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 |
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, | 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 submitsubmit 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 or a smaller reporting company, or an emerging growth company. See the definitions of “large“large accelerated filer,”filer”, “accelerated filer,” “smallerfiler”, “non-accelerated filer” and “small reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
[ ] large accelerated filerfiler [ ] 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
Part I | ||
Item 1 | ||
1 | ||
2 | ||
3 | ||
4 | ||
5 – 8 | ||
Item 2 | Management's Discussion and Analysis of Financial Condition and Results of Operations | 9 – 11 |
Item 3 |
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Item 4T |
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Part II |
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Exhibit 31 | 14-15 | |
| Exhibit 32 |
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1
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June 30, | December 31, | |||||||
2017 (Unaudited) | 2016 (Audited) | |||||||
Assets: | ||||||||
Investments - | ||||||||
Real estate, at cost | ||||||||
Land | $ | 470,000 | $ | 470,000 | ||||
Buildings, furnishings and improvements | 5,016,185 | 5,016,185 | ||||||
Less - accumulated depreciation | (2,006,016 | ) | (1,927,326 | ) | ||||
3,480,169 | 3,558,859 | |||||||
Investment in Sentinel Omaha, LLC, net of reserve for fair value of $13,251,109 and $13,575,238 at June 30, 2017 and December 31, 2016, respectively | 30,919,252 | 25,211,157 | ||||||
34,399,421 | 28,770,016 | |||||||
Other Assets - | ||||||||
Cash and cash equivalents | 1,348,302 | 1,327,197 | ||||||
Cash in escrow | 502,493 | 501,145 | ||||||
Other | 1,121 | 7,363 | ||||||
Total assets | $ | 36,251,337 | $ | 30,605,721 | ||||
Liabilities: | ||||||||
Loan payable, net of unamortized deferred finance costs of $18,198 and $29,118 at June 30, 2017 and December 31, 2016, respectively | $ | 5,708,392 | $ | 5,731,355 | ||||
Accounts payable | 408,291 | 419,755 | ||||||
Tenant security deposit | 100,015 | 98,616 | ||||||
Accrued expenses | 2,689,839 | 2,460,857 | ||||||
Total liabilities | 8,906,537 | 8,710,583 | ||||||
Partners' Equity (Deficit): | ||||||||
Units of partnership interest without par value; | ||||||||
Limited partner - 7,753 units | 27,359,709 | 21,910,750 | ||||||
General partner - 1 unit | (14,909 | ) | (15,612 | ) | ||||
Total partners' equity | 27,344,800 | 21,895,138 | ||||||
Total liabilities and partners' equity | $ | 36,251,337 | $ | 30,605,721 |
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2
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For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues: | ||||||||||||||||
Base rental income | $ | 178,772 | $ | 173,492 | $ | 357,544 | $ | 346,984 | ||||||||
Other rental income | 87,452 | 88,238 | 174,904 | 176,476 | ||||||||||||
Interest income | 1,576 | 1,051 | 2,730 | 1,633 | ||||||||||||
Total revenues | 267,800 | 262,781 | 535,178 | 525,093 | ||||||||||||
Expenses: | ||||||||||||||||
Real estate operating expenses | 68,704 | 62,610 | 135,832 | 150,337 | ||||||||||||
Amortization of deferred financing costs | 5,460 | 5,460 | 10,920 | 10,920 | ||||||||||||
Depreciation | 39,345 | 39,336 | 78,690 | 78,672 | ||||||||||||
Real estate taxes | 30,882 | 31,666 | 61,763 | 63,331 | ||||||||||||
Management fees | 221,718 | 217,136 | 442,101 | 433,330 | ||||||||||||
Other | 31,785 | 33,634 | 64,305 | 67,984 | ||||||||||||
Total expenses | 397,894 | 389,842 | 793,611 | 804,574 | ||||||||||||
Loss from operations | (130,094 | ) | (127,061 | ) | (258,433 | ) | (279,481 | ) | ||||||||
Equity in net income of investment | 1,934,067 | 3,289,592 | 5,383,966 | 5,262,392 | ||||||||||||
Reserve for value of investment | 1,531,594 | (1,644,796 | ) | 324,129 | (2,631,195 | ) | ||||||||||
Net income | 3,335,567 | 1,517,735 | 5,449,662 | 2,351,716 | ||||||||||||
Income allocated to general partner | 430 | 196 | 703 | 303 | ||||||||||||
Income allocated to limited partners | $ | 3,335,137 | $ | 1,517,539 | $ | 5,448,959 | $ | 2,351,413 | ||||||||
Income per unit of limited partnership interest (basic and diluted) | ||||||||||||||||
Net income | $ | 430.23 | $ | 195.76 | $ | 702.91 | $ | 303.33 | ||||||||
Weighted Average Number of Units of Limited Partnership Interest Outstanding | 7,753 | 7,753 | 7,753 | 7,753 |
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3
SB PARTNERS
(A New York Limited Partnership)
March 31, | December 31, | |||||||
2018 (Unaudited) | 2017 (Audited) | |||||||
Assets: | ||||||||
Investments - | ||||||||
Real estate, at cost | ||||||||
Land | $ | 470,000 | $ | 470,000 | ||||
Buildings, furnishings and improvements | 5,081,365 | 5,081,365 | ||||||
Less - accumulated depreciation | (2,124,611 | ) | (2,084,846 | ) | ||||
3,426,754 | 3,466,519 | |||||||
Investment in Sentinel Omaha, LLC, net of reserve for fair value of $10,243,635 and $12,526,608 at March 31, 2018 and December 31, 2017, respectively | 40,974,535 | 37,579,824 | ||||||
44,401,289 | 41,046,343 | |||||||
Other Assets - | ||||||||
Cash and cash equivalents | 1,504,625 | 1,449,927 | ||||||
Cash in escrow | 506,314 | 504,778 | ||||||
Other | 4,046 | 7,019 | ||||||
Total assets | $ | 46,416,274 | $ | 43,008,067 | ||||
Liabilities: | ||||||||
Loan payable, net of unamortized deferred finance costs of $1,820 and $7,279 at March 31, 2018 and December 31, 2017, respectively | $ | 5,724,770 | $ | 5,719,311 | ||||
Accounts payable | 531,562 | 516,793 | ||||||
Tenant security deposit | 101,414 | 101,414 | ||||||
Accrued expenses | 3,042,548 | 2,922,943 | ||||||
Total liabilities | 9,400,294 | 9,260,461 | ||||||
Partners' Equity (Deficit): | ||||||||
Units of partnership interest without par value; | ||||||||
Limited partner - 7,753 units | 37,029,641 | 33,761,689 | ||||||
General partner - 1 unit | (13,661 | ) | (14,083 | ) | ||||
Total partners' equity | 37,015,980 | 33,747,606 | ||||||
Total liabilities and partners' equity | $ | 46,416,274 | $ | 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 March 31, | ||||||||
2018 | 2017 | |||||||
Revenues: | ||||||||
Base rental income | $ | 184,203 | $ | 178,772 | ||||
Other rental income | 87,041 | 87,452 | ||||||
Interest income | 2,537 | 1,154 | ||||||
Total revenues | 273,781 | 267,378 | ||||||
Expenses: | ||||||||
Real estate operating expenses | 67,786 | 67,122 | ||||||
Amortization of deferred financing costs | 5,460 | 5,460 | ||||||
Depreciation | 39,765 | 39,345 | ||||||
Real estate taxes | 30,468 | 30,881 | ||||||
Management fees | 226,164 | 220,383 | ||||||
Other | 30,475 | 32,520 | ||||||
Total expenses | 400,118 | 395,711 | ||||||
Loss from operations | (126,337 | ) | (128,333 | ) | ||||
Equity in net income of investment | 1,111,737 | 3,449,898 | ||||||
Decrease (increase) in reserve for value of investment | 2,282,974 | (1,207,464 | ) | |||||
Net income | 3,268,374 | 2,114,101 | ||||||
Income allocated to general partner | 422 | 273 | ||||||
Income allocated to limited partners | $ | 3,267,952 | $ | 2,113,828 | ||||
Income per unit of limited partnership interest (basic and diluted) | ||||||||
Net income | $ | 421.56 | $ | 272.68 | ||||
Weighted Average Number of Units of Limited Partnership Interest Outstanding | 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 theSixthe Three Months EEnded March 31, 2018nded June 30, 2017 (Unaudited)
Limited Partners: | ||||||||||||||||||||||||||||||||||||||||
Units of Partnership Interest | ||||||||||||||||||||||||||||||||||||||||
Units of Partnership Interest | ||||||||||||||||||||||||||||||||||||||||
Number | Amount | Cumulative Cash Distributions | Accumulated Income | Total | ||||||||||||||||||||||||||||||||||||
Number | Amount | Cumulative Cash Distributions | Accumulated Income | Total | ||||||||||||||||||||||||||||||||||||
Balance, January 1, 2017 | 7,753 | $ | 119,968,973 | $ | (111,721,586 | ) | $ | 13,663,363 | $ | 21,910,750 | ||||||||||||||||||||||||||||||
Balance, January 1, 2018 | 7,753 | $ | 119,968,973 | $ | (111,721,586 | ) | $ | 25,514,302 | $ | 33,761,689 | ||||||||||||||||||||||||||||||
Net income for the period | - | - | - | 5,448,959 | 5,448,959 | - | - | - | 3,267,952 | 3,267,952 | ||||||||||||||||||||||||||||||
Balance, June 30, 2017 | 7,753 | $ | 119,968,973 | $ | (111,721,586 | ) | $ | 19,112,322 | $ | 27,359,709 | ||||||||||||||||||||||||||||||
Balance, March 31, 2018 | 7,753 | $ | 119,968,973 | $ | (111,721,586 | ) | $ | 28,782,254 | $ | 37,029,641 |
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 | - | - | - | 422 | 422 | |||||||||||||||
Balance, March 31, 2018 | 1 | $ | 10,000 | $ | (26,364 | ) | $ | 2,703 | $ | (13,661 | ) |
General Partner: | ||||||||||||||||||||
Units of Partnership Interest | ||||||||||||||||||||
Number | Amount | Cumulative Cash Distributions | Accumulated (Losses) | Total | ||||||||||||||||
Balance, January 1, 2017 | 1 | $ | 10,000 | $ | (26,364 | ) | $ | 752 | $ | (15,612 | ) | |||||||||
Net income for the period | - | - | - | 703 | 703 | |||||||||||||||
Balance, June 30, 2017 | 1 | $ | 10,000 | $ | (26,364 | ) | $ | 1,455 | $ | (14,909 | ) |
See notes to consolidated financial statements. |
4
SB PARTNERS
(A New York Limited PartnershipPartnership))
CONSOLIDATEDSTATEMENTS OF CASHFLOWS (Unaudited)
For the Six Months Ended June 30, | ||||||||
2017 | 2016 | |||||||
Cash Flows From Operating Activities: | ||||||||
Net income | $ | 5,449,662 | $ | 2,351,716 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Equity in net (income) of investment | (5,383,966 | ) | (5,262,392 | ) | ||||
Reserve for fair value of investment | (324,129 | ) | 2,631,195 | |||||
Depreciation and amortization | 89,610 | 89,592 | ||||||
Net decrease in operating assets | 6,242 | 12,100 | ||||||
Net (decrease) in accounts payable | (11,464 | ) | (18,112 | ) | ||||
Net increase in tenant security deposit | 1,399 | 1,399 | ||||||
Net increase in accrued expenses | 228,982 | 220,209 | ||||||
Net cash provided by operating activites | 56,336 | 25,707 | ||||||
Cash Flows From Investing Activities: | ||||||||
Interest earned on capital reserve escrow acount | (1,348 | ) | (308 | ) | ||||
Net cash (used in) investing activites | (1,348 | ) | (308 | ) | ||||
Cash Flows From Financing Activities: | ||||||||
Repayment of loan payable | (33,883 | ) | (226,415 | ) | ||||
Decrease in restricted cash | - | 200,000 | ||||||
Net cash (used in) financing activities | (33,883 | ) | (26,415 | ) | ||||
Net change in cash and cash equivalents | 21,105 | (1,016 | ) | |||||
Cash and cash equivalents at beginning of period | 1,327,197 | 1,206,899 | ||||||
Cash and cash equivalents at end of period | $ | 1,348,302 | $ | 1,205,883 |
For the Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Cash Flows From Operating Activities: | ||||||||
Net income | $ | 3,268,374 | $ | 2,114,101 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Equity in net (income) of investment | (1,111,737 | ) | (3,449,898 | ) | ||||
(Decrease) increase in reserve for value of investment | (2,282,974 | ) | 1,207,464 | |||||
Depreciation and amortization | 45,225 | 44,805 | ||||||
Net decrease in operating assets | 2,972 | 3,121 | ||||||
Net increase (decrease) in accounts payable | 14,769 | (2,051 | ) | |||||
Net increase in accrued expenses | 119,605 | 113,820 | ||||||
Net cash provided by operating activites and net change in cash and cash equivalents and cash in escrow | 56,234 | 31,362 | ||||||
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 | $ | 2,010,939 | $ | 1,859,704 |
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 six monthsmonth period ended June 30, 2017March 31, 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 10–10–K for the year ended December 31, 2016.2017.
(2)(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 June 30, 2017,March 31, 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 June 30, 2017March 31, 2018 and December 31, 2016.2017.
No. of | Year of | Real Estate at Cost | ||||||||||||||||||
Type | Prop. | Acquisition | Description (sf) | 3/31/2018 | 12/31/2017 | |||||||||||||||
Industrial flex property | 1 | 2002 | 60,345 | $ | 5,551,365 | $ | 5,551,365 | |||||||||||||
Less: Accumulated depreciation | (2,124,611 | ) | (2,084,846 | ) | ||||||||||||||||
Investment in real estate | $ | 3,426,754 | $ | 3,466,519 |
No. of | Year of | Real Estate at Cost | |||||||||||||||
Type | Prop. | Acquisition | Description | 6/30/2017 | 12/31/2016 | ||||||||||||
Industrial flex property | 1 | 2002 | 60,345 sf | $ | 5,486,185 | $ | 5,486,185 | ||||||||||
Less: Accumulated depreciation | (2,006,016 | ) | (1,927,326 | ) | |||||||||||||
Investment in real estate | $ | 3,480,169 | $ | 3,558,859 |
(3)(4) ASSETS MEASURED AT FAIR VALUE
The accounting guidance for fair value measurementsFair 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.
6
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. |
6
The following major categories of assets were measured at fair value as of June 30, 2017March 31, 2018 and December 31, 2016, respectively:2017:
Level 3: | June 30, | Level 3: | March 31, | |||||||||||||
Significant | 2017 | Significant | 2018 | |||||||||||||
Unobservable | (Unaudited) | Unobservable | (Unaudited) | |||||||||||||
Inputs | Total | Inputs | Total | |||||||||||||
Assets | ||||||||||||||||
Investment in Sentinel Omaha, LLC | $ | 44,170,361 | $ | 44,170,361 | $ | 51,218,170 | $ | 51,218,170 | ||||||||
Reserve for fair value of investment | (13,251,109 | ) | (13,251,109 | ) | (10,243,635 | ) | (10,243,635 | ) | ||||||||
Total assets | $ | 30,919,252 | $ | 30,919,252 | $ | 40,974,535 | $ | 40,974,535 |
Level 3: | December 31, | Level 3: | December 31, | |||||||||||||
Significant | 2016 | Significant | 2017 | |||||||||||||
Unobservable | (Audited) | Unobservable | (Audited) | |||||||||||||
Inputs | Total | Inputs | Total | |||||||||||||
Assets | ||||||||||||||||
Investment in Sentinel Omaha, LLC | $ | 38,786,395 | $ | 38,786,395 | $ | 50,106,432 | $ | 50,106,432 | ||||||||
Reserve for fair value of investment | (13,575,238 | ) | (13,575,238 | ) | (12,526,608 | ) | (12,526,608 | ) | ||||||||
Total assets | $ | 25,211,157 | $ | 25,211,157 | $ | 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 June 30, 2017March 31, 2018 and December 31, 2016:2017:
Investment in | Reserve for | Investment in | Reserve for | |||||||||||||||||||||
Sentinel | fair value | Sentinel | fair value | |||||||||||||||||||||
Omaha, LLC | of investment | Total | Omaha, LLC | of investment | Total | |||||||||||||||||||
Balance at January 1, 2016 | $ | 28,891,652 | $ | (14,445,826 | ) | $ | 14,445,826 | |||||||||||||||||
Balance at January 1, 2017 | $ | 38,786,395 | $ | (13,575,238 | ) | $ | 25,211,157 | |||||||||||||||||
Equity in net income of investment | 9,894,743 | - | 9,894,743 | 11,320,037 | - | 11,320,037 | ||||||||||||||||||
Decrease in reserve | - | 870,588 | 870,588 | - | 1,048,630 | 1,048,630 | ||||||||||||||||||
Balance at December 31, 2016 | 38,786,395 | (13,575,238 | ) | 25,211,157 | ||||||||||||||||||||
Balance at December 31, 2017 | 50,106,432 | (12,526,608 | ) | 37,579,824 | ||||||||||||||||||||
Equity in net income of investment | 5,383,966 | - | 5,383,966 | 1,111,737 | - | 1,111,737 | ||||||||||||||||||
Decrease in reserve | - | 324,129 | 324,129 | - | 2,282,974 | 2,282,974 | ||||||||||||||||||
Balance at June 30, 2017 | $ | 44,170,361 | $ | (13,251,109 | ) | $ | 30,919,252 | |||||||||||||||||
Balance at March 31, 2018 | $ | 51,218,169 | $ | (10,243,634 | ) | $ | 40,974,535 |
On September 30, 2015, Omaha refinanced six properties which had been encumbered by a single secured credit facility with a high fixed interest rate. Previously, a refinancing of the secured credit facility would have required significant prepayment penalties which made a refinancing cost prohibitive. On September 30, 2015, the prepayment penalties were reduced enough that combined with stronger valuation rates, each property’s borrowing capacity was sufficient to support a new separate mortgage with enough combined proceeds to pay off the credit facility and the prepayment penalties. The six new mortgages have lower interest rates although the new interest rates are floating rates, which are subject to changes in the credit markets. Omaha is precluded from making distributions to its investors until its unsecured loan iswas paid in full. However, based onOmaha’s unsecured loan which as of December 31, 2017 had a reviewbalance of $20,859,322 had a maturity date of December 31, 2017. During 2017, Omaha exercised its one option to extend the 2015 property operations and applying the terms of the new mortgages and barring any unforeseen downturn in the real estate and capital markets, the Partnership anticipated Omaha has a more likely than not chancematurity date to improve the operations of the real estate assets, sell the assets at values sufficient to pay off the mortgages and after paying off the unsecured bank loan, make distributions to its investors for a portion of the original capital invested. Therefore, the PartnershipJune 30, 2018. Registrant as of the year ended December 31, 20152017 had recognized a value in the Omaha investment equal to the Partnership’sRegistrant’s 30% portion of the equity reported on Omaha’s balance sheet as of December 31, 20152017 less a 50%25% reserve. During 2016, the net operating income reported for Omaha’s properties continuedfirst 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 improve which led to an increase in its real estate valuation. Omaha continued to make payments on its unsecured loan. However, Omaha’s mortgagespaying selling expenses and unsecured loan are encumbered with floating interest rates which began to increase near the end of 2016. As of the period ended December 31, 2016 the Partnership had recognized a value in the Omaha investment equal to the Partnership’s 30% portion of the equity reported on Omaha’s balance sheet as of December 31, 2016 less a 35% reserve. Omaha’s unsecured loan which as of June 30, 2017 has a balance of $27,034,322 has a maturity date of December 31, 2017 with one option to extend the maturity date to June 30, 2018. It is unlikely Omaha will be able to pay off the unsecured loan from net operating cash flow or refinancing proceeds. Omaha will have to sell one or more of its properties which will reduce its net cash flow from operations which could be available for distribution to its investors after the unsecured loan is paid off. During the three months ended June 30, 2017 Omaha sold one property located in Daytona, Florida and two properties located in Fayetteville, North Carolina. Net sales proceeds inmortgage securing each transaction were used to first pay off each property’s secured mortgage and remaining net salesproperty. Remaining proceeds were used to pay downfully retire the remaining balance of Omaha’s unsecured loan. As of the period ended June 30, 2017 the Partnership has recognized a value in the Omaha investment equal to the Partnership’s 30% portion of the equity reported on Omaha’s balance sheetRegistrant as of June 30, 2017 less a 30% reserve.March 31, 2018 has reduced the reserve to 20%.
7
(4)(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 June 30, 2017March 31, 2018 owns 119 multifamily properties in 86 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(000’s omitted) of Omaha as of and for the periods ended June 30, 2017March 31, 2018 and December 31, 2016.2017.
(Unaudited) | (Audited) | (Unaudited) | (Audited) | |||||||||||||
Balance Sheet | June 30, 2017 | December 31, 2016 | March 31, 2018 | December 31, 2017 | ||||||||||||
Investment in real estate, net | $ | 353,100 | $ | 378,460 | $ | 296,400 | $ | 368,600 | ||||||||
Other assets | 13,106 | 10,749 | 23,303 | 10,556 | ||||||||||||
Debt | (215,024 | ) | (254,913 | ) | (145,695 | ) | (207,187 | ) | ||||||||
Other liabilities | (3,947 | ) | (5,008 | ) | (3,281 | ) | (4,948 | ) | ||||||||
Net assets | $ | 147,235 | $ | 129,288 | ||||||||||||
Member's equity | $ | 170,727 | $ | 167,021 |
(Unaudited) | (Unaudited) | |||||||||||
Statement of Operations | June 30, 2017 | March 31, 2018 | ||||||||||
Rent and other income | $ | 21,750 | $ | 9,341 | ||||||||
Real estate operating expenses | (11,094 | ) | (4,761 | ) | ||||||||
Other expenses | (3,463 | ) | (1,649 | ) | ||||||||
Net realized losses | (20,794 | ) | ||||||||||
Net unrealized income | 31,548 | |||||||||||
Net realized gains | 9,919 | |||||||||||
Net unrealized losses | (9,145 | ) | ||||||||||
Net increase in net assets | $ | 17,947 | $ | 3,705 |
(5)
(6) LOAN PAYABLE
Loan payable consists of the following:
Annual | Net Carrying Amount | Annual | Net Carrying Amount | |||||||||||||||||||||||||||||||||||||||
Interest | Installment | Amount Due | June 30, | December 31, | Interest | Installment | Amount Due | March 31, | December 31, | |||||||||||||||||||||||||||||||||
Property | Rate | Maturity Date | Payments | at Maturity | 2017 | 2016 | Rate | Maturity Date | Payments | at Maturity | 2018 | 2017 | ||||||||||||||||||||||||||||||
Bank Loan (a): | ||||||||||||||||||||||||||||||||||||||||||
Note B | 0.000 | % | Apr-18 | - | 5,726,590 | $ | 5,726,590 | $ | 5,760,473 | 0.000 | % | Apr-19 | - | 5,726,590 | $ | 5,726,590 | $ | 5,726,590 | ||||||||||||||||||||||||
Less: unamortized finance costs | (18,198 | ) | (29,118 | ) | (1,820 | ) | (7,279 | ) | ||||||||||||||||||||||||||||||||||
Loan payable | $ | 5,708,392 | $ | 5,731,355 | $ | 5,724,770 | $ | 5,719,311 |
| On September 17, 2007, the Partnership entered into a bank loan (the “Loan”) with a bank (“Holder”) in the amount of |
1) |
|
8
|
|
| Note B in the amount of |
8
Except as discussed below, payments of principal are deferred until Registrant’s investment in Sentinel Omaha LLC (“Omaha”) 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. |
| 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. |
|
|
| The Partnership, |
| As | |
9
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS | |
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | ||
FOR THE THREEMONTHS ENDED MARCH 31, 2018 AND 2017 |
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREEAND SIX MONTHS ENDED JUNE 30, 2017 AND 2016
General
The consolidated financial statements for the three and six months ended June 30,March 31, 2018 and 2017 and 2016 reflect the operations of one wholly owned industrial flex property located in Maple Grove, Minnesota and a 30% interest in Omaha.
Registrant’sRegistrant’s wholly owned property located in Maple Grove, Minnesota is 100% leased to a single tenant whose lease expires October 31, 2019. The tenant has an ongoing option to terminate the lease under certain conditions. One of the conditions is the payment of an early termination penalty the calculation of which is based on the remaining time period in the lease. Another condition is the tenant must provide notice twelve months prior to the termination. As of June 30, 2017,March 31, 2018, Registrant has not received any notice from the 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.
Sentinel Omaha LLC’s portfolio consists of 108 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 June 30, 2017March 31, 2018 increased $5,000$7,000 to approximately $268,000$274,000 as compared to approximately $263,000$267,000 for the three months ended June 30, 2016.March 31, 2017. Total revenues increased due to an increase in base rental income and interest income. Base rental income increased $6,000$5,000 to approximately $179,000$184,000 for the three months ended June 30, 2017March 31, 2018 as compared to the same period in 20162017 due to an 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. Interest income increased slightly.
The Registrant reported a net loss from operations of approximately $130,000$126,000 for the three months ended June 30, 2017,March 31, 2018, an increaseimprovement of $3,000$2,000 as compared to a net loss from operations of approximately $127,000$128,000 for the same period in 2016. Net loss from operations consists of net income from the Maple Grove property offset by partnership income and expenses. The increase of loss from operations was due to higher total expenses partially offset by higher total revenues. Total expenses from operations for 2017 increased $8,000 to approximately $398,000 from approximately $390,000 in 2016, due primarily to increases in real estate operating expenses and management fee expense of $6,000 and $5,000, respectively.
Total revenues from continuing operations for the six months ended June 30, 2017 increased $10,000 to approximately $535,000 as compared to approximately $525,000 for the six months ended June 30, 2016. Total revenues increased due to an increase in base rental income. Base rental income increased $11,000 to approximately $358,000 for the six months ended June 30, 2017 as compared to the same period in 2016 due to an increase in base rent at Registrant’s property located in Maple Grove, MN. Other rental income decreased slightly. Interest income increased slightly.
The Registrant reported a net loss from operations of approximately $258,000 for the six months ended June 30, 2017, an improvement of $21,000 as compared to a net loss from operations of approximately $279,000 for the same period in 2016.2017. 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 lower total expenses combined with higher total revenues.revenues partially offset by higher total expenses. Total expenses from operations for 2017 decreased $11,0002018 increased $4,000 to approximately $794,000$400,000 from approximately $805,000$396,000 in 2016,2017, due primarily to decreases in real estate operating expenses and professional fees. This decrease was partially offset by an increase in management fee expense of $9,000.$6,000 partially offset by a decrease in professional fees of $2,000.
The Registrant has a 30% non-controlling interest in Omaha that is accounted for on a fair value basis. Under the terms of its unsecured bank loan Omaha is precluded from making distributions to its investors, including the Registrant, until its unsecured loan is paid in full. Net increase in net assets increased $406,000decreased $7,794,000 to approximately $17,947,000$3,705,000 for the sixthree months ended June 30, 2017March 31, 2018 compared to net increase in net assets of approximately $17,541,000$11,499,000 for the same period in 2016. Due to the global financial crisis, stagnant real estate market and slowing economy, Omaha reported a net write-down of the value of its real estate portfolio of approximately $100,852,000 during 2008 to 2014.2017. During 2015 and 2016 capitalization rates for older properties in tertiary markets where Omaha owns most of its properties, generally were lower than for the prior years. Physical and economic occupancy improved at the properties during 2015 and market rates increased during 2016. However, occupancy at two large properties which rely on tenants from a local military base declined due to deployments during 2016. Job growth continued to improve but at a slow pace. For the years 2015 and 2016, as real estate values recovered Omaha reported an increase in the value of its portfolio of $88,512,000. During the second quarter of 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 secured mortgagemortgage. 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 quarter ended March 31, 2018, Omaha sold its garden apartment property in Asheville, North Carolina and remainingits 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 secured mortgage. Remaining net sales proceeds were used to pay downoff Omaha’s unsecured loan. During the first sixthree months of 2017,ended March 31, 2018, Omaha reported a net increase in the value of its remaining real estate portfolio of $16,269,000. $1,075,000.
During 2017 the floating 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 the net operating income reported for Omaha’s properties continued to improve which allowed Omaha to continue to make payments on its unsecured loan. However, Omaha’s mortgages and unsecured loan are encumbered with floatingan average of (1.4925%) during December 2017. Fixed mortgage interest rates which startedfor multi-family properties of similar class and location as Omaha’s portfolio also increased during 2017 from an approximate range of 4.10% to increase4.15% in early 2017 to 4.35% to 4.50% near the end of 20162017. Mortgage interest rates are expected to continue to increase in 2018 as the U.S. Federal Reserve continues a policy to increase the Federal Funds Rate. Although increases in fixed mortgage rates do not impact the operating cash flow of the Omaha properties directly, increases in fixed and duringfloating rates on commercial mortgage debt can have a negative impact on capitalization rates and the first halfsales prices Sentinel Omaha may achieve in the future.
As noted above, Registrant’s only wholly owned property is 100% leased to a single tenant. If the tenant does not renew or if the tenant exercises its termination option, the Registrant would have no internal source of 2017. As mentioned above,funds until the space is released to a new tenant or Registrant receives distributions from Sentinel Omaha. Registrant may have to consider that it would be in the best interests of the limited partners to sell its investment in Sentinel Omaha during the second quarter of 2017 madeand/or sell its wholly owned property. Registrant would not have considered a pay downsale of its 30% non-controlling investment in Omaha in prior years due to Omaha’s unsecured debt. Selling the investment in Omaha while Omaha had a significant unsecured loan using net sales proceeds fromwith an upcoming maturity would have likely realized a sale price for the sale of three properties. Omaha’sinvestment that would be heavily discounted reflecting the unsecured loan which as of June 30, 2017 has a balance of $27,034,322 has a maturity date of December 31, 2017.debt risk. However, since Sentinel Omaha has one option to extendin the maturity date to June 30, 2018. It is unlikely Omaha will be able to paypast two years paid off the unsecured loan from net operating cash flow or refinancing proceeds. Omaha will havedebt along with improving performance at the properties, the debt risk is estimated to sell one or more of the remaining properties which will reduce its net cash flow from operations which could be available for distributionlower. The investment in a 30% non-controlling interest would still be valued at a discount due to the investors afterlack of liquidity. Registrant will continue to report a reserve on the value of Omaha on its books but due to the payoff of Omaha's unsecured loan in 2017, the reserve is paid off. Registrant had in 2015 recognized a value in the Omaha investment equal to Registrant’s 30% portion of the equity reported on Omaha’s balance sheetreduced from 25% as of December 31, 2015 less a 50% reserve. However the above mentioned improvement in Omaha’s real estate values and operations had allowed Registrant2017 to reduce the reserve in 2016 to 35%20% as of DecemberMarch 31, 2016 and further in 2017. Registrant as of June 30, 2017 has recognized a value in the Omaha investment equal to Registrant’s 30% portion of the equity reported on Omaha’s balance sheet as of June 30, 2016 less a 30% reserve.2018.
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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’sRegistrant’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, 2016.2017. There were no significant changes to such policies in 2017.2018. 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 June 30, 2017,March 31, 2018, the Registrant had cash and cash equivalents of approximately $1,348,000.$1,505,000. These balances are approximately $21,000$55,000 higher than cash and cash equivalents held on December 31, 2016.2017. Cash and cash equivalents increased slightly during the sixthree months ended June 30, 2017March 31, 2018 due to cash flow generated from operating activities at Registrant’s wholly owned property partially offset by partnership expenses and pay down of the loan payable.expenses.
Currently, Registrant’s only source of cash is rental income received from the tenant who 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.
Total outstanding debt at June 30, 2017March 31, 2018 consists of Note B at $5,726,590. Under the terms of the Loan Agreement, when Note A was repaid, interest on the Note B stopped accruing. Note B matures 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. If the Registrant does not have funds on hand sufficient to repay its indebtedness at maturity, the Registrant may need to refinance such indebtedness with new debt financing or provide necessary funds through equity offering(s) or other sources, if available. The Registrant may be unable to obtain a loan which will be sufficient to retire the existing loan. If it is unable to refinance this indebtedness on acceptable terms, the Registrant may be forced to liquidate its remaining assets upon disadvantageous terms, which could result in losses to the Registrant and adversely affect the amount of cash reserves. If general economic conditions result in higher interest rates at a time when the Registrant must refinance its indebtedness, the Registrant's interest expense could increase, which would adversely affect the Registrant's results of operations and financial condition. The Registrant has no other debt except normal trade accounts payable and accrued investment management fees.
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.
11
Eagle Lake Business Center IV (Maple Grove, Minnesota)
Total revenues for the three months ended June 30, 2017March 31, 2018 increased $4,000$5,000 to approximately $266,000$271,000 as compared to approximately $262,000$266,000 for the three months ended June 30, 2016. The property reported higher base rental income and slightly lower other rental income. Base rental income was higher in 2017 due to a scheduled increase in the base rent. Net operating income, which includes deductions for depreciation, increased $1,000 for the three months ended June 30, 2017 to approximately $158,000 from approximately $157,000 for the three months ended June 30, 2016 due primarily to higher total revenues offset by higher operating expenses. Operating expenses were higher due to higher repairs expenses and insurance premiums.
Total revenues for the six months ended June 30, 2017 increased $9,000 to approximately $532,000 as compared to approximately $523,000 for the six months ended June 30, 2016.March 31, 2017. The property reported higher base rental income and slightly lower other rental income. Base rental income was higher in 20172018 due to a scheduled increase in the base rent. Net operating income, which includes deductions for depreciation, increased $13,000decreased $4,000 for the sixthree months ended June 30, 2017March 31, 2018 to approximately $323,000$161,000 from approximately $310,000$165,000 for the sixthree months ended June 30, 2016March 31, 2017 due primarily to higher operating expenses partially offset by higher total revenues combined with lower operating expenses.revenues. Operating expenses were lowerhigher due to lowerhigher utilities expenses and real estate taxes.repairs expenses.
11
Investment in Sentinel Omaha, LLC
Comparison of three months ended June 30, 2017March 31, 2018 to June 30, 2016:March 31, 2017:
As of June 30, 2017,March 31, 2018, the Omaha portfolio consisted of 119 multi-family properties located in 86 markets.
Omaha’s total revenues for the three months ended June 30, 2017March 31, 2018 were approximately $10,463,000.$9,341,000. Income before realized losses and net unrealized income was approximately $3,272,000.$2,931,000. Major expenses included approximately $1,667,000$1,586,000 for interest expense, $976,000$705,000 for repairs and maintenance, $1,353,000$1,283,000 for payroll, and $1,400,000$1,209,000 for real estate taxes. Omaha reported realizednet unrealized losses of $20,794,000approximately $9,145,000 and net unrealized incomerealized gains of approximately $23,969,000$9,919,000 resulting in a net increase in net assets of approximately $6,447,000.$3,705,000. For the three months ended June 30, 2017,March 31, 2018, the Registrant’s 30% equity interest in the net increase in net assetsincome of Omaha was approximately $1,934,000.$1,112,000. Registrant recognized a reserve of 30%reserves 20% of the reported value of Omaha on its balance sheet. sheet for March 31, 2018.
The reserve for value was adjusted in conjunction with recording the equity income for the quarter ended June 30, 2017.March 31, 2018. As a result, Registrant reported net income from equity interest in net increase in net assetsincome of Omaha for the quarter ended June 30, 2017March 31, 2018 of $3,466,000.$3,395,000.
Omaha’sOmaha’s total revenues for the three months ended June 30, 2016March 31, 2017 were approximately $10,944,000.$11,287,000. Income before net unrealized income was approximately $4,103,000.$3,922,000. Major expenses included approximately $1,614,000$1,626,000 for interest expense, $964,000$820,000 for repairs and maintenance, $1,442,000$1,664,000 for payroll, and $1,061,000$1,342,000 for real estate taxes. Omaha reported net unrealized income of approximately $6,862,000$7,577,000 resulting in a net increase in net assets of approximately $10,965,000.$11,499,000. For the three months ended June 30, 2016,March 31, 2017, the Registrant’s 30% equity interest in the net increase in net assetsincome of Omaha was approximately $3,290,000.$3,450,000. Registrant reserved 50%35% of the reported value of Omaha on its balance sheet.sheet as of March 31, 2017.
The reserve for value was adjusted in conjunction with recording the equity income for the quarter ended June 30, 2016. As a result, Registrant reported net equity in net increase in net assets of Omaha for the quarter ended June 30, 2016 of $1,645,000.
Comparison of six months ended June 30, 2017 to June 30, 2016:
Omaha’s total revenues for the six months ended June 30, 2017 were approximately $21,750,000. Income before realized losses and net unrealized income was approximately $7,193,000. Major expenses included approximately $3,293,000 for interest expense, $1,796,000 for repairs and maintenance, $3,017,000 for payroll, and $2,742,000 for real estate taxes. Omaha reported realized losses of $20,794,000 and net unrealized income of approximately $31,548,000 resulting in net increase in net assets of approximately $17,947,000. For the six months ended June 30, 2017, the Registrant’s 30% equity interest in the net increase in net assets of Omaha was approximately $5,384,000. Registrant recognized a reserve of 30% 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 six months ended June 30,March 31, 2017. As a result, Registrant reported net income from equity interest in net increase in net assetsincome of Omaha for the six monthsquarter ended June 30,March 31, 2017 of $5,708,000.
Omaha’s total revenues for the six months ended June 30, 2016 were approximately $21,774,000. Income before net unrealized income was approximately $8,148,000. Major expenses included approximately $3,270,000 for interest expense, $1,746,000 for repairs and maintenance, $2,932,000 for payroll, and $2,211,000 for real estate taxes. Omaha reported net unrealized income of approximately $9,393,000 resulting in net increase in net assets of approximately $17,541,000. For the six months ended June 30, 2016, the Registrant’s 30% equity interest in the net increase in net assets of Omaha was approximately $5,262,000. Registrant reserved 50% 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 six months ended June 30, 2016. As a result, Registrant reported net equity in net increase in net assets of Omaha for the six months ended June 30, 2016 of $2,631,000.$2,242,000.
12
None
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 | |
(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 |
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.
13
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: | By: | /s/ George N. Tietjen III |
George N. Tietjen III | ||
Chief Executive Officer | ||
Principal Financial & Accounting Officer | ||
Dated: | By: | /s/ John H. Zoeller |
John H. Zoeller | ||
Chief Financial Officer |