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ITEM 1. FINANCIAL STATEMENTS

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Limited Partners:

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SB PARTNERS

Notes to Consolidated Financial Statements (Unaudited)

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

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

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

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Except as discussed below, payments of principal are deferred until Registrant’s investment in Sentinel Omaha LLC pays distributions to the Partnership or the Partnership sells Eagle Lake Business Center IV or its investment in Omaha. Distributions from Omaha or net proceeds from the sale of Eagle IV or Omaha would be used first to pay the outstanding principal balance of Note B. If there are no distributions from Omaha prior to the Note B maturity, principal is due at maturity, subject to the above mentioned extensions. On January 30, 2018, the Partnership sent notice to Holder to exercise its first one year option to extend the maturity date to April 29, 2019, which Holder has acknowledged.

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OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FOR THE THREE AND SIXNINE MONTHS ENDED JUNESEPTEMBER 30, 2018 AND 2017

General

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

Registrant’s wholly owned property located in Maple Grove, Minnesota is 100% leased to a single tenant whose lease expireswas to expire October 31, 2019. TheOn July 26, 2018, Registrant and the tenant has an ongoing optionexecuted the Fifth Amendment to terminate the lease under certain conditions. One ofagreement which extends the conditions is the payment of an early termination penalty the calculation of which is based on the remaining time period in the lease. Another condition is the tenant must provide notice twelve months priorexpiration date to the termination.October 31, 2024. The tenant pays fixed base rent which increases approximately 3% each year. The tenant pays directly or reimburses Registrant for all utilities, real estate taxes, insurance and most of the property operating expenses and property management fees.

On July 26, 2018, Registrant and the tenant executed the Fifth Amendment to the lease agreement which extends the expiration date to October 31, 2024. The tenant’s base rent will continue to increase 3% each year and the tenant’s option to terminate the lease early has been eliminated. All other significant terms of the lease remain the same.

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

Results of Operations

Total revenues from continuing operations for the three months ended JuneSeptember 30, 2018 increased $9,000 to approximately $277,000$281,000 as compared to approximately $268,000$272,000 for the three months ended JuneSeptember 30, 2017. Total revenues increased due to an increase in base rental income and interest income. Base rental income increased $5,000$6,000 to approximately $184,000$188,000 for the three months ended JuneSeptember 30, 2018 as compared to the same period in 2017 due to a scheduled increase in base rent at Registrant’s property located in Maple Grove, MN. Interest income increased due to an increase in interest rates. Other rental income decreased slightly.

The Registrant reported a net loss from operations of approximately $127,000$116,000 for the three months ended JuneSeptember 30, 2018, an improvement of $3,000$13,000 as compared to a net loss from operations of approximately $130,000$129,000 for the same period in 2017. Net loss from operations consists of net income from the Maple Grove property offset by partnership income and expenses. The decrease of loss from operations was due to higher total revenues combined with lower total expenses. Total expenses from operations for 2018 decreased $4,000 to approximately $397,000 from approximately $401,000 in 2017, due primarily to a decrease in amortization of financing costs of $5,000 and real estate operating expenses of $4,000 partially offset by an increase in management fee expense of $6,000.

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

The Registrant reported a net loss from operations of approximately $369,000 for the nine months ended September 30, 2018, an improvement of $19,000 as compared to a net loss from operations of approximately $388,000 for the same period in 2017. Net loss from operations consists of net income from the Maple Grove property offset by partnership income and expenses. The decrease of loss from operations was due to higher total revenues partially offset by higher total expenses. Total expenses from operations for 2018 increased $6,000 to approximately $404,000$1,201,000 from approximately $398,000$1,195,000 in 2017, due primarily to an increase in management fee expense of $7,000 partially offset by a decrease in amortization cost of $4,000.

Total revenues from continuing operations for the six months ended June 30, 2018 increased $16,000 to approximately $551,000 as compared to approximately $535,000 for the six months ended June 30, 2017. Total revenues increased due to an increase in base rental income and interest income. Base rental income increased $10,000 to approximately $368,000 for the six months ended June 30, 2018 as compared to the same period in 2017 due to a scheduled increase in base rent at Registrant’s property located in Maple Grove, MN. Interest income increased due to an increase in interest rates. Other rental income decreased slightly.

The Registrant reported a net loss from operations of approximately $253,000 for the six months ended June 30, 2018, an improvement of $5,000 as compared to a net loss from operations of approximately $258,000 for the same period in 2017. Net loss from operations consists of net income from the Maple Grove property offset by partnership income and expenses. The decrease of loss from operations was due to higher total revenues partially offset by higher total expenses. Total expenses from operations for 2018 increased $10,000 to approximately $804,000 from approximately $794,000 in 2017, due primarily to an increase in management fee expense of $13,000$19,000 and an increase in repairs and maintenance costs of $13,000.$16,000. This increase was partially offset by a decrease in administrative expenses of $9,000$14,000 and a decrease in amortization of financing cost of $4,000.$9,000.

The Registrant has a 30% non-controlling interest in Omaha that is accounted for on a fair value basis. Net increase in net assets decreased $10,521,000$7,006,000 to approximately $7,426,000$6,331,000 for the three months ended JuneSeptember 30, 2018 compared to net increase in net assets of approximately $17,947,000$13,337,000 for the same period in 2017. During 2017, Omaha sold its garden apartment property in Daytona, Florida and sold both garden apartment properties located in Fayetteville, North Carolina. Net sales proceeds in each transaction were used to first pay selling expenses and pay off each property’s related secured mortgage.mortgage loan. Remaining net sales proceeds were used to reduce Omaha’s unsecured loan. During the twelve months ended December 31, 2017, Omaha reported a net increase in the value of its remaining real estate portfolio of $33,815,000. During the sixnine months ended JuneSeptember 30, 2018, Omaha sold its garden apartment property in Asheville, North Carolina and its garden apartment property in Fresno, California. Net sales proceeds in each transaction were used to first pay selling expenses and pay off each property’s related secured mortgage.mortgage loan. Remaining net sales proceeds were used to pay off Omaha’s unsecured loan and were used to pay off Omaha’s secured mortgage loan encumbering its high rise apartment property located in Omaha, NE to further pay down Omaha’s debt. Retirement of the unsecured loan removed certain restrictions placed on Omaha by the lender including making distributions. During the sixnine months ended JuneSeptember 30, 2018, Omaha reported a net increase in the value of its remaining real estate portfolio of $2,775,000.$8,475,000.

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During 2017 the floatingvariable rates on Omaha loans increased as short term LIBOR rates increased. The one month LIBOR rate increased from an average of (0.7164%) during December 2016 to an average of (1.4925%) during December 2017.2017 and further to an average of (2.1755%) during September 2018. Fixed mortgage interest rates for multi-family properties of similar class and location as Omaha’s portfolio also increased during 2017 from an approximate range of 4.10% to 4.15% in early 2017 to 4.35% to 4.50% near the end of 2017.2017 and further to an approximate range of 5.05% to 5.10% in September 2018. Mortgage interest rates are expected tomay continue to increase in 20182019 as the U.S. Federal Reserve continueshas had a policy to increaseof increasing the Federal Funds Rate.Rate during the past few years. Although increases in fixed mortgage rates do not impact the operating cash flow of the Omaha properties directly, increases in fixed and floating rates on commercial mortgage debt can have a negative impact on capitalization rates and the sales prices Sentinel Omaha may achieve in the future.

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

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

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

CRITICAL ACCOUNTING POLICIES

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

Liquidity and Capital Resources

As of JuneSeptember 30, 2018, the Registrant had cash and cash equivalents of approximately $1,467,000.$1,344,000. These balances are approximately $17,000 higher$106,000 lower than cash and cash equivalents held on December 31, 2017. Cash and cash equivalents increased slightlydecreased during the sixnine months ended JuneSeptember 30, 2018 due to a leasing commission paid to an affiliate of the general partner in the amount of $158,494 related to the lease extension executed with the tenant at Registrant’s Maple Grove property combined with partnership expenses and a partial pay down of Registrant’s Note B. This was partially offset by cash flow generated from operating activities at Registrant’s wholly owned property partially offset by partnership expenses and a partial pay down of Registrant’s Note B.property.

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

Total outstanding debt at JuneSeptember 30, 2018 consists of Note B at $5,693,876. Under the terms of the Loan Agreement, when Note A was repaid, interest on the Note B stopped accruing. Note B matured April 29, 2018. Registrant has three one-year options to extend the maturity date if certain conditions are satisfied. On January 30, 2018, the Partnership sent notice to Holder to exercise its first one year option to extend the maturity date to April 29, 2019, which Holder has acknowledged. If Registrant does not have funds on hand sufficient to repay its indebtedness at maturity, the Registrant may need to refinance such indebtedness with new debt financing or provide necessary funds through equity offering(s) or other sources, if available. The Registrant may be unable to obtain a loan which will be sufficient to retire the existing loan. If it is unable to refinance this indebtedness on acceptable terms, the Registrant may be forced to liquidate its remaining assets upon disadvantageous terms, which could result in losses to the Registrant and adversely affect the amount of cash reserves. If general economic conditions result in higher interest rates at a time when the Registrant must refinance its indebtedness, the Registrant's interest expense could increase, which would adversely affect the Registrant's results of operations and financial condition. The Registrant has no other debt except normal trade accounts payable and accrued investment management fees.

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

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

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

Eagle Lake Business Center IV (Maple Grove, Minnesota)

Total revenues for the three months ended JuneSeptember 30, 2018 increased $5,000 to approximately $271,000$275,000 as compared to approximately $266,000$270,000 for the three months ended JuneSeptember 30, 2017. The property reported higher base rental income and slightly lower other rental income. Base rental income was higher in 2018 due to a scheduled increase in the base rent. Net operating income, which includes deductions for depreciation, increased $1,000$2,000 for the three months ended JuneSeptember 30, 2018 to approximately $159,000$173,000 from approximately $158,000$171,000 for the three months ended JuneSeptember 30, 2017 due primarily to higher total revenues partially offset by higher operating expenses. Operating expenses were higher due to higher repairs and administrative expenses.

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

Investment in Sentinel Omaha, LLC

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

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

Omaha’s total revenues for the three months ended JuneSeptember 30, 2018 were approximately $8,172,000.$8,224,000. Income before net unrealized income and net realized gains was approximately $3,275,000.$2,773,000. Major expenses included approximately $1,245,000$1,130,000 for interest expense, $646,000$750,000 for repairs and maintenance, $948,000$1,133,000 for payroll, and $821,000$1,061,000 for real estate taxes. Omaha reported net unrealized gains of approximately $425,000 and net realized gains of approximately $21,000$3,558,000 resulting in a net increase in net assets of approximately $3,720,000.$6,331,000. For the three months ended JuneSeptember 30, 2018, the Registrant’s 30% equity interest in the income of Omaha was approximately $1,116,000.$1,899,000. Registrant reserves 20% of the reported value of Omaha on its balance sheet for JuneSeptember 30, 2018. The reserve for value was adjusted in conjunction with recording the equity income for the quarter ended JuneSeptember 30, 2018. As a result, Registrant reported net income from equity interest in income of Omaha for the quarter ended JuneSeptember 30, 2018 of $893,000.$1,519,000.

As of September 30, 2017, the Omaha portfolio consisted of 11 multi-family properties located in 8 markets. Omaha’s total revenues for the three months ended JuneSeptember 30, 2017 were approximately $10,463,000.$9,867,000. Income before realized losses and net unrealized income was approximately $3,272,000.$3,225,000. Major expenses included approximately $1,667,000$1,554,000 for interest expense, $976,000$898,000 for repairs and maintenance, $1,353,000$1,286,000 for payroll, and $1,400,000$1,212,000 for real estate taxes. Omaha reported realized losses of $20,794,000 and net unrealized income of approximately $23,969,000$10,152,000 resulting in net increase in net assets of approximately $6,447,000.$13,377,000. For the three months ended JuneSeptember 30, 2017, the Registrant’s 30% equity interest in the net increase in net assets of Omaha was approximately $1,934,000.$4,013,000. Registrant recognized a reserve of 30%25% of the reported value of Omaha on its balance sheet. The reserve for value was adjusted in conjunction with recording the equity income for the quarter ended JuneSeptember 30, 2017. As a result, Registrant reported net equity in net increase in net assets of Omaha for the quarter ended JuneSeptember 30, 2017 of $3,466,000.$5,219,000.

Omaha’s total revenues for the sixnine months ended JuneSeptember 30, 2018 were approximately $17,514,000.$25,739,000. Income before net unrealized losses and net realized gains was approximately $6,206,000.$8,979,000. Major expenses included approximately $2,831,000$3,961,000 for interest expense, $1,352,0002,101,000 for repairs and maintenance, $2,231,000$3,364,000 for payroll, and $2,030,000$3,091,000 for real estate taxes. Omaha reported net unrealized losses of approximately $8,720,000$5,162,000 and net realized gains of approximately $9,940,000 resulting in a net increase in net assets of approximately $7,426,000.$13,757,000. For the sixnine months ended JuneSeptember 30, 2018, the Registrant’s 30% equity interest in the income of Omaha was approximately $2,228,000.$4,127,000. Registrant reserves 20% of the reported value of Omaha on its balance sheet for JuneSeptember 30, 2018. The reserve for value was adjusted in conjunction with recording the equity income for the sixnine months ended JuneSeptember 30, 2018. As a result, Registrant reported net equity in net increase in net assets of Omaha for the sixnine months ended JuneSeptember 30, 2018 of $4,288,000.approximately $5,807,000.

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Omaha’s total revenues for the sixnine months ended JuneSeptember 30, 2017 were approximately $21,750,000.$31,616,000. Income before realized losses and net unrealized income was approximately $7,193,000.$10,419,000. Major expenses included approximately $3,293,000$4,837,000 for interest expense, $1,796,000$2,694,000 for repairs and maintenance, $3,017,000$4,301,000 for payroll, and $2,742,000$3,952,000 for real estate taxes. Omaha reported realized losses of $20,794,000 and net unrealized income of approximately $31,548,000$41,700,000 resulting in net increase in net assets of approximately $17,947,000.$31,325,000. For the sixnine months ended JuneSeptember 30, 2017, the Registrant’s 30% equity interest in the net increase in net assets of Omaha was approximately $5,384,000.$9,397,000. Registrant recognized a reserve of 30%25% of the reported value of Omaha on its balance sheet. The reserve for value was adjusted in conjunction with recording the equity income for the sixnine months ended JuneSeptember 30, 2017. As a result, Registrant reported net equity in net increase in net assets of Omaha for the sixnine months ended JuneSeptember 30, 2017 of $5,708,000.approximately $10,927,000.

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ITEM 3.

None

ITEM 4.

CONTROLS AND PROCEDURES

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

PART II – OTHER INFORMATION

ITEM 6.

EXHIBITS

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

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SIGNATURES

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