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SB PARTNERS
(a New York limited partnership)
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Accounting and Financial Reporting
The consolidated financial statements included herein are unaudited; however, the information reflects all adjustments (consisting solely of normal recurring
adjustments) that are, in the opinion of management, necessary to a fair presentation of the financial position and results of operations for the year presented. Certain
information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the Registrant believes that the disclosures are adequate to make the information presented not
misleading. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Registrant's latest
annual report on Form 10-K, and Forms 8-K filed May 12, 2006, January 6, 2006, March 7, 2006, as amended, October 18, 2005, December 19, 2005, as amended, and
May 21, 2005 filed in connection with these transactions.
(2) Pro Forma Adjustments
The consolidated balance sheet as of the last filing date, September 30, 2006, has been restated to reflect the addition of the assets and liabilities related
to 175 Ambassador Drive, and the assumed mortgage note payable, as if the transactions had occurred on such date. The total costs to acquire 175 Ambassador Drive,
$20,931,261, have been added to the Registrant’s portfolio of investments in real estate properties. The mortgage assumption fee of $71,073 has been added to other
assets. Liabilities assumed at the time of the purchase, accrued expenses of $758,420 and deferred revenue of $69,941 have been added to the Registrant’s total
liabilities. The amount of the mortgage assumed, $7,107,319, which is secured by the property has been added to the total of the Registrant’s mortgage notes payable.
Cash held by the Registrant has been decreased by $13,066,654, the amount of cash paid by the Registrant at closing for the acquisition of 175 Ambassador Drive.
Additionally, the consolidated balance sheet as of the last filing date, September 30, 2006, has been restated to reflect the sale of Halton Place Apartments on
December 20, 2006, as if the transactions had occurred on such date. Accordingly, the assets and liabilities of Halton Place Apartments have been removed from the
historical balance sheet to reflect the sale of the property. Assets removed included real estate held for sale of $11,809,151 and other assets in discontinued operations
totaling $31,539. Liabilities removed include other liabilities in discontinued operations totaling $166,858. In addition, the balance of cash has been increased by
$12,249,967 to reflect the proceeds from the sale of Halton Place Apartments.
The accompanying pro forma consolidated statement of operations for the nine months ended September 30, 2006 has been adjusted to reflect the results
of operations of the Registrant as if the acquisition and financing of 175 Ambassador Drive and the sale of Halton Place Apartments had been consummated at the
beginning of the period. Additionally, the consolidated statement of operations for the nine months ended September 30, 2006 has been restated to reflect the results of
operations of the Registrant as if the sale of Holiday Park and the unimproved land on May 2, 2006 had taken place at the beginning of the period. The Registrant is
reflecting these transactions in accordance with the rules and regulations regarding the filing of Form 8-K, as the transactions were consummated during the fiscal
period presented.
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The items of income of 175 Ambassador Drive that have been added to the consolidated statement of operations for the nine months ended September 30,
2006 include rental and other income received from the tenant. All expenses relating to the property including real estate operating expenses, interest on mortgage notes
payable, depreciation, and other expenses have also been included. Management fees have been adjusted to reflect the investment in the property.
The income from discontinuing operations of Halton Place Apartments has been removed from the consolidated statement of operations for the nine months
ended September 30, 2006. Also, management fees have been reduced to reflect the sale of the property. In accordance with the rules and regulations regarding the
filing of Form 8-K, no gain from the sale of the investment in real estate property is reflected in the pro forma statement of operations.
The income from discontinuing operations of Holiday Park Apartments has been removed from the consolidated statement of operations for the nine months
ended September 30, 2006. Also, management fees have been reduced to reflect the sale of the property. In accordance with the rules and regulations regarding the
filing of Form 8-K, no gain from the sale of the investment in real estate property is reflected in the pro forma statement of operations.
The accompanying pro forma consolidated statement of operations for the year ended December 31, 2005 has been adjusted to reflect the results of
operations of the Registrant as if the acquisition and financing of 175 Ambassador Drive and the sale of Halton Place Apartments had been consummated at the
beginning of the year. Additionally, the consolidated statement of operations for the year ended December 31, 2005 has been restated to reflect the results of
operations of the Registrant as if the sale of Cypress Key Apartments on March 28, 2005, the acquisition and financing of 435 Park Court on October 5, 2005, the sale
of Waterview Apartments on December 22, 2005 and the sale of Holiday Park on May 2, 2006 had taken place at the beginning of the year. The Registrant is reflecting
these transactions in accordance with the rules and regulations regarding the filing of Form 8-K, as the transactions were consummated during the fiscal period
presented.
The items of income of 175 Ambassador Drive that have been added to the consolidated statement of operations for the year ended December 31, 2005
include rental and other income received from the tenant. All expenses relating to the property including real estate operating expenses, interest on mortgage notes
payable, depreciation, and other expenses have also been included. Management fees have been adjusted to reflect the investment in the property, net of the proceeds
of the mortgage note.
The items of income of Halton Place Apartments that have been removed from the consolidated statement of operations for the year ended December 31,
2005 include rental and other income received from the tenant. All expenses relating to the property including real estate operating expenses, interest on mortgage notes
payable, taxes, depreciation, and other expenses have also been removed. Also, management fees have been reduced to reflect the sale of the property. In accordance
with the rules and regulations regarding the filing of Form 8-K, no gain from the sale of the investment in real estate property is reflected in the pro forma statement of
operations.
The loss from discontinuing operations of Holiday Park Apartments has been removed from the consolidated statement of operations for the year ended
December 31, 2005. Also, management fees have been reduced to reflect the sale of the property. In accordance with the rules and regulations regarding the filing of
Form 8-K, no gain from the sale of the investment in real estate property is reflected in the pro forma statement of operations.
The equity income in joint venture of Waterview Apartments has been removed from the consolidated statement of operations for the year ended
December 31, 2005. Furthermore, management fees have been reduced to reflect the sale of the property. In accordance with the rules and regulations regarding the
filing of Form 8-K, no gain from the sale of the investment in real estate property is reflected in the pro forma statement of operations.
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The items of income of 435 Park Court that have been added to the consolidated statement of operations for the year ended December 31, 2005 include
rental and other income received from the tenant. All expenses relating to the property including real estate operating expenses, interest on mortgage notes payable,
taxes, depreciation, and other expenses have also been included. Management fees have been adjusted to reflect the investment in the property, net of the proceeds of
the mortgage note.
The loss from discontinuing operations of Cypress Key Apartments has been removed from the consolidated statement of operations for the year ended
December 31, 2005. Also, management fees have been reduced to reflect the sale of the property. In accordance with the rules and regulations regarding the filing of
Form 8-K, no gain from the sale of the investment in real estate property is reflected in the pro forma statement of operations.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
| | | SB PARTNERS |
| | | (Registrant) |
| | | |
| | By: | SB PARTNERS REAL ESTATE CORPORATION |
| | | General Partner |
| | | |
| | | Principal Financial & Accounting Officer |
| Dated: January 30, 2007 | By: | /s/ George N. Tietjen III |
| | | George N. Tietjen III |
| | | Chief Financial Officer & Treasurer |
| | | |
