10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q – QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2018

Or

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _____________ to _____________

Commission File Number: 0-8952

SB PARTNERS
(Exact name of registrant as specified in its charter)
New York	13-6294787
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
1 New Haven Avenue, Suite 102A, Milford, CT.	06460
(Address of principal executive offices)	(Zip Code)

(203) 283-9593

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ X ] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or a emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “non-accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.

[ ] large accelerated filer     [ ] accelerated filer     [X] non-accelerated filer     [ ] small reporting company  [ ] emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [ ]

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). [ ] Yes [X] No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. [ ] Yes [ ] No

Not Applicable

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Not Applicable

SB PARTNERS

INDEX

Part I	Financial Information
Item 1	Financial Statements
	Consolidated Balance Sheets as of September 30, 2018 (unaudited) and December 31, 2017 (audited)	1
	Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2018 and 2017	2
	Consolidated Statements of Changes in Partners' Equity (Deficit) (unaudited) for the nine months ended September 30, 2018	3
	Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2018 and 2017	4
	Notes to Consolidated Financial Statements (unaudited)	5 – 8
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	9 – 12
Item 3	Quantitative and Qualitative Disclosures about Market Risk	13
Item 4T	Controls and Procedures	13
Part II	Other Information	13
	Signatures	14
	Exhibit 31
	Exhibit 32

1

ITEM 1. FINANCIAL STATEMENTS

SB PARTNERS

(A New York Limited Partnership)

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2018 (Unaudited)			2017 (Audited)
Assets:
Investments -
Real estate, at cost
Land	$	470,000		$	470,000
Buildings, furnishings and improvements		5,239,859			5,081,365
Less - accumulated depreciation		(2,204,141	)		(2,084,846	)
		3,505,718			3,466,519
Investment in Sentinel Omaha, LLC, net of reserve for fair value of $10,846,676 and $12,526,608 at September 30, 2018 and December 31, 2017, respectively		43,386,702			37,579,824
		46,892,420			41,046,343
Other Assets -
Cash and cash equivalents		1,343,903			1,449,927
Cash in escrow		509,965			504,778
Other		37,024			7,019
Total assets	$	48,783,312		$	43,008,067
Liabilities:
Loan payable, net of unamortized deferred finance costs of $0 and $7,279 at September 30, 2018 and December 31, 2017, respectively	$	5,693,876		$	5,719,311
Accounts payable		514,799			516,793
Tenant security deposit		102,813			101,414
Accrued expenses		3,286,792			2,922,943
Total liabilities		9,598,280			9,260,461
Partners' Equity (Deficit):
Units of partnership interest without par value;
Limited partner - 7,753 units		39,198,414			33,761,689
General partner - 1 unit		(13,382	)		(14,083	)
Total partners' equity		39,185,032			33,747,606
Total liabilities and partners' equity	$	48,783,312		$	43,008,067

See notes to consolidated financial statements

2

SB PARTNERS

(A New York Limited Partnership)

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
Revenues:
Base rental income	$	187,924		$	182,393		$	556,330		$	539,937
Other rental income		87,041			87,452			261,123			262,356
Interest income		5,825			1,774			14,187			4,504
Total revenues		280,790			271,619			831,640			806,797
Expenses:
Real estate operating expenses		66,265			70,610			206,058			206,441
Amortization of deferred financing costs		-			5,460			7,279			16,380
Depreciation		39,765			39,345			119,295			118,035
Real estate taxes		30,467			30,881			91,401			92,644
Management fees		228,463			222,090			683,530			664,191
Other		32,320			32,730			93,529			97,035
Total expenses		397,280			401,116			1,201,092			1,194,726
Loss from operations		(116,490	)		(129,497	)		(369,452	)		(387,929	)
Equity in net income of investment		1,899,156			4,013,490			4,126,946			9,397,455
(Increase) decrease in reserve for value of investment		(379,831	)		1,205,146			1,679,932			1,529,276
Net income		1,402,835			5,089,139			5,437,426			10,538,802
Income allocated to general partner		181			656			701			1,359
Income allocated to limited partners	$	1,402,654		$	5,088,483		$	5,436,725		$	10,537,443
Income per unit of limited partnership interest (basic and diluted)
Net income	$	180.94		$	656.41		$	701.33		$	1,359.32
Weighted Average Number of Units of Limited Partnership Interest Outstanding		7,753			7,753			7,753			7,753

See notes to consolidated financial statements

3

SB PARTNERS

(A New York Limited Partnership)

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)

For the Nine Months Ended September 30, 2018

Limited Partners:
	Units of Partnership Interest
	Number		Amount		Cumulative Cash Distributions			Accumulated Income		Total
Balance, January 1, 2018		7,753	$	119,968,973	$	(111,721,586	)	$	25,514,302	$	33,761,689
Net income for the period		-		-		-			5,436,725		5,436,725
Balance, September 30, 2018		7,753	$	119,968,973	$	(111,721,586	)	$	30,951,027	$	39,198,414

General Partner:
	Units of Partnership Interest
	Number		Amount		Cumulative Cash Distributions			Accumulated Income		Total
Balance, January 1, 2018		1	$	10,000	$	(26,364	)	$	2,281	$	(14,083	)
Net income for the period		-		-		-			701		701
Balance, September 30, 2018		1	$	10,000	$	(26,364	)	$	2,982	$	(13,382	)

See notes to consolidated financial statements.

4

SB PARTNERS

(A New York Limited Partnership)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Nine Months Ended September 30,
	2018			2017
Cash Flows From Operating Activities:
Net income	$	5,437,426		$	10,538,802
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net (income) of investment		(4,126,946	)		(9,397,455	)
(Decrease) in reserve for value of investment		(1,679,932	)		(1,529,276	)
Depreciation and amortization		126,574			134,414
Net (increase) decrease in operating assets		(30,005	)		4,763
Net (decrease) in accounts payable		(1,994	)		(9,083	)
Net increase in tenant security deposit		1,399			1,399
Net increase in accrued expenses		363,849			344,512
Net cash provided by operating activites		90,371			88,076
Cash Flows From Investing Activities:
Capital additions to real estate owned		(158,494	)		-
Net cash (used in) investing activites		(158,494	)		-
Cash Flows From Financing Activities:
Repayment of loan payable		(32,714	)		(33,883	)
Net cash (used in) financing activities		(32,714	)		(33,883	)
Net change in cash and cash equivalents and cash in escrow		(100,837	)		54,193
Cash and cash equivalents and cash in escrow at beginning of period		1,954,705			1,828,342
Cash and cash equivalents and cash in escrow at end of period	$	1,853,868		$	1,882,535

See notes to consolidated financial statements

5

SB PARTNERS

Notes to Consolidated Financial Statements (Unaudited)

(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

SB Partners, a New York limited partnership, and its subsidiaries (collectively, the "Partnership" or the “Registrant”), have been engaged since April 1971 in acquiring, operating, and holding for investment a varying portfolio of real estate interests. SB Partners Real Estate Corporation (the "General Partner") serves as the general partner of the Partnership.

The consolidated financial statements included herein are unaudited; however, the information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to a fair presentation of the financial position, results of operations and cash flows for the interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Partnership’s latest annual report on Form 10-K.

The results of operations for the three and nine month periods ended September 30, 2018 are not necessarily indicative of the results to be expected for a full year.

For a discussion of the significant accounting and financial reporting policies of the Partnership, refer to the Annual Report on Form 10–K for the year ended December 31, 2017.

(2) RECLASSIFICATION

In November 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016 – 18, Restricted Cash (ASU 2016 – 18). ASU 2016 – 18 requires the statement of cash flows to explain the change during the period in the total cash and cash equivalents and amounts generally described as restricted cash. ASU 2016 – 18 is effective for annual reporting periods beginning after December 15, 2017. The new guidance has been applied retrospectively to each prior period presented.

(3) INVESTMENTS IN REAL ESTATE

As of September 30, 2018, the Partnership owns an industrial flex property in Maple Grove, Minnesota. The following is the cost basis and accumulated depreciation of the real estate investment owned by the Partnership at September 30, 2018 and December 31, 2017.

	No. of		Year of				Real Estate at Cost
Type	Prop.		Acquisition		Description		9/30/2018			12/31/2017
Industrial flex property		1		2002		60,345 sf	$	5,709,859		$	5,551,365
Less: Accumulated depreciation								(2,204,141	)		(2,084,846	)
Investment in real estate							$	3,505,718		$	3,466,519

The Partnership’s wholly owned property located in Maple Grove, Minnesota is 100% leased to a single tenant. The tenant pays fixed base rent which increases approximately 3% each year. The tenant pays directly or reimburses Registrant for all utilities, real estate taxes, insurance and most of the property operating expenses and property management fees. On July 26, 2018, the Partnership and the tenant executed the Fifth Amendment to the lease agreement which extends the expiration date to October 31, 2024. The tenant’s base rent will continue to increase 3% each year and the tenant’s option to terminate the lease early has been eliminated. All other significant terms of the lease remain the same. In accordance with the property management agreement, an affiliate of the general partner was paid a leasing commission in connection with the lease extension. The fee in the amount of $158,494 was based on 75% of the estimated prevailing market rate a third party broker would charge for similar services.

(4) ASSETS MEASURED AT FAIR VALUE

The accounting guidance for Fair Value Measurements establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in determining fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level of input that is significant to the fair value measurement.

6

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value is calculated based on the assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.

The three levels of fair value hierarchy are described below:

● Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical unrestricted assets or liabilities;

● Level 2 - Quoted prices in active markets for similar assets and liabilities or quoted prices in less active dealer or broker markets;

● Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and are unobservable.

The following major categories of assets were measured at fair value as of September 30, 2018 and December 31, 2017:

	Level 3:			September 30,
	Significant			2018
	Unobservable			(Unaudited)
	Inputs			Total
Assets
Investment in Sentinel Omaha, LLC ("Omaha")	$	54,233,378		$	54,233,378
Reserve for fair value of investment		(10,846,676	)		(10,846,676	)
Total assets	$	43,386,702		$	43,386,702

	Level 3:			December 31,
	Significant			2017
	Unobservable			(Audited)
	Inputs			Total
Assets
Investment in Sentinel Omaha, LLC	$	50,106,432		$	50,106,432
Reserve for fair value of investment		(12,526,608	)		(12,526,608	)
Total assets	$	37,579,824		$	37,579,824

The following is a reconciliation of the beginning and ending balances for assets measured at fair value using significant unobservable inputs (Level 3) during the periods ended September 30, 2018 and December 31, 2017:

	Investment in		Reserve for
	Sentinel		fair value
	Omaha, LLC		of investment			Total
Balance at January 1, 2017	$	38,786,395	$	(13,575,238	)	$	25,211,157
Equity in net income of investment		11,320,037		-			11,320,037
Decrease in reserve		-		1,048,630			1,048,630
Balance at December 31, 2017		50,106,432		(12,526,608	)		37,579,824
Equity in net income of investment		4,126,946		-			4,126,946
Decrease in reserve		-		1,679,932			1,679,932
Balance at September 30, 2018	$	54,233,378	$	(10,846,676	)	$	43,386,702

7

Omaha was precluded from making distributions to its investors until its unsecured loan was paid in full. Omaha’s unsecured loan which, as of December 31, 2017 had a balance of $20,859,322, had a maturity date of December 31, 2017. During 2017, Omaha exercised its one option to extend the maturity date to June 30, 2018. Registrant as of the year ended December 31, 2017 had recognized a value in the Omaha investment equal to Registrant’s 30% portion of the equity reported on Omaha’s balance sheet as of December 31, 2017 less a 25% reserve. During the first quarter of 2018, Omaha sold its garden apartment property in Asheville, North Carolina and its garden apartment property in Fresno, California. Net sales proceeds were used first to paying selling expenses and to pay off the mortgage securing each property. Remaining proceeds were used to fully retire the remaining balance of Omaha’s unsecured loan. Registrant as of March 31, 2018 had reduced the reserve to 20%.

(5) INVESTMENT IN SENTINEL OMAHA, LLC

In 2007, the Partnership made an investment in the amount of $37,200,000 in Sentinel Omaha, LLC (“Omaha”). Omaha is a real estate investment company which as of September 30, 2018 owns nine multifamily properties in six markets. Omaha is an affiliate of the Registrant’s general partner. The investment represents a 30% ownership interest in Omaha.

The following are the condensed financial statements (000’s omitted) of Omaha as of September 30, 2018 and December 31, 2017 and the nine months ended September 30, 2018 and 2017.

	(Unaudited)			(Audited)
Balance Sheet	September 30, 2018			December 31, 2017
Investment in real estate, net	$	303,800		$	368,600
Other assets		16,916			10,556
Debt		(135,485	)		(207,187	)
Other liabilities		(4,453	)		(4,948	)
Member's equity	$	180,778		$	167,021

	(Unaudited)			(Unaudited)
Statement of Operations	September 30, 2018			September 30, 2017
Rent and other income	$	25,739		$	21,750
Real estate operating expenses		(12,724	)		(11,094	)
Other expenses		(4,036	)		(3,463	)
Net realized gains (losses)		9,940			(20,794	)
Net unrealized (losses) gains		(5,162	)		31,548
Net increase in net assets	$	13,757		$	17,947

(6) LOAN PAYABLE

       Loan payable consists of the following:

						Annual				Net Carrying Amount
	Interest					Installment		Amount Due		September 30,		December 31,
Property	Rate			Maturity Date		Payments		at Maturity		2018		2017
Bank Loan (a):
Note B		0.000	%		Apr-19		-	$	5,693,876	$	5,693,876	$	5,726,590
Less: unamortized finance costs											-		(7,279	)
Loan payable										$	5,693,876	$	5,719,311

(a) On September 17, 2007, the Partnership entered into a bank loan (the “Loan”) with a bank (“Holder”) in the amount of $22,000,000. On April 29, 2011, the Holder and the Partnership executed a new Loan Agreement (“Loan Agreement”). Registrant paid down a portion of the Loan using the net sales proceeds from the sale of 175 Ambassador Drive in 2011. Registrant made a further pay down, including fully retiring Note A, using the net sales proceeds from the sale of Lino Lakes in 2015. The terms of the remaining bank loan are:

8

1) Note B in the amount of $5,693,876 had a maturity date of April 29, 2018. The Partnership has three one-year options to extend the maturity date if certain conditions are satisfied. Note B previously accrued interest at an annual fixed rate of 5% but only until all interest and principal had been paid in full on Note A. Accrued interest related to Note B in the amount of $1,335,833 was paid off in full on September 18, 2015 using sales proceeds from the sale of Lino Lakes. Thereafter Note B does not accrue any interest. Except as discussed below, payments of principal are deferred until Registrant’s investment in Sentinel Omaha LLC pays distributions to the Partnership or the Partnership sells Eagle Lake Business Center IV or its investment in Omaha. Distributions from Omaha or net proceeds from the sale of Eagle IV or Omaha would be used first to pay the outstanding principal balance of Note B. If there are no distributions from Omaha prior to the Note B maturity, principal is due at maturity, subject to the above mentioned extensions. On January 30, 2018, the Partnership sent notice to Holder to exercise its first one year option to extend the maturity date to April 29, 2019, which Holder has acknowledged.

2) Note B may be voluntarily prepaid upon notice to the Holder, subject to certain requirements as to the application of payments. The Partnership’s obligations under the Notes may be accelerated upon default. See Note 7 below regarding the early retirement of the Loan on October 19, 2018.

3) Until the Partnership’s obligations under Note B is satisfied in full, the Partnership is required to pay a portion of its net operating income (after payment of certain permitted expenses), and the net proceeds from the sale, transfer or refinancing of its remaining properties and investments, toward Note B while retaining the other portion to increase cash reserves. On May 14, 2018, the partnership paid $32,714 to the Holder to pay down a portion of the outstanding balance of Note B. On May 26, 2017, the partnership paid $33,883 to the Holder to pay down a portion of the outstanding balance of Note B. While the obligation under Note B is outstanding, the Partnership is precluded from making distributions to its partners.

4) The Partnership, its general partner and the Holder also entered into a Management Subordination Agreement accruing a portion of the investment management fee payable by the Partnership to its general partner so long as Note B remains outstanding. As of September 30, 2018 and December 31, 2017, $3,286,792 and $2,922,943, respectively of investment management fees have been accrued and are included in accrued expenses on the balance sheet.

5) As additional security for the Partnership’s payment of its obligations under the Loan Agreement, the Partnership, through its wholly-owned subsidiary Eagle IV Realty, LLC, has executed a Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement (“Eagle IV Security Agreement”) and a Pledge Agreement (“Eagle IV Pledge Agreement”) in favor of Holder. The Eagle IV Security Agreement provides Holder with a security interest on the Partnership’s property located in Maple Grove, Minnesota (“Eagle IV”) of up to $5,000,000. The Eagle IV Pledge Agreement pledges to Holder the Partnership’s membership interest in Eagle IV Realty, LLC, the direct owner of Eagle IV. The Partnership has no other debt obligation secured by Eagle IV. The Loan Agreement also provides for a negative pledge on the Partnership’s remaining property and investment.

(7) SUBSEQUENT EVENT

On October 4, 2018, the Partnership and the Holder of the Loan executed a Discounted Payoff Agreement (“Payoff Agreement”) whereby the Partnership will make a one-time payment of $4,000,000 on or before October 30, 2018 to pay off and fully satisfy the balance of the Loan of $5,693,876 at a discount. On October 19, 2018 the Partnership paid the $4,000,000 to the Holder to pay off the Loan. The source of funds to pay off the Loan is a distribution from Sentinel Omaha, LLC of $2,400,000, cash escrow held by the Holder of approximately $510,000 and the remainder from partnership cash reserves to total $4,000,000. The payoff of $4,000,000 to satisfy the Loan is less than the outstanding balance of the Loan in the amount of $5,693,876. The difference of $1,693,876 will be recorded as Income from Forgiveness of Debt.

9

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

General

The consolidated financial statements for the three and nine months ended September 30, 2018 and 2017 reflect the operations of one wholly owned industrial flex property located in Maple Grove, Minnesota and a 30% interest in Omaha.

Registrant’s wholly owned property located in Maple Grove, Minnesota is 100% leased to a single tenant whose lease was to expire October 31, 2019. On July 26, 2018, Registrant and the tenant executed the Fifth Amendment to the lease agreement which extends the expiration date to October 31, 2024. The tenant pays fixed base rent which increases approximately 3% each year. The tenant pays directly or reimburses Registrant for all utilities, real estate taxes, insurance and most of the property operating expenses and property management fees.

Sentinel Omaha LLC’s portfolio consists of eight garden apartment properties and one high rise apartment property. Leases generally are for one year or less. Tenants generally pay fixed rent plus utilities used by tenant.

Results of Operations

Total revenues from continuing operations for the three months ended September 30, 2018 increased $9,000 to approximately $281,000 as compared to approximately $272,000 for the three months ended September 30, 2017. Total revenues increased due to an increase in base rental income and interest income. Base rental income increased $6,000 to approximately $188,000 for the three months ended September 30, 2018 as compared to the same period in 2017 due to a scheduled increase in base rent at Registrant’s property located in Maple Grove, MN. Interest income increased due to an increase in interest rates. Other rental income decreased slightly.

The Registrant reported a net loss from operations of approximately $116,000 for the three months ended September 30, 2018, an improvement of $13,000 as compared to a net loss from operations of approximately $129,000 for the same period in 2017. Net loss from operations consists of net income from the Maple Grove property offset by partnership income and expenses. The decrease of loss from operations was due to higher total revenues combined with lower total expenses. Total expenses from operations for 2018 decreased $4,000 to approximately $397,000 from approximately $401,000 in 2017, due primarily to a decrease in amortization of financing costs of $5,000 and real estate operating expenses of $4,000 partially offset by an increase in management fee expense of $6,000.

Total revenues from continuing operations for the nine months ended September 30, 2018 increased $25,000 to approximately $832,000 as compared to approximately $807,000 for the nine months ended September 30, 2017. Total revenues increased due to an increase in base rental income and interest income. Base rental income increased $16,000 to approximately $556,000 for the nine months ended September 30, 2018 as compared to the same period in 2017 due to a scheduled increase in base rent at Registrant’s property located in Maple Grove, MN. Interest income increased due to an increase in interest rates. Other rental income decreased slightly.

The Registrant reported a net loss from operations of approximately $369,000 for the nine months ended September 30, 2018, an improvement of $19,000 as compared to a net loss from operations of approximately $388,000 for the same period in 2017. Net loss from operations consists of net income from the Maple Grove property offset by partnership income and expenses. The decrease of loss from operations was due to higher total revenues partially offset by higher total expenses. Total expenses from operations for 2018 increased $6,000 to approximately $1,201,000 from approximately $1,195,000 in 2017, due primarily to an increase in management fee expense of $19,000 and an increase in repairs and maintenance costs of $16,000. This increase was partially offset by a decrease in administrative expenses of $14,000 and a decrease in amortization of financing cost of $9,000.

The Registrant has a 30% non-controlling interest in Omaha that is accounted for on a fair value basis. Net increase in net assets decreased $7,006,000 to approximately $6,331,000 for the three months ended September 30, 2018 compared to net increase in net assets of approximately $13,337,000 for the same period in 2017. During 2017, Omaha sold its garden apartment property in Daytona, Florida and sold both garden apartment properties located in Fayetteville, North Carolina. Net sales proceeds in each transaction were used to first pay selling expenses and pay off each property’s related secured mortgage loan. Remaining net sales proceeds were used to reduce Omaha’s unsecured loan. During the twelve months ended December 31, 2017, Omaha reported a net increase in the value of its remaining real estate portfolio of $33,815,000. During the nine months ended September 30, 2018, Omaha sold its garden apartment property in Asheville, North Carolina and its garden apartment property in Fresno, California. Net sales proceeds in each transaction were used to first pay selling expenses and pay off each property’s related secured mortgage loan. Remaining net sales proceeds were used to pay off Omaha’s unsecured loan and were used to pay off Omaha’s secured mortgage loan encumbering its high rise apartment property located in Omaha, NE to further pay down Omaha’s debt. Retirement of the unsecured loan removed certain restrictions placed on Omaha by the lender including making distributions. During the nine months ended September 30, 2018, Omaha reported a net increase in the value of its remaining real estate portfolio of $8,475,000.

10

During 2017 the variable rates on Omaha loans increased as short term LIBOR rates increased. The one month LIBOR rate increased from an average of (0.7164%) during December 2016 to an average of (1.4925%) during December 2017 and further to an average of (2.1755%) during September 2018. Fixed mortgage interest rates for multi-family properties of similar class and location as Omaha’s portfolio also increased during 2017 from an approximate range of 4.10% to 4.15% in early 2017 to 4.35% to 4.50% near the end of 2017 and further to an approximate range of 5.05% to 5.10% in September 2018. Mortgage interest rates may continue to increase in 2019 as the U.S. Federal Reserve has had a policy of increasing the Federal Funds Rate during the past few years. Although increases in fixed mortgage rates do not impact the operating cash flow of the Omaha properties directly, increases in fixed and floating rates on commercial mortgage debt can have a negative impact on capitalization rates and the sales prices Sentinel Omaha may achieve in the future.

Since Omaha has in the past two years fully retired its unsecured loan that restricted its activity, including making distributions to its investors, and has shown improving performance at the properties, the debt risk is estimated to be lower. The investment in a 30% non-controlling interest would still be valued at a discount due to the lack of liquidity and ownership of a non-controlling (minority) interest. Registrant will continue to report a reserve on the value of Omaha on its books but due to the retirement of Omaha's unsecured loan in 2017, the reserve was reduced from 25% as of December 31, 2017 to 20% as of March 31, 2018.

For additional analysis, please refer to the discussions of the individual properties below.

This report on Form 10-Q includes statements that constitute "forward looking statements" within the meaning of Section 27(A) of the Securities Act of 1933 and Section 21(E) of the Securities Exchange Act of 1934 and that are intended to come within the safe harbor protection provided by those sections. By their nature, all forward looking statements involve risks and uncertainties as further described in the Registrant’s latest annual report on Form 10-K. Actual results may differ materially from those contemplated by the forward looking statements.

CRITICAL ACCOUNTING POLICIES

The Registrant’s critical accounting policies are described in its Annual Report on Form 10-K for the year ended December 31, 2017. There were no significant changes to such policies in 2018. There are no accounting pronouncements or interpretations that have been issued, but not yet adopted, that Registrant believes will have a material impact on its consolidated financial statements.

Liquidity and Capital Resources

As of September 30, 2018, the Registrant had cash and cash equivalents of approximately $1,344,000. These balances are approximately $106,000 lower than cash and cash equivalents held on December 31, 2017. Cash and cash equivalents decreased during the nine months ended September 30, 2018 due to a leasing commission paid to an affiliate of the general partner in the amount of $158,494 related to the lease extension executed with the tenant at Registrant’s Maple Grove property combined with partnership expenses and a partial pay down of Registrant’s Note B. This was partially offset by cash flow generated from operating activities at Registrant’s wholly owned property.

Currently, Registrant’s only consistent source of cash is rental income received from the tenant that leases 100% of the leasable space at Registrant’s wholly owned property in Maple Grove. The tenant reimburses Registrant for real estate taxes, insurance and most of the properties’ operating expenses leaving a significant portion of the base rent received available to fund capital improvements and partnership administrative expenses. A portion of any remaining annual cash flow is used to pay down the principal balance of Note B in accordance with the Loan Agreement while the remaining cash income is retained by Registrant as cash reserves. As part of Registrant and the Holder restructuring the bank loan in 2011, Registrant set aside $500,000 in escrow to be held and used only to pay the costs to re-tenant the space at Registrant’s wholly owned property if Registrant’s tenant defaults on its lease or exercises its right to terminate the lease early or fails to renew. On July 26, 2018, Registrant and the tenant executed the Fifth Amendment to the lease agreement which extends the expiration date to October 31, 2024. The tenant’s base rent will continue to increase 3% each year and the tenant’s option to terminate the lease early has been eliminated. All other significant terms of the lease remain the same.

Total outstanding debt at September 30, 2018 consists of Note B at $5,693,876. Under the terms of the Loan Agreement, when Note A was repaid, interest on the Note B stopped accruing. Note B matured April 29, 2018. Registrant has three one-year options to extend the maturity date if certain conditions are satisfied. On January 30, 2018, the Partnership sent notice to Holder to exercise its first one year option to extend the maturity date to April 29, 2019, which Holder has acknowledged. The Registrant has no other debt except normal trade accounts payable and accrued investment management fees.

11

On October 4, 2018, the Partnership and the Holder of the Loan executed a Discounted Payoff Agreement (“Payoff Agreement”) whereby the Partnership will make a one-time payment of $4,000,000 on or before October 30, 2018 to pay off and fully satisfy the balance of the Loan of $5,693,876 at a discount. On October 19, 2018 the Partnership paid the $4,000,000 to the Holder to pay off the Loan. The source of funds to pay off the Loan is a distribution from Sentinel Omaha, LLC of $2,400,000, cash escrow held by the Holder of approximately $510,000 and the remainder from partnership cash reserves to total $4,000,000. The payoff of $4,000,000 to satisfy the Loan is less than the outstanding balance of the Loan in the amount of $5,693,876. The difference of $1,693,876 will be recorded as Income from Forgiveness of Debt.

During the quarter, inflation and changing prices did not significantly affect the markets in which the Registrant conducts its business, or the Registrant's business overall.

Registrant anticipates cash flow generated from the property located in Maple Grove and current cash reserves will be sufficient to cover operating and capital improvement costs and other working capital requirements of the Registrant so long as the tenant remains in place.

Eagle Lake Business Center IV (Maple Grove, Minnesota)

Total revenues for the three months ended September 30, 2018 increased $5,000 to approximately $275,000 as compared to approximately $270,000 for the three months ended September 30, 2017. The property reported higher base rental income and slightly lower other rental income. Base rental income was higher in 2018 due to a scheduled increase in the base rent. Net operating income, which includes deductions for depreciation, increased $2,000 for the three months ended September 30, 2018 to approximately $173,000 from approximately $171,000 for the three months ended September 30, 2017 due primarily to higher total revenues partially offset by higher operating expenses. Operating expenses were higher due to higher repairs and administrative expenses.

Total revenues for the nine months ended September 30, 2018 increased $15,000 to approximately $817,000 as compared to approximately $802,000 for the three months ended September 30, 2017. The property reported higher base rental income and slightly lower other rental income. Base rental income was higher in 2018 due to a scheduled increase in the base rent. Net operating income, which includes deductions for depreciation, decreased $1,000 for the nine months ended September 30, 2018 to approximately $493,000 from approximately $494,000 for the three months ended September 30, 2017 due primarily to higher operating expenses total revenues partially offset by higher total revenues. Operating expenses were higher due to higher repairs and administrative expenses.

Investment in Sentinel Omaha, LLC

Comparison of three months ended September 30, 2018 to September 30, 2017:

As of September 30, 2018, the Omaha portfolio consisted of nine multi-family properties located in six markets. Omaha’s total revenues for the three months ended September 30, 2018 were approximately $8,224,000. Income before net unrealized income and net realized gains was approximately $2,773,000. Major expenses included approximately $1,130,000 for interest expense, $750,000 for repairs and maintenance, $1,133,000 for payroll, and $1,061,000 for real estate taxes. Omaha reported net unrealized gains of approximately $3,558,000 resulting in a net increase in net assets of approximately $6,331,000. For the three months ended September 30, 2018, the Registrant’s 30% equity interest in the income of Omaha was approximately $1,899,000. Registrant reserves 20% of the reported value of Omaha on its balance sheet for September 30, 2018. The reserve for value was adjusted in conjunction with recording the equity income for the quarter ended September 30, 2018. As a result, Registrant reported net income from equity interest in income of Omaha for the quarter ended September 30, 2018 of $1,519,000.

As of September 30, 2017, the Omaha portfolio consisted of 11 multi-family properties located in 8 markets. Omaha’s total revenues for the three months ended September 30, 2017 were approximately $9,867,000. Income before net unrealized income was approximately $3,225,000. Major expenses included approximately $1,554,000 for interest expense, $898,000 for repairs and maintenance, $1,286,000 for payroll, and $1,212,000 for real estate taxes. Omaha reported net unrealized income of approximately $10,152,000 resulting in net increase in net assets of approximately $13,377,000. For the three months ended September 30, 2017, the Registrant’s 30% equity interest in the net increase in net assets of Omaha was approximately $4,013,000. Registrant recognized a reserve of 25% of the reported value of Omaha on its balance sheet. The reserve for value was adjusted in conjunction with recording the equity income for the quarter ended September 30, 2017. As a result, Registrant reported net equity in net increase in net assets of Omaha for the quarter ended September 30, 2017 of $5,219,000.

Omaha’s total revenues for the nine months ended September 30, 2018 were approximately $25,739,000. Income before net unrealized losses and net realized gains was approximately $8,979,000. Major expenses included approximately $3,961,000 for interest expense, 2,101,000 for repairs and maintenance, $3,364,000 for payroll, and $3,091,000 for real estate taxes. Omaha reported net unrealized losses of approximately $5,162,000 and net realized gains of approximately $9,940,000 resulting in a net increase in net assets of approximately $13,757,000. For the nine months ended September 30, 2018, the Registrant’s 30% equity interest in the income of Omaha was approximately $4,127,000. Registrant reserves 20% of the reported value of Omaha on its balance sheet for September 30, 2018. The reserve for value was adjusted in conjunction with recording the equity income for the nine months ended September 30, 2018. As a result, Registrant reported net equity in net increase in net assets of Omaha for the nine months ended September 30, 2018 of approximately $5,807,000.

12

Omaha’s total revenues for the nine months ended September 30, 2017 were approximately $31,616,000. Income before realized losses and net unrealized income was approximately $10,419,000. Major expenses included approximately $4,837,000 for interest expense, $2,694,000 for repairs and maintenance, $4,301,000 for payroll, and $3,952,000 for real estate taxes. Omaha reported realized losses of $20,794,000 and net unrealized income of approximately $41,700,000 resulting in net increase in net assets of approximately $31,325,000. For the nine months ended September 30, 2017, the Registrant’s 30% equity interest in the net increase in net assets of Omaha was approximately $9,397,000. Registrant recognized a reserve of 25% of the reported value of Omaha on its balance sheet. The reserve for value was adjusted in conjunction with recording the equity income for the nine months ended September 30, 2017. As a result, Registrant reported net equity in net increase in net assets of Omaha for the nine months ended September 30, 2017 of approximately $10,927,000.

13

ITEM 3.

None

ITEM 4.

CONTROLS AND PROCEDURES

(a) The Chief Executive Officer and the Principal Accounting & Financial Officer of the general partner of SB Partners have evaluated the disclosure controls and procedures relating to the Registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 2018 as filed with the Securities and Exchange Commission and have judged such controls and procedures to be effective.

(b)     The Chief Executive Officer and the Principal Accounting and Financial Officer of the general partner of SB Partners have evaluated the internal control over financial reporting relating to the Registrant’s Quarterly Report on form 10-Q for the period ended September 30, 2018 and have identified no changes in the Registrant’s internal controls that have materially affected or are reasonably likely to materially affect the Registrant’s internal controls over financial reporting.

PART II – OTHER INFORMATION

ITEM 6.

EXHIBITS

Exhibit No.	Description
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS**	XBRL Instance
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation
101.DEF**	XBRL Taxonomy Extension Definition
101.LAB**	XBRL Taxonomy Extension Labels
101.PRE**	XBRL Taxonomy Extension Presentation

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

14

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		SB PARTNERS
		(Registrant)
	By:	SB PARTNERS REAL ESTATE CORPORATION
		General Partner
Dated: November 12, 2018	By:	/s/ George N. Tietjen III
		George N. Tietjen III
		Chief Executive Officer
		Principal Financial & Accounting Officer
Dated: November 12, 2018	By:	/s/ John H. Zoeller
		John H. Zoeller
		Chief Financial Officer

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT 0F 2002

I, George N. Tietjen III, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of SB Partners;

(2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

(3) Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

(4) The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this quarterly report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

(5)     The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: November 12, 2018	By:	/s/ George N. Tietjen III
		George N. Tietjen III
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT 0F 2002

I, John H. Zoeller, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of SB Partners;

(2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

(3) Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report.

(4) The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this quarterly report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting;

(5)     The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation over internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent function):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

		Principal Financing & Accounting Officer
Dated: November 12, 2018	By:	/s/ John H. Zoeller
		John H. Zoeller
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, George N. Tietjen III, hereby certify that to the best of my knowledge, the Quarterly Report of SB Partners (the “Partnership”) on Form 10-Q for the period ended September 30, 2018 the “Report” fully complies with the requirements of either Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

Dated: November 12, 2018	By:	/s/ George N. Tietjen III
		George N. Tietjen III
		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, John H. Zoeller, hereby certify that to the best of my knowledge, the Quarterly Report of SB Partners (the “Partnership”) on Form 10-Q for the period ended September 30, 2018 the “Report” fully complies with the requirements of either Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

		Principal Financing & Accounting Officer
Dated: November 12, 2018	By:	/s/ John H. Zoeller
		John H. Zoeller
		Chief Financial Officer

XML

Document And Entity Information	9 Months Ended
	Sep. 30, 2018 shares
Document Information [Line Items]
Entity Registrant Name	SB PARTNERS
Entity Central Index Key	0000087047
Trading Symbol	sbp
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding (in shares)	0
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Assets:
Land	$ 470,000	$ 470,000
Buildings, furnishings and improvements	5,239,859	5,081,365
Less - accumulated depreciation	(2,204,141)	(2,084,846)
	3,505,718	3,466,519
Investment in Sentinel Omaha, LLC, net of reserve for fair value of $10,846,676 and $12,526,608 at September 30, 2018 and December 31, 2017, respectively	43,386,702	37,579,824
	46,892,420	41,046,343
Other Assets -
Cash and cash equivalents	1,343,903	1,449,927
Cash in escrow	509,965	504,778
Other	37,024	7,019
Total assets	48,783,312	43,008,067
Liabilities:
Loan payable, net of unamortized deferred finance costs of $0 and $7,279 at September 30, 2018 and December 31, 2017, respectively	5,693,876	5,719,311
Accounts payable	514,799	516,793
Tenant security deposit	102,813	101,414
Accrued expenses	3,286,792	2,922,943
Total liabilities	9,598,280	9,260,461
Partners' Equity (Deficit):
Limited partner - 7,753 units	39,198,414	33,761,689
General partner - 1 unit	(13,382)	(14,083)
Total partners' equity	39,185,032	33,747,606
Total liabilities and partners' equity	$ 48,783,312	$ 43,008,067

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Investment in Sentinel Omaha, LLC, reserve for fair value	$ 10,846,676	$ 12,526,608
Deferred finance costs	$ 0	$ 7,279
Limited partner - units (in shares)	7,753	7,753
General partner - units (in shares)	1	1

XML

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenues:
Base rental income	$ 187,924	$ 182,393	$ 556,330	$ 539,937
Other rental income	87,041	87,452	261,123	262,356
Interest income	5,825	1,774	14,187	4,504
Total revenues	280,790	271,619	831,640	806,797
Expenses:
Real estate operating expenses	66,265	70,610	206,058	206,441
Amortization of deferred financing costs		5,460	7,279	16,380
Depreciation	39,765	39,345	119,295	118,035
Real estate taxes	30,467	30,881	91,401	92,644
Management fees	228,463	222,090	683,530	664,191
Other	32,320	32,730	93,529	97,035
Total expenses	397,280	401,116	1,201,092	1,194,726
Loss from operations	(116,490)	(129,497)	(369,452)	(387,929)
Equity in net income of investment	1,899,156	4,013,490	4,126,946	9,397,455
(Increase) decrease in reserve for value of investment	(379,831)	1,205,146	1,679,932	1,529,276
Net income	1,402,835	5,089,139	5,437,426	10,538,802
Income allocated to general partner	181	656	701	1,359
Income allocated to limited partners	$ 1,402,654	$ 5,088,483	$ 5,436,725	$ 10,537,443
Income per unit of limited partnership interest (basic and diluted)
Net income (in dollars per share)	$ 180.94	$ 656.41	$ 701.33	$ 1,359.32
Weighted Average Number of Units of Limited Partnership Interest Outstanding (in shares)	7,753	7,753	7,753	7,753

XML

Consolidated Statements of Changes in Partners' Equity (Deficit) (Unaudited) - 9 months ended Sep. 30, 2018 - USD ($)	Limited Partner [Member] Units of Partnership [Member]	Limited Partner [Member] Cumulative Cash Distributions [Member]	Limited Partner [Member] Retained Earnings [Member]	Limited Partner [Member]	General Partner [Member] Units of Partnership [Member]	General Partner [Member] Cumulative Cash Distributions [Member]	General Partner [Member] Retained Earnings [Member]	General Partner [Member]	Total
Balance (in shares) at Dec. 31, 2017	7,753				1
Balance at Dec. 31, 2017	$ 119,968,973	$ (111,721,586)	$ 25,514,302	$ 33,761,689	$ 10,000	$ (26,364)	$ 2,281	$ (14,083)	$ 33,747,606
Net income			5,436,725	5,436,725			701	701	5,437,426
Balance (in shares) at Sep. 30, 2018	7,753				1
Balance at Sep. 30, 2018	$ 119,968,973	$ (111,721,586)	$ 30,951,027	$ 39,198,414	$ 10,000	$ (26,364)	$ 2,982	$ (13,382)	$ 39,185,032

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Cash Flows From Operating Activities:
Net income	$ 1,402,835	$ 5,089,139	$ 5,437,426	$ 10,538,802
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net (income) of investment	(1,899,156)	(4,013,490)	(4,126,946)	(9,397,455)
(Decrease) in reserve for value of investment	379,831	(1,205,146)	(1,679,932)	(1,529,276)
Depreciation and amortization			126,574	134,414
Net (increase) decrease in operating assets			(30,005)	4,763
Net (decrease) in accounts payable			(1,994)	(9,083)
Net increase in tenant security deposit			1,399	1,399
Net increase in accrued expenses			363,849	344,512
Net cash provided by operating activites			90,371	88,076
Cash Flows From Investing Activities:
Capital additions to real estate owned			(158,494)
Net cash (used in) investing activites			(158,494)
Cash Flows From Financing Activities:
Repayment of loan payable			(32,714)	(33,883)
Net cash (used in) financing activities			(32,714)	(33,883)
Net change in cash and cash equivalents and cash in escrow			(100,837)	54,193
Cash and cash equivalents and cash in escrow at beginning of period			1,954,705	1,828,342	$ 1,828,342
Cash and cash equivalents and cash in escrow at end of period	$ 1,853,868	$ 1,882,535	$ 1,853,868	$ 1,882,535	$ 1,954,705

XML

Note 1 - Organization and Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

(

1

) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

SB Partners, a New York limited partnership, and its subsidiaries (collectively, the "Partnership" or the “Registrant”), have been engaged since

April 1971

in acquiring, operating, and holding for investment a varying portfolio of real estate interests. SB Partners Real Estate Corporation (the "General Partner") serves as the general partner of the Partnership.

The consolidated financial statements included herein are unaudited; however, the information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to a fair presentation of the financial position, results of operations and cash flows for the interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented

not

misleading. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Partnership’s latest annual report on Form

10

-K.

The results of operations for the

three

and

nine

month periods ended

September 30, 2018

are

not

necessarily indicative of the results to be expected for a full year.

For a discussion of the significant accounting and financial reporting policies of the Partnership, refer to the Annual Report on Form

10–K

for the year ended

December 31, 2017.

XML

Note 2 - Reclassification

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Reclassifications [Text Block]

(

2

) RECLASSIFICATION

In

November 2016,

the Financial Accounting Standards Board issued Accounting Standards Update

No.

2016

–

18,

Restricted Cash

(ASU

2016

–

18

). ASU

2016

–

18

requires the statement of cash flows to explain the change during the period in the total cash and cash equivalents and amounts generally described as restricted cash. ASU

2016

–

18

is effective for annual reporting periods beginning after

December 15, 2017.

The new guidance has been applied retrospectively to each prior period presented.

XML

Note 3 - Investments in Real Estate

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Real Estate Disclosure [Text Block]

(

3

) INVESTMENTS IN REAL ESTATE

As of

September 30, 2018,

the Partnership owns an industrial flex property in Maple Grove, Minnesota. The following is the cost basis and accumulated depreciation of the real estate investment owned by the Partnership at

September 30, 2018

and

December 31, 2017.

	No. of		Year of				Real Estate at Cost
Type	Prop.		Acquisition		Description		9/30/2018			12/31/2017
Industrial flex property		1		2002		60,345 sf	$	5,709,859		$	5,551,365
Less: Accumulated depreciation								(2,204,141	)		(2,084,846	)
Investment in real estate							$	3,505,718		$	3,466,519

The Partnership’s wholly owned property located in Maple Grove, Minnesota is

100%

leased to a single tenant. The tenant pays fixed base rent which increases approximately

3%

each year. The tenant pays directly or reimburses Registrant for all utilities, real estate taxes, insurance and most of the property operating expenses and property management fees. On

July 26, 2018,

the Partnership and the tenant executed the Fifth Amendment to the lease agreement which extends the expiration date to

October 31, 2024.

The tenant’s base rent will continue to increase

3%

each year and the tenant’s option to terminate the lease early has been eliminated. All other significant terms of the lease remain the same. In accordance with the property management agreement, an affiliate of the general partner was paid a leasing commission in connection with the lease extension. The fee in the amount of

$158,494

was based on

75%

of the estimated prevailing market rate a

third

party broker would charge for similar services.

XML

Note 4 - Assets Measured at Fair Value

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Fair Value Measurement and Measurement Inputs, Recurring and Nonrecurring [Text Block]

(

4

) ASSETS MEASURED AT FAIR VALUE

The accounting guidance for Fair Value Measurements establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in determining fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into

three

levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level of input that is significant to the fair value measurement.

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value is calculated based on the assumptions that market participants would use in pricing the asset or liability,

not

on assumptions specific to the entity.

The

three

levels of fair value hierarchy are described below:

● Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical unrestricted assets or liabilities;

● Level 2 - Quoted prices in active markets for similar assets and liabilities or quoted prices in less active dealer or broker markets;

● Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and are unobservable.

The following major categories of assets were measured at fair value as of

September 30, 2018

and

December 31, 2017:

	Level 3:			September 30,
	Significant			2018
	Unobservable			(Unaudited)
	Inputs			Total
Assets
Investment in Sentinel Omaha, LLC ("Omaha")	$	54,233,378		$	54,233,378
Reserve for fair value of investment		(10,846,676	)		(10,846,676	)
Total assets	$	43,386,702		$	43,386,702

	Level 3:			December 31,
	Significant			2017
	Unobservable			(Audited)
	Inputs			Total
Assets
Investment in Sentinel Omaha, LLC	$	50,106,432		$	50,106,432
Reserve for fair value of investment		(12,526,608	)		(12,526,608	)
Total assets	$	37,579,824		$	37,579,824

The following is a reconciliation of the beginning and ending balances for assets measured at fair value using significant unobservable inputs (Level

3

) during the periods ended

September 30, 2018

and

December 31, 2017:

	Investment in		Reserve for
	Sentinel		fair value
	Omaha, LLC		of investment			Total
Balance at January 1, 2017	$	38,786,395	$	(13,575,238	)	$	25,211,157
Equity in net income of investment		11,320,037		-			11,320,037
Decrease in reserve		-		1,048,630			1,048,630
Balance at December 31, 2017		50,106,432		(12,526,608	)		37,579,824
Equity in net income of investment		4,126,946		-			4,126,946
Decrease in reserve		-		1,679,932			1,679,932
Balance at September 30, 2018	$	54,233,378	$	(10,846,676	)	$	43,386,702

Omaha was precluded from making distributions to its investors until its unsecured loan was paid in full. Omaha’s unsecured loan which, as of

December 31, 2017

had a balance of

$20,859,322,

had a maturity date of

December 31, 2017.

During

2017,

Omaha exercised its

one

option to extend the maturity date to

June 30, 2018.

Registrant as of the year ended

December 31, 2017

had recognized a value in the Omaha investment equal to Registrant’s

30%

portion of the equity reported on Omaha’s balance sheet as of

December 31, 2017

less a

25%

reserve. During the

first

quarter of

2018,

Omaha sold its garden apartment property in Asheville, North Carolina and its garden apartment property in Fresno, California. Net sales proceeds were used

first

to paying selling expenses and to pay off the mortgage securing each property. Remaining proceeds were used to fully retire the remaining balance of Omaha’s unsecured loan. Registrant as of

March 31, 2018

had reduced the reserve to

20%.

XML

Note 5 - Investment in Sentinel Omaha, LLC

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Equity Method Investments and Joint Ventures Disclosure [Text Block]

(

5

) INVESTMENT IN SENTINEL OMAHA, LLC

In

2007,

the Partnership made an investment in the amount of

$37,200,000

in Sentinel Omaha, LLC (“Omaha”). Omaha is a real estate investment company which as of

September 30, 2018

owns

nine

multifamily properties in

six

markets. Omaha is an affiliate of the Registrant’s general partner. The investment represents a

30%

ownership interest in Omaha.

The following are the condensed financial statements (

000’s

omitted) of Omaha as of

September 30, 2018

and

December 31, 2017

and the

nine

months ended

September 30, 2018

and

2017.

	(Unaudited)			(Audited)
Balance Sheet	September 30, 2018			December 31, 2017
Investment in real estate, net	$	303,800		$	368,600
Other assets		16,916			10,556
Debt		(135,485	)		(207,187	)
Other liabilities		(4,453	)		(4,948	)
Member's equity	$	180,778		$	167,021

	(Unaudited)			(Unaudited)
Statement of Operations	September 30, 2018			September 30, 2017
Rent and other income	$	25,739		$	21,750
Real estate operating expenses		(12,724	)		(11,094	)
Other expenses		(4,036	)		(3,463	)
Net realized gains (losses)		9,940			(20,794	)
Net unrealized (losses) gains		(5,162	)		31,548
Net increase in net assets	$	13,757		$	17,947

XML

Note 6 - Loan Payable

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Debt Disclosure [Text Block]

(

6

) LOAN PAYABLE

       Loan payable consists of the following:

						Annual				Net Carrying Amount
	Interest					Installment		Amount Due		September 30,		December 31,
Property	Rate			Maturity Date		Payments		at Maturity		2018		2017
Bank Loan (a):
Note B		0.000	%		Apr-19		-	$	5,693,876	$	5,693,876	$	5,726,590
Less: unamortized finance costs											-		(7,279	)
Loan payable										$	5,693,876	$	5,719,311

(a) On September 17, 2007, the Partnership entered into a bank loan (the “Loan”) with a bank (“Holder”) in the amount of $22,000,000. On April 29, 2011, the Holder and the Partnership executed a new Loan Agreement (“Loan Agreement”). Registrant paid down a portion of the Loan using the net sales proceeds from the sale of 175 Ambassador Drive in 2011. Registrant made a further pay down, including fully retiring Note A, using the net sales proceeds from the sale of Lino Lakes in 2015. The terms of the remaining bank loan are:

1 ) Note B in the amount of $5,693,876 had a maturity date of April 29, 2018 . The Partnership has three one -year options to extend the maturity date if certain conditions are satisfied. Note B previously accrued interest at an annual fixed rate of 5% but only until all interest and principal had been paid in full on Note A. Accrued interest related to Note B in the amount of $1,335,833 was paid off in full on September 18, 2015 using sales proceeds from the sale of Lino Lakes. Thereafter Note B does not accrue any interest. Except as discussed below, payments of principal are deferred until Registrant’s investment in Sentinel Omaha LLC pays distributions to the Partnership or the Partnership sells Eagle Lake Business Center IV or its investment in Omaha. Distributions from Omaha or net proceeds from the sale of Eagle IV or Omaha would be used first to pay the outstanding principal balance of Note B. If there are no distributions from Omaha prior to the Note B maturity, principal is due at maturity, subject to the above mentioned extensions. On January 30, 2018, the Partnership sent notice to Holder to exercise its first one year option to extend the maturity date to April 29, 2019, which Holder has acknowledged.

2 ) Note B may be voluntarily prepaid upon notice to the Holder, subject to certain requirements as to the application of payments. The Partnership’s obligations under the Notes may be accelerated upon default. See Note 7 below regarding the early retirement of the Loan on October 19, 2018.

3 ) Until the Partnership’s obligations under Note B is satisfied in full, the Partnership is required to pay a portion of its net operating income (after payment of certain permitted expenses), and the net proceeds from the sale, transfer or refinancing of its remaining properties and investments, toward Note B while retaining the other portion to increase cash reserves. On May 14, 2018, the partnership paid $32,714 to the Holder to pay down a portion of the outstanding balance of Note B. On May 26, 2017, the partnership paid $33,883 to the Holder to pay down a portion of the outstanding balance of Note B. While the obligation under Note B is outstanding, the Partnership is precluded from making distributions to its partners.

4 ) The Partnership, its general partner and the Holder also entered into a Management Subordination Agreement accruing a portion of the investment management fee payable by the Partnership to its general partner so long as Note B remains outstanding. As of September 30, 2018 and December 31, 2017, $3,286,792 and $2,922,943, respectively of investment management fees have been accrued and are included in accrued expenses on the balance sheet.

5 ) As additional security for the Partnership’s payment of its obligations under the Loan Agreement, the Partnership, through its wholly-owned subsidiary Eagle IV Realty, LLC, has executed a Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement (“Eagle IV Security Agreement”) and a Pledge Agreement (“Eagle IV Pledge Agreement”) in favor of Holder. The Eagle IV Security Agreement provides Holder with a security interest on the Partnership’s property located in Maple Grove, Minnesota (“Eagle IV”) of up to $5,000,000. The Eagle IV Pledge Agreement pledges to Holder the Partnership’s membership interest in Eagle IV Realty, LLC, the direct owner of Eagle IV. The Partnership has no other debt obligation secured by Eagle IV. The Loan Agreement also provides for a negative pledge on the Partnership’s remaining property and investment.

XML

Note 7 - Subsequent Event

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Subsequent Events [Text Block]

(

7

) SUBSEQUENT EVENT

On

October 4, 2018,

the Partnership and the Holder of the Loan executed a Discounted Payoff Agreement (“Payoff Agreement”) whereby the Partnership will make a

one

-time payment of

$4,000,000

on or before

October 30, 2018

to pay off and fully satisfy the balance of the Loan of

$5,693,876

at a discount. On

October 19, 2018

the Partnership paid the

$4,000,000

to the Holder to pay off the Loan. The source of funds to pay off the Loan is a distribution from Sentinel Omaha, LLC of

$2,400,000,

cash escrow held by the Holder of approximately

$510,000

and the remainder from partnership cash reserves to total

$4,000,000.

The payoff of

$4,000,000

to satisfy the Loan is less than the outstanding balance of the Loan in the amount of

$5,693,876.

The difference of

$1,693,876

will be recorded as Income from Forgiveness of Debt.

XML

Note 3 - Investments in Real Estate (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Real Estate Properties [Table Text Block]

	No. of		Year of				Real Estate at Cost
Type	Prop.		Acquisition		Description		9/30/2018			12/31/2017
Industrial flex property		1		2002		60,345 sf	$	5,709,859		$	5,551,365
Less: Accumulated depreciation								(2,204,141	)		(2,084,846	)
Investment in real estate							$	3,505,718		$	3,466,519

XML

Note 4 - Assets Measured at Fair Value (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Table Text Block]

	Level 3:			September 30,
	Significant			2018
	Unobservable			(Unaudited)
	Inputs			Total
Assets
Investment in Sentinel Omaha, LLC ("Omaha")	$	54,233,378		$	54,233,378
Reserve for fair value of investment		(10,846,676	)		(10,846,676	)
Total assets	$	43,386,702		$	43,386,702

	Level 3:			December 31,
	Significant			2017
	Unobservable			(Audited)
	Inputs			Total
Assets
Investment in Sentinel Omaha, LLC	$	50,106,432		$	50,106,432
Reserve for fair value of investment		(12,526,608	)		(12,526,608	)
Total assets	$	37,579,824		$	37,579,824

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Investment in		Reserve for
	Sentinel		fair value
	Omaha, LLC		of investment			Total
Balance at January 1, 2017	$	38,786,395	$	(13,575,238	)	$	25,211,157
Equity in net income of investment		11,320,037		-			11,320,037
Decrease in reserve		-		1,048,630			1,048,630
Balance at December 31, 2017		50,106,432		(12,526,608	)		37,579,824
Equity in net income of investment		4,126,946		-			4,126,946
Decrease in reserve		-		1,679,932			1,679,932
Balance at September 30, 2018	$	54,233,378	$	(10,846,676	)	$	43,386,702

XML

Note 5 - Investment in Sentinel Omaha, LLC (Tables)

9 Months Ended

Sep. 30, 2018

Statement of Operations [Member]

Notes Tables

Real Estate Investment Financial Statements, Disclosure [Table Text Block]

	(Unaudited)			(Unaudited)
Statement of Operations	September 30, 2018			September 30, 2017
Rent and other income	$	25,739		$	21,750
Real estate operating expenses		(12,724	)		(11,094	)
Other expenses		(4,036	)		(3,463	)
Net realized gains (losses)		9,940			(20,794	)
Net unrealized (losses) gains		(5,162	)		31,548
Net increase in net assets	$	13,757		$	17,947

Balance Sheet [Member]

Notes Tables

Real Estate Investment Financial Statements, Disclosure [Table Text Block]

	(Unaudited)			(Audited)
Balance Sheet	September 30, 2018			December 31, 2017
Investment in real estate, net	$	303,800		$	368,600
Other assets		16,916			10,556
Debt		(135,485	)		(207,187	)
Other liabilities		(4,453	)		(4,948	)
Member's equity	$	180,778		$	167,021

XML

Note 6 - Loan Payable (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

						Annual				Net Carrying Amount
	Interest					Installment		Amount Due		September 30,		December 31,
Property	Rate			Maturity Date		Payments		at Maturity		2018		2017
Bank Loan (a):
Note B		0.000	%		Apr-19		-	$	5,693,876	$	5,693,876	$	5,726,590
Less: unamortized finance costs											-		(7,279	)
Loan payable										$	5,693,876	$	5,719,311

XML

Note 3 - Investments in Real Estate (Details Textual) - Maple Grove (Eagle Lake Business Center IV) [Member] - USD ($)		9 Months Ended
	Jul. 26, 2018	Sep. 30, 2018
Operating Lease Tenant Leasing Percentage		100.00%
Operating Lease, Yearly Percentage Increase in Tenants Base Rent	3.00%	3.00%
Property Management Fee Revenue		$ 158,494
Property Management Fee, Percent Fee		75.00%

XML

Note 3 - Investments in Real Estate - Summary of Investments in Real Estate (Details)	9 Months Ended
	Sep. 30, 2018 USD ($) ft²	Dec. 31, 2017 USD ($)
Less: Accumulated depreciation	$ (2,204,141)	$ (2,084,846)
Investment in real estate	$ 3,505,718	3,466,519
Industrial Flex Property [Member]
No. of Prop.	1
Year of Acquisition	2002
Description (Square Foot) | ft²	60,345
Investment in real estate, at cost	$ 5,709,859	5,551,365
Less: Accumulated depreciation	(2,204,141)	(2,084,846)
Investment in real estate	$ 3,505,718	$ 3,466,519

XML

Note 4 - Assets Measured at Fair Value (Details Textual) - USD ($)	Sep. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
Sentinel Omaha LLC [Member]
Equity Method Investment, Ownership Percentage	30.00%		30.00%
Equity Method Investment, Fair Value, Reserve, Percent		20.00%	25.00%
Sentinel Omaha LLC [Member]
Unsecured Debt, Total			$ 20,859,322

XML

Note 4 - Assets Measured at Fair Value - Fair Value Measurement of Assets (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017	Dec. 31, 2016
Reserve for fair value of investment	$ (10,846,676)	$ (12,526,608)
Total assets	43,386,702	37,579,824
Sentinel Omaha LLC [Member]
Investment in Sentinel Omaha, LLC ("Omaha")	54,233,378	50,106,432
Reserve for fair value of investment	(10,846,676)	(12,526,608)
Total assets	43,386,702	37,579,824
Fair Value, Inputs, Level 3 [Member] | Sentinel Omaha LLC [Member]
Investment in Sentinel Omaha, LLC ("Omaha")	54,233,378	50,106,432	$ 38,786,395
Reserve for fair value of investment	(10,846,676)	(12,526,608)
Total assets	$ 43,386,702	$ 37,579,824

XML

Note 4 - Assets Measured at Fair Value - Reconciliation of Assets Measured at Fair Value (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
(Decrease) in reserve for value of investment	$ 379,831	$ (1,205,146)	$ (1,679,932)	$ (1,529,276)
Sentinel Omaha LLC [Member]
Balance, Investment in Sentinel Omaha, LLC			50,106,432
Balance, Investment in Sentinel Omaha, LLC	54,233,378		54,233,378		$ 50,106,432
Fair Value, Inputs, Level 3 [Member] | Sentinel Omaha LLC [Member]
Balance, Investment in Sentinel Omaha, LLC			50,106,432	38,786,395	38,786,395
Equity in net income of investment, Investment in Sentinel Omaha, LLC			4,126,946		11,320,037
(Decrease) in reserve for value of investment
Balance, Investment in Sentinel Omaha, LLC	54,233,378		54,233,378		50,106,432
Balance, Reserve for fair value of investment			(12,526,608)	(13,575,238)	(13,575,238)
Decrease in reserve, Reserve for fair value of investment			1,679,932		1,048,630
Balance, Reserve for fair value of investment	(10,846,676)		(10,846,676)		(12,526,608)
Balance			37,579,824	$ 25,211,157	25,211,157
Equity in net income of investment			4,126,946		11,320,037
Decrease in reserve			1,679,932		1,048,630
Balance	$ 43,386,702		$ 43,386,702		$ 37,579,824

XML

Note 5 - Investment in Sentinel Omaha, LLC (Details Textual) - Sentinel Omaha LLC [Member]	Sep. 30, 2018	Dec. 31, 2017	Dec. 31, 2007 USD ($)
Investment Owned, at Cost			$ 37,200,000
Number of Multifamily Properties	9
Number of Markets	6
Equity Method Investment, Ownership Percentage	30.00%	30.00%

XML

Note 5 - Investment in Sentinel Omaha, LLC - Balance Sheet (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Other assets	$ 37,024	$ 7,019
Debt	(5,693,876)	(5,719,311)
Sentinel Omaha LLC [Member]
Investment in real estate, net	303,800,000	368,600,000
Other assets	16,916,000	10,556,000
Debt	(135,485,000)	(207,187,000)
Other liabilities	(4,453,000)	(4,948,000)
Member's equity	$ 180,778,000	$ 167,021,000

XML

Note 5 - Investment in Sentinel Omaha, LLC - Statement of Operations (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Rent and other income	$ 280,790	$ 271,619	$ 831,640	$ 806,797
Real estate operating expenses	(66,265)	(70,610)	(206,058)	(206,441)
Other expenses	(32,320)	(32,730)	(93,529)	(97,035)
Net increase in net assets	$ 1,402,835	$ 5,089,139	5,437,426	10,538,802
Sentinel Omaha LLC [Member]
Rent and other income			25,739,000	21,750,000
Real estate operating expenses			(12,724,000)	(11,094,000)
Other expenses			(4,036,000)	(3,463,000)
Net realized gains (losses)			9,940,000	(20,794,000)
Net unrealized (losses) gains			(5,162,000)	31,548,000
Net increase in net assets			$ 13,757,000	$ 17,947,000

XML

Note 6 - Loan Payable (Details Textual)					9 Months Ended
		May 14, 2018 USD ($)	May 26, 2017 USD ($)	Apr. 29, 2011 USD ($)	Sep. 30, 2018 USD ($)		Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)	Sep. 17, 2007 USD ($)
Long-term Debt, Total					$ 5,693,876			$ 5,719,311
Repayments of Unsecured Debt					32,714		$ 33,883
Notes Payable to Banks [Member]
Debt Instrument, Face Amount									$ 22,000,000
Management Fee Payable					3,286,792			2,922,943
Security Interest on Partnership's Property Maximum					5,000,000
Notes Payable to Banks [Member] | Note B [Member]
Debt Instrument, Face Amount	[1]				5,693,876
Long-term Debt, Total				$ 5,693,876	$ 5,693,876			$ 5,719,311
Original Maturity Date				Apr. 29, 2018	Apr. 30, 2019	[1]
Number of Extension Options				3
Term of Extension Options				1 year
Debt Instrument, Interest Rate, Stated Percentage				5.00%	0.00%	[1]
Interest Payable				$ 1,335,833
Repayments of Unsecured Debt		$ 32,714	$ 33,883

[1] On September 17, 2007, the Partnership entered into a bank loan (the "Loan") with a bank ("Holder") in the amount of $22,000,000. On April 29, 2011, the Holder and the Partnership executed a new Loan Agreement ("Loan Agreement"). Registrant paid down a portion of the Loan using the net sales proceeds from the sale of 175 Ambassador Drive in 2011. Registrant made a further pay down, including fully retiring Note A, using the net sales proceeds from the sale of Lino Lakes in 2015. The terms of the remaining bank loan are: 1) Note B in the amount of $5,693,876 had a maturity date of April 29, 2018. The Partnership has three one-year options to extend the maturity date if certain conditions are satisfied. Note B previously accrued interest at an annual fixed rate of 5% but only until all interest and principal had been paid in full on Note A. Accrued interest related to Note B in the amount of $1,335,833 was paid off in full on September 18, 2015 using sales proceeds from the sale of Lino Lakes. Thereafter Note B does not accrue any interest. Except as discussed below, payments of principal are deferred until Registrant’s investment in Sentinel Omaha LLC pays distributions to the Partnership or the Partnership sells Eagle Lake Business Center IV or its investment in Omaha. Distributions from Omaha or net proceeds from the sale of Eagle IV or Omaha would be used first to pay the outstanding principal balance of Note B. If there are no distributions from Omaha prior to the Note B maturity, principal is due at maturity, subject to the above mentioned extensions. On January 30, 2018, the Partnership sent notice to Holder to exercise its first one year option to extend the maturity date to April 29, 2019, which Holder has acknowledged. 2) Note B may be voluntarily prepaid upon notice to the Holder, subject to certain requirements as to the application of payments. The Partnership's obligations under the Notes may be accelerated upon default. See Note 7 below regarding the early retirement of the Loan on October 19, 2018. 3) Until the Partnership's obligations under Note B is satisfied in full, the Partnership is required to pay a portion of its net operating income (after payment of certain permitted expenses), and the net proceeds from the sale, transfer or refinancing of its remaining properties and investments, toward Note B while retaining the other portion to increase cash reserves. On May 14, 2018, the partnership paid $32,714 to the Holder to pay down a portion of the outstanding balance of Note B. On May 26, 2017, the partnership paid $33,883 to the Holder to pay down a portion of the outstanding balance of Note B. While the obligation under Note B is outstanding, the Partnership is precluded from making distributions to its partners. 4) The Partnership, its general partner and the Holder also entered into a Management Subordination Agreement accruing a portion of the investment management fee payable by the Partnership to its general partner so long as Note B remains outstanding. As of September 30, 2018 and December 31, 2017, $3,286,792 and $2,922,943, respectively of investment management fees have been accrued and are included in accrued expenses on the balance sheet. 5) As additional security for the Partnership's payment of its obligations under the Loan Agreement, the Partnership, through its wholly-owned subsidiary Eagle IV Realty, LLC, has executed a Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement ("Eagle IV Security Agreement") and a Pledge Agreement ("Eagle IV Pledge Agreement") in favor of Holder. The Eagle IV Security Agreement provides Holder with a security interest on the Partnership’s property located in Maple Grove, Minnesota ("Eagle IV") of up to $5,000,000. The Eagle IV Pledge Agreement pledges to Holder the Partnership’s membership interest in Eagle IV Realty, LLC, the direct owner of Eagle IV. The Partnership has no other debt obligation secured by Eagle IV. The Loan Agreement also provides for a negative pledge on the Partnership's remaining property and investment.

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Note 6 - Loan Payable - Summary of Notes and Loans Payable (Details) - USD ($)			9 Months Ended
		Apr. 29, 2011	Sep. 30, 2018		Dec. 31, 2017	Sep. 17, 2007
Less: unamortized finance costs			$ 0		$ (7,279)
Long-term Debt, Total			$ 5,693,876		5,719,311
Notes Payable to Banks [Member]
Long-term debt, At Maturity						$ 22,000,000
Notes Payable to Banks [Member] | Note B [Member]
Long-term debt, Interest Rate		5.00%	0.00%	[1]
Maturity Date		Apr. 29, 2018	Apr. 30, 2019	[1]
Long-term debt, At Maturity	[1]		$ 5,693,876
Long-term debt, Gross	[1]		5,693,876		5,726,590
Less: unamortized finance costs					(7,279)
Long-term Debt, Total		$ 5,693,876	$ 5,693,876		$ 5,719,311

[1] On September 17, 2007, the Partnership entered into a bank loan (the "Loan") with a bank ("Holder") in the amount of $22,000,000. On April 29, 2011, the Holder and the Partnership executed a new Loan Agreement ("Loan Agreement"). Registrant paid down a portion of the Loan using the net sales proceeds from the sale of 175 Ambassador Drive in 2011. Registrant made a further pay down, including fully retiring Note A, using the net sales proceeds from the sale of Lino Lakes in 2015. The terms of the remaining bank loan are: 1) Note B in the amount of $5,693,876 had a maturity date of April 29, 2018. The Partnership has three one-year options to extend the maturity date if certain conditions are satisfied. Note B previously accrued interest at an annual fixed rate of 5% but only until all interest and principal had been paid in full on Note A. Accrued interest related to Note B in the amount of $1,335,833 was paid off in full on September 18, 2015 using sales proceeds from the sale of Lino Lakes. Thereafter Note B does not accrue any interest. Except as discussed below, payments of principal are deferred until Registrant’s investment in Sentinel Omaha LLC pays distributions to the Partnership or the Partnership sells Eagle Lake Business Center IV or its investment in Omaha. Distributions from Omaha or net proceeds from the sale of Eagle IV or Omaha would be used first to pay the outstanding principal balance of Note B. If there are no distributions from Omaha prior to the Note B maturity, principal is due at maturity, subject to the above mentioned extensions. On January 30, 2018, the Partnership sent notice to Holder to exercise its first one year option to extend the maturity date to April 29, 2019, which Holder has acknowledged. 2) Note B may be voluntarily prepaid upon notice to the Holder, subject to certain requirements as to the application of payments. The Partnership's obligations under the Notes may be accelerated upon default. See Note 7 below regarding the early retirement of the Loan on October 19, 2018. 3) Until the Partnership's obligations under Note B is satisfied in full, the Partnership is required to pay a portion of its net operating income (after payment of certain permitted expenses), and the net proceeds from the sale, transfer or refinancing of its remaining properties and investments, toward Note B while retaining the other portion to increase cash reserves. On May 14, 2018, the partnership paid $32,714 to the Holder to pay down a portion of the outstanding balance of Note B. On May 26, 2017, the partnership paid $33,883 to the Holder to pay down a portion of the outstanding balance of Note B. While the obligation under Note B is outstanding, the Partnership is precluded from making distributions to its partners. 4) The Partnership, its general partner and the Holder also entered into a Management Subordination Agreement accruing a portion of the investment management fee payable by the Partnership to its general partner so long as Note B remains outstanding. As of September 30, 2018 and December 31, 2017, $3,286,792 and $2,922,943, respectively of investment management fees have been accrued and are included in accrued expenses on the balance sheet. 5) As additional security for the Partnership's payment of its obligations under the Loan Agreement, the Partnership, through its wholly-owned subsidiary Eagle IV Realty, LLC, has executed a Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement ("Eagle IV Security Agreement") and a Pledge Agreement ("Eagle IV Pledge Agreement") in favor of Holder. The Eagle IV Security Agreement provides Holder with a security interest on the Partnership’s property located in Maple Grove, Minnesota ("Eagle IV") of up to $5,000,000. The Eagle IV Pledge Agreement pledges to Holder the Partnership’s membership interest in Eagle IV Realty, LLC, the direct owner of Eagle IV. The Partnership has no other debt obligation secured by Eagle IV. The Loan Agreement also provides for a negative pledge on the Partnership's remaining property and investment.

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Note 7 - Subsequent Event (Details Textual) - Subsequent Event [Member] - Payoff Agreement [Member] - USD ($)	Oct. 19, 2018	Oct. 04, 2018
Debt Instrument, One-time Agreement Payment		$ 4,000,000
Long-term Debt, Gross		$ 5,693,876
Repayments of Debt	$ 4,000,000
Cash Held in Escrow	510,000
Gain (Loss) on Extinguishment of Debt, Total	1,693,876
Sentinel Omaha LLC [Member]
Proceeds from Equity Method Investment, Distribution	$ 2,400,000