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ITEM 1. FINANCIAL STATEMENTS

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Limited Partners:

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SB PARTNERS

Notes to Consolidated Financial Statements (Unaudited)

The Partnership’s wholly owned property located in Maple Grove, Minnesota is 100% leased to a single tenant to October 31, 2024. The tenant pays fixed base rent which increases approximately 3% each year. The tenant pays directly or reimburses the Partnership for all utilities, real estate taxes, insurance and most of the property operating expenses and property management fees.

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, 20182019 and December 31, 2017:2018:

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OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FOR THE THREEAND SIX MONTHS ENDED JUNE 30, 2018 AND 2017

General

The consolidated financial statements for the three and six months ended June 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 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. 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, 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.

Sentinel Omaha LLC’s portfolio consistsas of January 1, 2019 consisted of eight garden apartment properties and one high rise apartment property.located in five markets. Leases generally are for one year or less. Tenants generally pay fixed rent plus utilities used by tenant. On April 6, 2019, Omaha sold its garden apartment property in Independence, Missouri. Net sales proceeds were used to first pay selling expenses and retire the property’s related secured mortgage loan. On May 6, 2019, Omaha sold its garden apartment property in Columbus, Ohio. Net sales proceeds were used to pay selling expenses and were used to retire Omaha’s secured mortgage loan encumbering its garden apartment property located in Charleston, South Carolina to further pay down Omaha’s debt.

Results of Operations

Total revenues from continuing operations for the three months ended June 30, 20182019 increased $9,000$2,000 to approximately $277,000$279,000 as compared to approximately $268,000$277,000 for the three months ended June 30, 2017.2018. Total revenues increased due to an increase in base rental income and interest income. Base rental income increased $5,000$6,000 to approximately $184,000$190,000 for the three months ended June 30, 20182019 as compared to the same period in 20172018 due to a scheduled increase in base rent at Registrant’s property located in Maple Grove, MN. InterestOther income increased due to an increase in interest rates. Other rentalreal estate taxes charged back to the tenant. Interest income decreased slightly.due to a decrease in cash reserves.

The Registrant reported a net loss from operations of approximately $127,000$158,000 for the three months ended June 30, 2018,2019, an improvementincrease of $3,000$31,000 as compared to a net loss from operations of approximately $130,000$127,000 for the same period in 2017.2018. Net loss from operations consists of net income from the Maple Grove property offset by partnership income and expenses. The decreaseincrease of loss from operations was due to higher total revenuesexpenses partially offset by higher total expenses.income. Total expenses from operations for 20182019 increased $6,000$33,000 to approximately $404,000$437,000 from approximately $398,000$404,000 in 2017,2018, due primarily to an increase in management fee expense of $7,000$22,000, an increase in administration expenses of $10,000 and an increase in repairs and maintenance expense of $4,000. This was partially offset by a decrease of mortgage amortization expense of $2,000 and a decrease in amortization costdepreciation expense of $4,000.

Total revenues from continuing operations for the six months ended June 30, 20182019 increased $16,000$6,000 to approximately $551,000$557,000 as compared to approximately $535,000$551,000 for the six months ended June 30, 2017.2018. Total revenues increased due to an increase in base rental income and interestother income. Base rental income increased $10,000$12,000 to approximately $368,000$380,000 for the six months ended June 30, 20182019 as compared to the same period in 20172018 due to a scheduled increase in base rent at Registrant’s property located in Maple Grove, MN. InterestOther income increased due to an increase in interest rates. Other rentalreal estate taxes charged back to the tenant. Interest income decreased slightly.due to a decrease in cash reserves.

The Registrant reported a net loss from operations of approximately $253,000$295,000 for the six months ended June 30, 2018,2019, an improvementincrease of $5,000$42,000 as compared to a net loss from operations of approximately $258,000$253,000 for the same period in 2017.2018. Net loss from operations consists of net income from the Maple Grove property offset by partnership income and expenses. The decreaseincrease of loss from operations was due to higher total revenuesexpenses partially offset by higher total expenses.revenue. Total expenses from operations for 20182019 increased $10,000$49,000 to approximately $804,000$853,000 from approximately $794,000$804,000 in 2017,2018, due primarily to an increase in management fee expense of $13,000$48,000 and an increase in repairs and maintenanceadministration costs of $13,000.$18,000. This increase was partially offset by a decrease in administrativerepair and maintenance expenses of $9,000$5,000, a decrease in depreciation expense of $8,000 and a decrease in amortization cost of $4,000.$7,000.

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 $10,521,000$3,409,000 to approximately $7,426,000$4,017,000 for the threesix months ended June 30, 20182019 compared to net increase in net assets of approximately $17,947,000$7,426,000 for the same period in 2017.2018. During 2017,2018, Omaha sold its garden apartment property located in Daytona, Florida and sold bothAsheville, North Carolina, its garden apartment propertiesproperty located in Fayetteville, North Carolina.Fresno, California and its high rise apartment property located in Omaha, Nebraska. Net sales proceeds in each transaction were used to first pay selling expenses and pay offretire each property’s related secured mortgage.mortgage loan. Remaining net sales proceeds were used to reduceretire Omaha’s unsecured loan.loan and were used to retire Omaha’s secured mortgage loan encumbering its garden apartment property located in Columbus, Ohio to further pay down Omaha’s debt. Retirement of the unsecured loan removed certain restrictions placed on Omaha by the lender including making distributions to its members including Registrant. 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 thefirst six months ended June 30, 2018,of 2019, Omaha sold its garden apartment property located in Asheville, North CarolinaIndependence, Missouri and its garden apartment property located in Fresno, California.Columbus, Ohio. Net sales proceeds in each transaction were used to first pay selling expenses and pay offretire each property’s related secured mortgage.mortgage loan. Remaining net sales proceeds were used to pay off Omaha’s unsecured loan and were used to pay offretire Omaha’s secured mortgage loan encumbering its high risegarden apartment property located in Omaha, NECharleston, South Carolina to further pay down Omaha’s debt. During the six months ended June 30, 2018,2019, Omaha reported a net increasedecrease in the value of its remaining real estate portfolio of $2,775,000.$5,700,000.

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During 20172018 the floatingvariable rates on Omaha loans increased as short term LIBOR rates increased. The one month LIBOR rate increased from an average of (0.7164%(1.4925%) during December 20162017 to an average of (1.4925%(2.4582%) during December 2017.2018. The one month LIBOR rate decreased slightly to an average of (2.4034%) during June 2019. Fixed mortgage interest rates for multi-family properties of similar class and location as Omaha’s portfolio also increased during 20172018 from an approximate range of 4.10% to 4.15% in early 2017 to 4.35% to 4.50% near the end of 2017. Mortgage2017 to 5.05% to 5.10% near the end of 2018. Fixed mortgage interest rates are expectedhave decreased during 2019 to continuean average of 3.57% to increase3.89% in 2018 as the U.S. Federal Reserve continues a policy to increase the Federal Funds Rate.June 2019. Although increaseschanges 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 paid off the unsecured debt 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 beis valued at a discount due to the lack of liquidity and ownership of a non-controlling (minority) interest. Registrant will continue to reporthas reported a reserve on the value of Omaha on its books but dueof 20% since June 30, 2018.

On April 11, 2019, Sentinel Omaha paid a distribution to Registrant in the payoffamount of Omaha's unsecured loan$5,100,000. On April 16, 2019, the general partner declared a distribution of $400 per full unit for all partners holding units or participations on May 31, 2019. The distribution was paid on June 4, 2019. On May 31, 2019, Sentinel Omaha paid a distribution to Registrant in 2017, the reserveamount of $3,300,000. The distribution was reduced from 25% asused to pay accrued investment management fees and accrued expenses and to increase cash reserves of December 31, 2017 to 20% as of March 31, 2018.the Registrant.

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, 2017.2018. There were no significant changes to such policies in 2018.2019. 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, 2018,2019, the Registrant had cash and cash equivalents of approximately $1,467,000.$1,726,000. These balances are approximately $17,000$1,388,000 higher than cash and cash equivalents held on December 31, 2017.2018. Cash and cash equivalents increased slightly during the six months ended June 30, 20182019 due to distributions received from Omaha combined with cash flow generated from operating activities at Registrant’s wholly owned propertyproperty. This increase was partially offset by a distribution paid to the partners and payments of accrued investment management fees and accrued expenses as well as partnership expenses and a partial pay down of Registrant’s Note B.paid.

Currently, Registrant’s only consistent source of cash is rental income received from the tenant whothat 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.

Registrant pays the General Partner and an affiliate of the General Partner fees for services performed. A portion of any remaining annual cash flow isthe fees during 2011 to 2018 were accrued while Registrant’s unsecured loan was outstanding. Since the unsecured loan has been retired, Registrant was allowed to pay the accrued fees and current fees. On April 11, 2019, Sentinel Omaha paid a distribution to Registrant in the amount of $5,100,000. On April 16, 2019, the general partner declared a distribution of $400 per full unit for all partners holding units or participations on May 31, 2019. The distribution was paid on June 4, 2019. On May 31, 2019, Sentinel Omaha paid a distribution to Registrant in the amount of $3,300,000. The distribution was 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 Registrantaccrued investment management fees and the Holder restructuring the bank loan in 2011, Registrant set aside $500,000 in escrow to be heldaccrued expenses 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 termscash reserves of the lease remainRegistrant. Registrant anticipates cash flow generated from the same.

Total outstanding debt at June 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. If 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 whichproperty located in Maple Grove and current cash reserves 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 topay ongoing operating and capital improvement costs, other working capital requirements of the Registrant and adversely affectcurrent fees due to the amount of cash reserves. If general economic conditions resultGeneral Partner and its affiliates as long as the tenant remains 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.place. The Registrant has no other debt except normal trade accounts payable and accrued investment management fees.

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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

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Eagle Lake Business Center IV (Maple Grove, Minnesota)

Total revenues for the three months ended June 30, 20182019 increased $5,000$7,000 to approximately $271,000$278,000 as compared to approximately $266,000$271,000 for the three months ended June 30, 2017.2018. The property reported higher base rental income and slightly lowerhigher other rental income. Base rental income was higher in 20182019 due to a scheduled increase in the base rent. Net operating income, which includes deductions for depreciation, increased $1,000$5,000 for the three months ended June 30, 20182019 to approximately $159,000$164,000 from approximately $158,000$159,000 for the three months ended June 30, 20172018 due primarily to higher total revenues partially offset by higher operating expenses. Operating expenses were higher due to higher repairs and maintenance expense and real estate tax expense.

Total revenues for the six months ended June 30, 2019 increased $15,000 to approximately $557,000 as compared to approximately $542,000 for the six months ended June 30, 2018. The property reported higher base rental income and higher other rental income. Base rental income was higher in 2019 due to a scheduled increase in the base rent. Net operating income, which includes deductions for depreciation, increased $23,000 for the six months ended June 30, 2019 to approximately $343,000 from approximately $320,000 for the six months ended June 30, 2018 due primarily to higher total revenues combined with lower operating expenses. Operating expenses were lower due to lower repairs and maintenance expense and depreciation expense partially offset by higher real estate tax expense.

Investment in Sentinel Omaha, LLC

Comparison of three months ended June 30, 20182019 to June 30, 2017:2018:

As of June 30, 2019, the Omaha portfolio consisted of six multi-family properties located in three markets. Omaha’s total revenues for the three months ended June 30, 2019 were approximately $6,284,000. Income before net unrealized losses and net realized gains was approximately $2,287,000. Major expenses included approximately $1,010,000 for interest expense, $569,000 for repairs and maintenance, $844,000 for payroll, and $468,000 for real estate taxes. Omaha reported net unrealized losses of approximately $13,290,000 and net realized gains of approximately $13,635,000 resulting in a net increase in net assets of approximately $2,631,000. For the three months ended June 30, 2019, the Registrant’s 30% equity interest in the income of Omaha was approximately $796,000. Registrant reserves 20% of the reported value of Omaha on its balance sheet for June 30, 2019. The reserve for value was adjusted in conjunction with recording the equity income for the quarter ended June 30, 2019. As a result, Registrant reported net income from equity interest in income of Omaha for the quarter ended June 30, 2019 of $2,317,000.

As of June 30, 2018, the Omaha portfolio consisted of nine multi-family properties located in six markets.

markets Omaha’s total revenues for the three months ended June 30, 2018 were approximately $8,172,000. Income before net unrealized income and net realized gains was approximately $3,275,000. Major expenses included approximately $1,245,000 for interest expense, $646,000 for repairs and maintenance, $948,000 for payroll, and $821,000 for real estate taxes. Omaha reported net unrealized gains of approximately $425,000 and net realized gains of approximately $21,000 resulting in a net increase in net assets of approximately $3,720,000. For the three months ended June 30, 2018, the Registrant’s 30% equity interest in the income of Omaha was approximately $1,116,000. Registrant reserves 20% of the reported value of Omaha on its balance sheet for June 30, 2018. The reserve for value was adjusted in conjunction with recording the equity income for the quarter ended June 30, 2018. As a result, Registrant reported net income from equity interest in income of Omaha for the quarter ended June 30, 2018 of $893,000.

Comparison of six months ended June 30, 2019 to June 30, 2018:

Omaha’s total revenues for the threesix months ended June 30, 20172019 were approximately $10,463,000.$14,113,000. Income before realizednet unrealized losses and net unrealized incomerealized gains was approximately $3,272,000.$5,224,000. Major expenses included approximately $1,667,000$2,095,000 for interest expense, $976,000$1,128,000 for repairs and maintenance, $1,353,000$1,889,000 for payroll, and $1,400,000$1,420,000 for real estate taxes. Omaha reported realizednet unrealized losses of $20,794,000approximately $14,842,000 and net unrealized incomerealized gains of approximately $23,969,000$13,635,000 resulting in a net increase in net assets of approximately $6,447,000.$4,017,000. For the threesix months ended June 30, 2017,2019, the Registrant’s 30% equity interest in the net increase in net assetsincome of Omaha was approximately $1,934,000.$1,205,000. Registrant recognized a reserve of 30%reserves 20% of the reported value of Omaha on its balance sheet.sheet for June 30, 2019. The reserve for value was adjusted in conjunction with recording the equity income for the quarter ended June 30, 2017.2019. As a result, Registrant reported net income from equity interest in net increase in net assetsincome of Omaha for the quartersix months ended June 30, 20172019 of $3,466,000.$2,644,000.

Omaha’s total revenues for the six months ended June 30, 2018 were approximately $17,514,000. Income before net unrealized losses and net realized gains was approximately $6,206,000. Major expenses included approximately $2,831,000 for interest expense, $1,352,000 for repairs and maintenance, $2,231,000 for payroll, and $2,030,000 for real estate taxes. Omaha reported net unrealized losses of approximately $8,720,000 and net realized gains of approximately $9,940,000 resulting in a net increase in net assets of approximately $7,426,000. For the six months ended June 30, 2018, the Registrant’s 30% equity interest in the income of Omaha was approximately $2,228,000. Registrant reserves 20% of the reported value of Omaha on its balance sheet for June 30, 2018. The reserve for value was adjusted in conjunction with recording the equity income for the six months ended June 30, 2018. As a result, Registrant reported net equity in net increase in net assets of Omaha for the six months ended June 30, 2018 of $4,288,000.

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, 2017. As a result, Registrant reported net equity in net increase in net assets of Omaha for the six months ended June 30, 2017 of $5,708,000.

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ITEM 3.

None

ITEM 4.

CONTROLS AND PROCEDURES

PART II – OTHER INFORMATION

ITEM 6.

EXHIBITS

** 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.

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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.