-----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, BQ2zlS4TQYuuwmjhY3FwnMm+m1sn/lWjqi0GbtiFwxAk9t3Va8A1bAqUEC+LIXw1 7L19F6RZ9bRkbR+17ijTZQ== 0000948524-98-000016.txt : 19980302 0000948524-98-000016.hdr.sgml : 19980302 ACCESSION NUMBER: 0000948524-98-000016 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19971130 FILED AS OF DATE: 19980227 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: SEC FILE NUMBER: 000-11023 FILM NUMBER: 98552162 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 NOVEMBER 30, 1997 10-K 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, 1997 ------------------------------------------------------ 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.) 500 North Broadway, St. Louis, Missouri 63102 - --------------------------------------- ---------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (314) 206-4600 ----------------------------- - -------------------------------------------------------------------------------- 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 18 _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, 1998, 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, 1998 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 and has continued this improvement through 1997 and is expected to further continue improving 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 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, Inc. 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 69% leased by 14 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 92% 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, 1997, relating to the properties owned by the Registrant.
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 97,718 $ 549,000 $8.13 69% T.J. Maxx (23%) 2001 Old Country Buffet (16%) 2000 Woodhollow 402 Units $2,174,220 $5,409/unit 92% None
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 1997. PART II ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS As of February 1, 1998, there were 1,250 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 1996 or fiscal 1997. -5- ITEM 6: SELECTED FINANCIAL DATA
Year Ended November 30, ------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 (Not covered by independent auditors' report) Rental and other income $ 3,406,566 $ 3,505,163 $ 3,391,439 $ 3,281,516 $ 3,345,802 Net loss (193,748) (18,733) (151,835) (405,172) (324,856) Data per limited partnership unit - net loss (14.07) (1.36) (11.03) (29.43) (23.60) Weighted average limited partnership units outstanding 13,529 13,529 13,529 13,529 13,529 At year-end: Total assets 11,628,080 11,211,633 11,322,989 11,789,994 12,303,761 Investment property - net 11,110,241 10,678,208 10,705,962 11,170,661 11,750,886 Mortgage notes payable 12,871,393 12,529,484 12,628,720 12,721,302 12,850,500 Partners' deficiency in assets (1,687,945) (1,494,197) (1,475,464) (1,323,629) (918,457) 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, 1997 are $327,910, an increase of $116,070 from the year ended November 30, 1996. The increase in cash from year to year is due to higher balances in the real estate tax escrow accounts. The real estate taxes for Woodhollow are due in December of each year. In 1996 the taxes were paid early due to resolution of a real estate tax appeal. Cobblestone's taxes are due in May and October each year. Cobblestone did not have adequate funds in its real estate tax escrow to pay the taxes due October 15, 1997, ($152,649). These taxes remain delinquent to date and penalties and interest continue to accrue. The real estate tax escrow account for Cobblestone had a balance of $105,227 as of November 30, 1997. The anticipated capital expenditures during 1998 are: Leasing Operating Other Capital Capital Capital Total ------- ------- ------- ----- Woodhollow $ 0 $64,220 $44,369 $108,589 Cobblestone 0 0 0 0 ------------------------------------------------- $ 0 $64,220 $44,369 $108,589 At Woodhollow, operating capital will be spent for carpet and vinyl replacement, hot water heaters, refrigerators, and other appliances. In 1998, the Registrant anticipates spending $270,000 from the capital reserve escrow for Phase III of the renovation program. The other capital expenditures will be for new heating and air conditioning units and new signage on the property. No capital expenditures have been forecasted at Cobblestone as no new anchor has been identified for the East end of the Mall at this time. During 1994, the Registrant negotiated with the first mortgage lender on Woodhollow an extension of the maturity of its note which matured August 1, 1994. Under the modification, the note 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 were interest only. Commencing September 1, 1997, the Registrant pays principal based on a 15-year amortization schedule. The balance of the loan as of November 30, 1997, was $8,255,105.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. Since the capital renovation program was begun, the costs to complete the scope of work have increased due to faster deterioration of building exteriors not yet completed. The program will also take four, not three years to complete as funds can only be spent as they accumulate in the reserve account. In 1996, Phase I of the capital renovation program was completed and $283,000 of the capital reserve escrow was spent. In 1997, Phase II was completed and $387,000 of the capital reserve escrow was spent. -7- In December 1996 the Registrant entered into a new first mortgage on Cobblestone which called for interest only payments at a rate of LIBOR plus 2.75%. The note was originally due in May 1997 and had been extended several times by the lender. The note was due February 1, 1998. The balance of the loan as of November 30, 1997, was $2,602,432. The holder of the second mortgage on Cobblestone and a second mortgage on Woodhollow also extended these notes until October 31, 1998. The note secured by Cobblestone is at an interest rate of LIBOR plus 2.75% and requires interest only payments. At November 30, 1997, the balance of the second mortgage on Cobblestone was $1,689,571. The note secured by Woodhollow is at 1% over the bank's prime rate and also requires monthly principal payments of $1,000 per month. The balance of the second mortgage on Woodhollow was $199,601 at November 30, 1997. During 1997 the lender advanced additional funds on the Cobblestone second mortgage note to pay for the re-roofing of Cobblestone. This advance is secured by both properties and due October 31, 1998. At the time the roofing commenced, the new advance was changed to be at a rate of LIBOR plus 2.75%. The balance of this advance was $124,684. 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 at a price sufficient to cover required obligations. As stated earlier, the Registrant is delinquent in the payment of real estate taxes due October 1997 for Cobblestone. At this time, the Registrant is unable to determine when it will have sufficient cash available to bring the taxes current. The Registrant believes the real estate taxes will not be paid until the center is sold and cash proceeds from the sale are available to pay all real estate taxes and penalties due. The Registrant will continue to manage the properties to achieve its investment objectives. -8- Results of Operations The results of operations for the Registrant's properties for the year ended November 30, 1997, 1996 and 1995 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 ---------- ----------- 1997 ---- Revenues $ 2,375,142 $ 1,036,061 Expenses 2,446,486 1,156,046 ------------------------------- Net (Loss) $ (70,344) $ (119,985) ================================ 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 =============================== 1997 Property Comparisons Cobblestone revenue declined $89,482 from 1996 to 1997, due to a decrease in base rental revenue ($41,148), real estate tax reimbursement ($30,589), percentage rent income ($5,503), and an increase in bad debt expense ($30,745). The revenues decreased due to the decrease in occupancy from 1997 to 1996. Expenses at Cobblestone increased $105,752 when comparing 1997 to 1996. Expenses increased primarily in the categories of cleaning ($19,175), snow removal ($19,028), real estate tax expense ($37,195), other professional services ($81,222), partially offset by a decrease in amortization expense ($55,269). The Registrant continues to work with a local brokerage firm to find an anchor tenant for the East end of the Mall. When the anchor tenant is located, the Mall will be put on the market for sale with the new lease in place. During 1997 the Registrant re-roofed the entire center to make it more saleable. Operating results at Woodhollow were relatively steady. Revenue increased slightly when comparing 1997 to 1996. Operating expenses increased $47,787 when comparing the two years, mainly due to an increase in depreciation ($38,663) due to the numerous capital additions as part of the renovation program. -9- The occupancy levels at the Registrant's properties as of November 30 were: Occupancy rates at November 30 1997 1996 1995 ------------------------------- Woodhollow 92% 95% 93% Cobblestone 69% 84% 92% At Woodhollow, occupancy decreased during the fourth quarter of 1997 to 92%. The Registrant believes that the overall occupancy of the apartments will rebound once spring arrives and the demand for rental apartments improves. Occupancy at Cobblestone decreased from 84% at the beginning of the year to 69% at the end of the year. During the year, one tenant renewed its space for 7,984 square feet and two tenants vacated who occupied 14,773 square feet. No new tenants were signed during the year. The main focus has been on finding a new anchor tenant for the East end of the Mall which was not accomplished during 1997. The brokerage firm is working several prospects and anticipate identifying a potential user during the first half of 1998. The center has one major tenant who occupies approximately 26% of the available space under a lease which expires in January 2001. A second major tenant occupies approximately 7-1/2% of the available space under a lease which expires April 2000. Year 2000 issues The Registrant believes that the impact of the year 2000 will not be of a major concern on any future results. The management company employed by the Registrant utilizes various computer software packages as tools in running its accounting operations. The Registrant's properties are maintained on software provided by a third party. The management company has received information from that company indicating that the main software program has all its core products already compatible with 2000 dates and that these have been proven in the field for over five years. A few of the add on products that are not critical to the management company's business are in process of being updated and the third party vendor anticipates compliance by the end of 1998. 1997 Comparisons For the year ended November 30, 1997, the Registrant's consolidated revenues are $3,441,424 compared to $3,512,832 for the year ended November 30, 1996. This decrease in revenues is $71,408 or 2% and can be attributable to the decrease in revenues at Cobblestone due to the decrease in occupancy as previously discussed. The Registrant's consolidated expenses for the year ended November 30, 1997 and 1996 were $3,635,172 and $3,531,565 respectively. The increase in expenses is $103,607 or 2.9% which can be mainly attributable to an increase in other operating expenses ($128,120), partially offset by a decrease in repairs and maintenance ($13,628) and a decrease in depreciation and amortization ($16,464). -10- The decrease in consolidated revenues combined with the increase in consolidated expenses produced the Registrant's net loss of $193,748 for the year ended November 30, 1997 versus net loss of $18,733 for the year ended November 30, 1996. The net loss per limited partnership unit dropped to $14.07 in 1997 compared to a loss of $1.36 in 1996. Cash flow provided by operating activities was $672,300 in 1997 compared to $443,959 in 1996. The increase is mainly attributable to the non-payment of real estate taxes on Cobblestone as discussed previously. Operating cash flow along with the capital reserve escrow for Woodhollow and additional borrowings of $376,216 enabled the Registrant to fund capital expenditures of $898,139. 1996 Comparisons For the year ended November 30, 1996, the Registrant's consolidated revenues were $3,512,832 compared to $3,395,026 for the year-ended November 30, 1995. This increase in revenues was $117,806 or 3.5%. The increase in revenues is attributable to Woodhollow where increases were $207,438 versus a decrease in revenue at Cobblestone of $104,603. Woodhollow's 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. Since the property has been held for sale during all of 1996, no depreciation was taken. Other operating expenses increased mainly at Woodhollow 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 Registrant's 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 $443,959 in 1996 compared to $158,363 in 1995. Operating cash flow, along with the capital reserve escrows for Woodhollow enabled the Registrant to fund capital expenditures of $408,706 and reduce the balances of notes payable by $99,236 during 1996. Inflation The effects of inflation did not have a material impact upon the Registrant's operation in fiscal l997 and are not expected to materially affect the Registrant's operation in l998. Interest Rates Interest rates on floating rate debt remained constant in 1996 and went down in 1997. 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 67, 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. 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. and Patricia A. Nooney are directors of Nooney Capital Corp. Gregory J. Nooney, Jr. and John J. Nooney are brothers. Gregory J. Nooney, Jr. and the estae of Faith L. Nooney (the deceased wife of John J. Nooney) are stockholders of Nooney Company, with Gregory J. Nooney, Jr. controlling all voting stock of Nooney Company. PAN, Inc. became a General Partner during 1997 and is wholly-owned by Patricia A. Nooney, the daughter of Gregory J. Nooney, Jr. -12- The General Partners will continue to serve as General Partners until their withdrawal or their removal from office by the Limited Partners. 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. On October 31, 1997, Nooney Company sold its wholly-owned subsidiary, Nooney Capital Corp., the corporate general partner of the Partnership to S-P Properties, Inc., a California corporation, which in turn is a wholly-owned subsidiary of CGS Real Estate Company, Inc., a Texas corporation. Simultaneously, Gregory J. Nooney, Jr., an individual general partner and PAN, Inc., a corporate general partner, sold their economic interests to S-P Properties, Inc. and resigned as general partners. 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 l997 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. -13- 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. -14- 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 the 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 administrative expenses. During fiscal 1997 the Registrant paid property management fees of $166,624 to Nooney Krombach Company and $36,667 as reimbursement for indirect expenses incurred in connection with management of the Registrant. On October 31, 1997, CGS Real Estate Company purchased the real estate management business of Nooney Krombach Company and formed Nooney, Inc. to perform the management of the Registrant. The Registrant paid Nooney, Inc. $14,296 in property management fees in 1997 and $3,333 as reimbursement for indirect expenses incurred in connection with the management of the Registrant. See Item 11 above for a discussion of cash distributions paid to the General Partners during fiscal l997. (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 1997. (c) Indebtedness of Management. Not Applicable. (d) Transactions with promoters. Not Applicable. -15- 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 (deficiency in assets) 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 18. (b) Reports on Form 8-K On November 14, 1997, the Registrant filed a report on Form 8-K which reported an Item 1, Changes in Control of Registrant. (c) Exhibits: See Exhibit Index on Page 18. (d) Not Applicable -16- 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 27, 1998 /s/ Gregory J. Nooney, Jr. ----------------------------- -------------------------------- Gregory J. Nooney, Jr. General Partner PAN, Inc. General Partner Date: February 27, 1998 By: /s/ Patricia A. Nooney ----------------------------- -------------------------------- Patricia A. Nooney President and Secretary Nooney Capital Corp. General Partner Date: February 27, 1998 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 -17-
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 Krombach Company, a wholly-owned subsidiary of Nooney Company, on October 31, 1997, to Nooney, Inc. a wholly-owned subsidiary of CGS Real Estate Company, Inc., and is identical in all material respects to the management contract referred to above. 99.1 List of Directorships filed in response to Item 10. 19 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 -18-
EX-99.1 2 CHARTER 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. PAN, Inc. Limited Partnerships: Nooney Real Property Investors-Two, L.P. Nooney Income Fund Ltd., L.P. Nooney Income Fund Ltd.II, L.P. -19- 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. 12-MOS NOV-30-1997 DEC-01-1996 NOV-30-1997 327,910 0 111,353 0 0 467,035 14,854,917 7,598,733 11,628,080 364,345 12,871,393 0 0 0 (1,687,945) 11,628,080 3,406,566 3,412,192 0 0 2,469,712 0 1,136,228 (193,748) 0 0 0 0 0 (193,748) (14.07) 0
EX-99.3 4 VOTING TRUST 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, 1997 and 1996, 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, 1997. 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, 1997 and 1996, and the results of its operations and its cash flows for each of the three years in the period ended November 30, 1997 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, the Partnership has suffered recurring losses from operations and is trying to sell Cobblestone Court Shopping Center at an adequate price to cover required obligations or refinance the debt maturing in 1998 which raise substantial doubt about its ability to continue as a going concern. 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 9, 1998 (January 31, 1998 as to Note 3) St. Louis, Missouri -20- NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) BALANCE SHEETS NOVEMBER 30, 1997 AND 1996 - -------------------------------------------------------------------------------- ASSETS 1997 1996 CASH - Includes restricted cash of $36,855 at November 30, 1997 and $172,378 at November 30, 1996 (Note 3) $ 327,910 $ 211,840 ACCOUNTS RECEIVABLE - No allowance for doubtful accounts considered necessary 111,353 199,357 PREPAID EXPENSES AND DEPOSITS 27,772 56,679 INVESTMENT PROPERTY (Note 3): Land 1,013,858 1,013,858 Buildings and improvements 13,841,059 13,319,137 ------------ ------------ 14,854,917 14,332,995 Less accumulated depreciation (7,598,733) (7,134,674) ------------ ------------ 7,256,184 7,198,321 Investment property held for sale 3,854,057 3,479,887 ------------ ------------ Total investment property 11,110,241 10,678,208 DEFERRED EXPENSES - At amortized cost 50,804 65,549 ------------ ------------ TOTAL $ 11,628,080 $ 11,211,633 ============ ============ LIABILITIES AND PARTNERS' EQUITY (DEFICIENCY IN ASSETS) LIABILITIES: Accounts payable and accrued expenses $ 364,345 $ 86,951 Refundable tenant deposits 80,287 89,395 Mortgage notes payable (Note 3) 12,871,393 12,529,484 ------------ ------------ Total liabilities 13,316,025 12,705,830 PARTNERS' EQUITY (DEFICIENCY IN ASSETS) (1,687,945) (1,494,197) ------------ ------------ TOTAL $ 11,628,080 $ 11,211,633 ============ ============ See notes to financial statements. -21- NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) STATEMENTS OF OPERATIONS YEARS ENDED NOVEMBER 30, 1997, 1996 AND 1995 - -------------------------------------------------------------------------------- 1997 1996 1995 REVENUES: Rental and other income (Note 4) $ 3,406,566 $ 3,505,163 $ 3,391,439 Interest 5,626 7,669 3,587 ----------- ----------- ----------- Total revenues 3,412,192 3,512,832 3,395,026 ----------- ----------- ----------- EXPENSES: Interest 1,136,228 1,135,573 1,154,055 Depreciation and amortization 480,851 497,315 649,135 Real estate taxes 459,618 457,460 442,140 Payroll 264,786 256,960 262,816 Repairs and maintenance 270,225 267,239 257,091 Property management fees - related party 180,921 185,981 181,734 Other operating expenses (includes $40,000 in each year to related party) 813,311 731,037 599,890 ----------- ----------- ----------- Total expenses 3,605,940 3,531,565 3,546,861 ----------- ----------- ----------- NET LOSS $ (193,748) $ (18,733) $ (151,835) =========== =========== =========== NET LOSS ALLOCATION: General partners $ (3,357) $ (325) $ (2,630) Limited partners (190,391) (18,408) (149,205) LIMITED PARTNERSHIP DATA: Net loss per unit $ (14.07) $ (1.36) $ (11.03) =========== =========== =========== 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, 1997, 1996 AND 1995 - -------------------------------------------------------------------------------- Limited General Partners Partners Total BALANCE (DEFICIENCY IN ASSETS), DECEMBER 1, 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) Net loss (190,391) (3,357) (193,748) ----------- ----------- ----------- BALANCE (DEFICIENCY IN ASSETS) NOVEMBER 30, 1997 $(1,392,102) $ (295,843) $(1,687,945) =========== =========== =========== See notes to financial statements. -23- NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS YEARS ENDED NOVEMBER 30, 1997, 1996 AND 1995 - -------------------------------------------------------------------------------- 1997 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (193,748) $ (18,733) $ (151,835) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 466,106 436,460 618,306 Amortization of deferred expenses 14,745 60,855 30,829 Changes in accounts affecting operations: Accounts receivable 88,004 (12,988) (63,625) Prepaid expenses and deposits 28,907 12,460 (33,490) Deferred expenses -- (40,708) (19,234) Accounts payable and accrued expenses 277,394 12,316 (224,565) Refundable tenant deposits (9,108) (5,703) 1,977 ----------- ----------- ----------- Net cash provided by operating activities 672,300 443,959 158,363 ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES - Net additions to investment property (898,139) (408,706) (153,607) ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments on mortgage notes payable (34,307) (99,236) (92,582) Additional borrowings on mortgage notes payable 376,216 -- -- ----------- ----------- ----------- Net cash provided by (used in) financing activities 341,909 (99,236) (92,582) ----------- ----------- ----------- NET INCREASE (DECREASE) IN CASH 116,070 (63,983) (87,826) CASH, BEGINNING OF YEAR 211,840 275,823 363,649 ----------- ----------- ----------- CASH, END OF YEAR $ 327,910 $ 211,840 $ 275,823 =========== =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - Cash paid during the year for interest $ 1,183,922 $ 1,087,879 $ 1,166,752 =========== =========== =========== See notes to financial statements. -24- NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS YEARS ENDED NOVEMBER 30, 1997, 1996 AND 1995 - -------------------------------------------------------------------------------- 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 69% of rental and other income for the year ended November 30, 1997; and a retail shopping center located in Burnsville, Minnesota, a suburb of Minneapolis, which generated the remaining 31% of rental and other income for the year ended November 30, 1997. 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. All debt on Cobblestone Court Shopping Center of $4,292,003 and the second mortgages on both properties of $324,285 mature February 1, 1998 (subsequently extended to October 31, 1998). 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. If the sale were to occur, the Cobblestone Court second mortgage note payable requires the payment of a $100,000 loan purchase fee which is contingent upon the sale of the collateralized property. The fee would be paid out of the sale proceeds. 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' -25- 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 $166,624, $185,981 and $181,734 for the years ended November 30, 1997, 1996 and 1995, respectively. Property management fees paid to Nooney, Inc. in 1997 were $14,296. Additionally, the Partnership paid Nooney Krombach Company $36,667 in 1997 and $40,000 in 1996 and 1995 as reimbursement for management services and indirect expenses in connection with the management of the Partnership. The Partnership paid Nooney, Inc. $3,333 in 1997 for these same reimbursement items. On October 31, 1997, Nooney Company sold its 75% interest in Nooney Capital Corp., the corporate general partner of the Registrant to S-P Properties, Inc., a California corporation, which in turn is a wholly-owned subsidiary of CGS Real Estate Company, Inc., a Texas corporation. Simultaneously, Gregory J. Nooney, Jr., an individual general partner and PAN, Inc., a corporate general partner, sold their economic interests to S-P Properties, Inc. and resigned as general partners subject to a ninety day notification to the limited partners. CGS Real Estate also purchased the real estate management business of Nooney Krombach Company and formed Nooney, Inc. to perform the management of the Partnership. The Partnership continues to pay management fees to Nooney, Inc. Investment property is recorded at the lower of cost or fair market 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 (30 years) using the straight-line method. Tenant alterations are depreciated over the term of the lease on a straight-line basis. 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. 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, 1997 and 1996 and the related collateral book values consist of the following: 1997 1996 Cobblestone Court Shopping Center - --------------------------------- (Book value of $3,854,000 at November 30, 1997) 8.53%, due in monthly interest only payments of $18,438 at LIBOR plus 2.75% (8.47% at November 30, 1997) until February 1, 1998 when the entire principal balance is due. $ 2,602,432 $ 2,603,049 Note payable to bank, interest only due monthly at LIBOR plus 2.75% (8.47% at November 30, 1997) until February 1, 1998 when entire principal balance is due. 1,689,571 1,438,039 Woodhollow Apartments - --------------------- (Book value of $7,256,000 at November 30, 1997) 9.125%, due in monthly payments of $70,170, consisting of both principal and interest, until August 2001 when remaining principal balance of $7,859,989 is due. 8,255,105 8,276,961 Cobblestone Court Shopping Center and Woodhollow Apartments - ------------------------------------------------ Note payable to bank, due in monthly principal payments of $1,000 plus interest at 1% over the bank's prime rate (8.5% at November 30, 1997) until February 1, 1998 when entire principal balance is due. 199,601 211,435 Note payable to bank, interest only due monthly at LIBOR plus 2.75% (8.47% at November 30, 1997) until February 1, 1998, when entire principal balance is due. 124,684 -- ----------- ----------- Total debt of above properties (total book value of $11,110,000 at November 30, 1997) $12,871,393 $12,529,484 =========== =========== In connection with the Cobblestone Court first mortgage 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. As of November 30, 1997 and 1996 there were no excess cash flows. 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, 1997 and 1996, $36,855 and $172,378, respectively, was being held in escrow accounts. On January 31, 1998, the holders of the two notes jointly collateralized by Woodhollow Apartments and Cobblestone Court Shopping Center and the notes on Cobblestone Court Shopping Center extended the due dates to October 31, 1998 at the same rate. -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: 1998 $4,708,292 1999 100,759 2000 110,348 2001 7,951,994 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, 1997 and 1996 are summarized as follows: 1997 1996 ------------------------ ----------------------- Carrying Estimated Carrying Estimated Amount Fair Value Amount Fair Value Mortgage notes payable $12,871,393 $12,968,000 $12,529,484 $12,608,000 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, 1997 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, 1997 are as follows: 1998 $ 437,411 1999 354,756 2000 266,816 2001 46,083 ----------- Total $ 1,105,066 =========== 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 $387,000, $416,000 and $454,000 for the years ended November 30, 1997, 1996 and 1995, respectively. Contingent rentals were not significant for the years ended November 30, 1997, 1996 and 1995. 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. -28- 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 1997: Net loss $ (193,748) $ (307,511) Partners' deficiency in assets (1,687,945) (6,503,186) 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) * * * * * * -29-
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) SCHEDULE - RECONCILIATION OF PARTNERS' EQUITY (DEFICIENCY IN ASSETS) YEARS ENDED NOVEMBER 30, 1997, 1996 AND 1995 - ------------------------------------------------------------------------------------------------------------------------------------ The reconciliation of partners' equity (deficiency in assets) between financial statements and income tax reporting is as follows: 1997 ----------------------------------------------- Limited General Partners Partners Total Balance (deficiency) per statement of partners' equity $ (1,392,102) $ (295,843) $ (1,687,945) 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 3,985 70 4,055 Writedown of investment property not recognized for income tax purposes 1,045,565 18,435 1,064,000 ------------ ----------- ------------ 1,390,355 (277,338) 1,113,017 Less: Excess depreciation deducted for income tax purposes 7,395,960 201,166 7,597,126 Rent concessions not recognized for income tax purposes 190 2 192 Insurance premiums deducted for income tax purposes 18,558 327 18,885 ------------ ------------ ------------ Balance (deficiency) per tax return $ (6,024,353) $ (478,833) $ (6,503,186) ============ ============ ============ 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) ============ ============ ============ -30-
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) SCHEDULE III- REAL ESTATE AND ACCUMULATED DEPRECIATION NOVEMBER 30, 1997 - ------------------------------------------------------------------------------------------------------------------------------------ Column A Column B Column C -------- -------- -------- Initial Cost to Partnership -------------------------------------------- Buildings and Description Encumbrances Land Improvements Total Cobblestone Court Shopping Center, Burnsville, Minnesota $ 4,292,003 $ 1,205,378 $ 4,676,940 $ 5,882,318 Woodhollow Apartments, St. Louis, Missouri 8,255,105 1,013,858 11,651,289 12,665,147 Both properties 324,285 - - - ------------ ------------ ------------ ------------ Total $ 12,871,393 $ 2,219,236 $ 16,328,229 $ 18,547,465 ============ ============ ============ ============
Column D Column E -------- -------- Costs Gross Amount at Which Capitalized Carried at Close of Period Subsequent -------------------------------------------- to Buildings and Description Acquisition Land Improvements Total Cobblestone Court Shopping Center, Burnsville, Minnesota $ 657,789(1) $ 1,205,378 $ 5,334,729 $ 6,540,107(2) Woodhollow Apartments, St. Louis, Missouri 2,189,770(1) 1,013,858 13,841,059 14,854,917 Both properties - - - - ------------ ------------ ------------ ----------- Total $ 2,847,559 $ 2,219,236 $ 19,175,788 $21,395,024 ============ ============ ============ ===========
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 $ 2,686,050(2) 1980 2/16/82 30 yrs. Woodhollow Apartments, St. Louis, Missouri 7,598,733 1971-1972 7/28/82 30 yrs. ------------ Total $ 10,284,783 ============ (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 $(3,854,057). (Continued) -31-
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION YEARS ENDED NOVEMBER 30, 1997, 1996 AND 1995 - ---------------------------------------------------------------------------------------------------------------------- 1997 1996 1995 (A) Reconciliation of amounts in Column E: Balance at beginning of period $ 20,556,298 $ 20,150,890 $ 20,036,471 Add - Cost of improvements 898,139 408,706 153,607 Less - Cost of disposals (59,413) (3,298) (39,188) ------------ ------------ ------------ Balance at end of period $ 21,395,024 $ 20,556,298 $ 20,150,890 ============ ============ ============ (B) Reconciliation of amounts in Column F: Balance at beginning of period $ 9,878,090 $ 9,444,928 $ 8,865,810 Add - Provision during the period 466,106 436,460 618,306 Less - Depreciation on disposals (59,413) (3,298) (39,188) ------------ ------------ ------------ Balance at end of period $ 10,284,783 $ 9,878,090 $ 9,444,928 ============ ============ ============ (C) The aggregate cost of real estate owned for federal income tax purposes $ 22,459,024 $ 21,620,298 $ 21,214,890 ============ ============ ============ (Concluded) -32-
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