensation to General Partners and Affiliates" on pages 9-11 and "Profits and Losses for Tax Purposes; Distributions; and Expenses of General Partners" on pages A-16 to A-19 of the Prospectus of the Registrant dated April 8, 1982, as supplemented and filed pursuant to Rule 424(c) of the Securities Act of 1933 (the "Prospectus"), which are incorporated herein by reference. During fiscal l996 there were no cash distributions paid to the General Partners by the Registrant. See Item 13 below for a discussion of transactions between the Registrant and certain affiliates of the General Partners. ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) Security Ownership of Certain Beneficial Owners. No person is known to the Registrant to be the beneficial owner of more than 5% of the outstanding Interests of the Registrant. (b) Security Ownership of Management. None of the General Partners is known to the Registrant to be the beneficial owner, either directly or indirectly, of any Interests in the Registrant. (c) Changes in Control. There are no arrangements known to the Registrant, the operation of which may at a subsequent date result in a change in control of the Registrant. -13- ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (a) Transactions with Management and Others. Certain affiliates of the General Partners are entitled to certain fees and other payments from the Registrant in connection with certain transactions of the Registrant as more fully described under the headings "Compensation to General Partners and Affiliates" on pages 9-11 and "Management" on pages 26-28 of the Prospectus, which are incorporated herein by reference. Nooney Krombach Company, the manager of Registrant's properties, is a wholly-owned subsidiary of Nooney Company. Nooney Krombach Company is entitled to receive monthly compensation from the Registrant for property management and leasing services, plus reimbursement of expenses. During fiscal l996 the Registrant paid property management fees of $185,981 to Nooney Krombach Company. During fiscal l996 the Registrant paid Nooney Krombach Company $40,000 as reimbursement for indirect expenses incurred in connection with management of the Registrant. See Item 11 above for a discussion of cash distributions paid to the General Partners during fiscal l996. (b) Certain Business Relationships. The relationship of certain of the General Partners to certain of their affiliates is set forth in Item 13(a) above. Also see Item 13(a) above for a discussion of amounts paid by the Registrant to the General Partners or their affiliates during fiscal 1996. (c) Indebtedness of Management. Not Applicable. (d) Transactions with promoters. Not Applicable. -14- PART IV ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as a part of this report: (1) Financial Statements (filed herewith as Exhibit 99.3): Independent auditors' report Balance sheets Statements of operations Statements of partners' equity (deficiency in assets) Statements of cash flows Notes to financial statements (2) Financial Statement Schedules (filed herewith as Exhibit 99.3) Schedule - Reconciliation of partners' equity (deficit) Schedule III - Real estate and accumulated depreciation All other schedules are omitted because they are inapplicable or not required under the instructions. (3) Exhibits: See Exhibit Index on Page 17. (b) Reports on Form 8-K During the last quarter of the period covered by this report, the Registrant filed no reports on Form 8-K. (c) Exhibits: See Exhibit Index on Page 17. (d) Not Applicable -15- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) under the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. Date: February 28, 1997 /s/ Gregory J. Nooney, Jr. ----------------------------- ----------------------------------- Gregory J. Nooney, Jr. General Partner Nooney Capital Corp. General Partner Date: February 28, 1997 By: /s/ Gregory J. Nooney, Jr. ----------------------------- ----------------------------------- Gregory J. Nooney, Jr. Chairman of the Board and Chief Executive Officer By:/s/ Patricia A. Nooney ------------------------------------ Patricia A. Nooney Senior Vice President and Secretary -16- EXHIBIT INDEX
Exhibit Page Number Description Number - ------ ----------- ------ 3.1 Amended and Restated Agreement and Certificate of Limited N/A Partnership dated April 7, 1982, is incorporated by reference to the Prospectus contained in the Registration Statement on Form S-11 under the Securities Act of 1933 (File No. 2-76046). 10 Management Contract between Nooney Real Property Investors- N/A Four, L.P. and Nooney Company is incorporated by reference to Exhibit 10 to the Registration Statement on Form S-11 under the Securities Act of 1933 (File No. 2-76046). The Management Contract was assigned by Nooney Company to Nooney Management Company (now Nooney Krombach Company), a wholly-owned subsidiary of Nooney Company, on April 1, l985, and is identical in all material respects. 99.1 List of Directorships filed in response to Item 10. 18 99.2 Pages 9-11, 26-28 and A-16 - A-19 to the Prospectus N/A of the Registrant dated April 8, 1982, as supplemented and filed pursuant to Rule 424(c) of the Securities Act of 1933 are incorporated by reference. 99.3 Financial Statements and Schedules. 20-32
-17- EX-99.1 2 EXHIBIT 99.1 Below each General Partner's name is a list of the limited partnerships, other than the Registrant, for which the General Partner serves as a general partner and the companies for which the General Partner serves as a director. The list includes only those limited partnerships and companies which have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934 or are subject to the requirements of Section 15(d) of the Act. Gregory J. Nooney, Jr. Limited Partnerships: Nooney Real Property Investors-Two, L.P. Nooney Income Fund Ltd., L.P. Nooney Income Fund Ltd.II, L.P. Directorships: Nooney Realty Trust, Inc. John J. Nooney Limited Partnerships: Nooney Real Property Investors-Two, L.P. Nooney Income Fund Ltd., L.P. Nooney Income Fund Ltd.II, L.P. -18- EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS FOR NOONEY REAL PROPERTY INVESTORS - -FOUR, L.P. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000700720 NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. YEAR NOV-30-1996 DEC-01-1995 NOV-30-1996 211,840 0 199,357 0 0 467,876 14,332,995 7,134,674 11,211,633 86,951 12,529,484 0 0 0 (1,494,197) 11,211,633 3,505,163 3,512,832 3,531,565 3,531,565 0 0 1,135,573 (18,733) 0 0 0 0 0 (18,733) (1.36) 0
EX-99.3 4 Exhibit 99.3 INDEPENDENT AUDITORS' REPORT To the Partners of Nooney Real Property Investors-Four, L.P.: We have audited the accompanying balance sheets of Nooney Real Property Investors-Four, L.P. (a limited partnership) as of November 30, 1996 and 1995, and the related statements of operations, partners' equity (deficiency in assets) and cash flows for each of the three years in the period ended November 30, 1996. Our audits also included the financial statement schedules listed in the index at Item 14(a)2. These financial statements and financial statement schedules are the responsibility of the Partnership's general partners. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits 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 statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's general partners, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of Nooney Real Property Investors-Four, L.P. as of November 30, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended November 30, 1996 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. The accompanying financial statements and financial statement schedules have been prepared assuming that Nooney Real Property Investors-Four, L.P. will continue as a going concern. As discussed in Note 1, conditions exist which raise substantial doubt about the Partnership's ability to continue as a going concern unless it is able to negotiate with a mortgage lender to refinance the debt maturing in 1997 or sell Cobblestone Court Shopping Center at an adequate price to cover required obligations. Management's plans in regard to these matters are also described in Note 1. The financial statements and financial statement schedules do not include any adjustments that might result from the outcome of this uncertainty. DELOITTE & TOUCHE LLP January 10, 1997 St. Louis, Missouri -20- NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) BALANCE SHEETS NOVEMBER 30, 1996 AND 1995 - ----------------------------------------------------------------------------------------
ASSETS 1996 1995 CASH - Includes restricted cash of $172,378 at November 30, $ 211,840 $ 275,823 1996 and $152,236 at November 30, 1995 ACCOUNTS RECEIVABLE 199,357 186,369 PREPAID EXPENSES AND DEPOSITS 56,679 69,139 INVESTMENT PROPERTY (Notes 1 and 3): Land 1,013,858 1,013,858 Buildings and improvements 13,319,137 12,904,376 ------------ ------------ 14,332,995 13,918,234 Less accumulated depreciation (7,134,674) (6,702,698) ------------ ------------ 7,198,321 7,215,536 Investment property held for sale (Note 1) 3,479,887 3,490,426 ------------ ------------ Total investment property 10,678,208 10,705,962 DEFERRED EXPENSES - At amortized cost (Note 2) 65,549 85,696 ------------ ------------ TOTAL $ 11,211,633 $ 11,322,989 ============ ============ LIABILITIES AND PARTNERS' EQUITY (DEFICIENCY IN ASSETS) LIABILITIES: Accounts payable and accrued expenses $ 86,951 $ 74,635 Refundable tenant deposits 89,395 95,098 Mortgage notes payable (Notes 1 and 3) 12,529,484 12,628,720 ------------ ------------ Total liabilities 12,705,830 12,798,453 PARTNERS' EQUITY (DEFICIENCY IN ASSETS) (1,494,197) (1,475,464) ------------ ------------ TOTAL $ 11,211,633 $ 11,322,989 ============ ============
See notes to financial statements. -21- NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) STATEMENTS OF OPERATIONS YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994 - -------------------------------------------------------------------------------------------------
1996 1995 1994 REVENUES: Rental and other income (Note 4) $ 3,505,163 $ 3,391,439 $ 3,281,516 Interest 7,669 3,587 3,873 ----------- ----------- ----------- Total revenues 3,512,832 3,395,026 3,285,389 ----------- ----------- ----------- EXPENSES: Interest 1,135,573 1,154,055 1,200,009 Depreciation and amortization (Note 2) 497,315 649,135 764,463 Real estate taxes 457,460 442,140 508,620 Repairs and maintenance 267,239 257,091 189,834 Property management fees - related party 185,981 181,734 176,283 Payroll 256,960 262,816 252,824 Other operating expenses (includes $40,000 in each year to related party) 731,037 599,890 598,528 ----------- ----------- ----------- Total expenses 3,531,565 3,546,861 3,690,561 ----------- ----------- ----------- NET LOSS $ (18,733) $ (151,835) $ (405,172) =========== =========== =========== NET LOSS ALLOCATION: General partners $ (325) $ (2,630) $ (7,020) Limited partners (18,408) (149,205) (398,152) LIMITED PARTNERSHIP DATA: Net loss per unit $ (1.36) $ (11.03) $ (29.43) =========== =========== =========== Weighted average limited partnership units outstanding 13,529 13,529 13,529 =========== =========== ===========
See notes to financial statements. -22- NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY IN ASSETS) YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994 - ----------------------------------------------------------------------- Limited General Partners Partners Total BALANCE (DEFICIENCY IN ASSETS), DECEMBER 1, 1993 $ (635,946) $(282,511) $ (918,457) Net loss (398,152) (7,020) (405,172) ----------- --------- ----------- BALANCE (DEFICIENCY IN ASSETS), NOVEMBER 30, 1994 (1,034,098) (289,531) (1,323,629) Net loss (149,205) (2,630) (151,835) ----------- --------- ----------- BALANCE (DEFICIENCY IN ASSETS) NOVEMBER 30, 1995 (1,183,303) (292,161) (1,475,464) Net loss (18,408) (325) (18,733) ----------- --------- ----------- BALANCE (DEFICIENCY IN ASSETS) NOVEMBER 30, 1996 $(1,201,711) $(292,486) $(1,494,197) =========== ========= =========== See notes to financial statements. -23- NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994 - ------------------------------------------------------------------------------------------------
1996 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (18,733) $ (151,835) $ (405,172) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 436,460 618,306 717,339 Amortization of deferred expenses 60,855 30,829 47,124 Changes in accounts affecting operations: Accounts receivable (12,988) (63,625) (13,749) Due from Nooney Krombach Company 10,298 Prepaid expenses and deposits 12,460 (33,490) (3,265) Deferred expenses (44,006) (19,234) (92,975) Accounts payable and accrued expenses 12,316 (224,565) 11,671 Refundable tenant deposits (5,703) 1,977 8,932 ----------- ----------- ---------- Net cash provided by operating activities 440,661 158,363 280,203 CASH FLOWS FROM INVESTING ACTIVITIES - Net additions to investment property (405,408) (153,607) (137,114) CASH FLOWS FROM FINANCING ACTIVITIES - Payments on mortgage notes payable (99,236) (92,582) (129,198) ----------- ----------- ---------- NET (DECREASE) INCREASE IN CASH (63,983) (87,826) 13,891 CASH, BEGINNING OF YEAR 275,823 363,649 349,758 ----------- ----------- ---------- CASH, END OF YEAR $ 211,840 $ 275,823 $ 363,649 =========== =========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - Cash paid during the year for interest $ 1,087,879 $ 1,166,752 $1,197,055 =========== =========== ==========
See notes to financial statements. -24- NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994 - -------------------------------------------------------------------------------- 1. BUSINESS Nooney Real Property Investors-Four, L.P. (the "Partnership") is a limited partnership organized under the laws of the State of Missouri on February 9, 1982. The Partnership was organized to invest primarily in income-producing real properties such as shopping centers, office buildings and other commercial properties, apartment buildings, warehouses and light industrial properties. The Partnership's portfolio is comprised of an apartment building located in West St. Louis County, Missouri which generated 68% of rental and other income for the year ended November 30, 1996; and a retail shopping center located in Burnsville, Minnesota, a suburb of Minneapolis, which generated the remaining 32% of rental and other income for the year ended November 30, 1996. The accompanying financial statements for the Partnership have been presented on the basis that the Partnership will continue as a going concern, allowing for the realization of assets and the satisfaction of liabilities in the normal course of business. The uncertainty referred to in the following paragraph raises substantial doubt as to the Partnership's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of such uncertainty. First mortgage debt on Cobblestone Court Shopping Center of $2,603,049 and the second mortgages on both properties of $1,438,039 and $211,435 mature May 1, 1997. The Partnership's management is presently attempting to sell Cobblestone Court Shopping Center, but is unable to predict when such a sale will occur or if such a sale will be finalized. If the Partnership is successful in selling the property, it expects to be in a position to fully payoff the first and second mortgage on the property. If the Partnership is unsuccessful in selling the property, it intends to negotiate with the mortgage lender to renew and restructure the debt or pursue refinancing with another lender. Until a sale occurs, or the mortgage lender decides to foreclose, the Partnership will continue to operate the property. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements include only those assets, liabilities and results of operations of the partners which relate to the business of the Partnership. The statements do not include any assets, liabilities, revenues or expenses attributable to the partners' individual activities. No provision has been made for federal and state income taxes since these taxes are the personal responsibility of the partners. 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 statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The corporate general partner is a 75%-owned subsidiary of Nooney Company. One of the individual general partners is an officer, director and shareholder of Nooney Company. The other individual general partners' spouse is a shareholder of Nooney Company. Nooney Krombach Company, a wholly-owned subsidiary of Nooney Company, manages the Partnership's real estate for a management fee. Property management fees paid to Nooney Krombach Company were $185,981, $181,734 and $176,283 -25- for the years ended November 30, 1996, 1995 and 1994, respectively. Additionally, the Partnership pays Nooney Krombach Company $40,000 annually as reimbursement for management services and indirect expenses in connection with the management of the Partnership. Investment property is recorded at the lower of cost or net realizable value. Impairment is determined if the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the property. Investment property that is currently held for sale is recorded at the lower of its net book value or net realizable value. Apartment buildings are depreciated over their estimated useful lives using the 125% declining balance method. All other buildings are depreciated over their estimated useful lives using the straight-line method. Deferred expenses consist primarily of lease fees and financing costs and are amortized over the terms of their respective leases or notes. Lease agreements are accounted for as operating leases and rentals from such leases are reported as revenues ratably over the terms of the leases. Certain agreements provide for rent concessions. At November 30, 1996, accounts receivable include approximately $1,500 ($3,600 in 1995) of accrued rent concessions which is not yet due under the terms of the various lease agreements. Included in rental and other income are amounts received from tenants under provisions of lease agreements which require the tenants to pay additional rent equal to specified portions of certain expenses such as real estate taxes, insurance, utilities and common area maintenance. The income is recorded in the same period that the related expense is incurred. Pursuant to the terms of the Partnership Agreement, losses from operations and cash distributions are allocated l% to the individual general partners and the remainder pro rata to all general and limited partners based upon the relationship of original capital contributions. Limited partnership per unit computations are based on the weighted average number of limited partnership units outstanding during the year. -26- 3. MORTGAGE NOTES PAYABLE
Mortgage notes payable as of November 30, 1996 and 1995 and the related collateral book values consist of the following: 1996 1995 Cobblestone Court Shopping Center (Book value of $3,480,000 at November 30, 1996) 8.5%, due in monthly installments of $26,921, including interest, to September 30, 1996 (when the note matured) when monthly interest only payments of $18,438 until the note is refinanced (refinanced on December 30, 1996 to mature on May 1, 1997) $ 2,603,049 $ 2,692,277 Note payable to bank, interest only due monthly at bank's prime rate (8.25% at November 30, 1996) plus 1% to December 31, 1996 (refinanced on December 26, 1996 to adjust interest to LIBOR plus 2.75%, payable monthly, and extend the maturity to May 1, 1997) when entire principal balance is due 1,438,039 1,438,039 Woodhollow Apartments (Book value of $7,198,000 at November 30, 1996) 9.125%, due in monthly interest payments of $62,939 only until August 1997 when monthly payments increase to $70,170, consisting of both principal and interest, until August 2001 when remaining principal balance of $7,859,989 is due 8,276,961 8,276,961 Note payable to bank related to above properties, monthly principaL payments of $834 plus interest at 1% over the bank's prime rate (8.25% at November 30, 1996) to December 31, 1996 (refinanced on December 26, 1996 to increase monthly principal payments to $1,000 and extend the maturity to May 1, 1997) when entire principal balance is due 211,435 221,443 ----------- ----------- Total debt of above properties (total book value of $10,678,000 at November 30, 1996) $12,529,484 $12,628,720 =========== ===========
In December 1996, the 8.5% mortgage note payable was refinanced with the lender of the other three notes. The note requires monthly interest only payments at LIBOR plus 2.75% commencing February 1, 1997 to May 1, 1997 when the entire principal balance is due. The note also requires the payment of a $100,000 loan purchase fee payable upon the sale of the collateralized property. This fee has not been recorded as of November 30, 1996. In connection with the refinancing, the partnership is required to establish a capital reserve account. Under the terms of the note, the partnership is required to deposit on a monthly basis all excess cash flow from the property as defined in the note. All withdrawals must be approved by the lender. In July 1994, the 9.125% mortgage note payable was refinanced with the same lender. In connection with the refinancing, the partnership was required to establish a capital reserve escrow account to fund certain deferred maintenance including new siding, parking lot repairs and entry way renovations outlined in the escrow agreement. Under the terms of the agreement, the partnership is required to deposit on a monthly basis all net operating income as defined in the escrow agreement. Withdrawals may be made on a monthly basis only to fund the aforementioned repairs. Upon completion of the repairs, any funds remaining in the escrow account will be returned to the partnership. As of November 30, 1996 and 1995, $172,378 and $152,236, respectively, was being held in the escrow account. -27- The mortgage notes are collateralized by deeds of trust and assignments of rents on all investment properties. Principal payments required during the next five years are as follows: 1997 $4,281,598 1998 92,703 1999 101,525 2000 111,887 2001 7,942,471 In accordance with Statement of Financial Accounting Standards No. 107, Disclosures About Fair Value of Financial Instruments, the estimated fair value of mortgage notes payable with maturities greater than one year is determined based on rates currently available to the Partnership for mortgage notes with similar terms and remaining maturities. The estimated fair value of mortgage notes payable with maturities of less than one year are valued at their carrying amounts included in the balance sheet, which are reasonable estimates of fair value due to the relatively short period to maturity of the instruments. The carrying amount and estimated fair value of the Partnership's debt at November 30, 1996 and 1995 are summarized as follows: 1996 1995 ------------------------ ------------------------ Carrying Estimated Carrying Estimated Amount Fair Value Amount Fair Value Mortgage notes payable $12,529,484 $12,608,000 $12,628,720 $13,030,000 Fair value estimates are made at a specific point in time, are subjective in nature and involve uncertainties and matters of significant judgment. Settlement of the Partnership's debt obligations at fair value may not be possible and may not be a prudent management decision. The potential loss on extinguishment at November 30, 1996 does not take into consideration expenses that would be incurred to settle the debt obligations at fair value. 4. RENTAL REVENUES UNDER OPERATING LEASES Minimum future rental revenues under noncancelable operating leases on properties other than apartment buildings in effect as of November 30, 1996 are as follows: 1997 $512,000 1998 366,000 1999 283,000 2000 225,000 2001 46,000 ---------- Total $1,432,000 ========== In addition, certain lease agreements require tenant participation in certain operating expenses and additional contingent rentals based upon percentages of tenant sales in excess of minimum amounts. Tenant participation in expenses included in revenues approximated $416,000, $454,000 and $452,000 for the years ended November 30, 1996, 1995 and 1994, respectively. Contingent rentals were not significant for the years ended November 30, 1996, 1995 and 1994. -28- 5. FEDERAL INCOME TAX STATUS The general partners believe, based upon opinion of legal counsel, that Nooney Real Property Investors-Four, L.P. is considered a partnership for income tax purposes. Selling commissions and offering expenses incurred in connection with the sale of limited partnership units are not deductible for income tax purposes and therefore increase the partners' bases. Investment properties are depreciated for income tax purposes using rates which differ from rates used for computing depreciation for financial statement reporting. Rents received in advance are includable in taxable income in the year received. Rent concessions, recognized ratably over lease terms for financial statement purposes, are includable in taxable income in the year rents are received. Insurance premiums are deductible for tax purposes in the year paid. Losses in connection with the writedown of investment property are not recognized for income tax purposes until the property is disposed. The comparison of financial statement and income tax reporting is as follows: Financial Income Statement Tax 1996: Net loss $ (18,733) $ (631,020) Partners' deficiency in assets (1,494,197) (6,195,675) 1995: Net loss $ (151,835) $ (603,701) Partners' deficiency in assets (1,475,464) (5,564,655) 1994: Net loss $ (405,172) $ (737,206) Partners' deficiency in assets (1,323,629) (4,960,954) * * * * * * -29- ================================================================================ NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. ================================================================================ (A LIMITED PARTNERSHIP) SCHEDULE - RECONCILIATION OF PARTNERS' EQUITY (DEFICIENCY IN ASSETS) YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994 - ----------------------------------------------------------------------------------------------------------------- The reconciliation of partners' equity (deficiency in assets) between financial statements and income tax reporting is as follows:
1996 -------------------------------------- Limited General Partners Partners Total Balance (deficiency) per statement of partners' equity $(1,201,711) $ (292,486) $(1,494,197) Add: Selling commissions and other offering costs not deductible for income tax purposes 1,732,907 1,732,907 Prepaid rents included in income for income tax purposes 9,911 174 10,085 Writedown of investment property not recognized for income tax purposes 1,045,565 18,435 1,064,000 ----------- ----------- ----------- 1,586,672 (273,877) 1,312,795 Less: Excess depreciation deducted for income tax purposes 7,289,299 199,285 7,488,584 Rent concessions not recognized for income tax purposes 1,508 27 1,535 Insurance premiums deducted for income tax purposes 18,034 317 18,351 ----------- ----------- ----------- Balance (deficiency) per tax return $ 5,722,169 $ 473,506 $ 6,195,675 =========== =========== =========== 1995 -------------------------------------- Limited General Partners Partners Total Balance (deficiency) per statement of partners' equity $(1,183,303) $ (292,161) $(1,475,464) Add: Selling commissions and other offering costs not deductible for income tax purposes 1,732,907 1,732,907 Prepaid rents included in income for income tax purposes 11,068 195 11,263 Writedown of investment property not recognized for income tax purposes 1,045,565 18,435 1,064,000 ----------- ----------- ----------- 1,606,237 (273,531) 1,332,706 Less: Excess depreciation deducted for income tax purposes 6,678,466 188,532 6,866,998 Rent concessions not recognized for income tax purposes 3,523 62 3,585 Insurance premiums deducted for income tax purposes 26,314 464 26,778 ----------- ----------- ----------- Balance (deficiency) per tax return $ 5,102,066 $ 462,589 $ 5,564,655 =========== =========== =========== 1994 -------------------------------------- Limited General Partners Partners Total Balance (deficiency) per statement of partners' equity $(1,034,098) $ (289,531) $(1,323,629) Add: Selling commissions and other offering costs not deductible for income tax purposes 1,732,907 1,732,907 Prepaid rents included in income for income tax purposes 23,418 413 23,831 Writedown of investment property not recognized for income tax purposes 1,045,565 18,435 1,064,000 ----------- ----------- ----------- 1,767,792 (270,683) 1,497,109 Less: Excess depreciation deducted for income tax purposes 6,259,236 181,139 6,440,375 Rent concessions not recognized for income tax purposes 4,186 74 4,260 Insurance premiums deducted for income tax purposes 13,195 233 13,428 ----------- ----------- ----------- Balance (deficiency) per tax return $(4,508,825) $ (452,129) $(4,960,954) =========== =========== ===========
-30- ======================================================================= NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. ======================================================================= (A LIMITED PARTNERSHIP) SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION NOVEMBER 30, 1996 - ---------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Gross Amount at Which Initial Cost to Partnership Costs Carried at Close of Period --------------------------------- Capitalized ---------------------------------- Buildings and Subsequent to Buildings and Description Encumbrances Land Improvements Total Acquisition Land Improvements Total Cobblestone Court Shopping Center, Burnsville, Minnesota $ 4,041,088 $1,205,378 $ 4,676,940 $ 5,882,318 $ 340,985(1) $1,205,378 $ 5,017,925 $ 6,223,303(2) Woodhollow Apartments, St. Louis, Missouri 8,276,961 1,013,858 11,651,289 12,665,147 1,667,848(1) 1,013,858 13,319,137 14,332,995 Both properties 211,435 -- -- -- -- -- -- -- ----------- ---------- ----------- ----------- ---------- ---------- ----------- ----------- Total $12,529,484 $2,219,236 $16,328,229 $18,547,465 $2,008,833 $2,219,236 $18,337,062 $20,556,298 =========== ========== =========== =========== ========== ========== =========== =========== Column F Column G Column H Column I -------- -------- -------- -------- Life on which Depreciation Accumulated Date of Date in Latest Income Depreciation Construction Acquired Statement is Computed Cobblestone Court Shopping Center, Burnsville, Minnesota $2,743,416 (2) 1980 2/16/82 30 years Woodhollow Apartments, St. Louis, Missouri 7,134,674 1971-1972 7/28/82 30 years ---------- Total $9,878,090 ==========
(1) Amount is net of the following building writedowns to reflect the minimum recoverable value to the Partnership: Cobblestone Court $489,000 Woodhollow Apartments 575,000 (2) Amount is shown net in the financial statements $(3,479,887). (Continued) -31- NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION YEARS ENDED NOVEMBER 30, 1996, 1995 AND 1994 - -----------------------------------------------------------------------------------------------------------------------
1996 1995 1994 (A) Reconciliation of amounts in Column E: Balance at beginning of period $ 20,150,890 $ 20,036,471 $ 19,902,357 Add - Cost of improvements 408,706 153,607 137,114 Less - Cost of disposals (3,298) (39,188) (3,000) ------------ ------------ ------------ Balance at end of period $ 20,556,298 $ 20,150,890 $ 20,036,471 ============ ============ ============ (B) Reconciliation of amounts in Column F: Balance at beginning of period $ 9,444,928 $ 8,865,810 $ 8,151,471 Add - Provision during the period 436,460 618,306 717,339 Less - Depreciation on disposals (3,298) (39,188) (3,000) ------------ ------------ ------------ Balance at end of period $ 9,878,090 $ 9,444,928 $ 8,865,810 ============ ============ ============ (C) The aggregate cost of real estate owned for federal income tax purposes $ 21,620,298 $ 21,214,890 $ 21,100,471 ============ ============ ============
(Concluded) -32- -----END PRIVACY-ENHANCED MESSAGE-----