UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 28, 1996
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SB Partners
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(Exact name of registrant as specified in its charter)
New York 000-08952 13-6294787
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
666 Fifth Avenue, New York, NY 10103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 408-2929
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(Former name or former address, if changed since last report.)
Item 2. Disposition of Assets
As previously reported, the Registrant stopped making regularly
scheduled payments on the mortgage note secured by 1010 Market Street
office building in May, 1996. The lender, Connecticut General Life
Insurance Company, filed a Notice of Default on May 9, and a notice of
Acceleration of Debt on May 22, 1996. On August 1, 1996, the lender
filed a Notice of Foreclosure Sale. Title to the property was taken
by the lender on August 28, 1996 in a foreclosure sale. The
foreclosure will have negative tax consequences for some partners.
Item 7. Financial Statements
The following pro forma financial statements reflect the
disposition of the 1010 Market Street office building by the
Registrant. The balance sheet as of the last filing, June 30, 1996
has been restated to reflect the removal of the assets and liabilities
of the 1010 Market Street office building, and the statements of
operations for both the six months ended June 30, 1996 and the year
ended December 31, 1995 have been restated to reflect the results of
operations of the Registrant as if the disposition had been
consummated at the beginning of the periods presented.
In addition, all items of income and related expenses of the
International Jewelry Center have been removed from the statements of
operations for the periods presented, in accordance with the rules and
regulations regarding the filing of Form 8-K, as the Registrant
disposed of this property during the same fiscal year. Please refer
also to the Form 8-K dated May 22, 1996, filed earlier this year.
2
SB PARTNERS
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(a New York limited partnership)
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PRO FORMA BALANCE SHEET
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JUNE 30, PRO FORMA RESTATED
1996 ADJUSTMENTS BALANCE
AS REPORTED (SEE NOTE 2) SHEET
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Assets:
Investments -
Real Estate, at cost
Land $12,092,365 $ 6,978,674 $ 5,113,691
Buildings, furnishings and improvements 84,912,421 40,522,038 44,390,383
Less - accumulated depreciation and valuation allowance (28,909,650) (11,454,800) (17,454,850)
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68,095,136 36,045,912 32,049,224
Investment in joint venture 10,597,749 0 10,597,749
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78,692,885 36,045,912 42,646,973
Other assets-
Cash and cash equivalents 202,678 59,724 142,954
Accounts receivable, accrued interest and other 3,865,720 939,610 2,926,110
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Total assets $82,761,283 $37,045,246 $45,716,037
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Liabilities:
Mortgage notes payable $66,792,492 $39,563,617 $27,228,875
Accounts payable and accrued expenses 1,958,267 851,237 1,107,030
Tenants security deposits 298,084 35,280 262,804
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Total liabilities 69,048,843 40,450,134 28,598,709
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Partners' Capital:
Units of partnership interest without par value;
Limited partners - 7,753 units 13,729,107 (3,404,449) 17,133,556
General partner - 1 unit (16,667) (439) (16,228)
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13,712,440 (3,404,888) 17,117,328
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Total liabilities & partners' capital $82,761,283 $37,045,246 $45,716,037
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See accompanying notes to pro forma financial statements.
3
SB PARTNERS
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(a New York limited partnership)
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PRO FORMA STATEMENT OF OPERATIONS
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For the Six Months Ended June 30, 1996
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PRO FORMA ADJUSTMENTS
(SEE NOTE 2)
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RESTATED
AS INTERNATIONAL 1010 MARKET STREET INCOME
REPORTED JEWELRY CENTER OFFICE BUILDING STATEMENT
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Revenues:
Rental income $ 9,876,346 $ 2,848,479 $2,741,155 $4,286,712
Interest on short-term investments 34,197 0 627 33,570
Other 264,066 4,373 132,780 126,913
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Total revenues 10,174,609 2,852,852 2,874,562 4,447,195
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Expenses:
Interest on mortgage notes payable 4,978,139 1,793,018 1,994,418 1,190,703
Real estate operating expenses 6,581,538 3,511,462 866,410 2,203,666
Depreciation and amortization 2,215,126 788,104 497,487 929,535
Real estate taxes 670,883 85,476 209,291 376,116
Management fees 846,736 122,000 83,000 641,736
Other 371,310 154,219 19,120 197,971
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Total expenses 15,663,732 6,454,279 3,669,726 5,539,727
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Loss from operations (5,489,123) (3,601,427) (795,164) (1,092,532)
Equity in net income of joint venture 391,281 0 0 391,281
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Net loss before extraordinary items (5,097,842) (3,601,427) (795,164) (701,251)
Loss allocated to general partner (657) (464) (103) (90)
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Loss allocated to limited partners $(5,097,185) $(3,600,963) $ (795,061) $ (701,161)
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Net Income (Loss) Per Unit
of Limited Partnership Interest: $ (657.45) $ (464.46) $ (102.55) $ (90.44)
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Weighted Average Number of Units of Limited
Partnership Interest Outstanding 7,753 7,753 7,753 7,753
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See accompanying notes to pro forma financial statements.
4
SB PARTNERS
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(a New York limited partnership)
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PRO FORMA STATEMENT OF OPERATIONS
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For the Year Ended December 31, 1995
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PRO FORMA ADJUSTMENTS
(SEE NOTE 2)
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RESTATED
AS INTERNATIONAL 1010 MARKET STREET INCOME
REPORTED JEWELRY CENTER OFFICE BUILDING STATEMENT
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Revenues:
Rental income $22,618,843 $ 6,769,633 $5,689,542 $10,159,668
Interest on short-term investments 73,984 9,518 1,542 62,924
Other 631,381 9,038 282,229 340,114
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Total revenues 23,324,208 6,788,189 5,973,313 10,562,706
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Expenses:
Interest on mortgage notes payable 11,462,066 4,261,797 3,275,579 3,924,690
Real estate operating expenses 10,307,816 3,251,448 1,756,963 5,299,405
Depreciation and amortization 5,176,543 1,827,830 1,032,293 2,316,420
Real estate taxes 1,936,253 692,359 407,722 836,172
Management fees 1,929,127 450,000 188,000 1,291,127
Other 544,592 141,458 19,195 383,939
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Total expenses 31,356,397 10,624,892 6,679,752 14,051,753
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Loss from operations (8,032,189) (3,836,703) (706,439) (3,489,047)
Equity in net income of joint venture 725,118 0 0 725,118
Gain on sale of investment in real estate 3,963,791 0 0 3,963,791
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Net income (loss) (3,343,280) (3,836,703) (706,439) 1,199,862
Income (loss) allocated to general partner (431) (495) (91) 155
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Income (loss) allocated to limited partners $(3,342,849) $(3,836,208) $ (706,348) $ 1,199,707
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Net Income (Loss) Per Unit
of Limited Partnership Interest $ (431.17) $ (494.80) $ (91.11) $ 154.74
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Weighted Average Number of Units of Limited
Partnership Interest Outstanding 7,753 7,753 7,753 7,753
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See accompanying notes to pro forma financial statements.
5
SB PARTNERS
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(a New York limited partnership)
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NOTES TO PRO FORMA FINANCIAL STATEMENTS
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(1) Accounting and Financial Reporting
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The financial statements included herein are unaudited; however,
the information reflects all adjustments (consisting solely of normal
recurring adjustments) that are, in the opinion of management,
necessary to a fair presentation of the financial position and results
of operations for the periods presented. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations,
although the Registrant believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that
these financial statements be read in conjunction with the financial
statements and the notes thereto included in the Registrant's latest
quarterly report on Form 10-Q, annual report on Form 10-K, and Form
8-K dated May 22, 1996.
(2) Pro Forma Adjustments
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All the assets and related liabilities of the 1010 Market Street
office building have been removed from the historical financial
statements to reflect the disposition of the property. Assets removed
include the building and related accumulated depreciation, and amounts
recorded as receivable from tenants. Liabilities removed include the
first mortgage secured by the property and the related accrued
interest payable, and amounts recorded as tenant security deposits.
The partners' capital accounts are adjusted accordingly.
All items of income of the property have been removed from the
statements of operations for the periods presented, including rental
and other income received from tenants and interest earned on short-
term investments. All expenses relating to the property, including
interest accrued on the mortgage, real estate operating expenses and
taxes, depreciation, and other expenses have also been removed from
the statements of operations. In addition, management fees have been
reduced to reflect the disposition of the property. The
aforementioned income and expense adjustments have been prepared as if
the disposition had taken place at the beginning of the periods
presented.
In addition, all items of income and related expenses of the
International Jewelry Center have been removed from the statements of
operations for the periods presented, in accordance with the rules and
regulations regarding the filing of Form 8-K, as the Registrant
disposed of this property during the same fiscal year. Please refer
also to the Form 8-K dated May 22, 1996, filed earlier this year.
5a
(3) Gain on Disposition of Investment in Real Estate
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The foreclosure sale of 1010 Market Street resulted in a gain of
approximately $4,500,000. This gain is not reflected in the pro forma
statements of operations. The gain for tax purposes will be computed
using the tax basis of the asset disposed, and will differ from the
gain reported on the financial statements. The foreclosure will have
negative tax consequences for some partners.
6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
SB Partners
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(Registrant)
By: SB PARTNERS REAL ESTATE CORPORATION
GENERAL PARTNER
Date September 12, 1996 /s/ George N. Tietjen III
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George N. Tietjen III
Vice-President and Controller