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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995 Commission file number 0-8952
SB Partners
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(Exact name of registrant as specified in its charter)
New York 13-6294787
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(State of other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
666 Fifth Avenue, N.Y., N.Y. 10103
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(Address of Principal Executive Offices) Zip Code
(212) 408-2900
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Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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NONE
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Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interests
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(Title of Class)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT
THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN
SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NONAFFILIATES
OF THE REGISTRANT. (THE AGGREGATE MARKET VALUE SHALL BE COMPUTED BY
REFERENCE TO THE PRICE AT WHICH THE STOCK WAS SOLD, OR THE AVERAGE BID AND
ASKED PRICES OF SUCH STOCK, AS OF A SPECIFIED DATE WITHIN 60 DAYS PRIOR TO
THE DATE OF FILING.)
Not Applicable
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE (APPLICABLE
ONLY TO CORPORATE REGISTRANTS).
Not Applicable
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED,
TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K (x).
DOCUMENTS INCORPORATED BY REFERENCE: LIST THE FOLLOWING DOCUMENTS IF
INCORPORATED BY REFERENCE AND THE PART OF THE FORM 10-K INTO WHICH THE
DOCUMENT IS INCORPORATED: (1) ANY ANNUAL REPORT TO SECURITY HOLDERS; (2)
ANY PROXY OR INFORMATION STATEMENT; AND (3) ANY PROSPECTUS FILED PURSUANT
TO RULE 424(b) OR (c) UNDER THE SECURITIES ACT OF 1933. (THE LISTED
DOCUMENTS SHOULD BE CLEARLY DESCRIBED FOR IDENTIFICATION PURPOSES.)
None
Page 1 of 40
2
PART I
ITEM 1. BUSINESS
Description of SB Partners (the "Registrant")
The Registrant is an existing New York limited partnership, which has been
engaged in acquiring, operating and holding for investment a varying
portfolio of real properties since April, 1971. The Registrant's initial
public offering was in 1971. In 1973, 1978, 1980, 1982 and 1985, the
Registrant sold additional limited partnership interests. As of December
31, 1995, the Registrant owned a shopping center in Plantation, Florida;
office buildings in St. Louis, Missouri, Cherry Hill, New Jersey and Los
Angeles, California; and apartment projects in Holiday, Florida, and Reno,
Nevada. In addition, the Registrant owned an undivided 10% interest in an
apartment project in Orlando, Florida, a 60% interest in an apartment
project in Atlanta, Georgia, and 13.9 acres of land in Holiday, Florida.
The principal objectives of the Registrant are, first, to obtain capital
appreciation through equity investments in real estate, second, to
generate cash available for distribution, a portion of which may not be
currently taxable, and third, to the extent still permitted under the
Internal Revenue Code of 1986, as amended, to generate tax losses which
may offset the Limited Partners' income from the Registrant and certain
other sources. In recent years, the ability of the Registrant to meet
these objectives has been impacted negatively by factors discussed
elsewhere in this annual report on Form 10-K, among other things.
The Registrant incurred losses before gain or loss on sale of investments
in real estate during each year of its existence, except for calendar
years 1982, 1987, and 1988. The accumulated tax losses and accumulated
financial statement losses before gain on sale of investments in real
estate as of December 31, 1995 were $135,241,735, and $103,377,677,
respectively. The accumulated tax gains and the accumulated financial
statement gains on sale of investments in real estate as of December 31,
1995, were $104,849,671 and $92,426,216,respectively. Aggregate cash
distributions made to partners as of December 31, 1995 were $97,752,882.
Refer to the Registrant's 1995 Annual Audited Financial Statements, which
are contained in this annual report on Form 10-K, Note 9 of Notes to
Financial Statements, for a reconciliation of net loss for financial
reporting purposes to net loss for Federal income tax reporting purposes
for each of the three years in the period ended December 31, 1995.
3
Recent Developments and Real Estate Investment Factors
Numerous events which have affected the real estate industry over the last
decade including significant changes in federal income tax legislation,
stricter government regulations with respect to lending practices of
banking and savings and loan institutions, the Resolution Trust
Corporation's administration and disposition of billions of dollars of
real estate, and overbuilding in many markets have had a significant
negative impact on the value and operation of real estate investments.
During such periods of declining real estate values, the use of leverage
causes equity values and property cash flow to decrease more rapidly and
more substantially than instances where leverage is not used. The use of
leverage by the Registrant and other owners of real estate has had a
negative impact on equity values and cash flow during this period of
declining real estate values. Due to the tendency of real estate to be
relatively non-liquid, the ability of the Registrant and other owners of
real estate to vary their portfolios in response to these changing general
and local economic, financial and investment conditions has been limited
in the past and, for certain asset classes, may be limited in the future.
Certain markets and real estate asset classes have stabilized or exhibited
improvement during recent years from improved tenant demand, lower cost
and greater availability of debt, lower equity capital costs, more
potential buyers of real estate including real estate investment trusts
and opportunistic real estate funds, among other factors. Apartment
properties are typical of an improving asset class. Yet, many markets and
asset classes remain unstable or have stabilized at a level where current
rental rates less operating, financing and tenanting costs are
insufficient to support debt and equity structures created in the 1980's
and early 1990's. Certain central business district office buildings are
typical of these latter situations.
In the event that cash flow from the properties is not sufficient to cover
operating, financing and improvement costs, owners of real estate
properties, including the Registrant, may elect to fund such shortfalls
from other than internal sources. The sources may include, but are not
limited to, obtaining funds from sales or joint venturing of its real
estate investments, or additional secured or unsecured borrowing (Refer
also to Item 7. - Management's Discussion and Analysis of Financial
Condition and Results of Operations.) In such instances, the estimated
value of these properties may be less than mortgage notes encumbering such
properties. These owners may also take actions with respect to these
mortgage notes including renegotiating terms of the loans with or turning
the properties over to the lender.
4
Competition
The Registrant competes for tenants with many other real estate owners.
The success of the Registrant in attracting tenants for its properties
will depend upon its ability to maintain its properties and their
attractiveness to tenants, neighborhood conditions, and changing
demographic trends, among other things. The recent recession and other
factors resulted, and may continue to result, in the inability of existing
tenants to meet their obligations under the terms of their leases, which
may in turn adversely affect the performance and financial condition of
the Registrant.
Tax Matters
In August 1993, Congress passed and President Clinton signed into law the
Omnibus Budget Reconciliation Act of 1993 (the "Act"). The Act includes
several provisions designed to help revive the real estate industry,
including relaxed rules for pension fund investments in real estate,
passive-loss relief for developers, extension of the low-income housing
credit, and an easing of the rules on recognizing cancellation of certain
real estate debt. On the negative side, the Act extended the recovery
period for nonresidential real estate by 7.5 years (from 31.5 to 39).
The Act relaxes the "per se" passive characterization of certain rental
real estate operations. For tax years beginning after 1993, eligible
taxpayers, who materially participate in rental real estate activities,
are able to deduct losses from rental activities against other income.
For all other nonmaterial participating taxpayers, the provisions enacted
as part of the Tax Reform Act of 1986 and the Technical and Miscellaneous
Revenue Act of 1988 (as discussed below) continue to apply. The Act also
provides some relief by allowing taxpayers, other than corporations, to
elect to exclude from income some cancellation of "qualified real property
business indebtedness", effective for certain discharges after December
31, 1992. The amount of the exclusion is limited to the basis of the
taxpayer's business real property or the excess of the principal amount of
the debt over the fair market value of business real property that secures
the debt, whichever is less. The basis of the taxpayer's business real
property must be reduced by the amount of excluded income. The new
provision does not apply to foreclosures or "deeds in lieu" with respect
to nonrecourse debt.
5
Tax Reform Act of 1986 and the Technical
and Miscellaneous Revenue Act of 1988
On October 22, 1986, the Tax Reform Act of 1986 (the "1986 Act") was
signed into law. The Technical and Miscellaneous Revenue Act of 1988
("TAMRA 88") was enacted on November 10, 1988. Generally the principal
provisions of the 1986 Act and TAMRA 88 impacting the Registrant and its
Limited Partners are:
-Passive activity loss limitations have limited the ability of the
partners to offset their allocated share of taxable passive losses
(essentially losses from rental real estate operations) of the
Registrant against other earned or portfolio income.
-The limitation of losses to amounts that partners have "at risk" was
extended to passive real estate investments. The amount a partner has
"at risk" generally includes their proportionate share of qualified
non-recourse financing, and is also subject to other limitations.
-The 1986 Act limits the deduction of investment interest expense, as
defined, to the amount of net investment income generated for the
year, as defined, with an unlimited carryover for excess expense.
The effect of these and other changes in income tax laws will vary
depending upon each partner's individual tax situation. The Registrant
believes that its characterization of and allocation of passive and
portfolio income and losses from its operations are in compliance with
existing regulations, but it can provide no assurances that the Internal
Revenue Service ("IRS") will not challenge such treatment and allocations
in the event of an audit.
Other Tax Matters
The Revenue Act of 1987 retroactively changed the treatment of income and
loss of publicly-traded partnerships ("PTP") to characterize a partner's
share of income as portfolio instead of passive, and limits the current
deductibility of losses.
The term PTP refers to any partnership whose interests are traded on an
established securities market or are readily tradeable on a secondary
market (or the substantial equivalent thereof). The Registrant believes
that it is not a PTP pursuant to such definition and therefore its holders
will not be subject to the Revenue Act of 1987 provisions. However, due
to the complexities of the regulations, no assurance can be provided that
the IRS may not challenge the treatment of income and losses in the event
of an audit.
6
In 1989, the Registrant made an election under IRC Section 754 which
provides for an adjustment of the adjusted tax basis of depreciable
property which may result in additional depreciation deductions to
purchasing partners and those partners who inherit their interests in the
Registrant. These adjustments, however, are subject to the passive loss
rules discussed above and may or may not provide current benefit to a
particular partner. The Registrant will be bound by the Section 754
election for all subsequent years.
General
Efforts required in complying with Federal, state and local environmental
regulations may have and may continue to have an adverse effect on the
Registrant's operations in the future, although such costs have not
historically been significant in amount.
There are approximately 41 full and part-time on site project personnel
employed at the Registrant's properties.
The Registrant's real estate investments are not generally subject to
seasonal fluctuations, although net income (loss) may vary somewhat from
quarter to quarter based upon changes in utility consumption and seasonal
maintenance expenditures at each property.
The Registrant considers itself to be engaged in only one industry
segment, real estate investment, and therefore information regarding
industry segments is not applicable and has not been provided.
ITEM 2.PROPERTIES
The properties owned by the Registrant as of December 31, 1995 are set
forth on the Summary of Properties Schedule on the page immediately
following.
ITEM 3.LEGAL PROCEEDINGS
Refer to Footnote 11 in the Registrant's 1995 Annual Audited Financial
Statements included elsewhere in this annual report on Form 10-K.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF UNITHOLDERS
NONE.
7
SB PARTNERS
Summary of Properties
As of December 31, 1995
Description Acquisition Percent Mortgage
Property Location Sq. Ft. Units Acres Date Ownership Occupancy Payable
Apartments:
Holiday Park Apts. Holiday, FL 220,000 244 21.5 Jan 1991 100% 91.4% $ 3,592,065
Summerwalk Apts. (1) Orlando, FL 252,000 304 12.8 Mar 1978 10% 94.7% -
Riverbend Apts. (2) Atlanta, GA 557,000 594 49.8 Jan 1989 60% 91.4% -
Meadowwood Apts. Reno, NV 529,000 704 30.0 May 1983 100% 96.7% 17,975,016
--------- ----- -----
1,558,000 1,846 114.1
Office: ========= ===== =====
Cherry Hill Office Center Cherry Hill, NJ 138,000 n/a 3.4 Sep 1993 100% 74.6% 418,970
International Jewelry Center(3) Los Angeles, CA 371,000 n/a (3) Nov 1984 100% 72.3% 33,898,519
1010 Market Street St. Louis, MO 343,000 n/a 0.8 Nov 1984 100% 87.7% 40,749,555
------- ---
852,000 4.2
Retail: ======= ===
Plantation Center Plantation, FL 238,000 n/a 18.6 July 1981 100% 81.6% 6,773,388
Land:
Unimproved land (4) Holiday, FL n/a n/a 13.9 July 1978 100% n/a -
(1) Registrant owns a 10% interest in property.
(2) Property contributed to 60% owned joint venture on January 6, 1992. Refer also to the Registrant's 1995
Annual Audited Financial Statements. The property is included in "Investment in Joint Venture" in the 1995 Annual
Audited Financial Statements.
(3) Property owned includes a twelve story office building and jewelry mart, and a four story parking garage.
The improvements are owned subject to a participating ground lease. The mortgage note encumbering the property is
in default.
Refer also to Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations.
(4) Land is adjacent to Holiday Park Apartments.
8 PART II
ITEM 5.MARKET FOR REGISTRANT'S UNITS OF PARTNERSHIP
INTEREST AND RELATED UNITHOLDER MATTERS
The transfer of Units or Participations (equivalent to one-half Unit) is
subject to certain limitations, including the consent of the General
Partner. There is no public market for the Units and it is not
anticipated that any such public market will develop.
The number of Unitholders as of December 31, 1995 was 3,947.
Although at various times the Registrant has generated and distributed
cash to the Unitholders, there is no requirement to make such
distributions nor can there be any assurance that future operations will
generate cash available for distribution. The Registrant has not paid
distributions since 1990 and has no current plans to recommence paying
distributions.
ITEM 6.SELECTED FINANCIAL DATA
Selected Financial Data is set forth on the table on the following page.
This information should be read in conjunction with the Financial
Statements and Notes thereto, and Management's Discussion and Analysis of
Financial Condition and Results of Operations included elsewhere in this
annual report on Form 10-K.
9
SELECTED FINANCIAL DATA
The following table sets forth selected financial data regarding the Registrant's
financial condition and results of operations determined in accordance with
generally accepted accounting principles. This data should be read in conjunction
with the Audited Financial Statements and Notes thereto included elsewhere in this
annual report on Form 10-K.
For the Years Ended December 31,
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(In Thousands, Except Per Unit Data)
Income Statement Data:
Rental, Interest and Other Revenues $23,324 $25,544 $27,019 $30,221 $34,136
Operating Expenses, including
Depreciation and Amortization (31,356) (35,648) (35,424) (35,659) (39,245)
Provision for loan losses, net of recoveries 0 0 (129) (1,834) (3,250)
Writedown and Reserves of Investments in Real Estate 0 (4,162) 0 (1,295) (459)
Interest Expense on Unsecured and
Secured Loans 0 0 0 (53) (485)
-------- -------- -------- -------- --------
Loss from Operations (8,032) (14,266) (8,534) (8,620) (9,303)
Gain (Loss) on Sale of Investments
in Real Estate 3,964 6,859 (72) 125 0
Equity in Net Income or Loss of Joint Venture 725 (352) (372) (922) 0
-------- -------- -------- -------- --------
Net Loss ($3,343) ($7,759) ($8,978) ($9,417) ($9,303)
======== ======== ======== ======== ========
Net Loss per Unit of Partnership Interest: ($ 431) (1,001) ($1,158) ($1,215) ($1,200)
Weighted Average Number of
Partnership Units Outstanding 7754 7,754 7,754 7,754 7,754
Balance Sheet Data at Year End:
Real Estate, net $106,893 $116,253 $136,749 $136,069 $159,310
Investment in Joint Venture $10,697 $11,134 $11,635 $12,122 $0
Mortgage Notes Receivable, net $0 $0 $5,934 $10,006 $24,364
Total Assets $127,259 $135,238 $163,370 $170,311 $192,591
Mortgage Notes Payable, net $103,408 $112,254 $136,004 $136,436 $139,886
Other Secured and Unsecured
Loans Payable $0 $0 $0 $0 $6,200
10
ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1995, the Registrant had cash and cash equivalents of
approximately $3,305,000 in addition to $1,145,000 of deposits held in
escrow by certain lenders for the payment of insurance, real estate taxes
and certain capital and maintenance costs. These balances are
approximately $2,072,000 more than cash, cash equivalents and deposits
held in escrow on December 31, 1994.
During 1995, the Registrant sold Sahara Palms Apartments for $12,000,000
in an all cash transaction. The underlying mortgage note payable of
$8,431,000 was retired and a gain on sale of $3,964,000 was recognized in
1995.
Outstanding debt at December 31, 1995 consisted of approximately
$103,408,000 of nonrecourse first mortgage notes secured by real estate
owned by the Registrant. The scheduled maturity of the $6,773,000
mortgage note secured by Plantation Shopping Center has been extended to
June 28, 1996 by the mortgagee, subject to a partial principal payment of
$1,500,000 which was made on February 29, 1996. The Registrant is in
negotiations to sell Plantation Shopping Center prior to the extended
maturity date of the mortgage loan. If it fails to do so, the Registrant
may be required to secure funds from other sources to retire the mortgage
loan. The Registrant is also negotiating with the existing lender for the
mortgage loan secured by Meadowwood Apartments to extend the maturity of
the loan, increase the loan amount, and reduce the interest rate. Other
scheduled maturities through regularly scheduled monthly payments of
principal and interest will be $674,000 in 1996.
As of December 31, 1995, the Registrant had secured irrevocable letters of
credit in the amount of $1,038,000 which primarily serve as additional
collateral securing financing for 1010 Market Street office building. The
Registrant has no other debt except normal trade accounts payable and
accrued interest on previously discussed mortgage notes payable.
Cash flow from the Registrant's apartment properties has been increasing
moderately, reflecting the strong Atlanta and Reno apartment submarkets.
Office markets where the Registrant owns properties have experienced and
are likely to continue experiencing extended periods of high vacancy
rates, significantly lower effective rental rates, reduced demand, and
high risks of tenant failures and overbuilding. New leases and renewals
of existing leases are being made on terms that are significantly more in
favor of tenants with reduced rental rates, periods of free or reduced
rent, and costs of altering and
11
improving rented premises being borne by the landlord. Consequently,
rental revenues, for certain properties, in recent years have been and may
continue to be insufficient to cover operating costs, tenant improvement
costs and other capital expenditures and scheduled debt service payments.
Funds generated from other sources, including, but not limited to, sales
or joint venturing of real estate investments or additional secured or
unsecured borrowing, have at times been utilized to offset cash flow
deficits resulting from operating these properties. Although it expects
to generate sufficient cash flow from all sources to cover possible
shortfalls at certain commercial properties in 1996, the Registrant may
elect not to fund such deficits for certain properties.
Due to the impact of the conditions discussed above and the continuing
decline in commercial office rents in the downtown Los Angeles office
market, cash flow generated by International Jewelry Center has not been
sufficient to carry debt service on the mortgage encumbering the property.
The Registrant ceased paying scheduled debt service in May 1993 and since
then has only been paying debt service based on available cash flow from
the building. The loan was declared in default by the lender in November
1993, and the lender filed a Notice of Default and Election to Sell on
March 3, 1995. The Registrant recorded a reserve for real estate losses
of $4,162,000 for the year ended December 31, 1994 in connection with this
property. It is unlikely that the Registrant will be able to restructure
the loan terms and is cooperating with the lender to transfer title to the
property to a tenant group. A transfer of title may result in negative
tax consequences for some partners.
In 1994 and 1995, Southwestern Bell, formerly the largest non-governmental
tenant in the St. Louis Central Business District, relocated its
headquarters and other operations to San Antonio, Texas and other cities.
The St. Louis CBD continues to suffer from significant decreases in rental
rates charged for new and renewal leases and high vacancy rates caused by
other tenants downsizing, ceasing operations, or relocating to suburban
locations or other cities. This has, and will continue to, adversely
effect the operation of 1010 Market Street in St. Louis.
During 1996 and the first seven months of 1997, leases for approximately
170,000 square feet of space at 1010 Market Street expire. Included in
this total is one tenant previously occupying approximately 35,000 square
feet which it vacated by late 1995, although it has and will continue to
pay rent through its scheduled expiration in March 1996. As such, it is
unlikely that net operating income from the 1010 Market Street office
building will be sufficient to cover debt service in 1996.
12
MANAGEMENT'S DISCUSSION OF RESULTS OF OPERATIONS
1995 VS. 1994
Total revenues decreased $2,220,000 to $23,324,000 in 1995 from
$25,544,000 in 1994. Loss from operations decreased $6,234,000 to
$8,032,000 in 1995 from $14,266,000 in 1994. Net loss decreased
$4,415,000 to $3,343,000 in 1995 from $7,758,000 in 1994.
The net loss for 1995 includes a gain on sale of real estate of
$3,964,000. The net loss for 1994 includes a net gain on sales of real
estate of $6,859,000 and a reserve for real estate losses of $4,162,000.
Meadowwood Apartments (Reno, Nevada)
Total revenues increased $161,000 to $4,482,000 in 1995 from $4,321,000 in
1994. Net loss after depreciation and mortgage interest expense decreased
$60,000 to $40,000 in 1995 from $100,000 in 1994.
The increase in total revenues was primarily due to the strong apartment
market, evidenced by increases in rental rates implemented at the property
which increased revenues $132,000, and increased occupancy which increased
revenues $27,000. The decrease in net loss was primarily attributable to
the increases in income, partially offset by increases in repairs and
maintenance costs of $43,000, real estate taxes of $41,000, payroll and
related costs of $8,000, and insurance expense of $7,000.
Sahara Palms Apartments (Las Vegas, Nevada)
Sahara Palms Apartments was sold on December 28, 1995, for $12,000,000,
resulting in a gain on sale of $3,964,000. Revenues before gain on sale
increased $18,000 to $2,001,000 in 1995 from $1,983,000 in 1994. Net loss
before gain on sale and after depreciation and mortgage interest expense
increased $95,000 to $285,000 in 1995 from $190,000 in 1994.
The increase in total revenues was primarily due to increases in rental
rates implemented at the property during the year which increased income
$8,000 and increases in incidental income of $10,000. The increase in net
loss was primarily due the write-off of deferred financing costs of
$94,000, as well as increases in advertising costs of $11,000 and other
costs which were partially offset by the increases in income.
13
Holiday Park Apartments (Holiday, Florida)
Total revenues increased $6,000 to $1,071,000 in 1995 from $1,065,000 in
1994. Net loss after depreciation and mortgage interest expense increased
$21,000 to $120,000 in 1995 from $99,000 in 1994.
The increase in total revenues was primarily due to increases in
incidental income during the year. The increase in net loss was primarily
due to increases in repairs and maintenance of $11,000, insurance of
$4,000, utilities of $3,000, depreciation of $2,000 and professional fees
of $2,000.
Plantation Shopping Center (Plantation, Florida)
Total revenues increased $281,000 to $1,521,000 in 1995 from $1,240,000 in
1994. Net loss after depreciation and mortgage interest expense decreased
$489,000 to $435,000 in 1995 from $924,000 in 1994.
The increase in total revenues was primarily due to increases in rental
rates charged at the property which increased income $223,000, increases
in average occupancy which increased income $25,000, and increases in
escalation income which increased income $27,000. The decrease in net
loss was primarily due to the increased revenues, and decreases in
professional fees expense of $213,000. Legal fees incurred in the prior
year pertained to a tenant collection matter which has since been
resolved. As previously discussed, the maturity date of the mortgage note
secured by the property was extended to June 28, 1996.
1010 Market Street (St. Louis, Missouri)
Total revenues increased $396,000 to $5,972,000 in 1995 from $5,576,000 in
1994. Net loss after depreciation and mortgage interest expense decreased
$499,000 to $518,000 in 1995 from $1,017,000 in 1994.
The increase in total revenue was primarily due to increases in
escalations and other income of $352,000, and increases in miscellaneous
income of $38,000. The decrease in net loss was primarily due to the
increase in revenues, and decreases in repairs and maintenance expense of
$89,000 and utilities of $26,000.
14
Cherry Hill Office Center (Cherry Hill, New Jersey)
Total revenues decreased $125,000 to $1,383,000 in 1995 from $1,508,000 in
1994. Net income after depreciation and mortgage interest expense
decreased $125,000 to $123,000 in 1995 from $248,000 in 1994.
The decrease in total revenue was primarily due to decreases in base rent
charged to tenants which decreased income $34,000, and decreased average
occupancy which decreased income $78,000, and a decrease in escalation
income of $14,000. The decrease in net income was primarily due to the
decrease in revenues, as total expenses remained relatively constant.
International Jewelry Center (Los Angeles, California)
Total revenues decreased $222,000 to $6,779,000 in 1995 from $7,001,000 in
1994. Net loss after depreciation and mortgage interest expense decreased
$4,348,000 to $3,387,000 in 1995 from $7,735,000 in 1994. As previously
discussed in Liquidity and Capital Resources, a reserve for real estate
losses of $4,162,000 was recorded in 1994. The net loss excluding the
reserve for real estate losses decreased $186,000 to $3,387,000 in 1995
from $3,573,000 in 1994.
The decrease in total revenues was primarily due to a decrease in average
base rents charged to tenants which decreased income $251,000, and
decreases in escalation income of $109,000 and in other income of $70,000.
These decreases were partially offset by an increase in income of $207,000
which resulted from an increase in average occupancy of 4% to 71% in 1995
from 67% in 1994. The decrease in net loss was primarily due to decreases
in bad debt expense of $417,000, real estate taxes of $203,000, and
repairs and maintenance of $138,000, partially offset by the decrease in
revenues and increases in depreciation expense of $289,000, payroll and
related costs of $37,000, and utilities expense of $22,000.
The International Jewelry Center continues to be severely adversely
affected by the softening of the jewelry business in general, and the
migration of tenants and potential tenants to suburban areas perceived to
be safer than downtown Los Angeles. As a result, cash flow generated by
the International Jewelry Center has not been sufficient to carry ground
rent and debt service on the mortgage encumbering the property. Cash flow
for 1996 is also projected to be less than scheduled ground rent and debt
service. The positive effects of improvements in property occupancy have
been minimized by continuing reductions in rental rates paid by new and
renewal tenants, tenant failures and costs of improving such space for the
tenants at the Registrant's cost. Additionally, given the nature of the
tenancy at the building, many of whom manufacture and clean jewelry in the
building, the City of Los Angeles has imposed additional requirements in
respect of the waste water treatment plant and indoor air monitoring
system.
15
Mortgage Notes Receivable Portfolio
Interest income from the mortgages receivable portfolio decreased to $-0-
from $497,000 in 1994. The decrease was caused by the reacquisition of
Nob Hill Apartments in July, 1994. The Registrant has not owned interests
in mortgage notes receivable since that time.
Investment in Joint Venture
Equity in net income (loss) of joint venture increased $1,076,000 to
income of $725,000 in 1995 from a net loss of $351,000 in 1994. The
increase in net income was primarily due to increases in average occupancy
of approximately 7% to approximately 93% during the year ended December
31, 1995 from approximately 86% for the year ended December 31, 1994. In
addition to increased occupancy, increases in base rentals charged to
tenants accounted for $166,000 of the total increase in net income for the
year.
MANAGEMENT'S DISCUSSION OF RESULTS OF OPERATIONS
1994 VS. 1993
Total revenues decreased $1,475,000 to $25,544,000 in 1994 from
$27,019,000 in 1993. Loss from operations increased $5,732,000 to
$14,266,000 from $8,534,000 in 1993. Net loss decreased $1,220,000 to
$7,758,000 in 1994 from $8,978,000 in 1993.
The net loss for 1994 includes a gain on sales of real estate of
$6,859,000 and a reserve for real estate losses of $4,162,000. The net
loss for 1993 included a provision for loan losses of $853,000 after a
partial recovery of previously reserved mortgage note receivable of
$725,000 and a loss on sale of real estate of $72,000.
Meadowwood Apartments
Total revenues in 1994 increased $221,000 to $4,321,000 from $4,100,000 in
1993. Net loss after depreciation and mortgage interest expense decreased
$163,000 to $100,000 in 1994 from $263,000 in 1993.
16
Revenue increased due to base rent increases of $217,000 charged to
tenants with minimal impact on the property's occupancy. Property
occupancy remained above 95% for most of the year and as of December 31,
1994 was 97.8%. The decrease in net loss was caused by the increase in
revenues discussed above and reduction in real estate taxes ($49,000),
partially offset by an increase in apartment turnover costs ($22,000),
utility costs ($61,000) and professional fees ($24,000).
Sahara Palms Apartments
Total revenues increased $136,000 to $1,983,000 in 1994 from $1,847,000 in
1993 . Net loss after depreciation and mortgage interest expense
increased $34,000 to $190,000 in 1994 from $156,000 in 1993.
As with Meadowwood, occupancy at Sahara Palms remained above 95% for most
of the year and at December 31, 1994 was 97.6%. The increase in revenues
is indicative of the continuing strength of the Las Vegas apartment market
as base rents rose $42,000 and vacancy and other revenue losses decreased
$86,000.
The increase in net loss was caused by increases in depreciation and
amortization expense ($108,000), payroll ($43,000), contractual services
($24,000), utilities ($14,000), and property administration ($12,000),
partially offset by the previously discussed increase in revenues.
Holiday Park Apartments
Total revenues increased $37,000 to $1,065,000 in 1994 from $1,028,000 in
1993. Net loss after depreciation and mortgage interest expense increased
$25,000 to $99,000 in 1994 from $74,000 in 1993.
Revenues increased primarily from increases in base rents charged to
tenants ($40,000), partially offset by a small increase in average vacancy
($5,000). The increase in net loss was caused by increases in payroll
related costs ($16,000) and repair and maintenance costs ($47,000),
partially offset by the previously discussed increase in revenues.
Woodlake Village/Redwood Village
Woodlake Apartments was sold in June 1994 for $22,055,000 resulting in a
gain on sale of $6,442,000. Decreases in revenues and net loss before
gain on sale are attributable to a full year of ownership in 1993 as
compared with five months in 1994.
Revenue decreased $2,171,000 to $1,578,000 in 1994 from $3,749,000 in
1993. Net loss before gain on sale decreased $315,000 to $254,000 in 1994
from $569,000 in 1993.
17
Plantation Shopping Center
Total revenues decreased $159,000 to $1,240,000 in 1994 from $1,399,000 in
1993. Net loss after depreciation and mortgage interest expense increased
$171,000 to $924,000 in 1994 from $753,000 in 1993.
Performance continued to suffer from the effects of the fire which caused
significant damage to the property in late 1992 and the resulting decline
in occupancy. Revenues decreased primarily from a decrease in average
base rent charged to tenants ($282,000) partially offset by increases in
occupancy ($78,000) and tenant pass through income ($53,000). Net loss
increased primarily from the previously discussed revenue decrease and
increases in professional fees ($65,000) and amortization of discount on
mortgage notes payable ($43,000), partially offset by a decrease in real
estate tax expense ($73,000).
1010 Market Street
Total revenues increased $171,000 to $5,576,000 in 1994 from $5,405,000 in
1993. Net loss after depreciation and mortgage interest expense decreased
$59,000 to $1,017,000 in 1994 from $1,076,000 in 1993.
Revenue increased primarily from increases in escalation income ($21,000),
other income ($48,000) and an increase in average occupancy from 85% to
87% ($66,000). Net loss decreased due to the revenue increase described
previously, offset by increases in insurance costs ($31,000), repairs and
maintenance ($45,000) and payroll costs ($38,000). A portion of the
increases in property operating expenses have been billed to certain
tenants that have leases with pass through clauses for rent increases due
to increases in building operating expenses.
Cherry Hill Office Center
Cherry Hill Office Center was reacquired by the Registrant in September
1993 by credit bid of its mortgage, such bid being approved by the United
States Bankruptcy Court. Accordingly, increases in total revenue and net
income after depreciation and mortgage interest expense in 1994 are
attributable to a full year of ownership as compared with four months in
1993.
Total revenues increased $957,000 to $1,508,000 in 1994 from $551,000 in
1993. Net income after depreciation and interest expense increased
$136,000 to $248,000 in 1994 from $112,000 in 1993.
18
International Jewelry Center
Revenues decreased $716,000 to $7,001,000 in 1994 from $7,717,000 in 1993.
Net loss after depreciation and mortgage interest expense increased
$4,933,000 to $7,735,000 in 1994 from $2,802,000 in 1993.
Revenues decreased primarily from a reduction in average occupancy at the
property from 73% to 67% ($525,000), a decrease in average base rents
charged to tenants ($156,000) and a decrease in expense escalation revenue
related to the prior year reduction in occupancy ($102,000). The net loss
increased due to the previously described decrease in revenue, the reserve
for real estate losses ($4,162,000) previously discussed in Liquidity and
Capital Resources, and increases in real estate and other taxes
($181,000), salaries ($151,000), depreciation of improvements ($257,000),
and maintenance and security costs ($260,000), partially offset by a
decrease in bad debt expenses ($1,231,000).
Mortgage Notes Receivable Portfolio
Interest income from mortgage notes receivable decreased $558,000 to
$497,000 in 1994 from $1,055,000 in 1993. The decrease was caused by the
reacquisition of Cherry Hill Office Center in September 1993 and Nob Hill
Apartments in July 1994.
In 1993, the Registrant added $854,000 to its provision for possible loan
losses due to the deterioration in the performance of Nob Hill Apartments
and recovered $725,000 from the previously fully reserved third mortgage
note secured by an apartment complex located in Antioch, California.
During 1994, the Registrant reacquired Nob Hill Apartments for $700,000
cash over existing liens (Refer to page 10 - Liquidity and Capital
Resources). As of December 31, 1994, the Registrant did not own interests
in mortgage notes receivable.
Investment in Joint Venture
Equity in net loss of joint venture decreased $21,000 to $351,000 in 1994
from $372,000 in 1993.
The improvement was due to the continuing increase in property occupancy
during the year from 80% at December 31, 1993 to 93% at December 31, 1994
($158,000) and an increase in base rents paid by tenants ($129,000),
partially offset by increases in expenses related to the improvement in
occupancy - apartment turnover costs ($99,000), repairs and maintenance
($20,000) and utility costs ($40,000).
19
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements required by this item, together with the Report
of Independent Public Accountants, thereon, are contained herein on pages
25 through 38 of this annual report on Form 10-K. Supplementary financial
information required by this item is contained herein on pages 39 and 40
of this report.
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
NONE.
20
PART III
ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Registrant has no executive officers or directors. All of its
business affairs are handled by its General Partner, SB Partners Real
Estate Corporation ("General Partner").
The directors and executive officers of the General Partner are elected by
Sentinel Holdings Corporation ("SHC") as its sole shareholder to serve
until their successors are duly elected and qualified. The Limited
Partners of the Registrant are not entitled to vote in their election.
The directors and executive officers of the General Partner who are active
in the Registrant's operations are:
Name Age Position
John H. Streicker 53 President & Director
Michael J. Weinberger 60 Director
Millie C. Cassidy 50 Director
David Weiner 60 Director
Christine Kurtz 41 Director
Mr. Streicker joined the General Partner in May, 1976. He has been
President since April, 1984. He is President of SHC and its parent
company, J.H. Streicker & Co., Inc.
Mr. Weinberger, a Certified Property Manager, joined the General Partner
in February, 1973. He is the residential portfolio manager for the
Western region.
Ms. Cassidy joined the General Partner in August, 1982. She has been a
Director of the General Partner since March, 1988. She is the residential
portfolio manager for the Eastern region.
Mr. Weiner joined the General Partner in April, 1984. He is a portfolio
manager and manager of investor relations. He has been a Director of the
General Partner since March, 1988.
Ms. Kurtz joined the General Partner in 1980. Ms. Kurtz is a Director and
portfolio manager responsible for commercial property transactions and
management.
21
ITEM 11.EXECUTIVE COMPENSATION
The Registrant has no executive officers or directors.
ITEM 12.SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
(a) At December 31, 1995, an institutional investor of record owned 7.13%
of the outstanding Units of Limited Partnership Interests. On January
13, 1993, a group of unitholders of record, including the
institutional investor referred to above, entered into a collective
agreement with respect to their ownership interest in the Registrant.
The aggregate number of Units beneficially owned by the group is 676
Units, representing 8.7% of the total number of outstanding Units of
Limited Partnership Interest on that date. Each unitholder has
disclaimed beneficial ownership of all Units owned by the other
unitholders in this group. The foregoing information is based upon a
13-D filing made by the respective unitholders.
(b) As of December 31, 1995, none of the Directors of the General Partner
owned any outstanding Units of Limited Partnership Interest. However,
an Assistant Secretary of the General Partner owned four Units of
Limited Partnership Interest. No officers or Directors of SHC owned
any outstanding Units of the Limited Partnership Interest. SRE
Clearing Services (formerly known as SRE Investor Services, Inc.), an
affiliate of the General Partner, owned 134 Units of Limited
Partnership Interest representing 1.7% of the outstanding number of
Units on December 31, 1995.
(c) During the year ended December 31, 1995, there have been no changes in
control of the Registrant or the General Partner.
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner, among other things, furnishes services and advice to
the Registrant and is paid a variable annual fee for such services based
on calculations prescribed in the Registrant's Partnership Agreement.
Certain affiliates of the General Partner oversee the management and
operations of various real estate properties, including those owned by the
Registrant. Services performed by these affiliates applicable to the
Registrant's properties are billed at actual or allocated cost, percentage
of revenues or net equity. The costs of such services are believed to be
competitive with charges for similar services provided by unrelated
management companies. Fees charged by these affiliates totalled
$1,839,832, $2,073,339, and $2,370,964 in 1995, 1994, and 1993,
respectively.
22
In connection with the mortgage financing of certain properties, the
respective lenders required the Registrant to place the assets and
liabilities of these properties into single asset limited partnerships and
limited liability companies which hold title to these properties. A trust
company affiliated with the General Partner holds the general partner
interest in each single asset limited partnership as trustee for the
Registrant. For its services, the affiliate is paid an annual fee, which
aggregated $129,580, $134,086, and $138,450 in 1995, 1994, and 1993,
respectively, and is based upon the trust company's standard rate
schedule.
Reference is made to Items 10 and 11, and Notes 2 and 10 in the financial
statements.
PART IV
ITEM 14.EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial statements - The Registrant's 1995 Annual Audited
Financial Statements are included in this annual report on Form
10-K.
(2) Financial statement schedules - See Index to Financial Statement
Schedules on page 23. All other financial statement schedules are
inapplicable or the required subject matter is contained in the
financial statements or notes thereto.
(b) There were no current reports on Form 8-K filed with the SEC during
the quarter ended December 31, 1995.
(c) Financial data schedule (CE)
(d) Exhibits Incorporated by Reference -
Incorporated by
Description Reference to
Agreement of Exhibit A to Registration Statement
Limited Partnership on Form S-11 as filed with the
Securities and Exchange Commission
on May 16, 1985.
23
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SB PARTNERS
By: SB PARTNERS REAL ESTATE CORPORATION
GENERAL PARTNER
March 28, 1996 /s/ John H. Streicker
By: John H. Streicker
President, Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Position Date
/s/ John H. Streicker Chief Executive Officer
John H. Streicker and Director March 28, 1996
/s/ Elizabeth B. Longo Chief Financial Officer
Elizabeth B. Longo March 28, 1996
/s/ George N. Tietjen III Vice President and
George N. Tietjen III Controller March 28, 1996
24
SB PARTNERS
ITEMS 8 and 14 (a) (1) and (2)
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS AND
SUPPLEMENTAL FINANCIAL STATEMENT SCHEDULE
Report of Independent Public Accountants . . . . . . . . . . . 25
Balance Sheets as of December 31, 1995 and 1994 . . . . . . . . 27
Statements of Operations for the years ended
December 31, 1995, 1994 and 1993 . . . . . . . . . . . . 28
Statements of Changes in Partners' Capital for the
years ended December 31, 1995, 1994 and 1993 . . . . . . 29
Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 . . . . . . . . . . . . 30
Notes to Financial Statements . . . . . . . . . . . . . . . . . 31
Supplemental Financial Statement Schedule:
Schedule III -- Real Estate and Accumulated
Depreciation -- December 31, 1995 . . . . . . . . . . . 39
25
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of SB Partners:
We have audited the accompanying balance sheets of SB Partners (a
New York limited partnership) as of December 31, 1995 and 1994, and the
related statements of operations, changes in partners' capital and cash
flows for each of the three years in the period ended December 31, 1995.
These financial statements and schedule referred to below are the
responsibility of the general partner. Our responsibility is to express
an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by the
general partner, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
As discussed more fully in Note 11 to the financial statements, the
Partnership has incurred cash flow deficits at its major commercial
properties in recent years. These cash flow deficits have been generally
offset by cash flow from its residential properties, proceeds from secured
and unsecured financing, sales and joint venturing of its real estate
properties and, to a limited extent, cash flow from certain other
commercial properties. The general partner projects that the
Partnership's cash flow from all sources will be sufficient to allow the
Partnership to meet its obligations as they come due in 1996. The
Partnership's ability to meet obligations as they come due beyond 1996 is
dependent upon, among other things, its ability to generate sufficient
cash flow from the sources discussed above.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of SB Partners as
of December 31, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended December 31,
1995 in conformity with generally accepted accounting principles.
26
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedule listed in the
index to financial statements is presented for purposes of complying with
the Securities and Exchange Commission rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in
our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
/s/ Arthur Andersen LLP
New York, New York
January 29, 1996
27
SB PARTNERS
BALANCE SHEETS
As of December 31,
1995 1994
----------------------------
ASSETS:
Investments -
Real Estate, at cost
Land $ 12,092,365 $ 13,697,284
Buildings, furnishings and improvements 140,331,546 148,151,143
Less - accumulated depreciation and valuation allowance (45,560,951) (45,595,714)
------------ ------------
106,862,960 116,252,713
Investment in joint venture 10,697,225 11,133,621
------------ ------------
117,560,185 127,386,334
Other Assets -
Cash and cash equivalents 3,304,968 1,074,985
Other 6,394,068 6,776,434
------------ ------------
Total assets $127,259,221 $135,237,753
============ ============
LIABILITIES:
Mortgage notes payable, net of unamortized discount
of $0 and $310,904 respectively $103,407,513 $112,253,778
Accounts payable and accrued expenses 11,271,026 7,179,185
Tenants' security deposits 1,306,052 1,186,880
------------ ------------
Total liabilities 115,984,591 120,619,843
------------ ------------
PARTNERS' CAPITAL:
Units of partnership interest without par value;
Limited partners - 7,753 units 11,291,611 14,634,460
General partner - 1 unit (16,981) (16,550)
------------ ------------
Total partners' capital 11,274,630 14,617,910
------------ ------------
Total liabilities and partners' capital $127,259,221 $135,237,753
============ ============
The accompanying notes are an integral part of these statements.
28
SB PARTNERS
STATEMENTS OF OPERATIONS
For the Years Ended December 31,
1995 1994 1993
------------------------------------------
REVENUES
Rental income $22,618,843 $24,244,843 $25,161,455
Interest on mortgage notes receivable 0 496,834 1,055,263
Interest on short-term investments 73,984 114,946 148,591
Other 631,381 687,484 653,863
----------- ----------- -----------
Total revenues 23,324,208 25,544,107 27,019,172
----------- ----------- -----------
EXPENSES
Interest on mortgage notes payable 11,462,066 13,338,723 12,980,405
Real estate operating expenses 10,307,816 11,369,234 10,559,140
Depreciation and amortization 5,176,543 5,243,818 5,241,810
Real estate taxes 1,936,253 2,376,046 2,217,497
Management fees 1,929,127 2,141,519 1,960,552
Provision for loan losses, net of recoveries 0 0 128,651
Writedown and reserves of investments in real estate 0 4,161,531 0
Other 544,592 1,179,557 2,465,360
----------- ----------- -----------
Total expenses 31,356,397 39,810,428 35,553,415
----------- ----------- -----------
Loss from operations (8,032,189) (14,266,321) (8,534,243)
Equity in net income (loss) of joint venture 725,118 (351,586) (372,096)
Gain (loss) on sale of investments in real estate 3,963,791 6,859,221 (71,655)
----------- ----------- -----------
NET LOSS (3,343,280) (7,758,686) (8,977,994)
Loss allocated to general partner (431) (1,001) (1,158)
----------- ----------- -----------
Loss allocated to limited partners ($3,342,849) ($7,757,685) ($8,976,836)
=========== ============ ============
NET LOSS PER UNIT OF LIMITED PARTNERSHIP INTEREST ($431) ($1,001) ($1,158)
=========== ============ ============
WEIGHTED AVERAGE NUMBER OF UNITS OF LIMITED
PARTNERSHIP INTEREST OUTSTANDING 7753 7,753 7,753
=========== ============ ============
The accompanying notes are an integral part of these statements.
29
SB PARTNERS
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Limited Partners:
Units of
Partnership
Interest Cumulative Accumulated
-------------------- Cash Earnings
Number Amount Distributions (Losses) Total
-----------------------------------------------------------------------
Balance, December 31, 1992 7,753 $119,968,973 ($97,728,323) $ 9,128,331 $31,368,981
Net loss for the year - - - (8,976,836) (8,976,836)
----- ------------ ------------ ------------ -----------
Balance, December 31, 1993 7,753 119,968,973 (97,728,323) 151,495 22,392,145
Net loss for the year - - - (7,757,685) (7,757,685)
----- ------------ ------------ ------------ -----------
Balance, December 31, 1994 7,753 119,968,973 (97,728,323) (7,606,190) 14,634,460
Net loss for the year - - - (3,342,849) (3,342,849)
----- ------------ ------------ ------------ -----------
Balance, December 31, 1995 7,753 $119,968,973 ($97,728,323) ($10,949,039) $11,291,611
===== ============ ============ ============ ===========
General Partner:
Units of
Partnership
Interest Cumulative Accumulated
-------------------- Cash Earnings
Number Amount Distributions (Losses) Total
-----------------------------------------------------------------------
Balance, December 31, 1992 1 $10,000 ($24,559) $ 168 ($14,391)
Net loss for the year - - - (1,158) (1,158)
--- ------- -------- ------- --------
Balance, December 31, 1993 1 10,000 (24,559) (990) (15,549)
Net loss for the year - - - (1,001) (1,001)
--- ------- -------- ------- --------
Balance, December 31, 1994 1 10,000 (24,559) (1,991) (16,550)
Net loss for the year - - - (431) (431)
--- ------- -------- ------- --------
Balance, December 31, 1995 1 $10,000 ($24,559) ($2,422) ($16,981)
=== ======= ======== ======= ========
The accompanying notes are an integral part of these statements.
30
SB PARTNERS
STATEMENTS OF CASH FLOWS
For the years ended December 31,
1995 1994 1993
-------------------------------------------
Cash Flows From Operating Activities:
Net Loss ($3,343,280) ($7,758,686) ($8,977,994)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Provision for loan losses, net of recoveries 0 0 128,651
(Gain) loss on sale of investments in real estate (3,963,791) (6,859,221) 71,655
Writedown and reserves of investments in real estate 0 4,161,531 0
Equity in net (income) loss of joint venture (725,118) 351,586 372,096
Depreciation and amortization 5,176,543 5,243,818 5,241,810
Amortization of discount on mortgage notes payable 310,904 343,860 300,777
Decrease in other assets 187,050 969,920 1,066,506
Increase in other liabilities 3,886,240 3,376,486 2,469,392
---------- ---------- -----------
Net cash provided by (used in) operating activities 1,528,548 (170,706) 672,893
---------- ---------- -----------
Cash Flows From Investing Activities:
Net proceeds from sale of real estate 3,569,190 4,877,352 500,000
Principal collections on mortgage notes receivable 0 0 1,028,585
Cash paid on real estate acquisitions 0 (710,384) (9,896)
Capital additions to real estate (3,024,145) (2,636,254) (2,284,514)
Additional advances under guarantees 0 (113,651) (803,433)
Payments and distributions received from joint venture 882,749 150,000 114,630
---------- ---------- -----------
Net cash provided by (used in) investing activities 1,427,794 1,567,063 (1,454,628)
---------- ---------- -----------
Cash Flows Used in Financing Activities:
Principal payments on mortgage notes payable (726,359) (744,634) (732,781)
---------- ----------
Net cash used in financing activities (726,359) (744,634) (732,781)
---------- ---------- -----------
Net increase (decrease) in cash and cash equivalents 2,229,983 651,723 (1,514,516)
Cash and cash equivalents at beginning of year 1,074,985 423,262 1,937,778
---------- ---------- -----------
Cash and cash equivalents at end of year $3,304,968 $1,074,985 $ 423,262
========== ========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $8,043,302 $9,410,407 $10,532,172
========== ========== ===========
Supplemental disclosures of non-cash investing and financing activities:
The proceeds from the sale of Sahara Palms Apartments n 1995 and Nob Hill Apartments in 1994 are shown net of the
retirement of the underlying mortgages which had been secured by the properties. The sale of Woodlake Apartments, to the
extent of the assumption of a mortgage note payable by the purchaser, and the portion of the reacquisition of Nob Hill
Apartments in exchange for mortgage notes receivable in 1994, and the foreclosure of Cherry Hill in 1993, represent non-cash
investing and financing activities and have been excluded from the statements of cash flows.
See also Notes 4 and 5 to Financial Statements.
The accompanying notes are an integral part of these statements.
31
SB PARTNERS
Notes to Financial Statements
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
SB Partners (the "Partnership") is a New York limited partnership
which has been engaged since April 1971 in acquiring, operating and
holding for investment a varying portfolio of real properties. SB
Partners Real Estate Corporation (the "General Partner") serves as
the general partner of the Partnership. The significant accounting
and financial reporting policies of the Partnership are as follows:
(a) The accompanying financial statements are prepared using
the accrual basis of accounting under generally accepted
accounting principles. Revenues are recognized as earned
and expenses are recognized as incurred. Discounts on
mortgage notes payable are amortized as interest expense
using the effective interest method. The preparation of
financial statements in conformity with generally accepted
accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates. Certain prior year amounts have been
reclassified to make them comparable to the current year
presentation.
(b) Each partner is individually responsible for reporting his
share of the Partnership's taxable income or loss.
Accordingly, no provision has been made in the accompanying
financial statements for Federal, state or local income
taxes.
(c) Depreciation of buildings, furnishings and improvements is
computed using the straight-line method of depreciation,
based upon the estimated useful lives of the related
properties, as follows:
Buildings and improvements 5 to 50 years
Furnishings 5 to 7 years
Real estate is carried at the lower of cost or net
realizable value. Expenditures for maintenance and repairs
are expensed as incurred. Expenditures for improvements,
renewals and betterments, which increase the useful life of
the real estate, are capitalized. Upon retirement or sale
of property, the related cost and accumulated depreciation
are removed from the accounts. Amortization of deferred
financing and refinancing costs is computed by amortizing
the cost over the term of the related mortgage notes.
Amortization of leasing commissions and tenant improvements
is computed by amortizing the cost over the term of the
related lease.
32
(d) Gains on sales of investments in real estate are recognized
in accordance with generally accepted accounting principles
applicable to sales of real estate, which require minimum
levels of initial and continuing investment by the
purchaser, and that certain other tests be met prior to the
full recognition of profit at the time of the sale. When
the tests are not met, gains on sales are recognized on
either the installment or cost recovery methods.
(e) Net loss per unit of partnership interest has been computed
based on the weighted average number of units of
partnership interest outstanding during each year. There
were no potentially dilutive securities outstanding during
each year.
(f) For financial reporting purposes, the Partnership considers
all highly liquid short-term investments purchased with an
original maturity of three months or less to be cash
equivalents.
(g) The Partnership periodically reviewed its portfolio of
mortgage notes receivable and related advances for amounts
which may not have been collectible, based on, among other
things, estimates of the value of underlying collateral.
During the year ended December 31, 1993, the Partnership
provided $128,651 for such possible losses, net of
recoveries.
(h) The Partnership accounts for its investment in a joint
venture using the equity method. Pursuant to the special
allocations of cash flow which are contained in the joint
venture agreement, it recognizes income or loss to the
extent of its allocable share of the change in the net
assets of the joint venture.
(i) In connection with the mortgage financing on certain of its
properties, the Partnership placed the assets and
liabilities of these properties into single asset limited
partnerships and limited liability companies which hold
title to the properties. In these limited partnerships,
the Partnership holds a 99% limited partner interest, and
an affiliate of the General Partner holds a 1% general
partner interest as trustee for the Partnership.
33
(2) INVESTMENT MANAGEMENT AGREEMENT
The Partnership has entered into a Management Agreement with the
General Partner. Under the terms of this agreement, the General
Partner is responsible for the acquisition, management and
disposition of all investments, as well as performance of the day-
to-day administrative operations and provision of office space for
the Partnership.
For these services, the General Partner receives a management fee
equal to 2% of the average amount of capital invested in real
estate plus cumulative mortgage payments and 0.5% of capital not
invested in real estate, as defined in the partnership agreement.
The management fee amounted to $1,929,127, $2,141,519, and
$1,960,552, for the years ended December 31, 1995, 1994 and 1993,
respectively. In addition, the General Partner is entitled to 25%
of cash distributions in excess of the annual distribution
preferences, as defined in the partnership agreement. No such
amounts were due for the years ended December 31, 1995, 1994, and
1993.
(3) INVESTMENTS IN REAL ESTATE
As of December 31, 1995, the Partnership owned a shopping center
in Plantation, Florida; office buildings in St. Louis, Missouri,
Cherry Hill, New Jersey and Los Angeles, California; apartment
projects in Holiday, Florida, and Reno, Nevada, and 13.9 acres of
land in Holiday, Florida. The following is the cost basis, and
accumulated depreciation and valuation allowance of the real
estate investments owned by the Partnership at December 31, 1995
and 1994:
No.of Year of Carrying Amount
Type Prop. Acquisition Description 1995 1994
Residential properties 3 1978-91 1,252 Apt. units $ 30,811,051 $ 42,780,229
Shopping center 1 1981 240,821 Sq. Ft. 13,983,133 13,169,294
Office buildings 3 1984-93 851,588 Sq. Ft. 107,585,340 105,854,517
Undeveloped land 1 1978 13.9 Acres 44,387 44,387
------------ ------------
152,423,911 161,848,427
Less: Accumulated depreciation and valuation allowance 45,595,714 44,396,664
------------ ------------
$116,252,713 $136,749,305
============ ============
34
(4) REAL ESTATE TRANSACTIONS
In December 1995, the Partnership sold Sahara Palms Apartments for
$12,000,000 in an all cash transaction. The underlying mortgage
note payable of $8,431,000 was retired and the Partnership
recognized a net gain on sale of real estate investments of
$3,964,000 for the year ended December 31, 1995.
In June 1994, the Partnership sold Woodlake Apartments for
$22,055,000. In connection with the sale, the buyer assumed the
existing first mortgage note in the amount of approximately
$17,476,000 and paid the balance in cash. In July 1994, the
Partnership reacquired Nob Hill Apartments for $700,000 cash,
subject to existing liens secured by the property. The property
was recorded at $6,803,000 which in addition to cash paid was the
aggregate carrying amount of the liens, including those owned by
the Partnership on the date of acquisition, net of a deferred gain
of $5,179,000 and allowance for possible loan losses of
$5,212,000. The junior liens owned by the Partnership were
effectively extinguished. In December 1994, Nob Hill was sold for
$7,400,000, all cash. The Partnership recognized net gains on
sale of real estate investments of $6,859,000 for the year ended
December 31, 1994.
During 1993, the Partnership sold 400 Office Park for $500,000 all
cash and recognized a loss on the sale of $71,655. Additionally,
the Partnership reacquired Cherry Hill Office Center by credit bid
of its mortgage after the borrower failed to perform under the
terms of a bankruptcy court approved reorganization plan. The
property was recorded at $3,722,000, representing the carrying
value of its mortgage note receivable of $7,050,000, net of
deferred gain of $3,328,000, which amount approximated the
estimated market value on that date. Acquisition costs paid in
cash were $10,000.
(5) MORTGAGE AND OTHER NOTES RECEIVABLE
During 1994, the Partnership reacquired Nob Hill Apartments and
all of the junior liens owned were effectively extinguished (Refer
to Note 4). During 1993, the Partnership sold its interest in a
mortgage note for $725,000 to an affiliate of the borrower which
had previously filed for protection from creditors under Chapter
XI of the United States Bankruptcy Code.
35
(6) INVESTMENT IN JOINT VENTURE
During 1992, the Partnership and an institutional investor (the
"Investor") entered into a joint venture agreement where the
Partnership contributed Riverbend Apartments for an agreed equity
value of $14,250,000 and the Investor contributed $9,500,000 in
cash. The Partnership and the Investor hold interests in the
venture of 60% and 40%, respectively, and the Investor is entitled
to a guaranteed return of 9.5% of its average investment, as
defined in the joint venture agreement. For financial reporting
purposes, the Partnership recorded its investment in the joint
venture at its net carrying amount of the property contributed,
and no gain or loss was recognized. All significant matters
affecting the joint venture require the unanimous consent of the
venturers.
The following are the condensed financial statements (000's
omitted) of the joint venture as of and for the years ended
December 31, 1995, 1994, and 1993 (See Note 1):
BALANCE SHEETS
1995 1994 1993
---- ---- ----
Investment in real estate, net $19,935 $20,532 $21,071
Other assets and liabilities, net (323) (145) 64
------- ------- -------
Venturers'capital $19,612 $20,387 $21,135
======= ======= =======
STATEMENTS OF OPERATIONS
Rent and other income $ 4,395 $ 3,815 $ 3,357
Real estate operating expenses (3,353) (3,264) (2,827)
------- ------- -------
Net operating income $ 1,042 $ 551 $ 530
======= ======= =======
36
(7) FAIR VALUE OF FINANCIAL INSTRUMENTS
The Partnership's financial instruments consist of mortgage notes
payable and cash equivalents. For cash equivalents, the carrying
amount is a reasonable estimate of fair value. Mortgage notes
payable have been valued by discounting future payments required
under the terms of these obligations at rates currently available
to the Partnership for debt with similar maturities, terms and
underlying collateral, or estimated value of the underlying
collateral. Due to the circumstances, it is not practical to
value the mortgage note payable secured by the International
Jewelry Center. The fair value of all other notes is estimated to
be $65,800,000 and $70,900,000 at December 31, 1995 and 1994,
respectively.
(8) MORTGAGE NOTES PAYABLE
Mortgage notes payable consist of the following nonrecourse first
liens:
Net Carrying Amount
Interest rate Annual December 31,
Original ------------- Installment Amount Due ------------
Property Principal Coupon Effective Maturity date Payments at Maturity 1995 1994
--------------------------------------------------------------------------------------------------------------------------------
Holiday Park $ 3,700,000 9% 9% March 1999 $ 357,252 $ 3,494,467 $ 3,592,065 $ 3,624,412
Sahara Palms (a) 8,614,000 10 10 --- 8,473,981
Meadowwood 18,396,000 9.5 9.5 December 1997 1,813,724 17,893,476 17,975,016 18,075,849
International
Jewelry Center (b) 35,000,000 12.4 12.4 August 2018 4,398,634 --- 33,898,519 33,898,519
Plantation Center
Shopping Plaza 7,725,000 10.25 16.5 June 1996 813,540 5,215,041 6,773,388 6,575,433
1010 Market Street 42,000,000 8 8 August 1997 3,698,173 40,252,132 40,749,555 41,169,351
Cherry Hill 2,900,000 9.5 9.5 September 2000 109,941 --- 418,970 436,233
------------ ------------
$103,407,513 $112,253,778
============ ============
(a) Mortgage was paid in full in December, 1995.
(b) Mortgage is currently in default, refer to Note 11.
Principal payments including the accelerated maturity of the note
secured by International Jewelry Center are due as follows: 1996-
$41,346,057; 1997-$58,278,356; 1998-$130,890; 1999-$3,573,000 and
2000-$79,210.
37
(9) FEDERAL INCOME TAX INFORMATION
A reconciliation of net loss for financial reporting purposes to net
loss for Federal income tax reporting purposes is as follows:
For the Years Ended December 31,
1995 1994 1993
----------- ----------- ------------
Net loss for financial reporting purposes ($3,343,280) ($7,758,686) ($ 8,977,994)
Adjustment to net gains on sale of investments in real estate to reflect
gains recognized in different periods under the installment and
cost recovery methods 3,772,180 360,131 13,939
Adjustment for provision for loan and reserves for real estate losses 103,122 4,161,531 (624,342)
Difference between tax and financial statement equity in net income
or loss of joint venture (275,132) 140,227 (103,555)
Adjustment to interest income to reflect amortization of discount
on mortgage notes receivable for financial reporting purposes,
net of imputed interest recognized for tax purposes - - (43,864)
Adjustment to interest expense to reflect non-deductibility of interest and
amortization of discount on mortgage notes payable recognized for
financial reporting purposes 3,496,154 3,635,561 300,777
Difference between tax and financial statement depreciation (4,196,258) (5,135,849) (5,691,378)
Net change in accrual entries not recorded on tax basis and
prior tax adjustments - 754,969 (319,168)
----------- ----------- -------------
Net loss for Federal income tax reporting purposes ($ 443,214) ($3,842,116) ($15,445,585)
=========== =========== =============
Net loss per weighted average limited partnership unit for
Federal income tax reporting purposes:
Net ordinary loss per unit of Partnership interest ($ 1,055) ($ 1,333) ($ 2,078)
Average Capital (Sec.1231) gain per unit of
Partnership Interest 998 838 86
----------- ----------- ------------
($ 57) ($ 495) ($ 1,992)
=========== =========== ============
Weighted average number of units of limited partnership
interest outstanding 7,753 7,753 7,753
=========== =========== ============
As of December 31, 1995 and 1994, the tax bases of the Partnership's
assets and liabilities amounted to $88,303,000 and $96,877,000 of
assets, and $109,508,000 and $117,639,000 of liabilities,
respectively.
(10) PROPERTY MANAGEMENT SERVICES
Certain affiliates of the General Partner oversee the management and
operations of various real estate properties, including those owned by
the Partnership. Services performed by affiliates are billed at
actual or allocated cost, percentage of revenues or net equity. For
the years ended December 31, 1995, 1994 and 1993, such billings to the
Partnership amounted to $1,969,412, $2,207,425, and $2,509,414,
respectively, and are included in real estate operating expenses.
38
(11) COMMITMENTS AND CONTINGENCIES
During 1993, the Partnership stopped making regular monthly payments
of debt service to its lender on the mortgage note secured by the
International Jewelry Center. In the interim, the Partnership has
paid available cash flow from the building to the lender under an
informal agreement. In November 1993, the lender declared the loan in
default and in March 1995, filed a Notice of Default and Election to
Sell. The Partnership recorded a reserve for real estate losses of
$4,162,000 for the year ended December 31, 1994. It is unlikely that
the Partnership will be able to restructure the loan terms and is
cooperating with the lender to transfer title to the property to a
tenant group. Such a transfer may result in negative tax consequences
for some partners.
The Partnership is a party to certain actions directly related to its
normal business operations. While the ultimate outcome is not
presently determinable with certainty, the Partnership believes that
the resolution of these matters will not have a material effect on its
financial position and operations. The Partnership has secured
irrevocable letters of credit in the amount of approximately
$1,038,000 which primarily serve as additional collateral securing
certain financing.
The Partnership has incurred cash flow losses from operations in
recent years. The Partnership has historically covered, and expects
to be able to cover in 1996, the cash flow deficits of certain
commercial properties with cash flow from its residential and other
commercial properties, proceeds from secured and unsecured financings,
and sales and joint venturing of real estate properties.
Office markets where the Partnership owns properties have experienced
extended periods of high vacancy rates, significantly lower effective
rental rates, reduced demand, and higher risks of tenant failure.
This has resulted in revenues that have been insufficient to pay for
operating expenses, debt service and required capital expenditures at
those properties. The general partner projects that net operating
income for 1996 at the 1010 Market Street office building will be
insufficient to cover debt service.
(12) COMMERCIAL OPERATING LEASES
Minimum future rentals on noncancelable commercial operating leases
for each of the five succeeding fiscal years and thereafter are as
follows: 1996 - $13,128,468; 1997 - $10,408,368; 1998 - $8,956,114;
1999 - $6,449,404; 2000 - $5,003,878; and thereafter $8,956,996. The
minimum rentals received on noncancelable commercial operating leases
for the year ended December 31, 1995 was $13,445,005.
39
SB PARTNERS
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
Column A Column B Column C Column D
Initial Cost to the Registrant
Costs Capitalized
Buildings and Subsequent to
Description Encumbrances Land Improvements Total Acquisition
MULTI FAMILY RESIDENTIAL
Nevada -
Reno (Meadow Wood) 17,975,016 2,466,311 19,057,859 21,524,170 3,806,262
Florida -
Holiday (Holiday Park -
including undeveloped land) 3,592,065 458,344 4,043,352 4,501,696 600,156
Orlando (Villa Cordova) - 30,456 370,284 400,740 22,415
------------ ---------- ------------ ----------- -----------
21,567,081 2,955,111 23,471,495 26,426,606 4,428,833
------------ ----------- ------------ ------------ -----------
SHOPPING CENTER
Plantation (Plantation
Shopping Center) 6,773,388 1,510,714 9,668,665 11,179,379 2,803,754
------------ ----------- ------------ ------------ -----------
OFFICE BUILDINGS
California -
Los Angeles (Int'l Jewelry Center) 33,898,519 - 47,489,120 47,489,120 8,244,517
Missouri -
St Louis (1010 Market Street) 40,749,555 6,978,673 37,251,102 44,229,775 3,270,308
New Jersey -
Cherry Hill (Cherry Hill Office Park) 418,970 647,867 3,163,115 3,810,982 540,637
------------ ----------- ------------ ------------ -----------
75,067,044 7,626,540 87,903,337 95,529,877 12,055,462
------------ ----------- ------------ ------------ -----------
$103,407,513 $12,092,365 $121,043,497 $133,135,862 $19,288,049
============ =========== ============ ============ ===========
SB PARTNERS
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
DECEMBER 31, 1995
Column A Column E Column F
Gross amount at which Carried Accumulated
at End of Year
(Notes a & c) Depreciation
and Valuation
Buildings and Allowance
Description Land Improvements Total (Notes b & d)
MULTI FAMILY RESIDENTIAL
Nevada -
Reno (Meadow Wood) 2,466,311 22,864,121 25,330,432 10,263,657
Florida -
Holiday (Holiday Park -
including undeveloped land) 458,344 4,643,508 5,101,852 895,803
Orlando (Villa Cordova) 30,456 392,699 423,155 303,249
----------- ------------ ------------ -----------
2,955,111 27,900,328 30,855,439 11,462,709
----------- ------------ ------------ -----------
SHOPPING CENTER
Plantation (Plantation
Shopping Center) 1,510,714 12,472,419 13,983,133 4,911,411
----------- ------------ ------------ -----------
OFFICE BUILDINGS
California -
Los Angeles (Int'l Jewelry Center) - 55,733,637 55,733,637 17,916,845
Missouri -
St Louis (1010 Market Street) 6,978,673 40,521,410 47,500,083 11,011,985
New Jersey -
Cherry Hill (Cherry Hill Office Park) 647,867 3,703,752 4,351,619 258,001
----------- ------------ ------------ -----------
7,626,540 99,958,799 107,585,339 29,186,831
----------- ------------ ------------ -----------
$12,092,365 $140,331,546 $152,423,911 $45,560,951
=========== ============ ============ ===========
/TABLE
SB PARTNERS
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
DECEMBER 31, 1995
Column A Column G Column H Column I
Life on which
Depreciation in
Latest Statement
Date of Date of Operations
Description Construction Acquired is Computed
MULTI FAMILY RESIDENTIAL
Nevada -
Reno (Meadow Wood) 1974 - 1977 May 1983 5 to 30 years
Florida -
Holiday (Holiday Park -
including undeveloped land) Jan 1991 7 to 27.5 years
Orlando (Villa Cordova) 1974 March 7 to 31 years
1978
SHOPPING CENTER
Plantation (Plantation
Shopping Center) 1980 July 1981 5 to 40 years
OFFICE BUILDINGS
California -
Los Angeles (Int'l Jewelry Center) 1982 Nov 1984 15 to 50 years
Missouri -
St Louis (1010 Market Street) 1982 Nov 1984 5 to 50 years
New Jersey -
Cherry Hill (Cherry Hill Office Park) 1970 Sept 1993 40 years
40
NOTES TO SCHEDULE III:
1995
----
(a)Reconciliation of amounts shown in Column E:
Balance at beginning of year $161,848,427
Additions -
Cost of improvements and adjustments 3,024,145
Deductions -
Sale of property 12,448,661
------------
Balance at end of year $152,423,911
============
(b)Reconciliation of amounts shown in Column F:
Balance at beginning of year $45,595,714
Additions -
Depreciation expense for year 4,707,563
Deductions -
Accumulated depreciation on sold property 4,742,326
------------
Balance at end of year $45,560,951
============
(c)Aggregate cost basis for Federal
income tax reporting purposes $160,374,153
============
(d)Accumulated depreciation for Federal
income tax reporting purposes $93,726,561
============