-----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, RTUhF07UVj80oXRYMQxfa45WcSeEZH9GOa8FSQdMBT7BCX8XgFwITi14JkSc2Hm3 HygjxHeKHeQWf+deULEbUg== 0000950138-96-000022.txt : 19960228 0000950138-96-000022.hdr.sgml : 19960228 ACCESSION NUMBER: 0000950138-96-000022 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951130 FILED AS OF DATE: 19960227 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: 96525820 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 1 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, 1995 ----------------------------------------------------- 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 34 Pages Exhibit Index located on Page 16 2 [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, 1996, 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, 1996 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, 1982, 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. 3 PART I ------ ITEM 1: BUSINESS - ----------------- 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 described in Item 2 below. 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. During fiscal 1993, one of the Registrant's properties, 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 is expected to further continue its improvement over the next several years. Management believes this trend should increase the value of the Registrant's properties in the future. 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.) 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. 4 ITEM 2: PROPERTIES - ------------------- On February 16, 1982, 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 1980 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. Cobblestone was 92% leased by 18 tenants at year end. The purchase price of Cobblestone was $5,882,318. On July 28, 1982, 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 1971 and 1972, 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. Woodhollow was 93% occupied at year end. The purchase price of Woodhollow was $12,665,147. On December 22, 1983, 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. 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. The following table sets forth certain information as of November 30, 1995, relating to the properties owned by the Partnership.
AVERAGE ANNUALIZED EFFECTIVE TOTAL BASE RENT PRINCIPAL TENANTS SQUARE ANNUALIZED PER PERCENT OVER 10% OF PROPERTY BASE LEASE PROPERTY FEET BASE RENT SQUARE FOOT LEASED RENT REVENUES (%) EXPIRATION - ------------------ --------- ---------- ----------- ------- ------------------------------ ----------- Cobblestone Court S.C. 97,718 $ 672,000 $7.48 92% T.J. Maxx (16%) 2001 Old Country Buffet (10%) 2000 Touch of Countree (10%) 1996 Woodhollow Apartments 402 Units $2,126,000 $5,288/unit 93% None
5 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 1995. PART II ------- ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS - -------------------------------------------------------------- As of February 1, 1996, there were 1,438 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 1994 or fiscal 1995. ITEM 6: SELECTED FINANCIAL DATA - --------------------------------
Year Ended November 30, --------------------------------------------------------------- 1995 1994 1993 1992 1991 ----------- ----------- ----------- ----------- ----------- (Not covered by independent auditors' report) Rental and other income $ 3,372,342 $ 3,266,262 $ 3,330,071 $ 3,373,636 $ 3,461,104 Net loss (151,835) (405,172) (324,856) (771,085) (2,011,861) Data per limited partnership unit: Net loss (11.03) (29.43) (23.60) (56.01) (146.13) Weighted average limited partnership units outstanding 13,529 13,529 13,529 13,529 13,529 At year-end: Total assets 11,322,989 11,789,994 12,303,761 14,790,938 15,543,925 Investment property - net 10,705,962 11,170,661 11,750,886 14,054,978 14,824,961 Mortgage notes payable 12,628,720 12,721,302 12,850,500 14,846,620 14,995,909 Partners' equity (deficiency in assets) (1,475,464) (1,323,629) (918,457) (593,601) 177,484 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, 1995 are $275,823, a decrease of $87,826 from year ended November 30, 1994. The decrease in cash from year ended November 30, 1995 is attributable to the payment of 1994 and 1995 real estate taxes for Woodhollow Apartments. The 1995 real estate taxes were paid in October instead of December to take advantage of a real estate tax law change in the state of Missouri which lowered the real estate taxes by approximately 38% when compared to the 1994 real estate tax invoice. Though cash reserves have decreased from November 30, 1994, the Registrant expects the cash flow provided by operations and the Woodhollow capital reserve escrow to be adequate to fund the anticipated capital expenditures in fiscal year 1996. The anticipated capital expenditures by property are as follows:
Leasing Operating Other Capital Capital Capital Total ---------- ---------- ---------- ---------- Woodhollow Apartments 0 $ 59,452 $223,428 $282,880 Cobblestone Court $ 98,146 0 0 98,146 ---------- ---------- ---------- ---------- $ 98,146 $ 59,452 $223,428 $381,026
Throughout 1996 the Registrant approximates capital expenditures of $381,026. At Woodhollow Apartments, operating capital is necessary in 1996 for carpet and vinyl replacement, hot water heaters and other appliances. In 1996 the Registrant anticipates spending $150,000 from the capital reserve escrow on new siding and parking lot upgrades. The remainder of the other capital expenditures will be for the cost of replacing air conditioning units, signage and the installation of a wheelchair ramp for accessing the clubhouse. Forecasted capital expenditures for Cobblestone Court relate to capital necessary to build out tenant space and fund brokerage lease commissions. During 1994, the Registrant successfully 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. 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. The refinancing of the first mortgage of Woodhollow reduced its annual debt service by approximately $170,000. The holder of the first deed of trust on Cobblestone Court informed the Registrant that they would not renew the loan at maturity due to their underwriting standards relating to loan size. The lender extended the loan 7 several times through June 30, 1996, to allow the Registrant time to place the loan with another mortgage lender. In November the Registrant determined that refinancing the property could not be achieved and placed the property on the market for sale. Subsequent to the end of the fourth quarter, the Registrant executed extensions on the second deed of trust secured by Cobblestone Court and Woodhollow Apartments through June 30, 1996. The terms and conditions of the extensions have not changed from those of previous extensions. During 1995, the State of Missouri passed a law that affected the classification of apartment and nursing home properties. These properties had their property classification changed from commercial to residential thus reducing their assessment rate from 32% to 19%. Woodhollow Apartments qualified under the new law, resulting in a real estate tax reduction of approximately 38%. The savings recognized will be placed into the property's capital reserve escrow. 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. 8 Results of Operations - --------------------- The results of operations for the Registrant's properties for the year ended November 30, 1995, 1994 and 1993 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 Quad I Apartments Court S.C. Warehouse ------------ ------------ ------------ 1995 - ---- Revenues $2,142,229 $1,230,146 0 Expenses 2,288,324 1,179,866 0 ------------ ------------ ------------ Net Income $ (146,095) $ 50,280 0 ============ ============ ============ 1994 - ---- Revenues $2,059,244 $1,164,660 0 Expenses 2,422,264 1,164,660 0 ------------ ------------ ------------ Net Income $ (363,020) $ 44,640 0 ============ ============ ============ 1993 - ---- Revenues $1,944,202 $1,168,903 $ 228,638 Expenses 2,484,760 1,123,580 247,527 Gain on Sale 0 0 286,980 ------------ ------------ ------------ Net Income $ (540,558) $ 45,323 $ 268,091 ============ ============ ============
The three year operating results of Woodhollow Apartments have significantly improved, with revenues increasing and expenses decreasing during the three years presented. The increased revenues over the past three years can be attributable to an overall improvement of the apartment market in the metro west St. Louis area. The improved market has allowed average rental rates to increase and occupancy to remain at relatively high levels. The decrease in expenses can be attributable to decreasing depreciation and amortization resulting from certain capital expenditures becoming fully amortized throughout the three years, decreasing interest expense due to the refinancing completed in 1994 and real estate taxes which decreased from 1994 to 1995. Offsetting the decreases in the aforementioned expense categories were increases in operating expenses. 9 At Cobblestone Court the operating results were mixed with net income decreasing from 1993 to 1994 and then increasing from 1994 to 1995. Revenues for the three years increased from $1,168,903 in 1993, to $1,209,300 in 1994 and to $1,230,146 in 1995. The increase in revenues from 1993 to 1994 and from 1994 to 1995 can be attributable to the strengthening market and the Registrant's ability to negotiate rent increases on new leases and renewals. Another factor contributing to increased revenues from 1993 to 1994 was the increase in real estate tax reimbursement. As the property's real estate tax expense increased from 1993 to 1994, the property had the ability to pass through those increases to the tenants. Expenses increased during the three year period from 1993 to 1995. The increase from 1993 to 1994 relates to an increase in real estate tax expense. The increase from 1994 to 1995 can be attributable to increases in interest expense and parking lot expenditures, offset by decreases in amortization and office expenses. Quad I Warehouses were disposed of on August 10, 1993. The occupancy levels at the Registrant's properties as of November 30, 1995, 1994 and 1993 are detailed in the schedule below.
Occupancy rates at November 30 ------------------------------- 1995 1994 1993 --------- --------- --------- Woodhollow Apartments 93% 93% 95% Cobblestone Court 92% 99% 96%
At Woodhollow Apartments the occupancy remained relatively constant for the three years presented. The Registrant attributes the consistently high occupancy to increasing demand for apartments in the metro west St. Louis area without an increasing supply. The Registrant expects this trend to continue. During the fourth quarter the occupancy at Cobblestone Court remained at 92%. Cobblestone Court did not have any leasing activity during the fourth quarter. For the year, occupancy decreased 7% from year ended December 31, 1994, through leasing of 1,574 square feet to new tenants, renewal leases of 13,167 square feet, and two tenants vacating totaling 8,813 square feet. As previously disclosed, a major tenant who occupies approximately 26% of the available space exercised their option for an additional five years commencing December 1, 1995. The new term will expire January 2001. Two other major tenants that individually occupy approximately 10% of the available space have leases that expire in May 1996 and April 2000. 1995 Comparisons - ---------------- As of November 30, 1995, the Registrant's consolidated revenues are $3,375,929 compared to $3,270,135 for the year ended November 30, 1994. The increase in revenues are $105,794 or 3.24%. 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 10 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 $3,527,764 and $3,675,307, respectively. The decrease of $147,543 or 4.01% 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. 1994 Comparisons - ---------------- Revenues for the years ended November 30, 1994 and 1993 are $3,270,135 and $3,620,743, respectively. The decrease in consolidated revenues relates to a $286,980 gain on the sale of one of the Registrant's properties recorded in 1993. Without consideration to the gain, revenues decreased $63,628. The decrease is attributable to the sold property, Quad I Warehouses, because in 1993 revenues totaling $228,638 were recorded while in 1994 the property had already been sold and no revenues recorded. The decrease in revenues relating to the sold property were offset by increases in revenues at Woodhollow Apartments ($99,311) and Cobblestone Court ($40,397). At Woodhollow Apartments the revenue increases were caused by increasing rental rates and a reduction in rent concessions. Cobblestone Court's increase in revenues relates to higher occupancy and increased tax participation revenues. The Registrant's consolidated expenses for the years ended November 30, 1994 and 1993 are $3,675,307 and $3,945,599, respectively. A significant part of 11 the operating expense decrease relates to Quad I Warehouses. The property operated in 1993 generating expenses of $250,638 while in 1994 no expenses from this property had been recorded due to its sale in August 1993. Without considering the impact of Quad I Warehouses, consolidated expenses would have decreased only $19,654 or less than 1%. Net loss for the year ended November 30, 1994 was $405,172 or $29.43 per limited partnership unit. When compared to year ended November 30, 1993, the net loss increased by $80,316. Even though the property's operating results were weak, cash flow provided by operating activities was $280,203 enabling the Registrant to fund capital expenditures of $137,114 and reduce the outstanding debt by $129,128. Inflation - --------- The effects of inflation did not have a material impact upon the Registrant's operation in fiscal 1995 and are not expected to materially affect the Registrant's operation in 1996. Interest Rates - -------------- Interest rates on floating rate debt increased in 1995 which negatively affected the operations of the Registrant in 1995. Future increases in the prime interest rate can adversely affect the operations of the Registrant during 1996 and in the future. 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 65, and Nooney Capital Corp., a Missouri corporation. Gregory J. Nooney, Jr. is a senior officer of Nooney Company, the sponsor of the Registrant. 12 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. 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 1995 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. 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 1995 the Registrant paid property management and leasing fees of $181,734 to Nooney Krombach Company. During fiscal 1995 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 1995. (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 1995. (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 16. (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 16. (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 21, 1996 /s/ Gregory J. Nooney, Jr. ----------------------------------------- Gregory J. Nooney, Jr. General Partner Nooney Capital Corp. General Partner Date: February 21, 1996 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 Number Description - -------------- --------------------------------------------------------------- 3.1 Amended and Restated Agreement and Certificate of Limited 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- 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, 1985, and is identical in all material respects. 27 Financial Data Schedule (provided for the information of the U.S. Securities and Exchange Commission only) 99.1 List of Directorships filed in response to Item 10. 99.2 Pages 9-11, 26-28 and A-16 - A-19 to the Prospectus 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. EX-27 2
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-30-1995 DEC-01-1994 NOV-30-1995 275,823 0 186,369 0 0 531,331 13,918,234 6,702,698 11,322,989 74,635 12,628,720 0 0 0 (1,475,464) 11,322,989 3,372,342 3,375,929 3,527,764 3,527,764 0 0 1,154,055 (151,835) 0 0 0 0 0 (151,835) (11.03) 0
EX-99.1 3 1 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. EX-99.3 4 1 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, 1995 and 1994, 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, 1995. 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, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended November 30, 1995 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 mortgage lenders to refinance the debt maturing in 1996 or sell Cobblestone Court 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. /S/ DELOITTE & TOUCHE LLP January 12, 1995 2 NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) BALANCE SHEETS NOVEMBER 30, 1995 AND 1994 - -------------------------------------------------------------------------------
1995 1994 ------------ ------------ ASSETS CASH - Includes restricted cash of $152,236 at November 30, 1995 and $-0- at November 30, 1994 $ 275,823 $ 363,649 ACCOUNTS RECEIVABLE 186,369 122,744 PREPAID EXPENSES AND DEPOSITS 69,139 35,649 INVESTMENT PROPERTY (Notes 1 and 3): Land 1,013,858 2,219,236 Buildings and improvements 12,904,376 17,817,235 ------------ ------------ 13,918,234 20,036,471 Less accumulated depreciation (6,702,698) (8,865,810) ------------ ------------ 7,215,536 11,170,661 Investment property held for sale (Note 1) 3,490,426 ------------ ------------ Total investment property 10,705,962 11,170,661 DEFERRED EXPENSES - At amortized cost (Note 2) 85,696 97,291 ------------ ------------ TOTAL $11,322,989 $11,789,994 ============ ============ LIABILITIES AND PARTNERS' EQUITY (DEFICIENCY IN ASSETS) LIABILITIES: Accounts payable and accrued expenses $ 74,635 $ 299,200 Refundable tenant deposits 95,098 93,121 Mortgage notes payable (Notes 1 and 3) 12,628,720 12,721,302 ------------ ------------ Total liabilities 12,798,453 13,113,623 PARTNERS' EQUITY (DEFICIENCY IN ASSETS) (1,475,464) (1,323,629) ------------ ------------ TOTAL $11,322,989 $11,789,994 ============ ============ See notes to financial statements.
3 NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) STATEMENTS OF OPERATIONS YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993 - ---------------------------------------------------------------------------------------------
1995 1994 1993 ------------ ------------ ------------ REVENUES: Rental and other income (Notes 2 and 4) $3,372,342 $3,266,262 $3,330,071 Interest 3,587 3,873 3,692 Gain on sale of investment property 286,980 ------------ ------------ ------------ Total revenues 3,375,929 3,270,135 3,620,743 EXPENSES: Interest 1,154,055 1,200,009 1,359,378 Depreciation and amortization (Note 2) 649,135 764,463 854,470 Real estate taxes 442,140 508,620 519,511 Repairs and maintenance 237,994 174,580 212,834 Property management fees - related party (Note 2) 181,734 176,283 181,608 Payroll 262,816 252,824 256,310 Other operating expenses (includes $40,000 in each year to related party) (Note 2) 599,890 598,528 561,488 ------------ ------------ ------------ Total expenses 3,527,764 3,675,307 3,945,599 ------------ ------------ ------------ NET LOSS $ (151,835) $ (405,172) $ (324,856) ============ ============ ============ NET LOSS ALLOCATION: General partners $ (2,630) $ (7,020) $ (5,629) Limited partners (149,205) (398,152) (319,227) LIMITED PARTNERSHIP DATA (Note 2): Net loss per unit $ (11.03) $ (29.43) $ (23.60) ============ ============ ============ Weighted average limited partnership units outstanding 13,529 13,529 13,529 ============ ============ ============ See notes to financial statements.
4 NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY IN ASSETS) YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993 - ---------------------------------------------------------------------------------------------
Limited General Partners Partners Total ------------ ------------ ------------ BALANCE (DEFICIENCY IN ASSETS), DECEMBER 1, 1992 $ (316,719) $ (276,882) $ (593,601) Net loss (319,227) (5,629) (324,856) ------------ ------------ ------------ BALANCE (DEFICIENCY IN ASSETS), NOVEMBER 30, 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) ============ ============ ============ See notes to financial statements.
5 NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993 - ------------------------------------------------------------------------------------------------------------
1995 1994 1993 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (151,835) $ (405,172) $ (324,856) Adjustments to reconcile net loss to net cash provided by operating activities: Gain on sale of investment property (286,980) Depreciation 618,306 717,339 790,290 Amortization of deferred expenses 30,829 47,124 64,180 Changes in accounts affecting operations: Accounts receivable (63,625) (13,749) 23,666 Due from Nooney Krombach Company 10,298 (10,298) Prepaid expenses and deposits (33,490) (3,265) (1,115) Deferred expenses (19,234) (92,975) (2,736) Accounts payable and accrued expenses (224,565) 11,671 (131,614) Refundable tenant deposits 1,977 8,932 (11,953) ------------ ------------ ------------ Net cash provided by operating activities 158,363 280,203 108,584 ------------ ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of investment property -- 1,918,965 Additions to investment property (153,607) (137,114) (103,475) ------------ ------------ ------------ Net cash (used in) provided by investing activities (153,607) (137,114) 1,815,490 ------------ ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES - Payments on mortgage notes payable (92,582) (129,198) (1,996,120) ------------ ------------ ------------ NET INCREASE (DECREASE) IN CASH (87,826) 13,891 (72,046) CASH, BEGINNING OF YEAR 363,649 349,758 421,804 ------------ ------------ ------------ CASH, END OF YEAR $ 275,823 $ 363,649 $ 349,758 ============ ============ ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - Cash paid during the year for interest $ 1,166,752 $ 1,197,055 $ 1,465,118 ============ ============ ============ See notes to financial statements.
6 NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993 - ------------------------------------------------------------------------------- 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 63.5% of rental and other income for the year ended November 30, 1995; and a retail shopping center located in Burnsville, Minnesota, a suburb of Minneapolis, which generated the remaining 36.5% of rental and other income for the year ended November 30, 1995. 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 $2,692,277 matures June 1996 (Note 3). Second mortgages on both properties of $1,438,039 and $221,443 are also due June 1996. 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 first and second mortgage lenders to renew and restructure the debt or pursue refinancing with another lender. Until a sale occurs, or the first mortgage lender decides to foreclose, the Partnership will continue to operate the properties. 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 Nooney Real Property Investors-Four, L.P. 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 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 7 estate for a management fee. Property management fees paid to Nooney Krombach Company were $181,734, $176,283 and $181,608 for the years ended November 30, 1995, 1994 and 1993, 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. 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. 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, 1995, accounts receivable include approximately $4,000 ($4,000 in 1994) of accrued rent 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. Deferred expenses consist of lease fees and financing costs and are amortized over the terms of their respective leases or notes. Certain reclassifications have been made to 1994 and 1993 amounts to conform with 1995 balances. 8 3. MORTGAGE NOTES PAYABLE Mortgage notes payable as of November 30, 1995 and 1994 and the related collateral book values consist of the following:
1995 1994 ------------ ------------ Cobblestone Court Shopping Center --------------------------------- (Book value of $3,500,000 at November 30, 1995) 8.5%, due in monthly installments of $26,921, including interest, to December 31, 1995 (refinanced on January 1, 1996 to mature on June 29, 1996) when remaining principal balance of $2,636,188 is due $ 2,692,277 $ 2,774,851 Note payable to bank, interest only due monthly at bank's prime rate (8.75% at November 30, 1995) plus 1% to December 31, 1995 (refinanced on January 1, 1996 to mature on June 29, 1996) when entire principal balance is due 1,438,039 1,438,039 Woodhollow Apartments --------------------- (Book value of $7,292,000 at November 30, 1995) 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 (8.75% at November 30, 1995) commencing November 1, 1994 to December 31, 1995 (refinanced on January 1, 1996 to mature on June 29, 1996) when entire principal balance is due 221,443 231,451 ------------ ------------ Total debt of above properties (total book value of $10,792,000 at November 30, 1995) $12,628,720 $12,721,302 ============ ============
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, 1995, no additional deposits were required to be made to the escrow account based upon the net operating income calculation. 9 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: 1996 $ 4,352,000 1997 29,000 1998 93,000 1999 102,000 2000 110,000
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, 1995 are summarized as follows:
Carrying Estimated Amount Fair Value ------------ ------------ Mortgage notes payable $12,628,720 $13,029,593
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, 1995 does not take into consideration expenses that would be incurred to settle the debt obligations at fair value. 10 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, 1995 are as follows: 1996 $ 429,000 1997 301,000 1998 151,000 1999 90,000 2000 90,000 ---------- Total $1,061,000 ==========
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 $454,000, $452,000 and $446,000 for the years ended November 30, 1995, 1994 and 1993, respectively. Contingent rentals were not significant for the years ended November 30, 1995, 1994 and 1993. 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. 11 The comparison of financial statement and income tax reporting is as follows:
Financial Income Statement Tax ------------ ------------ 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) 1993: Net loss $ (324,856) $ (192,753) Partners' deficiency in assets (918,457) (4,223,748)
6. DISPOSAL OF INVESTMENT PROPERTY On August 10, 1993, the Partnership sold Quad I to an unrelated party for $2,050,000. The property had a net book value of $1,631,985 and first mortgage debt outstanding of $1,448,925. The Partnership incurred other selling costs of $131,035. Proceeds of the sale in the amount of $335,000 were used to reduce second mortgage debt on Woodhollow Apartments. In connection with this transaction, second mortgage debt of $200,000 previously on Quad I remained unpaid. The unpaid balance was consolidated with Cobblestone Court Shopping Center second mortgage debt held by the same lender (Note 3). * * * * * * 12 NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) SCHEDULE - RECONCILIATION OF PARTNERS' EQUITY (DEFICIENCY IN ASSETS) YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993 - ------------------------------------------------------------------------------------------------------------ The reconciliation of partners' equity (deficiency in assets) between financial statements and income tax reporting is as follows:
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 ============ ============ ============ (Continued)
13
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) ============ ============ ============ 1993 ---------------------------------------- Limited General Partners Partners Total ------------ ------------ ------------ Balance (deficiency) per statement of partners' equity $ (635,946) $ (282,511) $ (918,457) 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 34,932 616 35,548 Writedown of investment property not recognized for income tax purposes 1,045,565 18,435 1,064,000 ------------ ------------ ------------ 2,177,458 (263,460) 1,913,998 Less: Excess depreciation deducted for income tax purposes 5,943,268 175,569 6,118,837 Rent concessions not recognized for income tax purposes 6,947 122 7,069 Insurance premiums deducted for income tax purposes 11,635 205 11,840 ------------ ------------ ------------ Balance (deficiency) per tax return $(3,784,392) $ (439,356) $(4,223,748) ============ ============ ============
14 NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION NOVEMBER 30, 1995 - ------------------------------------------------------------------------------------------------------------
Column A Column B Column C - ---------------------------------------------------- ------------ ---------------------------------------- Initial Cost to Partnership ---------------------------------------- Buildings and Description Encumbrances Land Improvements Total - ---------------------------------------------------- ------------ ------------ ------------ ------------ Cobblestone Court Shopping Center, Burnsville, Minnesota $ 4,130,316 $ 1,205,378 $ 4,676,940 $ 5,882,318 Woodhollow Apartments, St. Louis, Missouri 8,276,961 1,013,858 11,651,289 12,665,147 Both properties 221,443 ------------ ------------ ------------ ------------ Total $12,628,720 $ 2,219,236 $16,328,229 $18,547,465 ============ ============ ============ ============ Column A Column D Column E - ---------------------------------------------------- ------------ ---------------------------------------- Gross Amount at Which Costs Carried at Close of Period Capitalized ---------------------------------------- Subsequent Buildings to and Description Acquisition Land Improvements Total - ------------------------------------------------- --------------- ------------ ------------ ------------ Cobblestone Court Shopping Center, Burnsville, Minnesota $ 350,338 $ 1,205,378 $ 5,027,278 $ 6,232,656 Woodhollow Apartments, St. Louis, Missouri 1,253,087 1,013,858 12,904,376 13,918,234 Both properties --------------- ------------ ------------ ------------ Total $ 1,603,425 $ 2,219,236 $17,931,654 $20,150,890 =============== ============ ============ ============ 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 (Continued)
15
Column A Column F Column G Column H Column I - ------------------------------------------------- --------------- ------------ ------------ ------------ Life on which Depreciation in Latest Income Accumulated Date of Date Statement Description Depreciation Construction Acquired is Computed - ------------------------------------------------- --------------- ------------ ------------ ------------ Cobblestone Court Shopping Center, Burnsville, Minnesota $ 2,742,230 1980 2/16/82 30 years Woodhollow Apartments, St. Louis, Missouri 6,702,698 1971-1972 7/28/82 30 years --------------- Total $ 9,444,928 =============== (Continued)
16 NOONEY REAL PROPERTY INVESTORS-FOUR, L.P. (A LIMITED PARTNERSHIP) SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993 - ------------------------------------------------------------------------------------------------------------
1995 1994 1993 ------------ ------------ ------------ (A) Reconciliation of amounts in Column E: Balance at beginning of period $20,036,471 $19,902,357 $22,008,963 Add - Cost of improvements 153,607 137,114 103,475 Less: Cost of disposals (39,188) (3,000) (2,210,081) ------------ ------------ ------------ Balance at end of period $20,150,890 $20,036,471 $19,902,357 ============ ============ ============ (B) Reconciliation of amounts in Column F: Balance at beginning of period $ 8,865,810 $ 8,151,471 $ 7,953,985 Add - Provision during the period 618,306 717,339 790,290 Less - Depreciation on disposals (39,188) (3,000) (592,804) ------------ ------------ ------------ Balance at end of period $ 9,444,928 $ 8,865,810 $ 8,151,471 ============ ============ ============ (C) The aggregate cost of real estate owned for federal income tax purposes $21,214,890 $21,100,471 $20,966,357 ============ ============ ============ (Concluded)
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