SB Partners 10-Q/A 2008 Q3 Quarterly report (amended)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

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

OF THE SECURITIES EXCHANGE ACT OF 1934

AMENDMENT 1

(Mark One)

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 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.)
1 New Haven Avenue Suite 207, Box 11, Milford, CT.	06460
(Address of principal executive offices)	(Zip Code)

(203) 283-9593

(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

EXPLANATORY NOTE

This form 10-Q/A is being filed by SB Partners (the “Registrant”) to amend its quarterly report on Form 10-Q for the period ended September 30, 2008 (the “Amended September 30, 2008 Form 10-Q”), filed with the Securities and Exchange Commission on November 13, 2008 (the “September 30, 2008 Form 10-Q”).  This Amended September 30, 2008 Form 10-Q is being filed to revise the following:

Registrant has a thirty percent interest in Sentinel Omaha, LLC, an affiliate of the Registrant’s general partner (“Omaha”). In March 2009, Registrant was informed by the manager of Omaha that Omaha’s 2008 financial statements included a cumulative effect of a change in accounting principle that, as a result of Registrant’s early adoption of Financial Accounting Standards No. 159 in 2007, required Registrant to amend our 2007 financial statements.   The change affected the estimated fair value of the mortgage notes, bonds and credit facilities payable reported on the consolidated statement of assets, liabilities and members’ equity for Omaha and the net unrealized depreciation on fair value of mortgage notes and bonds reported on the consolidated statement of operations for Omaha.  The net affect of this change to the financial statements of Registrant for 2007 is as follows:

1)   On the Consolidated Balance Sheets a decrease in the Investment in Sentinel Omaha, LLC and of Total Partners Capital of $732,399.

2)   On the Consolidated Statement of Operations an increase in Equity in Net Loss of Investments of $732,399.

The net affect of this change to the financial statements of Registrant for the period ended September 30, 2008 is as follows:

1)   On the Consolidated Balance Sheets a decrease in the Investment in Sentinel Omaha, LLC and of Total Partners Capital of $732,399.

   2) The described change to the Omaha financial statements had no affect on Registrant’s Consolidated Statements of Operations for 2008 as the affect was reported on Registrant’s Consolidated Statements of Operations for 2007.  Refer to the Annual Report on Form 10–K, as amended for the year ended December 31, 2007.

SB PARTNERS

INDEX

Part I	Financial Information
	Consolidated Balance Sheets as of  September 30, 2008 (unaudited) and December 31, 2007 (audited) (Restated)	1
	Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2008 and 2007	2
	Consolidated Statements of Changes in Partners' Capital (unaudited) for the nine months ended September 30, 2008 (Restated)	3
	Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2008 and 2007	4
	Notes to Consolidated Financial Statements (unaudited) (Restated)	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

(As Restated)
			September 30,			December 31,
			2008			2007
			(Unaudited)			(Audited)
Assets:
Investments -
	Real estate, at cost
	Land			$4,065,000			$4,065,000
	Buildings, furnishings and improvements			37,488,318			37,474,216
	Less - accumulated depreciation			(2,730,624	)		(2,000,624	)
				38,822,694			39,538,592
	Investment in Sentinel Omaha, LLC			36,201,745			36,227,213
				75,024,439			75,765,805
Other Assets -
	Cash and cash equivalents			464,988			1,679,152
	Other			150,253			169,871
		Total assets		$75,639,680			$77,614,828
Liabilities:
	Mortgage notes and unsecured loan payable			$38,844,212			$38,943,176
	Accounts payable and accrued expenses			361,765			238,821
	Tenant security deposits			99,017			99,017
		Total liabilities		39,304,994			39,281,014
Partners' Capital:
	Units of partnership interest without par value;
	Limited partner - 7,753 units			36,348,435			38,347,305
	General partner - 1 unit			(13,749	)		(13,491	)
		Total partners' capital		36,334,686			38,333,814
		Total liabilities and partners' capital		$75,639,680			$77,614,828

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 Nine Months
		Ended September 30,						Ended September 30,
		2008			2007			2008			2007
Revenues:
Base rental income			$734,658			$747,605			$2,167,209			$2,194,447
Other rental income			139,081			247,198			544,333			736,250
Interest			2,615			103,386			14,856			472,070
	Total revenues		876,354			1,098,189			2,726,398			3,402,767
Expenses:
Real estate operating expenses			110,320			157,200			412,421			564,738
Interest expense			494,489			319,994			1,557,590			817,432
Depreciation and amortization			259,262			246,411			777,557			758,594
Real estate taxes			75,400			159,780			376,100			469,473
Management fees			275,849			221,853			671,844			550,738
Other			32,033			7,628			51,661			27,603
Total expenses			1,247,353			1,112,866			3,847,173			3,188,578
Income (loss) from  operations			(370,999	)		(14,677	)		(1,120,775	)		214,189
Equity in net income (loss) of investment			589,813			-			(25,468	)		-
Income (loss) from continuing operations			218,814			(14,677	)		(1,146,243	)		214,189
Income (loss) from discontinued operations			-			12,018			-			(40,928	)
Net gain on sale of investment in real estate property			-			-			-			2,518,418
Net income (loss)			218,814			(2,659	)		(1,146,243	)		2,691,679
Income (loss) allocated to general partner			28			-			(148	)		347
Income (loss) allocated to limited partners			$218,786			$(2,659	)		$(1,146,095	)		$2,691,332
Earnings per unit of limited partnership interest
(basic and diluted)
Continuing operations			$28.22			$(1.89	)		$(147.85	)		$27.63
Discontinued operations			$-			$1.55			$-			$319.55
Net  income (loss)			$28.22			$(0.34	)		$(147.85	)		$347.18
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 nine months ended September 30, 2008 (Unaudited)

(As Restated)

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	)		$29,247,143			$38,347,305
Cash distributions		-		-		(852,775	)		-			(852,775	)
Net Loss		-		-		-			(1,146,095	)		(1,146,095	)
Balance, September 30, 2008		7,753		$119,968,973		$(111,721,586	)		$28,101,048			$36,348,435
General Partner:
	Units of Partnership Interest
					Cumulative			Accumulated
	Number		Amount		Cash Distributions			Earnings			Total
Balance, January 1, 2008		1		$10,000		$(26,254	)		$2,763			$(13,491	)
Cash distributions		-		-		(110	)		-			(110	)
Net Loss		-		-		-			(148	)		(148	)
Balance, September 30, 2008		1		$10,000		$(26,364	)		$2,615			$(13,749	)

See notes to consolidated financial statements.

4

SB PARTNERS

(A New York Limited Partnership)

CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)

	For the Nine Months Ended
	September 30,
	2008	2007
Cash Flows From Operating Activities:
Net income (loss)	$    (1,146,243)	$      2,691,679
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Net gain on sale of investment in real estate property	-	(2,518,418)
Depreciation and amortization	777,557	792,652
Equity in net loss of investment	25,468	-
Net decrease (increase) in operating assets	(27,939)	149,119
Net increase in operating liabilities	122,944	226,535
Net cash provided by (used in) operating activites	(248,213)	1,341,567
Cash Flows From Investing Activities:
Net proceeds from sale of investments in real estate property	-	15,085,446
Investment in Sentinel Omaha, LLC	-	(37,200,000)
Decrease in cash held in escrow	-	24,112
Purchase of marketable securities	-	(19,999,226)
Proceeds from sale of marketable securities	-	32,998,424
Capital additions to real estate owned	(14,102)	(224,542)
Net cash used in investing activites	(14,102)	(9,315,786)
Cash Flows From Financing Activities:
Principal payments on mortgage notes payable	(98,964)	(144,056)
Retirement of mortgage note payable	-	(9,427,012)
Proceeds from bank loan	-	22,000,000
Payment of deferred financing costs	-	(55,000)
Distributions paid to partners	(852,885)	(2,713,725)
Net cash provided by (used in) financing activities	(951,849)	9,660,207
Net increase (decrease) in cash and cash equivalents	(1,214,164)	1,685,988
Cash and cash equivalents at beginning of period	1,679,152	999,342
Cash and cash equivalents at end of period	$        464,988	$     2,685,330
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$      1,475,719	$      1,025,368

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, as amended.

The results of operations for the three and nine month periods ended September 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, as amended, for the year ended December 31, 2007.

 (2) ADJUSTMENTS TO PRIOR YEARS

In March 2009, Registrant was informed by the manager of Omaha that Omaha’s 2008 financial statements included a cumulative effect of a change in accounting principle that, as a result of Registrant’s early adoption of Financial Accounting Standards No. 159 in 2007, required Registrant to amend our 2007 financial statements.   The change affected the estimated fair value of the mortgage notes, bonds and credit facilities payable reported on the consolidated statement of assets, liabilities and members’ equity for Omaha and the net unrealized depreciation on fair value of mortgage notes and bonds reported on the consolidated statement of operations for Omaha.  The net affect of this change to the financial statements of Registrant for 2007 is as follows:

1)   On the Consolidated Balance Sheets a decrease in the Investment in Sentinel Omaha, LLC and of Total Partners Capital of $732,399.

2)   On the Consolidated Statement of Operations an increase in Equity in Net Loss of Investments of $732,399.

The net affect of this change to the financial statements of Registrant for the period ended September 30, 2008 is as follows:

1) On the Consolidated Balance Sheets a decrease in the Investment in Sentinel Omaha, LLC and of Total Partners Capital of $732,399.

2) The described change to the Omaha financial statements had no affect on Registrant’s Consolidated Statements of Operations for 2008 as the affect was reported on Registrant’s Consolidated Statements of Operations for 2007.

(3) INVESTMENTS IN REAL ESTATE

As of September 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 September 30, 2008 and December 31, 2007:

	No. of		Year of			Real Estate at Cost
Type	Prop.		Acquisition		Description	9/30/2008			12/31/2007
Industrial flex property		1	2002		60,345 sf		$5,186,608			$5,172,506
Warehouse distribution property		2		2005-06	596,605 sf		36,366,710			36,366,710
Total cost							41,553,318			41,539,216
Less: Accumulated depreciation							(2,730,624	)		(2,000,624	)
Total investments in real estate							$38,822,694			$39,538,592

6

(4) 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 September 30, 2008 and December 31, 2007.

	(Unaudited)			(Audited)
Balance Sheet	September 30, 2008			December 31, 2007
Investment in real estate, net		$482,900			$545,304
Other assets		19,720			24,609
Debt		(371,389	)		(435,621	)
Other liabilities		(8,117	)		(11,093	)
Member's equity		$123,114			$123,199
	(Unaudited)
Statement of Operations	September 30, 2008
Rent and other income		$41,178
Real estate operating expenses		(23,501	)
Other income and expenses		(15,806	)
Unrealized losses		(304	)
Loss on sale of real estate properties		(1,652	)
Net loss		$(85	)

In March 2009, Registrant was informed by the manager of Omaha that Omaha’s 2008 financial statements included a cumulative effect of a change in accounting principle that, as a result of Registrant’s early adoption of Financial Accounting Standards No. 159 in 2007, required Registrant to amend our 2007 financial statements.  See Footnote 2 of the Financial Statements.

(5)  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		September 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		6,844,212		6,943,176
Bank Loan:
Unsecured (c )		4.410	%	October, 2008		n/a			22,000,000		22,000,000		22,000,000
											$38,844,212		$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 September 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. See Note 7.

(6) 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) SUBSEQUENT EVENT

On October 1, 2008, the holder of the unsecured bank loan has verbally extended the maturity of the loan on a month to month basis while continuing negotiations for a longer formal extension.  The Registrant is reviewing options to possible pay down a portion of the loan either by refinancing one or more of the real estate assets or a sale of one of the real estate assets.

7

ITEM 2.                                                                                                          MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

General

The consolidated financial statements for the three and nine months ended September 30, 2008, reflect the operations of one industrial flex property and two warehouse distribution centers as well as a 30% interest in Omaha.  The consolidated financial statements for the three and nine months ended September 30, 2007 reflects a composition which also includes the same one industrial flex property and two warehouse distribution centers.  The composition for 2007 also includes Le Coeur du Monde Apartments which was sold on April 24, 2007 and the investment in Omaha but which was purchased in the second and third quarters of 2007 and had minimal operations during the first nine months of 2007.

Results of Operations

Total revenues from continuing operations for the three months ended September 30, 2008 decreased approximately $222,000 to approximately $876,000 from approximately $1,098,000.  Income from continuing operations increased approximately $234,000 to approximately $219,000 for the three months ended September 30, 2008, as compared to an approximate loss of $15,000 for the three months ended September 30, 2007.  Income from discontinued operations for the three months ended September 30, 2008, decreased by approximately $12,000 to zero from an approximate income of $12,000 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 September 30, 2008, increased approximately $134,000 to approximately $1,247,000 from $1,113,000 for the three months ended September 30, 2007.

Total revenues from continuing operations for the nine months ended September 30, 2008 decreased approximately $677,000 to approximately $2,726,000 from approximately $3,403,000.  Income from continuing operations decreased approximately $1,360,000 to a loss of approximately $1,146,000 for the nine months ended September 30, 2008, as compared to an approximate income of $214,000 for the nine months ended September 30, 2007.  Income from discontinued operations for the nine months ended September 30, 2008, decreased by approximately $2,477,000 to zero from an approximate income of $2,477,000 for the same period in 2007 due to the sale of Le Coeur du Monde Apartments.  Total expenses from continuing operations for the nine months ended September 30, 2008, increased approximately $658,000 to approximately $3,847,000 from $3,189,000 for the nine months ended September 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, as amended.  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, as amended, 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.

Liquidity and Capital Resources

As of September 30, 2008, the Registrant had cash and cash equivalents of approximately $465,000. These balances are approximately $1,214,000 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 $262,000 during the nine months ended September 30, 2008 due to higher interest costs.  Other uses of cash during the period included principal payments of approximately $99,000.

Total outstanding debt at September 30, 2008, consisted of approximately $16,844,000 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 5 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

8.

have increased and some borrowers are finding it difficult to secure debt at acceptable terms as lenders have imposed stricter terms on borrowers. Registrant’s unsecured credit facility matures October 1, 2008.   The holder of the unsecured debt has extended the maturity on a temporary basis and has entered into discussions with Registrant as to terms for extending the debt on a longer term basis.  There can be no assurance that the holder will offer such extension or that Registrant will be able to comply with the terms offered and conditions imposed by the holder in exchange for such extension.

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 September 30, 2008 and 2007, as a result of the sale on April 24, 2007.  Total revenues for the three months ended September 30, 2007 were approximately $0.  Net income for the three months, which consisted primarily of reconciling estimated expenses, was approximately $3,000.

There was no material revenue or expenses for the nine months ended September 30, 2008, as a result of the sale on April 24, 2007.  Total revenues for the nine months ended September 30, 2007 were approximately $584,000.  Net loss for the nine months, which includes deductions for interest expense, was approximately $52,000.

Eagle Lake Business Center IV (Maple Grove, Minnesota)

Total revenues for the three months ended September 30, 2008, decreased approximately $19,000 to approximately $202,000 from approximately $221,000 for the three months ended September 30, 2007.  Total revenues decreased as a result of lower rental income charged to the tenant in accordance with the terms of the tenant’s lease.  Net income, which includes deductions for depreciation, for the three months ended September 30, 2008 decreased approximately $30,000 to approximately $88,000 from $118,000 for the three months ended September 30, 2007.  The decrease in net income was due to lower rental income charged to the tenant coupled with higher real estate taxes and repairs costs.

Total revenues for the nine months ended September 30, 2008, decreased approximately $45,000 to approximately $569,000 from approximately $614,000 for the nine months ended September 30, 2007.  Total revenues decreased as a result of a one month rent abatement credited to the tenant in January and lower rental income charged to the tenant in accordance with the terms of the tenant’s lease.  Net income, which includes deductions for depreciation, for the nine months ended September 30, 2008 decreased approximately $51,000 to approximately $214,000 from $265,000 for the nine months ended September 30, 2007.  The decrease in net income for the nine month period was primarily due to a one month abatement credited to the tenant in January and lower rental income charged to the tenant in accordance with the terms of the tenant’s lease.  The decrease in net income was also due to higher real estate taxes and repairs cost.

435 Park Court (Lino Lakes, Minnesota)

Total revenues for the three months ended September 30, 2008, decreased approximately $86,000 to $320,000 from $406,000 for the three months ended September 30, 2007 due to a decrease in expense recovery from the tenant.  The tenant is charged semi-annually for real estate taxes.  The 2nd half charge for 2008 which was billed in September was reduced for a tax refund of approximately $22,000 due to a lower tax assessment received during the three months ended September 30, 2008.  Net income, which includes deductions for interest expense and depreciation, for the three months ended  September 30, 2008 decreased $17,000 to $28,000 as compared to $45,000 for the three months ended September 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.  Expense recovery income and real estate tax expense were lower due to a refund of taxes received during the three months ended September 30, 2008.

Total revenues for the nine months ended September 30, 2008, decreased approximately $152,000 to $1,107,000 from $1,260,000 for the nine months ended September 30, 2008 due to a decrease in expense recovery from the tenant.  The tenant is charged semi-annually for real estate taxes.  The 2nd half charge for 2008 which was billed in September was reduced for a tax refund of approximately $22,000 due to a lower tax assessment received during the three months ended September 30, 2008.  Net income, which includes deductions for interest expense and depreciation, for the nine months ended September 30, 2008 decreased $84,000 to $85,000 as compared to $169,000 for the nine months ended September 30, 2007 due to a decrease in expense recovery and an increase in administrative expenses partially offset by

9.

a decrease in real estate operating expenses. Expense recovery income and real estate tax expense were lower due to a refund of taxes received during the three months ended September 30, 2008.

175 Ambassador Drive (Naperville, Illinois)

        Total revenues for the three months ended September 30, 2008, increased approximately $7,000 to approximately $342,000 from approximately $335,000 for the three months ended September 30, 2007 due to an increase in tenant base rent charged.  Net income, which includes deductions for depreciation and interest expense, for the three months ended September 30, 2008 increased approximately $16,000 to approximately $86,000 from $70,000 for the three months ended September 30, 2007 due primarily to an increase in base rent and a decrease in repairs costs.

        Total revenues for the nine months ended September 30, 2008, slightly increased approximately $5,000 to approximately $1,023,000

from approximately $1,018,000 for the nine months ended September 30, 2007.  Revenues increased due to higher rental income charged partially offset by lower expense recovery charged.  Net income, which includes deductions for depreciation and interest expense, for the nine months ended September 30, 2008 increased approximately $40,000 to approximately $240,000 from $200,000 for the nine months ended September 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.  In addition, interest cost declined due to the lower mortgage balance as a result of monthly principal payments.

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 September 30, 2008 were approximately $13,599,000.  Income before deductions for depreciation, unrealized losses and realized losses was $187,000.  Major expenses included approximately $4,927,000 for interest expense, $1,784,000 for repairs and maintenance, $2,138,000 for payroll and $1,510,000 for real estate taxes. In addition, Omaha reported realized gains on sales of two apartment properties of approximately $1,099,000. The properties sold were located in Bristol, Tennessee and Tulsa, Oklahoma. In addition, Omaha reported unrealized gains of approximately $679,000.  For the three months ended September 30, 2008, the Registrant’s equity interest in the income of Omaha was approximately $590,000. During the three months ended September 30, 2007, there were minimal operating results for Omaha.

Total revenues for the nine months ended September 30, 2008 were approximately $41,178,000.  Income before deductions for depreciation, unrealized losses and realized losses was $1,871,000.  Major expenses included approximately $15,342,000 for interest expense, $4,577,000 for repairs and maintenance, $5,942,000 for payroll and $4,641,000 for real estate taxes.  Omaha reported realized losses on sales of five apartment properties of approximately $1,652,000.  The properties were located in Southfield, Michigan, Ann Arbor, Michigan, Newport News, Virginia, Bristol, Tennessee and Tulsa, Oklahoma.  In addition, Omaha reported unrealized losses of approximately $984,000.  For the nine months ended September 30, 2008, the Registrant’s equity interest in the loss of Omaha was approximately $25,000. During the nine months ended September 30, 2007, there were minimal ongoing operations of Omaha.

10

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 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. Based on the weighted average outstanding balance under the credit facility for the three and nine months ended September 30, 2008, a 1% change in the interest rate charged would impact the Registrant’s three and nine month net loss and cash flows by approximately $55,000 and $165,000, 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 September 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 September 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: May 6, 2009	By:	/s/ David Weiner
		David Weiner
		Chief Executive Officer
		Principal Financial & Accounting Officer
Dated: May 6, 2009	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: May 6, 2009	By:	/s/ David Weiner
		David Weiner
		Chief Executive Officer

13

I, 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: May 6, 2009	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 September 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:  May 6, 2009	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 September 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:  May 6, 2009	By:	Principal Financing & Accounting Officer
		/s/ John H. Zoeller
		John H. Zoeller
		Chief Financial Officer