SB Partners 10-Q 2008 Q2 Quarterly report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q. – QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2008

Or

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________________ to __________________

Commission File Number: 0-8952

SB PARTNERS
(Exact name of registrant as specified in its charter)
New York	13-6294787
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
750 Washington Boulevard, Stamford, CT.	06901
(Address of principal executive offices)	(Zip Code)

(203) 975-1300

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  [X] Yes  [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definitions of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act.

[ ] large accelerated filer                                                      [ ] accelerated filer                                                      [x] non-accelerated filer

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). [ ] Yes  [X] No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  [ ] Yes  [ ] No

Not Applicable

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Not Applicable

SB PARTNERS

INDEX

Part I	Financial Information
	Consolidated Balance Sheets as of  June 30, 2008 (unaudited) and December 31, 2007 (audited)	1
	Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2008 and 2007	2
	Consolidated Statements of Changes in Partners' Capital (unaudited) for the six months ended June 30, 2008	3
	Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2008 and 2007	4
	Notes to Consolidated Financial Statements (unaudited)	5 – 6
	Management's Discussion and Analysis of Financial Condition and Results of Operations	7 – 9
	Quantitative and Qualitative Disclosures about Market Risk	10
	Controls and Procedures	10
Part II	Other Information	10
	Signatures	11
	Exhibit 31	12 – 13
	Exhibit 32	14

1

ITEM 1. FINANCIAL STATEMENTS

SB PARTNERS

(A New York Limited Partnership)

CONSOLIDATED BALANCE SHEETS

			June 30,			December 31,
			2008			2007
			(Unaudited)			(Audited)
Assets:
Investments -
	Real estate, at cost
	Land		$	4,065,000		$	4,065,000
	Buildings, furnishings and improvements			37,474,216			37,474,216
	Less - accumulated depreciation			(2,487,215	)		(2,000,624	)
				39,052,001			39,538,592
	Investment in Sentinel Omaha, LLC			36,344,331			36,959,612
				75,396,332			76,498,204
Other Assets -
	Cash and cash equivalents			481,210			1,679,152
	Other			91,245			169,871
		Total assets	$	75,968,787		$	78,347,227
Liabilities:
	Mortgage notes and unsecured loan payable		$	38,869,317		$	38,943,176
	Accounts payable and accrued expenses			152,182			238,821
	Tenant security deposits			99,017			99,017
		Total liabilities		39,120,516			39,281,014
Partners' Capital:
	Units of partnership interest without par value;
	Limited partner - 7,753 units			36,861,953			39,079,609
	General partner - 1 unit			(13,682	)		(13,396	)
		Total partners' capital		36,848,271			39,066,213
		Total liabilities and partners' capital	$	75,968,787		$	78,347,227

See notes to consolidated financial statements.

2

SB PARTNERS

(A New York Limited Partnership)

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

		For The Three Months						For The Six Months
		Ended June 30,						Ended June 30,
		2008			2007			2008			2007
Revenues:
Base rental income		$	734,658		$	747,092		$	1,432,551		$	1,446,842
Other rental income			190,956			298,207			405,252			489,052
Interest			4,087			187,998			12,241			368,684
	Total revenues		929,701			1,233,297			1,850,044			2,304,578
Expenses:
Real estate operating expenses			157,997			238,893			302,101			407,538
Interest expense			503,101			248,295			1,063,101			497,438
Depreciation and amortization			265,292			267,764			518,295			512,183
Real estate taxes			139,331			158,039			300,700			309,693
Management fees			198,990			153,293			395,995			328,885
Other			11,020			10,809			19,628			19,975
Total expenses			1,275,731			1,077,093			2,599,820			2,075,712
Income (loss) from  operations			(346,030	)		156,204			(749,776	)		228,866
Equity in net income (loss) of investment			970,810			-			(615,281	)		-
Income (loss) from continuing operations			624,780			156,204			(1,365,057	)		228,866
Loss from discontinued operations			-			(105,376	)		-			(52,946	)
Net gain on sale of investment in real estate property			-			2,518,418			-			2,518,418
Net income (loss)			624,780			2,569,246			(1,365,057	)		2,694,338
Income (loss) allocated to general partner			81			331			(176	)		348
Income (loss) allocated to limited partners		$	624,699		$	2,568,915		$	(1,364,881	)	$	2,693,990
Earnings per unit of limited partnership interest
(basic and diluted)
Continuing operations		$	80.58		$	20.15		$	(176.07	)	$	29.52
Discontinued operations		$	-		$	311.24		$	-		$	318.00
Net  income (loss)		$	80.58		$	331.39		$	(176.07	)	$	347.52
Weighted Average Number of Units of Limited
Partnership Interest Outstanding			7,753			7,753			7,753			7,753

See notes to consolidated financial statements.

3

SB PARTNERS

(A New York Limited Partnership)

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

For the six months ended June 30, 2008 (Unaudited)

Limited Partners:
	Units of Partnership Interest
					Cumulative			Accumulated
	Number		Amount		Cash Distributions			Earnings			Total
Balance, January 1, 2008		7,753	$	119,968,973	$	(110,868,811	)	$	29,979,447		$	39,079,609
Cash distributions		-		-		(852,775	)		-			(852,775	)
Net income (loss)		-		-		-			(1,364,881	)		(1,364,881	)
Balance, June 30, 2008		7,753	$	119,968,973	$	(111,721,586	)	$	28,614,566		$	36,861,953
General Partner:
	Units of Partnership Interest
					Cumulative			Accumulated
	Number		Amount		Cash Distributions			Earnings			Total
Balance, January 1, 2008		1	$	10,000	$	(26,254	)	$	2,858		$	(13,396	)
Cash distributions		-		-		(110	)		-			(110	)
Net income (loss)		-		-		-			(176	)		(176	)
Balance, June 30, 2008		1	$	10,000	$	(26,364	)	$	2,682		$	(13,682	)

See notes to consolidated financial statements.

4

SB PARTNERS

(A New York Limited Partnership)

CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)

	For the Six Months Ended
	June 30,
	2008			2007
Cash Flows From Operating Activities:
Net income (loss)	$	(1,365,057	)	$	2,694,338
Adjustments to reconcile net income (loss)
to net cash (used in) provided by operating activities:
Net gain on sale of investment in real estate property					(2,518,418	)
Depreciation and amortization		518,295			546,241
Equity in net loss of investment		615,281			-
Accrued interest on marketable securities		-			(118,436	)
Net decrease in operating assets		46,922			173,499
Net decrease in operating liabilities		(86,639	)		(260,161	)
Net cash (used in) provided by operating activites		(271,198	)		517,063
Cash Flows From Investing Activities:
Net proceeds from sale of investments in real estate property		-			15,085,446
Investment in Sentinel Omaha, LLC		-			(5,000,000	)
Decrease in cash held in escrow		-			24,112
Purchase of marketable securities		-			(9,999,730	)
Proceeds from sale of marketable securities		-			12,999,198
Capital additions to real estate owned		-			(224,542	)
Net cash provided by investing activites		-			12,884,484
Cash Flows From Financing Activities:
Principal payments on mortgage notes payable		(73,859	)		(120,381	)
Retirement of mortgage note payable		-			(9,427,012	)
Distributions paid to partners		(852,885	)		(2,713,725	)
Net cash used in financing activities		(926,744	)		(12,261,118	)
Net increase (decrease) in cash and cash equivalents		(1,197,942	)		1,140,429
Cash and cash equivalents at beginning of period		1,679,152			999,342
Cash and cash equivalents at end of period	$	481,210		$	2,139,771
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	1,063,101		$	804,839

See notes to consolidated financial statements.

5

SB PARTNERS

Notes to Consolidated Financial Statements (Unaudited)

(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

SB Partners, a New York limited partnership, and its subsidiaries (collectively, the "Partnership"), have been engaged since April 1971 in acquiring, operating, and holding for investment a varying portfolio of real estate interests.  SB Partners Real Estate Corporation (the "General Partner") serves as the general partner of the Partnership.

The consolidated financial statements included herein are unaudited; however, the information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to a fair presentation of the financial position, results of operations and cash flows for the interim periods.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading.  It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Partnership’s latest annual report on Form 10-K.

The results of operations for the three and six month periods ended June 30, 2008 are not necessarily indicative of the results to be expected for a full year.

For a discussion of the significant accounting and financial reporting policies of the Partnership, refer to the Annual Report on Form 10–K for the year ended December 31, 2007.

(2) INVESTMENTS IN REAL ESTATE

 As of June 30, 2008, the Partnership owns an industrial flex property in Maple Grove, Minnesota and warehouse distribution centers in Lino Lakes, Minnesota and Naperville, Illinois.  The following is the cost basis and accumulated depreciation of the real estate investments owned by the Partnership at June 30, 2008 and December 31, 2007:

	No. of		Year of			Real Estate at Cost
Type	Prop.		Acquisition		Description	6/30/2008			12/31/2007
Industrial flex property		1	2002		60,345 sf	$	5,172,506		$	5,172,506
Warehouse distribution property		2		2005-06	596,605 sf		36,366,710			36,366,710
Total cost							41,539,216			41,539,216
Less: Accumulated depreciation							(2,487,215	)		(2,000,624	)
Total investments in real estate						$	39,052,001		$	39,538,592

6

(3) INVESTMENT IN SENTINEL OMAHA, LLC

In 2007, the Registrant made an investment in the amount of $37,200,000 in Sentinel Omaha, LLC (“Omaha”), the manager of which is an affiliate of the Registrant’s General Partner.  The investment represents a 30% ownership interest in Omaha.

The following are the condensed financial statements (000’s omitted) of Omaha as of and for the periods ended June 30, 2008 and December 31, 2007.

	(Unaudited)			(Audited)
Balance Sheet	June 30, 2008			December 31, 2007
Investment in real estate, net	$	497,400		$	545,304
Other assets		21,719			24,609
Debt		(390,229	)		(435,621	)
Other liabilities		(7,742	)		(11,093	)
Member's Equity	$	121,148		$	123,199
	(Unaudited)
Statement of Operations	June 30, 2008
Rent and other income	$	27,579
Real estate operating expenses		(15,188	)
Other income and expenses		(10,707	)
Unrealized losses		(984	)
Loss on sale of real estate properties		(2,751	)
Net loss	$	(2,051	)

(4)  MORTGAGE NOTES AND UNSECURED LOAN PAYABLE

Mortgage notes and unsecured loan payable consist of the following non-recourse first liens:

					Annual					Net Carrying Amount
	Interest				Installment			Amount Due		June 30,		December 31,
Property	Rate			Maturity Date	Payments			at Maturity		2008		2007
Lino Lakes		5.800	%	October, 2015	$	580,000	(a)	$	10,000,000	$	10,000,000	$	10,000,000
Ambassador Drive		5.880	%	October, 2010		554,178	(b)		6,508,785		6,869,317		6,943,176
Bank Loan:
Unsecured (c )		4.410	%	October, 2008		n/a			22,000,000		22,000,000		22,000,000
										$	38,869,317	$	38,943,176

(a)      Annual installment payments include interest only.

(b)      Annual installment payments include principal and interest.

(c)      On September 17, 2007, the Partnership entered into a bank loan (the “Loan”) with a bank in the amount of

$22,000,000, that matures on October 1, 2008 and provides for interest only monthly payments based upon LIBOR plus1.95%. The outstanding amount of the loan at June 30, 2008 was $22,000,000.  The loan provides for a pledge of the proceeds of sale or refinancing of the industrial flex property located in Maple Grove, Minnesota.

(5) DISTRIBUTIONS

On March 1, 2008, the Partnership made a cash distribution of $110 per unit to Unitholders of record as of December 31, 2007, which totaled $852,885 based on 7,754 units outstanding.

7

ITEM 2.                                                                                               MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007

General

The consolidated financial statements for the three and six months ended June 30, 2008, reflect the operations of one industrial flex property and two warehouse distribution centers as well as a 30% interest investment in Omaha.  The consolidated financial statements for the three and six months ended June 30, 2007 reflect the same composition as 2008, with the inclusion of Le Coeur du Monde Apartments which was sold on April 24, 2007 and the exclusion of the investment in Omaha which was made in the second and third quarters of 2007.

Results of Operations

Total revenues from continuing operations for the three months ended June 30, 2008 decreased approximately $304,000 to approximately $929,000 from approximately $1,233,000.  Income from continuing operations increased approximately $469,000 to approximately $625,000 for the three months ended June 30, 2008, as compared to an approximate income of $156,000 for the three months ended June 30, 2007.  Loss from discontinued operations for the three months ended June 30, 2008, increased by approximately $105,000 to zero from an approximate loss of $105,000 for the same period in 2007 due to the sale of Le Coeur du Monde Apartments.  Total expenses from continuing operations for the three months ended June 30, 2008, increased approximately $199,000 to approximately $1,276,000 from $1,077,000 for the three months ended June 30, 2007.

Total revenues from continuing operations for the six months ended June 30, 2008 decreased approximately $455,000 to approximately 1,850,000 from approximately $2,305,000.  Income from continuing operations decreased approximately $1,594,000 to a loss of approximately $1,365,000 for the six months ended June 30, 2008, as compared to an approximate income of $229,000 for the six months ended June 30, 2007.  Loss from discontinued operations for the six months ended June 30, 2008, increased by approximately $53,000 to zero from an approximate loss of $53,000 for the same period in 2007 due to the sale of Le Coeur du Monde Apartments.  Total expenses from continuing operations for the six months ended June 30, 2008, increased approximately $524,000 to approximately $2,600,000 from $2,076,000 for the six months ended June 30, 2007.

    The changes in revenues, expenses and net income and loss are primarily the result of the changes from 2007 to 2008 in the composition of the portfolio.  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, 2007. There were no significant changes to such policies in 2008. There are no accounting pronouncements or interpretations that have been issued, but not yet adopted, that the Partnership believes will have a material impact on its consolidated financial statements.

8

Liquidity and Capital Resources

As of June 30, 2008, the Registrant had cash and cash equivalents of approximately $481,000. These balances are approximately $1,198,000 lower than cash and cash equivalents held on December 31, 2007.Distributions of approximately $853,000 were paid to unit holders of record as of December 31, 2007.  Operating activities further reduced cash and cash equivalents by approximately $345,000 during the six months ended June 30, 2008 due to higher interest costs.  Other uses of cash during the period included principal payments of approximately $74,000.

Total outstanding debt at June 30, 2008, consisted of approximately $16,869,000 of long-term non-recourse first mortgage notes, secured by real estate owned by the Registrant and $22,000,000 under an unsecured credit facility (see Note 4 to the Consolidated Financial Statements). The Registrant has no other debt except normal trade accounts payable and accrued interest on mortgage notes payable.

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.  However, the real estate market is suffering through one of its worst debt crises.  Interest rates have increased and some borrowers are finding it difficult to secure debt at favorable terms as lenders have imposed stricter terms on borrowers. Registrant’s unsecured credit facility matures October 1, 2008.   Registrant cannot be assured that the holder of the unsecured debt will extend the debt long term.  Should Registrant be unable to extend this debt on its current terms it may have to consider alternative financing or a sale of one of the real estate assets to reduce the unsecured debt.

In March 2008, the Registrant made a distribution of $110 per unit to Unit holders of record as of December 31, 2007.  However, there is no requirement to make such distributions, nor can there be any assurance that future operations will generate cash available for distributions.

The Registrant's properties and investments are expected to generate sufficient cash flow to cover operating, financing, capital improvement costs, and other working capital requirements of the Registrant for the foreseeable future.

Le Coeur du Monde Apartments (St. Louis, Missouri)

On April 24, 2007, the Registrant sold Le Coeur du Monde Apartments for $16,000,000 in an all cash transaction. The net proceeds from the sale were used, in part, to retire the mortgage note of approximately $9,427,000 that had been secured by the property.  The sale of Le Coeur du Monde Apartments resulted in a net gain for financial reporting purposes of approximately $2,518,000.  (Please refer to the 8-K filed May 8, 2007, in connection with this transaction.)  The gain for tax purposes was computed using the tax basis of the asset sold, and was different from the gain reported on the consolidated financial statements.

There was no material revenue or expenses for the three months ended June 30, 2008, as a result of the sale on April 24, 2007.  Total revenues for the three months ended June 30, 2007 were approximately $108,000.  Net loss for the three months, which includes deductions for interest expense, was approximately $105,000.

There was no material revenue or expenses for the six months ended June 30, 2008, as a result of the sale on April 24, 2007.  Total revenues for the six months ended June 30, 2007 were approximately $584,000.  Net loss for the six months, which includes deductions for interest expense, was approximately $53,000.

Eagle Lake Business Center IV (Maple Grove, Minnesota)

Total revenues for the three months ended June 30, 2008, decreased approximately $19,000 to approximately $202,000 from approximately $221,000 for the three months ended June 30, 2007.  Net income, which includes deductions for depreciation, for the three months ended June 30, 2008 decreased approximately $5,000 to approximately $80,000 from $85,000 for the three months ended June 30, 2007.

Total revenues for the six months ended June 30, 2008, decreased approximately $25,000 to approximately $367,000 from approximately $392,000 for the six months ended June 30, 2007.  Net income, which includes deductions for depreciation, for the six months ended June 30, 2008 decreased approximately $21,000 to approximately $126,000 from $147,000 for the six months ended June 30, 2007.  The decrease in revenues and net income for the six month period was primarily due to a one month abatement credited to the tenant in January.  The abatement was in accordance with the terms of the tenant’s lease.

435 Park Court (Lino Lakes, Minnesota)

Total revenues for the three months ended June 30, 2008, decreased approximately $76,000 to $383,000 from $459,000 for the three months ended June 30, 2007 due to a decrease in expense recovery from the tenant.  Net income, which includes deductions for interest expense and depreciation, for the three months ended  June 30, 2008 decreased $67,000 to $25,000 as compared to $92,000 for the three months ended June 30, 2007 due to a decrease in expense recovery income and an increase in administrative expenses partially offset by a decrease in real estate operating expenses.

Total revenues for the six months ended June 30, 2008, decreased approximately $67,000 to $787,000 from $854,000 for the six months ended June 30, 2008 due to a decrease in expense recovery from the tenant.  Net income, which includes deductions for interest expense and depreciation, for the six months ended June 30, 2008 decreased $67,000 to $58,000 as compared to $125,000 for the six months ended June 30, 2007 due to a decrease in expense recovery and an increase in administrative expenses.

9

175 Ambassador Drive (Naperville, Illinois)

        Total revenues for the three months ended June 30, 2008, decreased approximately $26,000 to approximately $338,000 from approximately $364,000 for the three months ended June 30, 2007 due to a decrease in expense recovery partially offset by an increase in tenant base rent charged.  Net income, which includes deductions for depreciation and interest expense, for the three months ended June 30, 2008 decreased approximately $9,000 to approximately $62,000 from $71,000 for the three months ended June 30, 2007 due primarily to a decrease in expense recovery partially offset by an increase in base rent and a decrease in insurance and repairs costs.

 Total revenues for the six months ended June 30, 2008, slightly decreased approximately $3,000 to approximately $680,000 from approximately $683,000 for the six months ended June 30, 2007.  Net income, which includes deductions for depreciation and interest expense, for the six months ended June 30, 2008 increased approximately $12,000 to approximately $141,000 from $129,000 for the six months ended June 30, 2007 due primarily to a decrease in insurance and repairs costs and an increase in base rent partially offset by a decrease in expense recovery.

Investment in Sentinel Omaha, LLC

During the second and third quarters of 2007, the Registrant acquired a 30% interest in Omaha for $37,200,000.  On September 18, 2007, Omaha acquired all the outstanding common shares of America First Apartment Investors, Inc. (“AFAI”) in a transaction valued at $532 million, including the assumption of outstanding debt and excluding transaction costs.  At the time of the acquisition, AFAI’s portfolio was comprised of 31 apartment communities and one office complex.  Total revenues for the three months ended June 30, 2008 were approximately $13,579,000.  Income before deductions for depreciation, unrealized losses and realized losses was $979,000.  Major expenses included approximately $4,849,000 for interest expense, $1,452,000 for repairs and maintenance, $1,779,000 for payroll and $1,500,000 for real estate taxes.  In addition, Omaha reported unrealized gains of approximately $2,257,000.  For the three months ended June 30, 2008, the Registrant’s equity interest in the income of Omaha was approximately $971,000. During the three months ended June 30, 2007, there were no ongoing operations of Omaha.

 Total revenues for the six months ended June 30, 2008 were approximately $27,579,000.  Income before deductions for depreciation, unrealized losses and realized losses was 1,684,000.  Major expenses included approximately $10,415,000 for interest expense, $2,744,000 for repairs and maintenance, $3,822,000 for payroll and $3,094,000 for real estate taxes.  Omaha reported realized losses on sales of three apartment properties of approximately $2,751,000.  The properties were located in Southfield, Michigan, Ann Arbor, Michigan and Newport News, Virginia.  In addition, Omaha reported unrealized losses of approximately $984,000.  For the six months ended June 30, 2008, the Registrant’s equity interest in the loss of Omaha was approximately $615,000. During the six months ended June 30, 2007, there were no ongoing operations of Omaha.

10

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

AS OF AND FOR THE SIX  MONTHS ENDED JUNE 30, 2008

On September 17, 2007, the Registrant entered into an unsecured credit facility agreement with a bank under which interest incurred is determined based on current market rates that fluctuate with LIBOR.  As such, the Registrant has market risk to the extent interest rates fluctuate during the term of the credit facility and funds are advanced by the bank under the agreement. Based on the weighted average outstanding balance under the credit facility for the three and six months ended June 30, 2008, a 1% change in LIBOR would impact the Registrant’s three and six month net loss and cash flows by approximately $55,000 and $110,000, respectively.

ITEM 4.

CONTROLS AND PROCEDURES

(a) The Chief Executive Officer and the Principal Accounting & Financial Officer of the general partner of SB Partners have evaluated the disclosure controls and procedures relating to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2008 as filed with the Securities and Exchange Commission and have judged such controls and procedures to be effective.

(b) There have been no changes in the Registrant’s internal controls during the quarter ended June 30, 2008 that could significantly affect those controls subsequent to the date of evaluation.

PART II – OTHER INFORMATION

ITEM 6.

EXHIBITS AND REPORTS ON FORM 8-K

Exhibit 31 – Incorporated herein.

Exhibit 32 – Incorporated herein.

11

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.

		SB PARTNERS
		(Registrant)
	By:	SB PARTNERS REAL ESTATE CORPORATION
		General Partner
Dated: August 13, 2008	By:	/s/ David Weiner
		David Weiner
		Chief Executive Officer
		Principal Financial & Accounting Officer
Dated: August 13, 2008	By:	/s/ John H. Zoeller
		John H. Zoeller
		Chief Financial Officer

12

Exhibit 31

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT 0F 2002

I, David Weiner, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of SB Partners;

(2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

(3) Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

(4) The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) disclosed in this quarterly report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

(5) The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation over internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent function):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which  are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: August 13, 2008	By:	/s/ David Weiner
		David Weiner
		Chief Executive Officer

13

John H. Zoeller, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of SB Partners;

(2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

(3) Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report.

(4) The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) disclosed in this quarterly report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting;

(5) The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation over internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent function):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: August 13, 2008	By:	Principal Financing & Accounting Officer
		/s/ John H. Zoeller
		John H. Zoeller
		Chief Financial Officer

14

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of SB Partners (the “Partnership”) on Form 10-Q for the period ended June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof we hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

Dated:  August 13, 2008	By:	/s/ David Weiner
		David Weiner
		Chief Executive Officer

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of SB Partners (the “Partnership”) on Form 10-Q for the period ended June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof we hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

Dated:  August 13, 2008	By:	Principal Financing & Accounting Officer
		/s/ John H. Zoeller
		John H. Zoeller
		Chief Financial Officer