SB Partners 10-Q 9 Aug 16 2016 Q2 Quarterly report Financial data

Document And Entity Information

Document And Entity Information	6 Months Ended
	Jun. 30, 2016shares
Document Information [Line Items]
Entity Registrant Name	SB PARTNERS
Entity Central Index Key	87,047
Trading Symbol	sbp
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)	0
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q2
Amendment Flag	false

Consolidated Balance Sheets (Cu

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Assets:
Land	$ 470,000	$ 470,000
Buildings, furnishings and improvements	5,016,185	5,016,185
Less - accumulated depreciation	(1,848,654)	(1,769,982)
	3,637,531	3,716,203
Investment in Sentinel Omaha, LLC, net of reserve for fair value of $17,077,022 and $14,445,826 at June 30, 2016 and December 31, 2015, respectively	17,077,022	14,445,826
	20,714,553	18,162,029
Other Assets -
Cash and cash equivalents	1,205,883	1,206,899
Restricted Cash and Cash Equivalents		200,000
Cash in escrow	500,552	500,244
Other	1,787	13,887
Total assets	22,422,775	20,083,059
Liabilities:
Loan payable, net of unamortized deferred finance costs of $40,037 and $50,956 at June 30, 2016 and December 31, 2015, respectively	5,720,436	5,935,932
Accounts payable	352,097	370,209
Tenant security deposit	97,217	95,818
Accrued expenses	2,239,448	2,019,239
Total liabilities	8,409,198	8,421,198
Partners' Equity (Deficit):
Limited partner - 7,753 units	14,030,206	11,678,793
General partner - 1 unit	(16,629)	(16,932)
Total partners' equity	14,013,577	11,661,861
Total liabilities and partners' equity	$ 22,422,775	$ 20,083,059

Consolidated Balance Sheets (C3

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Investment in Sentinel Omaha, LLC, reserve for fair value	$ 17,077,022	$ 14,445,826
Deferred finance costs	$ 40,037	$ 50,956
Limited partner - units (in shares)	7,753	7,753
General partner - units (in shares)	1	1

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenues:
Base rental income	$ 173,492	$ 160,216	$ 346,984	$ 320,432
Other rental income	88,238	87,936	176,476	175,872
Interest on short-term investments and other	1,051	337	1,633	670
Total revenues	262,781	248,489	525,093	496,974
Expenses:
Real estate operating expenses	62,610	66,179	150,337	156,895
Interest on loan payable		126,540		250,404
Depreciation and amortization	44,796	37,141	89,592	74,282
Real estate taxes	31,666	31,362	63,331	62,724
Management fees	217,136	221,700	433,330	441,761
Other	33,634	36,520	67,984	73,923
Total expenses	389,842	519,442	804,574	1,059,989
Loss from operations	(127,061)	(270,953)	(279,481)	(563,015)
Equity in net increase in net assets of investment	3,289,592	1,130,278	5,262,392	2,283,409
Reserve for value of investment	(1,644,796)	(1,130,278)	(2,631,195)	(2,283,409)
Income (loss) from continuing operations	1,517,735	(270,953)	2,351,716	(563,015)
Income from discontinued operations		142,554		293,895
Net income (loss)	1,517,735	(128,399)	2,351,716	(269,120)
Income (loss) allocated to general partner	196	(17)	303	(35)
Income (loss) allocated to limited partners	$ 1,517,539	$ (128,382)	$ 2,351,413	$ (269,085)
Income (loss) per unit of limited partnership interest (basic and diluted)
Income (loss) from continuing operations (in dollars per share)	$ 195.76	$ (34.95)	$ 303.33	$ (72.62)
Income from discontinued operations (in dollars per share)		18.39		37.91
Net income (loss) (in dollars per share)	$ 195.76	$ (16.56)	$ 303.33	$ (34.71)
Weighted Average Number of Units of Limited Partnership Interest Outstanding (in shares)	7,753	7,753	7,753	7,753

Consolidated Statements of Chan

Consolidated Statements of Changes in Partners' Equity (Deficit) (Unaudited) - 6 months ended Jun. 30, 2016 - USD ($)	Limited Partner [Member]Units of Partnership [Member]	Limited Partner [Member]Cumulative Cash Distributions [Member]	Limited Partner [Member]Retained Earnings [Member]	Limited Partner [Member]	General Partner [Member]Units of Partnership [Member]	General Partner [Member]Cumulative Cash Distributions [Member]	General Partner [Member]Retained Earnings [Member]	General Partner [Member]	Total
Balance (in shares) at Dec. 31, 2015	7,753				1
Balance at Dec. 31, 2015	$ 119,968,973	$ (111,721,586)	$ 3,431,406	$ 11,678,793	$ 10,000	$ (26,364)	$ (568)	$ (16,932)	$ 11,661,861
Net income (loss)			2,351,413	2,351,413			303	303	2,351,716
Balance (in shares) at Jun. 30, 2016	7,753				1
Balance at Jun. 30, 2016	$ 119,968,973	$ (111,721,586)	$ 5,782,819	$ 14,030,206	$ 10,000	$ (26,364)	$ (265)	$ (16,629)	$ 14,013,577

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash Flows From Operating Activities:
Net income (loss)	$ 2,351,716	$ (269,120)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Equity in net (increase) in net assets of investment	(5,262,392)	(2,283,409)
Reserve for fair value of investment	2,631,195	2,283,409
Depreciation and amortization	89,592	75,594
Net decrease in operating assets	12,100	26,499
Net decrease in accounts payable	(18,112)	(10,336)
Net increase in tenant security deposit	1,399	1,398
Net increase in accrued expenses	220,209	379,469
Net cash provided by operating activites	25,707	203,504
Cash Flows From Investing Activities:
Interest earned on capital reserve escrow acount	(308)	(24)
Capital additions to real estate owned		(106,580)
Net cash (used in) investing activites	(308)	(106,604)
Cash Flows From Financing Activities:
Repayment of loan payable	(226,415)	(124,285)
Decrease in restricted cash	200,000
Net cash (used in) financing activities	(26,415)	(124,285)
Net change in cash and cash equivalents	(1,016)	(27,385)
Cash and cash equivalents at beginning of period	1,206,899	933,373
Cash and cash equivalents at end of period	1,205,883	905,988
Supplemental disclosure of cash flow information:
Cash paid during the period for interest		$ 388,171

Note 1 - Organization and Signi

Note 1 - Organization and Significant Accounting Policies	6 Months Ended
	Jun. 30, 2016
Notes to Financial Statements
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]	(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES SB Partners, a New York limited partnership, and its subsidiaries (collectively, the "Partnership" or the “Registrant”), 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, 2016 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, 2015.

Note 2 - Reclassification

Note 2 - Reclassification	6 Months Ended
	Jun. 30, 2016
Notes to Financial Statements
Reclassifications [Text Block]	(2) RECLASSIFICATION In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-3, Simplifying the Presentation of Debt Issuance Costs The consolidated balance sheets for the periods ended June 30, 2016 and December 31, 2015 report the unamortized deferred financing costs as deductions from the loan payable.

Note 3 - Investments in Real Es

Note 3 - Investments in Real Estate	6 Months Ended
	Jun. 30, 2016
Notes to Financial Statements
Real Estate Disclosure [Text Block]	(3) INVESTMENTS IN REAL ESTATE As of June 30, 2016, the Partnership owns an industrial flex property in Maple Grove, Minnesota. The following is the cost basis and accumulated depreciation of the real estate investment owned by the Partnership at June 30, 2016 and December 31, 2015. No. of Year of Real Estate at Cost Type Prop. Acquisition Description 6/30/2016 12/31/2015 Industrial flex property 1 2002 60,345 sf $ 5,486,185 $ 5,486,185 Less: Accumulated depreciation (1,848,654 ) (1,769,982 ) Investment in real estate $ 3,637,531 $ 3,716,203

Note 4 - Real Estate Transactio

Note 4 - Real Estate Transaction	6 Months Ended
	Jun. 30, 2016
Notes to Financial Statements
Real Estate Held for Sale [Text Block]	(4) REAL ESTATE TRANSACTION On September 17, 2015, the Partnership sold Lino Lakes for $16,050,000 in an all cash transaction. The net proceeds from the sale were used, in part, to retire the mortgage note of $10,000,000 that had been secured by the property and to pay down the Partnership’s loan. The results of operations for the three and six months ended June 30, 2015 are reflected as income from discontinued operations in the accompanying consolidated statements of operations.

Note 5 - Investment in Sentinel

Note 5 - Investment in Sentinel Omaha, LLC	6 Months Ended
	Jun. 30, 2016
Notes to Financial Statements
Equity Method Investments and Joint Ventures Disclosure [Text Block]	(5) INVESTMENT IN SENTINEL OMAHA, LLC In 2007, the Partnership made an investment in the amount of $37,200,000 in Sentinel Omaha, LLC (“Omaha”). Omaha is a real estate investment company which as of June 30, 2016 owns 14 multifamily properties in 10 markets. Omaha 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, 2016 and December 31, 2015. (Unaudited) (Audited) Balance Sheet June 30, 2016 December 31, 2015 Investment in real estate, net $ 368,100 $ 355,615 Other assets 10,822 13,552 Debt (261,293 ) (267,674 ) Other liabilities (3,782 ) (5,187 ) Member's equity $ 113,847 $ 96,306 (Unaudited) Statement of Operations June 30, 2016 Rent and other income $ 21,774 Real estate operating expenses (10,278 ) Other expenses (3,348 ) Net unrealized income 9,393 Net increase in net assets $ 17,541

Note 6 - Loan Payable

Note 6 - Loan Payable	6 Months Ended
	Jun. 30, 2016
Notes to Financial Statements
Debt Disclosure [Text Block]	(6) LOAN PAYABLE Loan payable consists of the following non-recourse first lien: Annual Net Carrying Amount Interest Installment Amount Due June 30, December 31, Property Rate Maturity Date Payments at Maturity 2016 2015 Bank Loan (a): Note B 0.000 % Apr-18 - 5,786,888 $ 5,760,473 $ 5,986,888 Less: unamortized finance costs (40,037 ) (50,956 ) Loan payable $ 5,720,436 $ 5,935,932 (a) On September 17, 2007, the Partnership entered into a bank loan (the “Loan”) with a bank (“Holder”) in the amount of $22,000,000, which matured on October 1, 2008. On April 29, 2011, the Partnership and Holder executed the new loan agreement (“Loan Agreement”) on the following terms: 1) In connection with the execution of the Loan Agreement, the Partnership was required to make an immediate payment to Holder of $11,930,430, reducing the balance due under the unsecured credit facility to $10,069,570. The payment was made from proceeds resulting from the sale of 175 Ambassador Drive. Additional proceeds from the sale were used to pay Holder’s legal and appraisal costs and to fund a reserve account for future tenant improvement and leasing costs, as needed. The remaining outstanding obligation in the amount of $10,069,570 was divided into two notes (“Note A” and “Note B;” together, the “Notes”). 2) Note A which had a balance of $3,768,751 as of September 18, 2015 was paid off in full using proceeds from the sale of Lino Lakes. 3) Note B in the amount of $5,760,473 has a maturity date of April 29, 2018. The Partnership has three 1-year options to extend the maturity date if certain conditions are satisfied. Note B previously accrued interest at an annual fixed rate of 5% but only until all interest and principal had been paid in full on Note A. Thereafter Note B does not accrue any interest. Except as discussed below, payments of principal are deferred until Registrant’s investment in Sentinel Omaha LLC (“Omaha”) 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. 4) Note B may be voluntarily prepaid upon notice to the Holder, subject to certain requirements as to the application of payments. The Partnership’s obligations under the Notes may be accelerated upon default. 5) On September 17, 2015, the Partnership sold Lino Lakes (see note 4). $200,000 of net sales proceeds had been held in reserve pending the expiration of the representations and warranties period as stipulated in the sales contract. On March 15, 2016, the representation and warranties period expired. There were no charges made against this reserve, therefore in March 2016, the $200,000 was used to further pay down the principal balance of the Note B in accordance with the terms of the Loan Agreement. Until the Partnership’s obligations under Note B is satisfied in full, the Partnership is required to pay a portion of its net operating income (after payment of certain permitted expenses), and the net proceeds from the sale, transfer or refinancing of its remaining properties and investments, toward Note B while retaining the other portion to increase cash reserves. On May 16, 2016, the partnership paid $26,415 to the Holder to pay down a portion of the outstanding balance of Note B. While the obligation under Note B is outstanding, the Partnership is precluded from making distributions to its partners. 6) The Partnership, its general partner and the Holder also entered into a Management Subordination Agreement accruing a portion of the investment management fee payable by the Partnership to its general partner so long as Note B remains outstanding. As of June 30, 2016 and December 31, 2015, $2,239,448 and $2,019,239, respectively of investment management fees have been accrued and are included in accrued expenses on the balance sheet. As additional security for the Partnership’s payment of its obligations under the Loan Agreement, the Partnership, through its wholly-owned subsidiary Eagle IV Realty, LLC, has executed a Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement (“Eagle IV Security Agreement”) and a Pledge Agreement (“Eagle IV Pledge Agreement”) in favor of Holder. The Eagle IV Security Agreement provides Holder with a security interest on the Partnership’s property located in Maple Grove, Minnesota (“Eagle IV”) of up to $5,000,000. The Eagle IV Pledge Agreement pledges to Holder the Partnership’s membership interest in Eagle IV Realty, LLC, the direct owner of Eagle IV. The Partnership has no other debt obligation secured by Eagle IV. The Loan Agreement also provides for a negative pledge on the Partnership’s remaining property and investment.

Note 3 - Investments in Real 13

Note 3 - Investments in Real Estate (Tables)	6 Months Ended
	Jun. 30, 2016
Notes Tables
Schedule of Real Estate Properties [Table Text Block]	No. of Year of Real Estate at Cost Type Prop. Acquisition Description 6/30/2016 12/31/2015 Industrial flex property 1 2002 60,345 sf $ 5,486,185 $ 5,486,185 Less: Accumulated depreciation (1,848,654 ) (1,769,982 ) Investment in real estate $ 3,637,531 $ 3,716,203

Note 5 - Investment in Sentin14

Note 5 - Investment in Sentinel Omaha, LLC (Tables)	6 Months Ended
	Jun. 30, 2016
Statement of Operations [Member]
Notes Tables
Real Estate Investment Financial Statements, Disclosure [Table Text Block]	(Unaudited) Statement of Operations June 30, 2016 Rent and other income $ 21,774 Real estate operating expenses (10,278 ) Other expenses (3,348 ) Net unrealized income 9,393 Net increase in net assets $ 17,541
Balance Sheet [Member]
Notes Tables
Real Estate Investment Financial Statements, Disclosure [Table Text Block]	(Unaudited) (Audited) Balance Sheet June 30, 2016 December 31, 2015 Investment in real estate, net $ 368,100 $ 355,615 Other assets 10,822 13,552 Debt (261,293 ) (267,674 ) Other liabilities (3,782 ) (5,187 ) Member's equity $ 113,847 $ 96,306

Note 6 - Loan Payable (Tables)

Note 6 - Loan Payable (Tables)	6 Months Ended
	Jun. 30, 2016
Notes Tables
Schedule of Long-term Debt Instruments [Table Text Block]	Annual Net Carrying Amount Interest Installment Amount Due June 30, December 31, Property Rate Maturity Date Payments at Maturity 2016 2015 Bank Loan (a): Note B 0.000 % Apr-18 - 5,786,888 $ 5,760,473 $ 5,986,888 Less: unamortized finance costs (40,037 ) (50,956 ) Loan payable $ 5,720,436 $ 5,935,932

Note 3 - Investments in Real 16

Note 3 - Investments in Real Estate - Summary of Investments in Real Estate (Details)	6 Months Ended
	Jun. 30, 2016USD ($)ft²	Dec. 31, 2015USD ($)
Industrial Flex Property [Member]
Industrial flex property	1
Industrial flex property	2,002
Industrial flex property | ft²	60,345
Industrial flex property	$ 5,486,185	$ 5,486,185
Less: Accumulated depreciation	(1,848,654)	(1,769,982)
Investment in real estate	$ 3,637,531	$ 3,716,203

Note 4 - Real Estate Transact17

Note 4 - Real Estate Transaction (Details Textual)	Sep. 17, 2015USD ($)
Property, Plant and Equipment, Disposals	$ 16,050,000
Repayments of Long-term Debt	$ 10,000,000

Note 5 - Investment in Sentin18

Note 5 - Investment in Sentinel Omaha, LLC (Details Textual) - Sentinel Omaha LLC [Member]	Jun. 30, 2016	Dec. 31, 2007USD ($)
Investment Owned, at Cost		$ 37,200,000
Number of Multifamily Properties	14
Number of Markets	10
Equity Method Investment, Ownership Percentage	30.00%

Note 5 - Investment in Sentin19

Note 5 - Investment in Sentinel Omaha, LLC - Balance Sheet (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Sentinel Omaha LLC [Member]
Other	$ 10,822,000	$ 13,552,000
Debt	(261,293,000)	(267,674,000)
Other liabilities	(3,782,000)	(5,187,000)
Investment in real estate, net	368,100,000	355,615,000
Other	1,787	13,887
Debt	(5,720,436)	(5,935,932)
Member's equity	$ 113,847,000	$ 96,306,000

Note 5 - Investment in Sentin20

Note 5 - Investment in Sentinel Omaha, LLC - Statement of Operations (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Sentinel Omaha LLC [Member]
Rent and other income			$ 21,774,000
Real estate operating expenses			(10,278,000)
Other expenses			(3,348,000)
Net unrealized income			9,393,000
Net income (loss)			17,541,000
Rent and other income	$ 262,781	$ 248,489	525,093	$ 496,974
Real estate operating expenses	(62,610)	(66,179)	(150,337)	(156,895)
Other expenses	(33,634)	(36,520)	(67,984)	(73,923)
Net income (loss)	$ 1,517,735	$ (128,399)	$ 2,351,716	$ (269,120)

Note 6 - Loan Payable (Details

Note 6 - Loan Payable (Details Textual)

May 16, 2016USD ($)

Sep. 17, 2015USD ($)

Apr. 29, 2011USD ($)

Mar. 31, 2016USD ($)

Jun. 30, 2016USD ($)

Jun. 30, 2015USD ($)

Dec. 31, 2015USD ($)

Sep. 18, 2015USD ($)

Sep. 17, 2007USD ($)

Note B [Member] | Notes Payable to Banks [Member]

Original Maturity Date

Apr. 29, 2018

Debt Instrument, Face Amount

[1]

$ 5,786,888

Long-term Debt

$ 5,760,473

[1]

$ 5,986,888

[1]

$ 5,760,473

Number of Extension Options

3

Term of Extension Options

1 year

Debt Instrument, Interest Rate, Stated Percentage

0.00%

[1]

5.00%

Repayments of Long-term Debt

$ 26,415

$ 200,000

Note A [Member] | Notes Payable to Banks [Member]

Long-term Debt

$ 3,768,751

Notes Payable to Banks [Member]

Debt Instrument, Face Amount

$ 22,000,000

Repayments of Unsecured Debt

$ 11,930,430

Long-term Debt

$ 10,069,570

Management Fee Payable

$ 2,239,448

$ 2,019,239

Security Interest on Partnership's Property Maximum

5,000,000

Lino Lakes [Member]

Restricted Cash and Cash Equivalents

$ 200,000

Repayments of Unsecured Debt

226,415

$ 124,285

Long-term Debt

5,720,436

5,935,932

Restricted Cash and Cash Equivalents

$ 200,000

Repayments of Long-term Debt

$ 10,000,000

[1]

On September 17, 2007, the Partnership entered into a bank loan (the “Loan”) with a bank (“Holder”) in the amount of $22,000,000, which matured on October 1, 2008. On April 29, 2011, the Partnership and Holder executed the new loan agreement (“Loan Agreement”) on the following terms:

Note 6 - Loan Payable - Summary

Note 6 - Loan Payable - Summary of Notes and Loans Payable (Details) - USD ($)		Jun. 30, 2016		Dec. 31, 2015		Sep. 18, 2015	Apr. 29, 2011	Sep. 17, 2007
Notes Payable to Banks [Member] | Note B [Member]
Debt Instrument, Interest Rate, Stated Percentage		0.00%	[1]	5.00%
Debt Instrument, Face Amount	[1]	$ 5,786,888
Long-term Debt		5,760,473	[1]	$ 5,986,888	[1]	$ 5,760,473
Less: unamortized finance costs	[1]	(40,037)		(50,956)
Loan payable, net of unamortized deferred finance costs of $40,037 and $50,956 at June 30, 2016 and December 31, 2015, respectively		5,760,473	[1]	5,986,888	[1]	$ 5,760,473
Notes Payable to Banks [Member]
Debt Instrument, Face Amount								$ 22,000,000
Long-term Debt							$ 10,069,570
Loan payable, net of unamortized deferred finance costs of $40,037 and $50,956 at June 30, 2016 and December 31, 2015, respectively							$ 10,069,570
Long-term Debt		5,720,436		5,935,932
Less: unamortized finance costs		(40,037)		(50,956)
Loan payable, net of unamortized deferred finance costs of $40,037 and $50,956 at June 30, 2016 and December 31, 2015, respectively		$ 5,720,436		$ 5,935,932
[1]	On September 17, 2007, the Partnership entered into a bank loan (the “Loan”) with a bank (“Holder”) in the amount of $22,000,000, which matured on October 1, 2008. On April 29, 2011, the Partnership and Holder executed the new loan agreement (“Loan Agreement”) on the following terms: