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PART I

ITEM 1. BUSINESS

Description of SB Partners (the “Registrant”)

The Registrant is a New York limited partnership formed to engage in acquiring, operating and holding for investment a varying portfolio of real estate interests. The Registrant's initial public offering was in 1971, the year it began operations. As of December 31, 2018,2019, the Registrant owns an industrial flex property in Maple Grove, Minnesota. In addition, the Registrant has a thirty percent interest in Sentinel Omaha, LLC (“Omaha”). Omaha is a real estate investment company which as of December 31, 20182019 owns eightsix multifamily properties in fivethree markets. Omaha is an affiliate of the Registrant’s general partner.

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.

The Registrant’s filings with the Securities and Exchange Commission (the “SEC”) are available on the SEC’s Website at www.sec.gov and type in 0000087047 for the Registrant’s CIK.

Recent Developments and Real Estate Investment Factors

Due to the COVID-19 outbreak, Registrant and Omaha may be operating in a challenging and uncertain economic environment. Financial and real estate companies may be affected by liquidity, disparity of real estate values and financing issues. Should market conditions deteriorate, there is no assurance that such conditions will not result in decreased cash flows or ability to repay, refinance or extend Omaha’s debt when it comes due, which could result in the sale of investments at amounts less than the reported value at December 31, 2019.

Omaha’s portfolio consists exclusively of older multi-family properties located in secondary and tertiary markets. During 20182019 and 2017,2018, physical and economic occupancy remained stable at most of Omaha’s properties. However average net rental income increased at a much slower rate of 1.8% for 2019 and 1.7% for 2018 and 1.1% for 2017 vs. 5.7% for 2016 and 7.2% for 2015 (see Item 2. Properties). All of Omaha’s property mortgage loans pay interest based on floating interest rates. During 2018 and 2017 the floating rates on these loans increased as short term LIBOR rates and various bond index rates increased as their rates are based on one month LIBOR. The one month LIBOR rate increased from an average of (0.7164%) during December 2016 to an average of (1.4925%) during December 2017 and an average of (2.4582%) during December 2018. During 2017 Omaha was able to pay down a portion of its unsecured bank loan using net sales proceeds from the sale of three properties and cash generated from real estate operations. During 2017, Omaha sold its garden apartment property in Daytona, Florida and sold both garden apartment properties located in Fayetteville, North Carolina. Net sales proceeds in each transaction were used to first pay selling expenses and retire each property’s secured mortgage loan. Remaining net sales proceeds were used to reduce Omaha’s unsecured loan. As of December 31, 2017 Omaha’s unsecured loan had a balance of $20,359,322. Omaha’s unsecured loan had a maturity date of December 31, 2017. Prior to maturity, Omaha exercised its one option to extend the maturity date to June 30, 2018.or bond index rates. During 2018, Omaha sold its garden apartment property in Asheville, North Carolina and its garden apartment property in Fresno, California. Net sales proceeds in each transaction were used to first pay selling expenses and retire each property’s related secured mortgage loan. Remaining net sales proceeds were used to retire Omaha’s unsecured loan and were used to retire Omaha’s secured mortgage loan encumbering its high rise apartment property located in Omaha, Nebraska to further pay down Omaha’s overall debt. Retirement of the unsecured loan removed certain restrictions placed on Omaha by the lender including making distributions to its members including the Registrant. On October 16, 2018 Sentinel Omaha paid distributions to its members including $2,400,000 to Registrant. During 2018 Omaha also sold its high rise apartment property located in Omaha, Nebraska. Net sales proceeds were used to first pay selling expenses. Remaining net sales proceeds were used to retire Omaha’s secured mortgage loan encumbering its garden apartment property located in Columbus, Ohio to further pay down Omaha’s overall debt. During 2019, Omaha sold its garden apartment property located in Independence, Missouri. Net sales proceeds were used to first pay selling expenses and retire the property’s related secured mortgage loan. Also during 2019, Omaha sold its garden apartment property located in Columbus, Ohio. Net sales proceeds were used to first pay selling expenses. Remaining net sales proceeds 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 overall debt.

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 accrued investment management fees and accrued expenses, and to increase cash reserves of the Registrant.

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Omaha reports its investments in real estate properties on a fair value basis and for the year ended December 31, 20182019 Omaha reported an increase of $8,325,000$9,500,000 (4.3%) in the value of its portfolio over the same properties as of the year ended December 31, 2017.2018. The total real estate portfolio value of $290,500,000$230,900,000 as of December 31, 20182019 consists of the same properties which made up Omaha’s portfolio as of December 31, 2017 less2018 with the threeexception of the two properties sold during 2018.2019 as referred to above. Registrant as of the year ended December 31, 20162017 recognized a value in the Omaha investment equal to Registrant’s 30% portion of the equity reported on Omaha’s balance sheet as of December 31, 20162017 less a 35%25% reserve for possible unforeseen disruptions in the property and capital markets. As a result of the overall increase in Omaha’s real estate values and the further pay down of its unsecured bank loan, Registrant reduced the reserve of Omaha’s equity value from 35%25% to 25%20% as of DecemberMarch 31, 2017.2018. The investment in a 30% non-controlling interest would still be valued at a discount due to the lack of control and liquidity. Due to Omaha paying off the unsecured debt in 2018 the reserve has been reduced to 20% as of March 31, 2018.

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For the year ended December 31, 2018 Sentinel Omaha reported a 3.0% increase in real estate values. Omaha anticipates the net operating income from its remaining portfolio to be flat during 2019 as compared to 2018. As noted above, all of Omaha’s property mortgage loans use floating rates based on one month LIBOR rates plus the credit spread.

As noted earlier, during 2018spread or based on various bond index rates. During 2019 the floating rates on Omaha loans increaseddecreased as short term LIBOR rates increased.and bond index rates decreased. Fixed mortgage loan 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%4.35% to 4.15%4.50% in early 20172018 to 4.35%5.05% to 4.50%5.10% near the end of 2017 and further2018. Fixed mortgage loan interest rates decreased to an approximate range of 5.05%3.45% to 5.10% in December 2018.3.82% near the end of 2019. Although increaseschanges in fixed mortgage rates do not impact the operating cash flow of the Omaha properties directly, increaseschanges in fixed and floating rates on commercial mortgage debt can have a negativean impact on capitalization rates and the sales prices Omaha may achieve in the future. Omaha anticipates the net operating income from its remaining portfolio to be flat during 2020 as compared to 2019.

Registrant has only one wholly owned property which is located in Maple Grove, Minnesota. It is 100% leased to a single tenant whose lease was to expire October 31, 2019. On July 26, 2018, Registrant and the tenant executed the Fifth Amendment to the lease agreement which extends the expiration date toexpires October 31, 2024. The tenant pays fixed base rent which increases approximately 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.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. If the tenant defaulted the Registrant would have no internal source of funds until the space is released to a new tenant or Registrant receives distributions from Omaha.

Registrant’s total outstanding debt at December 31, 2017 consisted of a bank loan (“Loan”) with a bank (“Holder”) with a balance of $5,726,590. On October 4, 2018, Registrant and the Holder of the Loan executed a Discounted Payoff Agreement (“Payoff Agreement”) whereby Registrant made a one-time payment of $4,000,000 on October 19, 2018 to retire and fully satisfy the balance of the Loan of $5,693,876 at a discount. The source of funds to retire the Loan was a distribution from Sentinel Omaha, LLC of $2,400,000, cash escrow held by the Holder of approximately $510,000 and the remainder from partnership cash reserves to total $4,000,000. The payoff of $4,000,000 to satisfy the Loan is less than the outstanding balance of the Loan in the amount of $5,693,876. The difference of $1,693,876 was recorded as gain on extinguishment of debt. The Registrant has no other debt except normal trade accounts payable and a security deposit held for the tenant leasing the space at the Maple Grove property and accrued investment management fees.property.

(Please refer to Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations.)

ITEM 1A. Risks Factors

This report on Form 10-K 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. Actual results may differ materially from those contemplated

by the forward looking statements for a number of reasons, including, but not limited to, those risks described below:

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Covid-19

Due to the COVID-19 outbreak, Registrant and Omaha may be operating in a challenging and uncertain economic environment. Financial and real estate companies may be affected by liquidity, disparity of real estate values and financing issues. Should market conditions deteriorate, there is no assurance that such conditions will not result in decreased cash flows or ability to repay, refinance or extend Omaha’s debt when it comes due, which could result in the sale of investments at amounts less than the reported value at December 31, 2019.

General

The Registrant's investments consist of direct or indirect investments in real property and as such will be subject to varying degrees of risk generally incident to the ownership of real estate assets. The underlying value of the Registrant's direct real property and the Registrant's financial condition will be dependent upon its ability to operate the property in a manner sufficient to maintain or increase revenues and to generate sufficient income in excess of ownership and operating expenses. The underlying value of the Registrant's real estate investment will be dependent upon the investment’s managing partner’s ability to operate its properties in a manner sufficient to maintain or increase revenues and to generate sufficient income in excess of ownership and operating expenses. Income from the wholly owned property and the properties of the investments may be adversely affected by changes in national and local economic conditions such as oversupply of industrial flex space or apartments in the Registrant's markets, the attractiveness of the properties to tenants, changes in interest rates and in the availability, cost and terms of mortgage financing, the ongoing need for capital improvements, particularly in older structures, changes in real estate tax rates, adverse changes in governmental rules and fiscal policies, adverse changes in zoning laws, civil unrest, acts of God, including natural disasters (which may result in uninsured losses), and other factors which are beyond the control of the Registrant. If the Registrant were unable to promptly renew the leases of a significant number of tenants, re-lease vacant spaces or, if the rental rates upon such renewal or re-letting were significantly lower than expected rates, the Registrant's results of operations, financial condition and ability to make distributions to Unit holders may be adversely affected.

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Risks of Liability and Loss

The development and ownership of real estate may result in liability to third parties due to conditions existing on a property which may result in injury. In addition, real estate may suffer a loss in value due to casualties such as fire or natural disaster. Such liability or loss may be uninsurable in some circumstances, such as a loss caused by the presence of mold or may exceed the limits of insurance maintained at typical amounts for the type and condition of the property. Real estate may also be taken, in whole or in part, by public authorities for public purposes in eminent domain proceedings. Awards resulting from such proceedings may not adequately compensate the Registrant for the value lost.

Value and Non-liquidity of Real Estate

Real estate investments are relatively non-liquid. The Registrant's ability to vary its portfolio in response to changes in economic and other conditions will therefore be limited. If the Registrant must sell an investment, there can be no assurance that it will be able to dispose of the investment in the time period it desires or that the sales price of the investment will recoup or exceed the amount of the Registrant's cost of the investment.

Potential Adverse Effect on Results of Operations Due to Operating Risks

The Registrant's real estate investments are subject to operating risks common to real estate in general, any and all of which may adversely affect occupancy or rental rates.

Debt Servicing and Financing

Total outstanding debt at December 31, 2017 consisted of a bank loan (“Loan”) with a bank (“Holder”) with a balance of $5,726,590. On October 4, 2018, Registrant and the Holder of the Loan executed a Discounted Payoff Agreement (“Payoff Agreement”) whereby Registrant made a one-time payment of $4,000,000 on October 19, 2018 to retire and fully satisfy the balance of the Loan of $5,693,876 at a discount. The source of funds to retire the Loan was a distribution from Sentinel Omaha, LLC of $2,400,000, cash escrow held by the Holder of approximately $510,000 and the remainder from partnership cash reserves to total $4,000,000. The payoff of $4,000,000 to satisfy the Loan is less than the outstanding balance of the Loan in the amount of $5,693,876. The difference of $1,693,876 was recorded as gain on extinguishment of debt. The Registrant has no other debt except normal trade accounts payable, a security deposit held for the tenant leasing the space at the Maple Grove property and accrued investment management fees.

Environmental Issues

Under various federal, state and local environmental laws, ordinances and regulations, an owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances on such property. These laws often impose environmental liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. The presence of such substances, or the failure to properly remediate their presence, may adversely affect the owner's or operator's ability to sell or rent the property or to borrow using the property as collateral. Persons who arrange for the disposal or treatment of hazardous or toxic substances may also be liable for the costs of removal or remediation of such substances at a disposal or treatment facility, whether or not such facility is owned or operated by such person. Certain third parties may seek recovery from owners or operators of such properties or persons who arranged for the disposal or treatment of hazardous or toxic substances and, therefore, are potentially liable for removal or remediation costs, as well as certain other related costs, including governmental fines and injuries to persons and property.

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Competition

The Registrant competes for tenants with many other real estate owners. The success of the Registrant in attracting tenants for its property will depend upon its ability to maintain its property and its attractiveness to tenants, new property developments, local conditions, and changing demographic trends. The Registrant's property is located in a developed area that includes other, similar properties. The number of competitive properties in a particular area could have a material effect on the Registrant's ability to lease industrial flex space and on the rents charged at such property.

Tax Matters

On December 22, 2017, the Tax Cuts and Jobs Act (the Act)“Act”) was signed into law. The Act is a complex revision to U.S. federal income tax laws with various impacts on different categories of taxpayers and industries, and will require subsequent rulemaking and interpretation in a number of areas.industries. The long term impact of the Act on the overall economy, the real estate industry, the Registrant, and the Unit holders cannot be reliably predicted at this time. Unit holders are urged to consult their own tax advisors with respect to the tax consequences arising under the federal law (including the Act) and the laws of any state, municipality or other taxing jurisdiction, including tax consequences arising from such Unit holders own tax characteristics.

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.

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 1B. UNRESOLVED STAFF COMMENTS

None.

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ITEM 2. PROPERTIES

The property owned by the Registrant as of December 31, 20182019 is as follows:

Additional information regarding properties owned by the Registrant:

(a) For period of ownership.

(b) Property was purchased June 12, 2002.

(c) Property was purchased on October 5, 2005.

(d) Investment was purchased September 2007.

(e) Property was sold on September 17, 2015.

(f) Average per square foot per annum. Base rent plus operating expense reimbursements from tenant, divided by the total number of square feet at the property. Expense reimbursements include only expenses paid by Registrant in accordance with the terms of each lease. Reimbursements by the tenant include real estate taxes, insurance and certain operating expenses. Amounts are annualized for periods of ownership of less than one year.

(g) Average per apartment unit per annum. Gross potential rent, less concessions and vacancies, divided by the total

number of apartment units at the property. Amounts are annualized for periods of ownership of less than one year.

ITEM 3. LEGAL PROCEEDINGS

None

ITEM 4. MINE SAFETY DISCLOSURES

(Removed and Reserved).Not applicable.

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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 Unit holders as of December 31, 20182019 was 2,233.2,128.

At various times, the Registrant has generated and distributed cash to the Unit holders. Registrant paid a distribution during 2019 to Unit holders of record as of June 1, 2019 in the amount of $400 for each Unit owned. Registrant did not declare a distribution for 2018 2017 or 2016.2017. Cumulative distributions since inception have totaled $111,747,950.$114,849,350. However, there is no requirement to make such distributions nor can there be any assurance that future operations will generate cash available for distribution.

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ITEM 6. 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 accounting principles generally accepted in the United States of America. This data should be read in conjunction with the Audited Consolidated 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.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS

COMPANY OVERVIEW

The Registrant is a New York limited partnership formed to engage in acquiring, operating and holding for investment a varying portfolio of real estate interests. The Registrant's initial public offering was in 1971, the year it began operations. As of December 31, 2018,2019, the Registrant owned an industrial flex property in Maple Grove, Minnesota and the Registrant has a thirty percent interest in Sentinel Omaha, LLC. Omaha is a real estate investment company which as of December 31, 20182019 owns eightsix multifamily properties in fivethree markets. Omaha is an affiliate of the Registrant’s general partner.

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.

The consolidated financial statements for the years ended December 31, 2019, 2018 2017 and 20162017 reflect the operations of one industrial flex property located in Maple Grove, Minnesota as well as a 30% interest in Omaha.

CRITICAL ACCOUNTING ESTIMATES

In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Set forth below is a summary of the accounting policies that management believes are critical to the preparation of the consolidated financial statements. The summary should be read in conjunction with the more complete discussion of significant accounting policies included in Note 1 to the consolidated financial statements for the year ended December 31, 2018.2019.

Real Estate

Real estate is carried at cost, net of accumulated depreciation and amortization. Maintenance and repairs are charged to operations as incurred. Depreciation requires an estimate by management of the useful life of each property as well as an allocation of the costs associated with a property to its various components. If Registrant does not allocate these costs appropriately or incorrectly estimates the useful lives of its real estate, depreciation expense may be misstated.

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

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

Registrant's property is regularly evaluated for impairment. Impairment is determined by calculating the sum of the estimated undiscounted future cash flows including the projected undiscounted future net proceeds from the sale of the property. In the event such sum is less than the net carrying value of the property, the property will be written down to estimated fair value. If the Partnership incorrectly estimates the value of the asset or the undiscounted cash flows, the impairment charges may be different from those, if any, in the consolidated financial statements.

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Investment in Sentinel Omaha, LLC

The Registrant has a 30% non-controlling interest in Omaha that is accounted for on a fair value basis. Due to the global financial crisis, stagnant real estate market and slowing economy, Omaha reported a net write-down of the value of its real estate portfolio of approximately $100,852,000 during 2008 to 2014. For the years 2015 to 2017, as real estate values recovered Omaha reported an increase in the value of its portfolio of $122,327,000. During the twelve months ended December 31, 2017, Omaha sold its garden apartment property in Daytona, Florida and sold both garden apartment properties located in Fayetteville, North Carolina. Net sales proceeds in each transaction were used to first pay selling expenses and retire each property’s secured mortgage loan. Remaining net sales proceeds were used to reduce Omaha’s unsecured loan. Omaha’s mortgage loans are encumbered with floating interest rates which started to increase near the end of 2016 and continued to increase during 2017 and 2018. Omaha’s unsecured loan had a balance of $20,359,322 as of December 31, 2017. During the twelve months ended December 31, 2018, Omaha sold its garden apartment property in Asheville, North Carolina, its garden apartment property in 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 retire each property’s related secured mortgage loan. Remaining net sales proceeds were used to retire Omaha’s unsecured 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. On October 16, 2018 Sentinel Omaha paid distributions totaling $8,000,000 to its members including $2,400,000 to Registrant. RegistrantDuring 2019, Omaha sold its garden apartment property located in Independence, Missouri. Net sales proceeds were used to first pay selling expenses and retire the property’s related secured mortgage loan. Also during 2019, Omaha sold its garden apartment property located in Columbus, Ohio. Net sales proceeds were used to first pay selling expenses. Remaining net sales proceeds 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 overall debt. During 2019, Omaha paid distributions totaling $28,000,000 to its members including $8,400,000 to Registrant. For the year ended December 31, 2019 Omaha reported an increase of $9,500,000 in the value of its portfolio over the same properties as of the year ended December 31, 2018. The total real estate portfolio value of $230,900,000 as of December 31, 2019 consists of the same properties which made up Omaha’s portfolio as of December 31, 2018 less the two properties sold during 2019. As of December 31, 2018, the Partnership had in 2015 recognized a value in the Omaha investment equal to Registrant’sthe Partnership’s 30% portion of the equity reported on Omaha’s balance sheet as of December 31, 20152018 less a 50%20% reserve. The improvement in Omaha’s real estate values and operations and the pay down of the unsecured bank loan allowed Registrant to reduce the reserve to 35% as of December 31, 2016 and 25% as of December 31, 2017.

Registrant has only one wholly owned property which is located in Maple Grove, Minnesota. It is 100% leased to a single tenant whose lease was to expire October 31, 2019. On July 26, 2018, Registrant and the tenant executed the Fifth Amendment to the lease agreement which extends the expiration date to October 31, 2024. The tenant pays fixed base rent which increases approximately 3% each year and the tenant’s option to terminate the lease early has been eliminated. All other significant terms of the lease remain the same. 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. If the tenant defaulted the Registrant would have no internal source of funds until the space is released to a new tenant or Registrant receives distributions from Omaha. Registrant may have to consider that it would be in the best interests of the limited partners to sell its investment in Omaha and/or sell its wholly owned property. Registrant would not have considered a sale of its 30% non-controlling investment in Omaha in prior years due to Omaha’s unsecured debt. Selling the investment in Omaha while Omaha had a significant unsecured loan with an upcoming maturity would have likely realized a sale price for the investment that would be heavily discounted reflecting the unsecured debt risk. However, since Omaha has in the past two years paid off the unsecured debt along with improving performance at the properties, the debt risk is estimated to be lower. The investment in a 30% non-controlling interest would still be valued at a discount due to the lack of control and liquidity. Registrant will continueThe Partnership continues to report a reserve on the value of Omaha on its books but due to the continuing pay down of Omaha’s unsecured loan in 2017, the reserve was reduced from 35% to 25%. Due to Omaha paying off the unsecured debt in 2018 the reserve has been reduced to 20% as of MarchDecember 31, 2018. 2019.

For the year ended December 31, 20182019, Omaha reported an increasenet investment income of $8,325,000 in$10,495,319 of which the valueRegistrant’s interest was $3,148,596. In addition, Omaha reported net unrealized depreciation of its portfolio over the same properties as of the year ended December 31, 2017. The total real estate portfolio valueproperties and interest rate protection agreements of $290,500,000 as$1,366,240 of December 31, 2018 consistswhich Registrant’s interest was $409,872 for 2019. Also Omaha reported net realized gain on the sale of two real estate properties of $13,634,547 of which the same properties which made up Omaha’s portfolio as of December 31, 2017 less the three properties sold during 2018.Registrant’s interest was $4,090,364.

For the year ended December 31, 2018, Omaha reported net investment income of $11,892,478 of which the Registrant’s interest was $3,567,718. In addition, Omaha reported net unrealized appreciation of real estate properties and interest rate protection agreements of $487,605 of which Registrant’s interest was $146,281 for 2018. Also Omaha reported net realized gain on the sale of three real estate properties of $7,093,942 of which the Registrant’s interest was $2,128,183.

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For the year ended December 31, 2017, Omaha reported net investment income of $14,151,469 of which the Registrant’s interest was $4,245,442. In addition, Omaha reported net unrealized appreciation of real estate properties and interest rate protection agreements of $44,074,122 of which the Registrant’s interest was $13,222,237. Also Omaha reported net realized loss on the sale of three real estate properties of $20,492,141 of which the Registrant’s interest was $6,147,642.

For the year ended December 31, 2016, Omaha reported net investment income of $16,379,734 of which the Registrant’s interest was $4,913,920. In addition, Omaha reported net unrealized appreciation of real estate properties and interest rate protection agreements of $16,602,744 of which Registrant’s interest was $4,980,823 for 2016.

Determination of the fair value of Omaha involves numerous estimates and subjective judgments that are subject to change in response to current and future economic and market conditions, including, among other things, demand for residential apartments, competition, and operating cost levels such as labor, energy costs, real estate taxes and market interest rates. Judgments regarding these factors are not subject to precise quantification or verification and may change from time to time as economic and market factors change.

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

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

The three levels of fair value hierarchy are described below:

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

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

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

Estimated fair value of the underlying assets of Omaha was determined utilizing Level 3 inputs based upon independent appraisals or utilizing Level 2 inputs based upon sales contracts or bona fide sales offers.

Further, the investment in Omaha is not consolidated because other investors have substantive ownership and participative rights regarding Omaha’s operations and therefore control does not vest in the Registrant. Were the Registrant deemed to control Omaha, it would have to be consolidated and therefore would impact the financial statements and related ratios.

Revenue Recognition

Rental income is recognized when earned pursuant to the terms of the leases. Base rents and reimbursement of the tenants' share of certain operating expenses are generally recognized when due from tenants. Before Registrant can recognize revenue, it is required to assess, among other things, its collectability. Registrant continually analyzes the collectability of its revenue and will reserve against its revenue if conditions warrant such action.

Off-Balance Sheet Arrangements

None.

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Recently Issued Accounting Pronouncements

In February 2016,August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-2,2018-13, LeasesFair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2016-2), which amends the existing accounting standards for lease accounting, including requiring lessees2018-13). ASU 2018-13 is intended to recognize a lease liability for the obligation to make lease paymentsimprove fair value measurement disclosures by removing, modifying, and/or adding certain disclosures and a right-of-use asset for the right to use the underlying asset for the lease term on their balance sheet. The accounting for lessors will remain largely unchanged from existing standards; however ASU 2016-02 requires that lease procurement costs, which were previously capitalized, be expensed as-incurred. ASU 2016-2 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018, and requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application. In July 2018, the FASB issued ASU No. 2018-11, Leases – Targeted Improvements (ASU 2018-11), which provides entities with relief from the costs of implementing certain aspects of ASU 2016-2, including a transition option that permits the recognition of a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. As a result of the standard for lessors remaining largely unchanged from the previous guidance,2019. The Partnership does not expect the adoption of ASU 2016-2 and ASU 2018-11 is not expected2018-13 to have a material impact on the Partnership’sits consolidated financial statements.statements or disclosures.

CONTRACTUAL OBLIGATIONS

AsPursuant to the original investment agreement, the Partnership may be called upon to contribute, in cash, an additional $3,720,000 to the capital of December 31, 2018,Omaha, as and when required, as determined by the Registrant’s did not have any contractual obligations.Manager.

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LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2018,2019, Registrant had cash and cash equivalents of approximately $338,000$988,000 as compared to approximately $1,450,000$338,000 as of December 31, 2017.2018. Cash and cash equivalents decreasedincreased during the year ended December 31, 20182019 primarily due to the payoff of the bank loan to the Holder.distributions received from Omaha combined with cash flow generated from operating activities at Registrant’s wholly owned property. This increase was partially offset by a distribution received from Omaha. The decrease in cashpaid to the partners and cash equivalents was also partially offset by rental income received frompayments of accrued investment management fees and accrued expenses, payments to replace the tenant leasing spaceroof at Registrant’s property less operating expenses and capital improvements at Registrants wholly owned property andas well as partnership expenses paid.

As of December 31, 2018,2019, Registrant’s only consistent source of cash is rental income received from the tenant who leases 100% of the leasable space at Registrant’s wholly owned property in Maple Grove. The tenant reimburses Registrant for real estate taxes, insurance and most of the property’s operating expenses leaving a significant portion of the base rent received available to pay capital improvements and partnership administrative expenses.

Total outstanding debt at December 31, 2017 consisted of a bank loan (“Loan”) with a bank (“Holder”) with a balance of $5,726,590. On October 4, 2018, Registrant and the Holder of the Loan executed a Discounted Payoff Agreement (“Payoff Agreement”) whereby Registrant made a one-time payment of $4,000,000 on October 19, 2018 to retire and fully satisfy the balance of the Loan of $5,693,876 at a discount. The source of funds to retire the Loan was a distribution from Omaha of $2,400,000, cash escrow held by the Holder of approximately $510,000 and the remainder from partnership cash reserves to total $4,000,000. The payoff of $4,000,000 to satisfy the Loan was less than the outstanding balance of the Loan in the amount of $5,693,876. The difference of $1,693,876 was recorded as gain on extinguishment of debt. The Registrant has no other debt except normal trade accounts payable, a security deposit held for the tenant leasing the space at the Maple Grove property and accrued investment management fees.

Inflation and changing prices during the current period did not significantly affect the markets in which the Registrant conducts its business, or the Registrant’s business overall.

Omaha reports its investments in real estate properties on a fair value basis and for the year ended December 31, 20182019 Omaha reported an increase of $8,325,000$9,500,000 in the value of its portfolio over the same properties as of the year ended December 31, 2017.2018. The total real estate portfolio value of $290,500,000$230,900,000 as of December 31, 20182019 consists of the same properties which made up Omaha’s portfolio as of December 31, 2017 less2018 with the threeexception of the two properties sold during 2018.2019. Although the remaining commercial property owned by the Registrant is 100% occupied, it is occupied by a single tenant. According to a report by CBRE, the Minneapolis industrial market reported positive absorption, and a minor increase in market rates remained steady and vacancy rates remained a low 4.4% in 2018.2019. Registrant may still require a longer time period to replace the tenant at its property should a default occur or shouldocur and the tenant not renew its lease at the end of the lease term.

Registrant did not pay a distribution in 2018. There is no requirement to make such distributions, nor can there be any assurance that future operations will generate cash available for distribution.space become vacant.

Registrant pays the General Partner and an affiliate of the General Partner fees for services performed (See Item 13).performed. A portion of the fees during 2011 to 2018 were accrued while Registrant’s Loanunsecured loan was outstanding. Since the Loan hasunsecured loan had been retired in 2018, Registrant iswas allowed to pay the accrued fees and current fees. However,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 accrued investment management fees and accrued expenses and to increase cash reserves of the Registrant. Registrant anticipates cash flow generated from the property located in Maple Grove and current cash reserves will not be sufficient to pay ongoing operating and capital improvement costs, other working capital requirements of the Registrant and current and accrued fees due to the General Partner and its affiliates. A portion ofaffiliate. The Registrant has no debt except normal trade accounts payable and a security deposit held for the fees due to the General partner and its affiliate may be accrued until Registrant receives distributions from Omaha ortenant at Registrant’s wholly owned property.

MANAGEMENT’S DISCUSSION OF RESULTS OF OPERATIONS

2019 VS. 2018

Total revenues from operations increased $21,000 to approximately $1,131,000 in 2019 from approximately $1,110,000 in 2018 primarily due to higher rental income. Rental income increased due to a scheduled increase in base rent for the tenant at the Maple Grove property. Other income increased slightly due to an increase in real estate tax reimbursement while interest income decreased due to a decrease in cash reserves available for investment.

The Registrant reported a net loss from operations of approximately $574,000 in 2019, an increase of the loss of $45,000 as compared to a net loss from operations of approximately $529,000 in 2018. Net loss from operations consists of net income from the Maple Grove property is sold.combined with partnership income and expenses. The increase of loss from operations was due to higher operating expenses partially offset by higher total revenues. Total expenses from operations for 2019 increased $65,000 to approximately $1,705,000 from approximately $1,640,000 in 2018, due to increases in investment fees, real estate taxes and administrative expenses partially offset by decreases in depreciation expense, repairs and maintenance expense and deferred financing costs.

14

Omaha reports its investments in real estate properties on a fair value basis. During 2019, Omaha sold its garden apartment property located in Independence, Missouri. Net sales proceeds were used to first pay selling expenses and retire the property’s related secured mortgage loan. Also during 2019, Omaha sold its garden apartment property located in Columbus, Ohio. Net sales proceeds were used to first pay selling expenses. Remaining net sales proceeds 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 overall debt. During 2019, Omaha paid distributions totaling $28,000,000 to its members including $8,400,000 to Registrant. For the year ended December 31, 2019 Omaha reported an increase of $9,500,000 in the value of its portfolio over the same properties as of the year ended December 31, 2018. The total real estate portfolio value of $230,900,000 as of December 31, 2019 consists of the same properties which made up Omaha’s portfolio as of December 31, 2018 less the two properties sold during 2019.

Equity in net income of investment increased $987,000 to an income of approximately $6,829,000 for 2019 compared to income of approximately $5,842,000 for 2018. Omaha anticipates the net operating income from its remaining portfolio to be flat during 2020 as compared to 2019. All of Omaha’s property mortgage loans and banks loans use floating rates based on one month LIBOR rates plus the credit spread or based on bond index rates. During 2019 the floating rates on Omaha loans decreased as short term LIBOR rates and bond index rates decreased.

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

Eagle Lake Business Center IV (Maple Grove, Minnesota)

Total revenues increased $33,000, to approximately $1,127,000 in 2019 compared with approximately $1,094,000 in 2018. Net income, which includes deductions for depreciation, increased $58,000 to approximately $690,000 in 2019 from approximately $632,000 in 2018. The property has been 100% leased and occupied by the same single tenant for both years. The increase in total revenue was due to higher rental income combined with higher other income. Rental income increased due to a scheduled increase in base rent for the tenant. Other income increased from 2018 to 2019 due to an increase in real estate tax reimbursement. The increase in net income was due to the increase in revenues combined with the decrease in operating expenses. The decrease in operating expenses was primarily due to decreases in repairs and maintenance of $13,000 and depreciation of $18,000.

According to a report by CBRE, the Minneapolis industrial market reported positive absorption, market rates remained steady and vacancy rates remained a low 4.4% in 2019.

Investments

During 2007, the Registrant made a total investment in the amount of $37,200,000 in Omaha representing a thirty percent ownership interest. The Registrant’s investment in Omaha is accounted for at fair value.

On September 18, 2007, Omaha acquired all the outstanding common shares of America First Apartment Investors, Inc., a publicly held real estate investment trust, in a transaction valued at approximately $532 million, including the assumption of outstanding debt and excluding transactions costs. Omaha consisted of 31 wholly owned multifamily residential properties, a wholly owned commercial property and a wholly owned multifamily property that was under development. During 2019, Omaha sold its garden apartment property located in Independence, Missouri. Net sales proceeds were used to first pay selling expenses and retire the property’s related secured mortgage loan. Also during 2019, Omaha sold its garden apartment property located in Columbus, Ohio. Net sales proceeds were used to first pay selling expenses. Remaining net sales proceeds 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 overall debt. During 2019, Omaha paid distributions totaling $28,000,000 to its members including $8,400,000 to Registrant. For the year ended December 31, 2019 Omaha reported an increase of $9,500,000 in the value of its portfolio over the same properties as of the year ended December 31, 2018. The total real estate portfolio value of $230,900,000 as of December 31, 2019 consists of the same properties which made up Omaha’s portfolio as of December 31, 2018 less the two properties sold during 2019.

15

Omaha reported total revenues for 2019 of approximately $26,602,000. Net investment income before net unrealized appreciation was $10,495,000. Major expenses included $3,101,000 of interest expense, $2,443,000 for repairs and maintenance, $3,429,000 for payroll and $2,789,000 for real estate taxes. In addition, Omaha reported a net unrealized depreciation based on the valuation of the remaining real estate assets and interest rate protection agreements of $1,366,000. Also Omaha reported net realized gain on the sale of two real estate properties of $13,635,000. For the year ended December 31, 2019, the Registrant’s equity interest in the income of Omaha was approximately $6,829,000.

MANAGEMENT’S DISCUSSION OF RESULTS OF OPERATIONS 2018 VS. 2017

Total revenues from operations increased $29,000 to approximately $1,110,000 in 2018 from approximately $1,081,000 in 2017 primarily due to higher rental income. Rental income increased due to a scheduled increase in base rent for the tenant at the Maple Grove property. Other income decreased slightly while interest income increased.

The Registrant reported a net loss from operations of approximately $529,000 in 2018, an increase of the loss of $13,000 as compared to a net loss from operations of approximately $516,000 in 2017. Net loss from operations consists of net income from the Maple Grove property combined with partnership income and expenses. The increase of loss from operations was due to higher operating expenses partially offset by higher total revenues. Total expenses from operations for 2018 increased $43,000 to approximately $1,640,000 from approximately $1,597,000 in 2017, due to increases in repairs and maintenance, depreciation, professional fees and investment fees partially offset by decreases administration and deferred financing costs.

Omaha reports its investments in real estate properties on a fair value basis and due to the global financial crisis, stagnant real estate market and slowing economy, Omaha reported a net write-down of the value of its real estate portfolio of approximately $100,852,000 during 2008 to 2014. For the years 2015 to 2017, as real estate values recovered Omaha reported an increase in the value of its portfolio of $122,327,000. During the twelve months ended December 31, 2018, Omaha sold its garden apartment property in Asheville, North Carolina, its garden apartment property in 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 retire each property’s related secured mortgage loan. Remaining net sales proceeds were used to retire Omaha’s unsecured 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. On October 16, 2018 Sentinel Omaha paid a distribution to Registrant in the amount of $2,400,000. For the year ended December 31, 2018 Omaha reported an increase of $8,325,000 in the value of its portfolio over the same properties as of the year ended December 31, 2017. The total real estate portfolio value of $290,500,000 as of December 31, 2018 consists of the same properties which made up Omaha’s portfolio as of December 31, 2017 less the three properties sold during 2018.

Equity in net income of investment decreased $5,478,000 to an income of approximately $5,842,000 for 2018 compared to income of approximately $11,320,000 for 2017. Under the terms of the unsecured loan extension Omaha signed effective July 1, 2009, as extended and modified, Omaha was precluded from making distributions to its investors until its unsecured loan is paid. As a result of the aforementioned, Registrant did not anticipate receiving any distributions from Omaha during the foreseeable future and had reserved 100% of the reported value prior to 2015. During 2016 and 2017, the net operating income reported for Omaha’s properties continued to improve which allowed Omaha to continue to make payments on its unsecured loan. The improvement in Omaha’s real estate values and operations allowed Registrant to reduce the reserve to 35% as of December 31, 2016 and to 25% as of December 31, 2017. Omaha’s mortgages and unsecured loan are encumbered with floating interest rates which started to increase near the end of 2016 and continued to increase during 2017 and 2018. Omaha’s unsecured loan had a balance of $20,359,322 as of December 31, 2017. During 2018, Omaha sold its garden apartment property in Asheville, North Carolina and its garden apartment property in Fresno, California. Net sales proceeds in each transaction were used to first pay selling expenses and retire each property’s related secured mortgage loan. Remaining net sales proceeds were used to retire Omaha’s unsecured loan and were used to retire Omaha’s secured mortgage loan encumbering its high rise apartment property located in Omaha, Nebraska to further pay down Omaha’s debt. Retirement of the unsecured loan removed certain restrictions placed on Omaha by the lender including making distributions.

16

For the year ended December 31, 2018 Sentinel Omaha reported a 3.0% increase in real estate values. Omaha anticipates the net operating income from its remaining portfolio to be flat during 2019 as compared to 2018. As noted above, all of Omaha’s property mortgage loans and banks loans use floating rates based on one month LIBOR rates plus the credit spread.

16

As noted earlier, during 2018 the floating rates on Omaha loans increased as short term LIBOR rates increased. The one month LIBOR rate increased from an average of (0.7164%) during December 2016 to an average of (1.4925%) during December 2017 and an average of (2.4582%) during December 2018. Fixed mortgage interest rates for multi-family properties of similar class and location as Omaha’s portfolio also increased during 2017 from an approximate range of 4.10% to 4.15% in early 2017 to 4.35% to 4.50% near the end of 2017and further to an approximate range of 5.05% to 5.10% in December 2018. Mortgage interest rates may continue to increase in 2019 if the U.S. Federal Reserve continues a policy to increase the Federal Funds Rate. Although increases in fixed mortgage rates do not impact the operating cash flow of the Omaha properties directly, increases in fixed and 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 along with improving performance at the properties, the debt risk to the investment is estimated to be lower. The investment in a 30% non-controlling interest would still be valued at a discount due to the lack of control and liquidity. Registrant will continue to report a reserve on the value of Omaha on its books but due to Omaha paying off the unsecured debt in 2018 the reserve has been reduced to 20% as of March 31, 2018.

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

Eagle Lake Business Center IV (Maple Grove, Minnesota)

Total revenues increased $20,000, to approximately $1,094,000 in 2018 compared with approximately $1,074,000 in 2017. Net income, which includes deductions for depreciation, decreased $24,000 to approximately $632,000 in 2018 from approximately $656,000 in 2017. The property has been 100% leased and occupied by the same single tenant for both years. The increase in total revenue was primarily due to higher rental income. Rental income increased due to a scheduled increase in base rent for the tenant. Other income decreased slightly from 2017 to 2018. The decrease in net income was due to the increase in operating expenses partially offset by an increase in revenues. The increase in operating expenses was primarily due to increases in repairs and maintenance of $40,000 and depreciation of $7,000.

According to a report by CBRE the Minneapolis industrial market reported positive absorption and a minor increase in market rates in 2018.

Investments

During 2007, the Registrant made a total investment in the amount of $37,200,000 in Omaha representing a thirty percent ownership interest. The Registrant’s investment in Omaha is accounted for at fair value.

On September 18, 2007, Omaha acquired all the outstanding common shares of America First Apartment Investors, Inc., a publicly held real estate investment trust, in a transaction valued at approximately $532 million, including the assumption of outstanding debt and excluding transactions costs. Omaha consisted of 31 wholly owned multifamily residential properties, a wholly owned commercial property and a wholly owned multifamily property that was under development. During 2018 Omaha sold its garden apartment property located in Asheville, North Carolina, its garden apartment property located in 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 retire each property’s related secured mortgage loan. Remaining net sales proceeds were used to retire Omaha’s unsecured 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 overall debt.

Omaha reported total revenues for 2018 of approximately $33,786,000. Net investment income before net unrealized appreciation was $11,892,000. Major expenses included $5,273,000 of interest expense, $3,044,000 for repairs and maintenance, $4,319,000 for payroll and $3,640,000 for real estate taxes. In addition, Omaha reported a net unrealized appreciation based on the valuation of the remaining real estate assets and interest rate protection agreements of $488,000. Also Omaha reported net realized gain on the sale of three real estate properties of $7,094,000. For the year ended December 31, 2018, the Registrant’s equity interest in the income of Omaha was approximately $5,842,000.

17

MANAGEMENT’S DISCUSSION OF RESULTS OF OPERATIONS 2017 VS. 2016

Total revenues from operations increased $22,000 to approximately $1,081,000 in 2017 from approximately $1,059,000 in 2016 primarily due to higher rental income. Rental income increased due to a scheduled increase in base rent for the tenant at the Maple Grove property. Other income decreased slightly while interest income increased slightly.

The Registrant reported a net loss from operations of approximately $516,000 in 2017, an improvement of $16,000 as compared to a net loss from operations of approximately $532,000 in 2016. Net loss from operations consists of net income from the Maple Grove property combined with partnership income and expenses. The decrease of loss from operations was due to higher total revenues partially offset by higher operating expenses. Total expenses from operations for 2017 increased $6,000 to approximately $1,597,000 from approximately $1,591,000 in 2016, due to increases in administration costs and investment fees partially offset by decreases in real estate taxes, professional fees and repairs and maintenance.

During the twelve months ended December 31, 2017, Omaha sold its garden apartment property in Daytona, Florida and sold both garden apartment properties located in Fayetteville, North Carolina. Net sales proceeds in each transaction were used to first pay selling expenses and retire each property’s secured mortgage loan. Remaining net sales proceeds were used to reduce Omaha’s unsecured loan. Equity in net increase in net assets increased $1,425,000 to an income of approximately $11,320,000 for 2017 compared to income of approximately $9,895,000 for 2016.

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

Eagle Lake Business Center IV (Maple Grove, Minnesota)

Total revenues increased $18,000, to approximately $1,074,000 in 2017 compared with approximately $1,056,000 in 2016. Net income, which includes deductions for depreciation, increased $25,000 to approximately $656,000 in 2017 from approximately $631,000 in 2016. The property has been 100% leased and occupied by the same single tenant for both years. The increase in total revenue was primarily due to higher rental income. Rental income increased due to a scheduled increase in base rent for the tenant. Other income decreased slightly from 2016 to 2017. The increase in net income was due to the increase in revenues combined with a decrease in operating expenses. The decrease in operating expenses was primarily due to decreases in repairs and maintenance of $5,000 and real estate taxes of $3,000.

According to a market report by CBRE, the Minneapolis Metropolitan Statistical Area’s industrial market reported that during 2017 vacancy rates for industrial space remained the same and rental rates decreased. Net absorption of industrial space increased in 2017.

Investments

During 2017 Omaha sold its garden apartment property located in Dayton, Florida. and Omaha sold both its garden apartments located in Fayetteville, North Carolina. Sales proceeds from all three sales were first used to pay selling expenses and retire the mortgages encumbering each property. Remaining sales proceeds were used to pay down Omaha’s unsecured bank loan.

Omaha reported total revenues for 2017 of approximately $41,488,000. Net investment income before net unrealized appreciation was $14,151,000. Major expenses included $6,391,000 of interest expense, $3,806,000 for repairs and maintenance, $5,409,000 for payroll and $4,645,000 for real estate taxes. In addition, Omaha reported a net unrealized appreciation based on the valuation of the remaining real estate assets and interest rate protection agreements of $44,074,000. Also Omaha reported net realized loss on the sale of three real estate properties of $20,492,141. For the year ended December 31, 2017, the Registrant’s equity interest in the income of Omaha was approximately $11,320,000.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

NONE

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ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Financial Statements required by this item, together with the Report of Independent Registered Public Accounting Firm thereon, are contained herein on pages 23 through 3937 of this Annual Report on Form 10-K.

Supplementary financial information required by this item is contained herein on pages 38 through 39 of this report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A.9A . CONTROLS AND PROCEDURES

Registrant’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and Chief Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Our evaluation of internal control over financial reporting includes using the COSO 2013 framework, an integrated framework for the evaluation of internal controls issued by the Committee of Sponsoring Organizations of the Treadway Commission, to identify the risks and control objectives related to the evaluation of our control environment.

Based on our evaluation under the frameworks described above, our management has concluded that our internal control over financial reporting was effective as of December 31, 2018.2019.

This Annual Report does not include an attestation report of the Registrant’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Registrant’s independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit Registrant to provide only management’s report in this Annual Report.

ITEM 9B. OTHER INFORMATION

NONE

1918

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 (the "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:

Mr. Streicker joined the General Partner in May 1976. He has been a Director since April 1984. He is Chairman of SHC and its parent company, The Sentinel Corporation.

Ms. Cassidy joined the General Partner in August 1982. She has been a Director of the General Partner since March 1988. She is President of SHC and its parent company, The Sentinel Corporation.

Mr. Tietjen joined the General Partner in 1990 and served as its Chief Accounting Officer until 2006 and Chief Financial Officer and Treasurer from 2004 to 2007. He is a certified public accountant with over 3435 years of real estate related financial, management, accounting and reporting experience.

Mr. Cawley joined the General Partner in 1994. He is the regional manager responsible for commercial property transactions and management.

Mr. Roth joined the General Partner in 1994 and serves as its treasurer. He is a certified public accountant with over 3334 years of real estate related financial, accounting and reporting experience.

Mr. Zoeller joined the General Partner in 1994 and serves as its principal financial and accounting officer. He is a certified public accountant with over 3738 years of real estate related financial, accounting and reporting experience.

2019

ITEM 11. EXECUTIVE COMPENSATION

The Registrant has no executive officers or directors.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BBENEFICIALENEFICIAL OWNERS AND MANAGEMENT

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. 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 amortization payments, and 0.5% of capital not invested in real estate, as defined in the Partnership Agreement. The management fee amounted to $1,007,137, $911,615 $888,325 and $867,859$888,325 for the years ended December 31, 2019, 2018, 2017, and 2016,2017, respectively. Of the amounts earned in 2018 and 2017 $485,374 and 2016, $485,374, $462,086, and $441,618, respectively had been accrued while the obligations under the Loan Agreementagreement were outstanding. The accrued amounts totaltotaled $3,408,317 and $2,922,943 and arewere included in accrued expenses on the balance sheet as of December 31, 2018 and 2017, respectively.2018. Since the Loan has been retired, Registrant iswas allowed to pay the accrued fees and current fees. The accrued fees will be paid as cash flow from property operations and distributions from Omaha allow. In addition, the General Partner is entitled to 25% of cash distributions in excess of the annual distribution preference, as defined in the Partnership Agreement. No such amounts were due for the years ended December 31, 2019, 2018 2017 or 2016.2017.

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, or percentage of revenues. 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 totaled $56,734, $55,409 and $54,311 in 2019, 2018, and $53,242 in 2018, 2017, and 2016, respectively.

Registrant’s wholly owned property located in Maple Grove, Minnesota is 100% leased to a single tenant whose lease was scheduled to expire July 31, 2019. On July 26, 2018, Registrant and the tenant executed an extension of the lease to October 31, 2024. An affiliate of the General Partner was paid a leasing commission of $158,494 for the lease extension.

2120

In 2012 an affiliate of the General Partner commenced maintaining and updating the investor database and preparing the tax K-1 forms and related schedules which previously had been prepared by an unaffiliated company. The fee charged by the affiliate for the similar service is lower than the fee previously charged by the unaffiliated company. Fees charged for 2019, 2018 2017 and 20162017 were $54,000 each year.

During 2019 the Partnership had the roof of its wholly owned property located in Maple Grove, Minnesota replaced. In accordance with the management agreement, an affiliate of the General Partner was paid a construction supervision fee for the supervision of the capital project in the amount of $16,547. 

In 2007 the Registrant made an investment of $37,200,000, representing a thirty percent ownership interest in Omaha. For the years 2019, 2018 2017 and 2016,2017, the Registrant’s equity interest in the net income of Omaha was approximately $6,829,000, $5,842,000 and $11,320,000, and $9,895,000, respectively.

Reference is made to Items 10 and 11, and Notes 3, 5, 6 and 109 in the consolidated financial statements.

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

2221

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENTSCHEDULES

(b)     Exhibits -