SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
_X_ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended November 30, 1999
OR
___ 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 0-11023
MAXUS REAL PROPERTY INVESTORS-FOUR, L.P.
(Exact name of Registrant as specified in its charter)
Missouri 43-1250566
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 Main St, Ste 2100 Kansas City, Missouri 64105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (816) 421- 4670
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
(Title of Class)
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. Yes _X_ No ___.
_X_ Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
1
As of February 1, 2000, the aggregate market value of the Registrant's units of
limited partnership interest (which constitute voting securities under certain
circumstances) held by non-affiliates of the Registrant was $12,047,000. (The
aggregate market value was computed on the basis of the initial selling price of
$1,000 per unit of limited partnership interest, using the number of units not
beneficially owned on February 1, 2000 by the General Partners or holders of 10%
or more of the Registrant's limited partnership Units. The initial selling price
of $1,000 per unit is not the current market value. Accurate pricing information
is not available because the value of the limited partnership units is not
determinable since no active secondary market exists. The characterization of
such General Partners and 10% holders as affiliates is for the purpose of this
computation only and should not be construed as an admission for any purpose
that any such persons are, or other persons not so characterized are not, in
fact, affiliates of the Registrant).
PART I
ITEM 1: BUSINESS
This 10-K contains forward-looking information (as defined in the Private
Securities Litigation Reform Act of 1995) that involves risk and uncertainty,
including trends in the real estate investment market, projected leasing and
sales, and the future prospects for the Registrant. Actual results could differ
materially from those contemplated by such statements.
Maxus Real Property Investors-Four, L.P. (formerly known as Nooney Real Property
Investors-Four, L.P.) (the "Registrant") is a limited partnership formed under
the Missouri Uniform Limited Partnership Law on February 9, 1982, to invest, on
a leveraged basis, in income-producing real properties such as shopping centers,
office buildings, apartment complexes, office/warehouses and other commercial
properties. The Registrant originally acquired five real property investments.
Between 1990 and 1993, the Registrant disposed of three properties, two by sale
and one by deed in lieu of foreclosure. Presently, the Registrant owns two
properties, Cobblestone Court Shopping Center in Burnsville, Minnesota and
Woodhollow Apartments in St. Louis County, Missouri. For information respecting
these assets and revenue and income therefrom, see Exhibit 99.2 Financial
Statements and Schedules, which is filed herewith and is incorporated by
reference. (See Item 14(a)(1)).
On November 19, 1999, Maxus Capital Corp. (formerly known as Nooney Capital
Corp.) amended its articles of incorporation to change its name. On December 21,
1999, Maxus Capital Corp., the Registrant's general partner, filed an amendment
to the Registrant's Certificate of Limited Partnership, changing (i) the name
and address of the managing general partner to Maxus Capital Corp., 1100 Main,
Suite 2100 Kansas City, MO 64105 and (ii) the Registrant's name to Maxus Real
Property Investors-Four, L.P.
The Registrant's primary investment objectives are to preserve and protect the
Limited Partners' capital and obtain long-term appreciation in the value of its
properties. The original term of the Registrant is until December 31, 2082. It
was originally anticipated that the Registrant would sell or refinance its
properties within approximately five to ten years after their acquisition. The
depression of real estate values experienced nationwide from 1988 to 1993
lengthened this time frame in order to achieve the goal of capital appreciation.
The Registrant is intended to be self-liquidating and proceeds, if any, from the
sale or refinancing of the Registrant's real property investments will not be
invested in new properties but will be distributed to the
2
Partners or, at the discretion of the managing General Partners, applied to
capital improvements to, or the payment of indebtedness with respect to,
existing properties, the payment of other expenses or the establishment of
reserves.
As previously reported, the Registrant entered into contracts as of November 13,
1998 to sell both of the Registrant's properties to American Spectrum Realty,
Inc. ("ASR"), a former affiliate (prior to the change in control described
below) of the managing General Partner of the Registrant. Pursuant to a proxy
statement and majority vote, the limited partners approved the sale on January
21, 1999, at a special meeting held for that purpose.
Under the terms of the contracts, ASR was to have satisfied or waived all
contingencies contained in the contracts by April 6, 1999. Certain of the
contingencies were not satisfied or waived by that date and the managing General
Partner agreed to extend the contingency period for 30 days. Since the time
period for satisfying the contingencies was extended, no earnest money was
deposited by ASR. Subsequently, the contingency period was extended for two
additional 30-day periods, the final one expiring July 7, 1999. On July
7, 1999, certain contingencies remained unfulfilled and not waived. The managing
General Partner elected not to grant any further extensions and the sale
contracts have become null and void.
On June 25, 1999 a complaint was filed in the United States District Court for
the Eastern District of Missouri by Bond Purchase, L.L.C. ("Bond Purchase")
against the Registrant and its general partner, Nooney Capital Corp. The
complaint alleged that the defendants arranged for the sale of partnership
assets to ASR, at a price which was $1 million less than another entity
affiliated with the plaintiff was willing to pay. The complaint further alleged
that Nooney Capital Corp, as a general partner of the Registrant, filed a proxy
statement relating to the sale of partnership assets which omitted certain
unspecified material facts and which otherwise failed to provide complete
information to the limited partners. In addition, the complaint alleged that the
defendants refused to allow the plaintiff access to the books and records of the
partnership. The complaint sought injunctive relief against the proposed sale of
the partnership assets, damages for alleged violations of the Securities
Exchange Act, damages for alleged breaches of fiduciary duty, appointment of a
receiver for the partnership and an accounting. The Registrant and Nooney
Capital Corp. moved to dismiss the complaint on various grounds, including the
fact that the sale transaction did not take place. As a result of the settlement
described below, Bond Purchase dismissed its lawsuit against the Registrant and
Nooney Capital Corp.
On November 9, 1999, S-P properties, Inc., a wholly-owned subsidiary of CGS Real
Estate Company, Inc. ("CGS") sold all of the outstanding stock of Nooney Capital
Corp, the Registrant's managing General Partner, to Bond Purchase for $177,000
cash. David L. Johnson owns 86% of the outstanding equity interests in Bond
Purchase.
The sale was part of a larger agreement entered into by CGS and its affiliates
with Bond Purchase and certain affiliates, pursuant to which Bond Purchase and
CGS agreed (i) to stipulate to the dismissal of certain lawsuits among the
parties (including the complaint filed by Bond Purchase against the Registrant)
(ii) to settle certain disputes between CGS and Bond Purchase and (iii) to
transfer stock and/or partnership Units in various private and publicly-traded
entities controlled at that time by CGS.
3
In connection with the sale, each of the members of the Board of Directors and
each of the officers of the managing General Partner resigned, effective as of
the closing under the settlement agreement. David L. Johnson, Daniel W. Pishny
and John W. Alvey were appointed as members of the Board of Directors.
Effective November 9, 1999, the new members of the Board of Directors elected
the following officers: David L. Johnson, Chairman and Executive Vice President;
Daniel W. Pishny, President; and John W. Alvey, Vice-President, Secretary and
Treasurer.
Nooney, Inc., a former affiliate (prior to the change of control described
above) of the managing General Partner, also terminated its management agreement
with the Partnership effective as of November 9, 1999. The Partnership entered
into a property management agreement with Maxus Properties, Inc. ("Maxus"), a
Missouri corporation that is an affiliate of Bond Purchase. David L. Johnson,
the principal equity holder of Bond Purchase, is also the majority shareholder
of Maxus.
On January 28, 2000, the Registrant entered into a contract to sell the
Cobblestone Court Shopping Center ("Cobblestone"), located at 14150 Nicollet
Avenue South in Burnsville, Minnesota, a suburb of Minneapolis, to an unrelated
third party, Farrington Properties, Inc., a Minnesota corporation. The sale
price is $5,100,000. The contract was subject to a fifteen (15) day due
diligence period pursuant to which Farrington had the right to terminate the
contract without liability to the Registrant. The due diligence period expired
February 12, 2000. The sale is tentatively scheduled to close on March 28, 2000
with the contract providing for one 45 day extension. The sale is subject to
certain conditions, including but not limited to delivery of satisfactory title
and delivery of satisfactory Subordination, non-disturbance and attornment
agreements and estoppel letters from all tenants of the Property.
The business in which the Registrant is engaged is highly competitive. The
Registrant's investment properties are located in or near major urban areas and
are subject to competition from other similar types of properties in such areas.
The Registrant competes for tenants for its properties with numerous other real
estate limited partnerships, as well as with individuals, corporations, real
estate investment trusts and other entities engaged in real estate investment
activities. Such competition is based on such factors as location, rent
schedules and services and amenities provided.
The Registrant has no employees. Property management services for the
Registrant's investment properties are provided by Maxus. Maxus employs more
than 250 people to manage 49 commercial properties, including more than 8,000
apartment units and 700,000 square feet of retail and office space.
ITEM 2: PROPERTIES
On February 16, l982, the Registrant purchased the Cobblestone Court Shopping
Center ("Cobblestone"), located at 14150 Nicollet Avenue South in Burnsville,
Minnesota, a suburb of Minneapolis. Cobblestone, which contains approximately
98,000 net rentable square feet, was constructed in l980 of brick and concrete
with a wood facade covering a portion of an enclosed pedestrian walkway.
Cobblestone is located on an 11 acre site which provides paved parking for 605
cars. The purchase price of Cobblestone was $5,882,318. Cobblestone was 61%
leased by seven tenants at year end.
4
On July 28, l982, the Registrant purchased the Woodhollow
Apartments ("Woodhollow"), a 402-unit garden apartment complex located on
Dorsett Road in west St. Louis County, Missouri. The complex, which was
constructed in phases in l971 and l972, consists of 17 buildings containing one,
two and three bedroom apartments. The complex is located on a 26 acre site which
provides paved parking for 707 cars. The purchase price of Woodhollow was
$12,665,147. Woodhollow was 86% occupied at year end.
Reference is made to Note 2 to Notes to Financial Statements filed herewith as
Exhibit 99.2 in response to Item 8 for a description of the mortgage
indebtedness secured by the Registrant's real property investments.
The following table sets forth certain information as of November 30, 1999,
relating to the properties owned by the Registrant.
AVERAGE
ANNUALIZED
EFFECTIVE
TOTAL BASE RENT PRINCIPAL TENANTS
SQUARE ANNUALIZED SQUARE PERCENT OVER 10% OF PROPERTY LEASE
PROPERTY FEET BASE RENT FOOT LEASED SQUARE FOOTAGE EXPIRATION
Cobblestone 97,718 $418,449 $ 7.02 61% T.J. Maxx (26.2%) 2001
Woodhollow 402 Units $2,298,232 $5,717/unit 86% None
ITEM 3: LEGAL PROCEEDINGS
On June 25, 1999 a complaint was filed in the United States District Court for
the Eastern District of Missouri by Bond Purchase, L.L.C. against the Registrant
and its general partner, Nooney Capital Corp. The complaint alleged that the
defendants arranged for the sale of partnership assets to American Spectrum
Realty, Inc., an entity affiliated with Nooney Capital Corp., at a price which
was $1 million less than another entity affiliated with the plaintiff was
willing to pay. The complaint further alleged that Nooney Capital Corp, as a
general partner of the partnership, filed a proxy statement relating to the sale
of partnership assets which omitted certain unspecified material facts and which
otherwise failed to provide complete information to the limited partners. In
addition, the complaint alleged that the defendants refused to allow the
plaintiff access to the books and records of the partnership. The complaint
sought injunctive relief against the proposed sale of the partnership assets,
damages for alleged violations of the Securities Exchange Act, damages for
alleged breaches of fiduciary duty, appointment of a receiver for the
partnership and an accounting. The Registrant and its general partner moved to
dismiss the complaint on various grounds, including the fact that the sale
transaction did not take place. Pursuant to the settlement agreement described
below, Bond Purchase, L.L.C. dismissed its lawsuit against the Registrant and
Nooney Capital Corp.
On November 9, 1999, S-P properties, Inc., a wholly-owned subsidiary of CGS Real
Estate Company, Inc. ("CGS") sold all of the outstanding stock of Nooney Capital
Corp, the Registrant's managing General Partner, to Bond Purchase, L.L.C. for
$177,000 cash. David L. Johnson owns 86% of the outstanding equity interests
in Bond Purchase, L.L.C.
5
The sale was part of a larger agreement entered into by CGS and its affiliates
with Bond Purchase and certain affiliates, pursuant to which Bond Purchase and
CGS agreed (i) to stipulate to the dismissal of certain lawsuits among the
parties (including the complaint filed by Bond Purchase against the Registrant)
(ii) to settle certain disputes between CGS and Bond Purchase and (iii) to
transfer stock and/or partnership units in various private and publicly-traded
entities currently controlled by CGS.
In connection with the sale, each of the members of the Board of Directors and
each of the officers of the managing General Partner resigned, effective as of
the closing under the settlement agreement. David L. Johnson, Daniel W. Pishny,
and John W. Alvey were appointed as members of the Board of Directors.
Effective November 9, 1999, the new members of the Board of Directors elected
the following officers: David L. Johnson, Chairman and Executive Vice President;
Daniel W. Pishny, President; and John W. Alvey, Vice-President, Secretary and
Treasurer.
Nooney, Inc, a former affiliate (prior to the change in control described above)
of the managing General Partner, also terminated its management agreement with
the Partnership effective as of November 9, 1999. The Partnership entered into a
property management agreement with Maxus Properties, Inc., a Missouri
corporation that is an affiliate of Bond Purchase. David L. Johnson, the
principal equity holder of Bond Purchase, is also the majority shareholder of
Maxus.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On July 15, 1999, Millenium Investors 2, LLC ("Millenium"), a California limited
liability company, commenced a solicitation of the Registrant's limited partners
seeking the approval by written consent (the "Consents") of the limited partners
to remove the general partners and to elect Millenium as the new general partner
of the Registrant, and to approve the liquidation of the Registrant and final
distribution of its assets to the limited partners. Millenium terminated its
solicitation of Consents as of November 30, 1999, in response to the recent
change of control of the Registrant.
Millenium filed a report with the Securities and Exchange Commission indicating
that it received Consents with respect to 6,317 limited partnership units
(approximately 47% of the outstanding units). According to Millenium, of the
Consents received, 95% were voted in favor of Millenium's proposals.
PART II
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
As of February 1, 2000, there were 1,148 record holders of Units in the
Registrant. There is no public market for the Units, and it is not anticipated
that a public market will develop.
There were no cash distributions paid to the Limited Partners during fiscal 1998
or fiscal 1999.
6
ITEM 6: SELECTED FINANCIAL DATA
Year Ended November 30,
1999 1998 1997 1996 1995
(Not covered by independent auditors' report)
Rental and other income $3,250,073 $ 3,287,570 $ 3,406,566 $ 3,505,163 $ 3,391,439
Loss before adjustment to (503,472) (401,699) (193,748) (18,733) (151,835)
liquidation basis
Data per limited partnership (36.56) (29.18) (14.07) (1.36) (11.03)
unit - loss before adjustment
to liquidation basis
Weighted average limited 13,529 13,529 13,529 13,529 13,529
partnership units outstanding
At year-end:
Total assets (1) 11,314,263 17,918,396 11,628,080 11,211,633 11,322,989
Investment property - net 10,983,890 17,585,000 11,110,241 10,678,208 10,705,962
Mortgage notes payable 13,825,996 13,500,465 12,871,393 12,529,484 12,268,720
Partners' deficit (1) (3,046,544) -- (1,687,945) (1,494,197) (1,475,464)
Net liabilities in -- (3,128,533) -- -- --
liquidation (1)
See Item 7: Management's Discussion and Analysis for discussion of comparability
of items.
(1) A plan of liquidation was approved effective January 21, 1999. As a result,
the Partnership's financial statements as of and for the year ended November 30,
1998 were prepared on a liquidation basis of accounting. The planned liquidation
was not consummated and as such, the 1999 financial statements are no longer
presented on a liquidation basis of accounting.
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
Cash reserves as of November 30, 1999 are $21,021, a decrease of $206,352 from
the year ended November 30, 1998. The decrease in cash is due primarily to an
increase in operating loss of $101,773 caused by continued lower occupancy at
Cobblestone Court, an increase in accounts receivable of $82,556 and an
increase in prepaid expenses of $19,100. An increase of $334,937 in capital
7
expenditures and a decrease of $152,652 in deferred expenses were offset by an
increase in proceeds from mortgage notes payable of $499,534.
On January 28, 2000, the Registrant entered into a contract to sell the
Cobblestone Court Shopping Center ("Cobblestone"), located at 14150 Nicollet
Avenue South in Burnsville, Minnesota, a suburb of Minneapolis, to an unrelated
third party, Farrington Properties, Inc., a Minnesota corporation. The sale
price is $5,100,000. The contract was subject to a fifteen (15) day due
diligence period pursuant to which Farrington had the right to terminate the
contract without liability to the Registrant. The due diligence period expired
February 12, 2000. The sale is tentatively scheduled to close on March 28, 2000
with the contract providing for one 45 day extension. The sale is subject to
certain conditions, including but not limited to delivery of satisfactory title
and delivery of satisfactory Subordination, non-disturbance and attornment
agreements and estoppel letters from all tenants of the Property.
The Cobblestone sales contract provides for a net sale price of $5,100,000. If
consummated as currently structured the transaction would result in a gain of
approximately $1,529,000. There is no assurance at this time, however, that the
transaction will be consummated or that the gain will be realized.
On November 30, 1998, the Registrant refinanced the debt on both of its
properties. A new loan agreement with an aggregate balance of $13,500,465
secured by both Cobblestone Court and Woodhollow Apartments was obtained. The
loan agreement includes two notes, which are at a floating interest rate of
LIBOR + 2.75% and call for monthly principal payments of $15,818. The notes
mature November 30, 2001. In 1999, additional funds of $499,534 were borrowed
on these notes.
Results of Operations
The results of operations for the Registrant's properties for the years ended
November 30, 1999, 1998, and 1997 are detailed in the schedule below. The
information contained in the schedule are the results of operations for each
property prior to the proposed adjustment to liquidation basis. For further
discussion of the potential liquidation of Cobblestone Court , see Item 7,
"Liquidity and Capital Resources". Expenses of the Registrant are excluded.
Woodhollow Cobblestone
------------ -------------
1999
Revenues $ 2,452,272 $ 789,371
Expenses 2,717,191 1,013,190
--------- ---------
Net (Loss) from Operations $ (264,919) $ (223,819)
========= =========
1998
Revenues $ 2,372,154 $ 911,124
Expenses 2,564,351 1,126,982
--------- ---------
Net (Loss) from Operations $ (192,197) $ (215,858)
========= =========
8
1997 Woodhollow Cobblestone
------------ -------------
Revenues $ 2,371,681 $ 1,036,061
Expenses 2,442,025 1,156,047
--------- ---------
Net (Loss) from Operations $ (70,344) $ (119,986)
========= =========
1999 Property Comparisons
Cobblestone Court revenues declined $121,753 from 1998 to 1999 due to a decrease
in base rental revenue of $77,094 and common area maintenance income of $78,415,
partially offset by an increase in percentage rental income of $29,477. The
revenues decreased due to the decrease in average occupancy from 1998 to 1999.
Expenses decreased $104,360 in 1999 compared to 1998. The primary reason for the
decrease in expenses was a decrease in property operating expenses of $193,647,
including a decrease of $78,111 in management fees and a $77,950 decrease in
property taxes. The decrease in expense was partially offset by an increase in
professional service expense of $79,957.
At Woodhollow Apartments, revenues increased $80,118 from 1998 to 1999. Expenses
increased $166,632 in 1999 compared to 1998, due to an increase in repair and
maintenance expense of $69,846, depreciation of $14,592, interest expense of
$38,632 and professional services of $52,457. The increased expenses were
partially offset by a decrease in amortization expense of $16,493.
The occupancy levels at the Registrant's properties as of November 30 were:
Occupancy rates at November 30
1999 1998 1997
Woodhollow 87% 92% 92%
Cobblestone 61% 59% 69%
At Woodhollow, occupancy decreased when compared to 1998. A rental increase was
implemented on each floorplan during the year. There were a high number of
vacant one bedroom units at November 30, 1999. The rent on these units has since
been reduced in an effort to increase the demand for one bedroom rental
apartments.
Occupancy at Cobblestone Court increased from 59% at the beginning of the year
to 61% at the end of the year, although average occupancy percent for the year
decreased from 1998 to 1999. No tenants vacated their space during the year. No
tenants renewed their lease during the year. No new tenants were signed during
the year, with the exception of one seasonal tenant who occupied space for the
holiday season (October 25, 1999 through December 31, 1999), which accounted for
the increase in occupancy. A contract to sell the center was signed
January 28, 2000. For further discussion of the potential sale of Cobblestone
Court , see Item 7, "Liquidity and Capital Resources". The center has one major
tenant who occupies approximately 26% of the available space under a lease which
expires in January 2001. A second major tenant occupies approximately 9% of the
available space under a lease which expires April 2000.
9
Year 2000 issues
Information Technology Systems
Subsequent to December 31, 1999, the Registrant has not experienced any material
information technology ("IT") or embedded ("non-IT") systems disruptions or
failures and anticipates no material systems problems at Cobblestone Court or
Woodhollow Apartments.
Material Third Parties' Systems Failures
Evaluation of material third parties' Year 2000 readiness status was essentially
complete as of December 31, 1999. The Registrant continues to monitor for any
additional information pertaining to these parties' Year 2000 readiness. The
Registrant has not experienced and does not anticipate any Year 2000 performance
issues related to its material third parties.
1999 Comparisons
For the year ended November 30, 1999, the Registrant's consolidated revenues are
$3,250,073 compared with $3,287,570 for the year ended November 30, 1998. The
decrease in revenues of $37,497 (1.1%) can be attributed primarily to the
decrease in revenue from Cobblestone Court due to the decrease in occupancy
previously discussed.
The Registrant's consolidated expenses were $3,753,545 for the year ended
November 30, 1999 as compared to $3,689,269 for the year ended November 30,
1998. The increase in expenses of $64,276 (1.7%) is mainly attributable to an
increase in repairs and maintenance of $32,663 and depreciation of $64,513,
offset partially by a decrease in interest expense of $44,606. An increase in
professional fees of $148,767, primarily as a result of litigation which has
been resolved, was offset by a decrease in management fees of $74,884, and real
estate taxes of $67,519.
The loss before adjustment to liquidation basis for the year ended 1999 was
$503,472 or $36.56 per limited partnership unit as compared to a loss before
adjustment to liquidation basis of $401,699 or $29.18 per limited partnership
unit for the year ended 1998. Cash flow provided by operating activities was
$327,711 for the year ended 1999 as compared to cash flow used in operating
activities of $204,952 for the year ended 1998.
1998 Comparisons
For the year ended November 30, 1998, the Registrant's consolidated revenues
were $3,287,570 compared to $3,406,566 for the year ended November 30, 1997. The
decrease in revenues of $118,996 (3.5%) can be attributed to the decrease in
revenue from Cobblestone Court due to the decrease in occupancy previously
discussed.
The Registrant's consolidated expenses were $3,689,269 for the year ended
November 30, 1998 as compared to $3,600,314 for the year ended November 30,
1997. The increase in expenses of $88,955 (2.5%) is mainly attributable to an
increase in depreciation and amortization of $66,310 and payroll expense of
$47,389, partially offset by decreases in other expenses of $26,477.
10
The loss before adjustment to liquidation basis for the year ended 1998 was
$401,699 or $29.18 per limited partnership unit as compared to a loss before
adjustment to liquidation basis of $193,748 or $14.07 per limited partnership
unit for the year ended 1997. Cash flow used in operating activities was
$204,952 for the year ended 1998 as compared to cash flow provided by operating
activities of $672,300 for the year ended 1997. The main reasons for the
significant decrease is an adjustment for accruals to the liquidation basis net
of the write down of investment property (see potential liquidation of the
Registrant in Item 7 "Liquidity and Capital Resources" and Note 2 to Notes to
Financial Statements), and a decrease in accounts payable and accrued expenses
of $378,280.
Inflation
The effects of inflation did not have a material impact upon the Registrant's
operation in fiscal l999 and are not expected to materially affect the
Registrant's operation in 2000.
Interest Rates
The interest rate on floating rate debt fluctuated in 1999 and was 8.34% at
November 30, 1999. Future significant increases in LIBOR could adversely affect
the operations of the Registrant.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Registrant considered the provision of Financial Reporting Release No. 48
"Disclosure of Accounting Policies for Derivative Financial Instruments and
Derivative Commodity Instruments, and Disclosure of Quantitative and Qualitative
Information about Market Risk Inherent in Derivative Financial Instruments,
Other Financial Instruments and Derivative Commodity Instruments". The
Registrant had no holdings of derivative financial or commodity instruments at
November 30, 1999. A review of the Registrant's other financial instruments and
risk exposures at that date revealed that the Registrant had exposure to
interest rate risk. The Registrant utilized sensitivity analyses to assess the
potential effect of this risk and concluded that near-term increases in the
interest rate will negatively affect the Registrant as all of the debt on its
properties is on a floating rate. Based on the Registrant's current outstanding
borrowings, at an average interest rate of 8.34 % per annum, a 100 basis point
increase in market interest rates would increase interest expense and decrease
earnings before income taxes by approximately $130,000.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements of the Registrant are filed herewith as Exhibit 99.2 and
are incorporated herein by reference (see Item 14(a)(1)). The supplementary
financial information specified by Item 302 of Regulation S-K is provided in
Item 7.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
The Registrant dismissed Deloitte and Touche and appointed KPMG as the
Registrant's independent auditors for the year 1999, based on the recommendation
of the managing General Partner. For more information regarding the change in
auditors, refer to the Form 8-K filed January 25, 2000, as amended February 16,
2000 and the Form 8-K filed February 11, 2000.
11
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Registrant has two General Partners. The background and experience of the
General Partners are as follows:
The managing General Partner of the Registrant responsible for all aspects of
the Registrant's operations is Maxus Capital Corp., a Missouri corporation
(formerly known as Nooney Capital Corp.). Maxus Capital Corp. was formed in
February 1982 for the purpose of being a general and/or limited partner in the
Registrant and other limited partnerships.
On November 9, 1999, S-P Properties, Inc. sold all of the outstanding stock of
Nooney Capital Corp. (now known as Maxus Capital Corp.) to Bond Purchase,
L.L.C., a Missouri limited liability company.
The three members of the board of directors of Maxus Capital Corp. are David L.
Johnson, Daniel W. Pishny and John W. Alvey. The executive officers are Mr.
Johnson, Chairman and Executive Vice President; Mr. Pishny, President; and Mr.
Alvey, Vice President, Secretary and Treasurer.
Mr. Johnson, age 43, is a member of the Board of Trustees and Chairman of Nooney
Realty Trust, Inc., a publicly-traded real estate investment trust ("NRTI"). Mr.
Johnson also is Chairman, Chief Executive Officer, and majority shareholder of
Maxus Properties, Inc. ("Maxus"), a Missouri corporation located at 1100 Main,
Suite 2100, Kansas City, Missouri 64105, that specializes in commercial property
management for affiliated owners. Maxus employs more than 250 people to manage
49 commercial properties, including more than 8,000 apartment units and 700,000
square feet of retail and office space. Mr. Johnson is also currently Vice
President of KelCor, Inc. ("KelCor"), a Missouri corporation that specializes in
the acquisition of commercial real estate.
Mr. Pishny, age 37, is a member of the Board of Trustees and President of NRTI,
and is President and Chief Operating Officer of Maxus. Mr. Pishny is responsible
for the day-to-day operations of Maxus and its managed properties.
Mr. Alvey, age 41, is Vice President of NRTI, Executive Vice President and Chief
Financial Officer of Maxus and President of KelCor.
John J. Nooney is a Special General Partner of the Partnership and as such, does
not exercise control of the affairs of the Partnership. John J. Nooney joined
Nooney Company in 1958 and was President and Treasurer until he resigned in
1992.
The General Partners will continue to serve as General Partners until their
withdrawal or their removal from office by the Limited Partners.
ITEM 11: EXECUTIVE COMPENSATION
Pursuant to the Registrant's limited partnership agreement, the General Partners
are entitled to receive one percent (1%) of all of the net operating cash income
of the Registrant. In addition, the limited
12
partnership agreement provides that the General Partners are entitled to
additional distributions in connection with net extraordinary cash income
generated by the Partnership. No cash distributions were paid to the General
Partners during the fiscal year 1999 because the Partnership did not generate
net operating cash income or net extraordinary cash income. In addition, no
direct compensation was paid or payable by the Registrant to directors or
officers (since it does not have any directors or officers) for the year ended
November 30, 1999, nor was any direct compensation paid or payable by the
Registrant to the General Partners or directors or officers of the corporate
general partner for the year ended November 30, 1999.
See Item 13 - Certain Relationships and Related Transactions for a discussion of
transactions between the Registrant and certain affiliates of the General
Partners.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners.
The table below sets forth each person or entity that has reported to the
Registrant beneficial ownership of more than 5% of the Registrant's limited
partner units as of January 31, 2000. The percentage of ownership is based on
13,529 limited partner units outstanding as of February 1, 2000.
Amount and Nature of
Name Beneficial Ownership Percentage
---- -------------------- ----------
Bond Purchase, L.L.C. 1,482 10.95%
1100 Main, Suite 2100
Kansas City, Missouri 64105
Chris B. Garlich 773 5.71%
1610 Des Peres Rd., #370
St. Louis, Missouri 63131
(b) Security Ownership of Management.
The table shown below sets forth the number of the Registrant's limited partner
units beneficially owned as of January 31, 2000, directly or indirectly, by each
general partner and executive officer and all general partners and executive
officers as a group. securities shown.
Amount and Nature of
Name Beneficial Ownership (1) Percentage(2)
John J. Nooney (3).................... -0- -
David L. Johnson (4).................. 1,482 10.95%
Daniel W. Pishny .................... -0- -
John W. Alvey ........................ -0- -
All general partners and officers..... 1,482 10.95%
________________
(1) A beneficial owner of a security includes a person who, directly or
indirectly, has or
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shares voting or investment power with respect to such security. Voting
power is the power to vote or direct the voting of the security and
investment power is the power to dispose or direct the disposition of the
security. Each person listed has stated that he, either alone or with his
spouse, has sole voting power and sole investment power with respect to
the units shown as beneficially owned, except as otherwise indicated.
(2) The percentages represent the total number of limited partner units in the
adjacent column divided by 13,529, the number of issued and outstanding
units of the Registrant on February 1, 2000.
(3) Mr. Nooney, Special General Partner of the Registrant, is not known to the
Registrant to be the beneficial owner, either directly or indirectly, of
any limited partner units of the Registrant.
(4) Represents units held by Bond Purchase, L.L.C. of which Mr. Johnson is
approximately an 86% owner.
(c) Changes in Control.
There are no arrangements known to the Registrant, the operation of which may at
a subsequent date result in a change in control of the Registrant.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with Management and Others.
Nooney, Inc., the former manager of the Registrant's properties, is a
wholly-owned subsidiary of CGS Real Estate Company, a former affiliate of the
managing General Partner. Nooney, Inc. was entitled to receive monthly
compensation from the Registrant for property management and leasing services,
plus administrative expenses through November 9, 1999. During fiscal 1999 the
Registrant paid property management fees of $89,627 to Nooney, Inc.. No amounts
were paid as reimbursement for indirect expenses incurred in connection with
management of the Registrant. During fiscal 1998 the Registrant paid property
management fees of $176,292 to Nooney, Inc., and $40,000 as reimbursement for
indirect expenses incurred in connection with management of the Registrant.
Effective November 10, 1999, Maxus Properties, Inc., an affiliate of the
managing General Partner, became the management company for the Registrant's
properties. Pursuant to the current management contract for Cobblestone Court,
Maxus is entitled to receive monthly compensation of Five and Four Tenths
percent (5.4%) of the monthly gross receipts from the operation of Cobblestone
Court, for property management and leasing services, plus reimbursement for
administrative expenses. Pursuant to the current management contract for
Woodhollow Apartments, Maxus is entitled to receive monthly compensation of
Four and one half percent (4.5%) of the monthly gross receipts from the
operation of Woodhollow Apartments, for property management and leasing
services, plus reimbursement for administrative expenses. During fiscal 1999 the
Registrant paid property management fees of $11,781 to Maxus.
See Item 11 above for a discussion of cash distributions paid to the General
Partners during fiscal l999.
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(b) Certain Business Relationships.
The relationship of certain of the General Partners to certain of their
affiliates is set forth in Item 13(a) above. Also see Item 13(a) above for a
discussion of amounts paid by the Registrant to the General Partners or their
affiliates during fiscal 1999.
(c) Indebtedness of Management.
Not Applicable.
(d) Transactions with promoters.
Not Applicable.
PART IV
- -------
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
(1) Financial Statements (filed herewith as Exhibit 99.2):
Independent auditors' reports
Balance sheet as of November 30, 1999
Statement of net liabilities in liquidation as of November 30, 1998
Statements of operations for the years ended November 30, 1999 and 1997
Statement of loss in liquidation for the year ended November 30, 1998
Statements of partners' deficit for the years ended November 30, 1999 and
1997
Statement of changes in net liabilities in liquidation for the year ended
November 30, 1998
Statements of cash flows for the years ended November 30, 1999 and 1997
Statement of cash flows in liquidation for the year ended November 30, 1998
Notes to financial statements
15
(2) Financial Statement Schedules (filed herewith as Exhibit 99.2):
Schedule 1 (Schedule I) - Reconciliation of partners' equity (deficit)
Schedule 2 (Schedule III) - Real estate and accumulated depreciation
All other schedules are omitted because they are inapplicable or not
required under the instructions.
(3) Exhibits:
A list of exhibits required to be filed as part of this report on Form 10-K
is set forth in the Exhibit Index, which immediately precedes such exhibits,
and is incorporated herein by reference.
(b) Reports on Form 8-K
The following reports on Form 8-K were filed by the Registrant since the end of
the third quarter of 1999, each of which are incorporated herein by reference
(File No. 000-11023):
On November 10, 1999, the Registrant filed a Form 8-K reporting a change in
control of the Registrant.
On January 21, 2000, the Registrant filed a Form 8-K reporting the change of
the Registrant's name and the change of its general partner's name.
On January 25, 2000, the Registrant filed a Form 8-K reporting the dismissal
of Deloitte and Touche LLP as its certifying accountant. On February 16,
2000, the Registrant filed Amendment No. 1 to this Form 8-K.
On February 11, 2000, the Registrant filed a report on Form 8-K reporting
the appointment of KPMG as its certfifying accountant.
On February 17, 2000, the Registrant filed a Form 8-K reporting an agreement
entered into by the Registrant to sell Cobblestone Court Shopping Center.
(c) Exhibits:
A list of exhibits required to be filed as part of this report on Form 10-K
is set forth in the Exhibit Index, which immediately precedes such exhibits,
and is incorporated herein by reference.
(d) Not Applicable
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) under the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MAXUS REAL PROPERTY INVESTORS-FOUR, L.P.
Maxus Capital Corp.
General Partner
Date: February 28, 2000 By:/s/ David L. Johnson
David L. Johnson
Chairman of the Board
and Executive Vice President
By:/s/ Daniel W. Pishny
Daniel W. Pishny
Director and President
By:/s/ John W. Alvey
John W. Alvey
Director , Vice President
Secretary and Treasurer
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EXHIBIT INDEX
Exhibit
Number Description
2.1 Contract for the sale of Cobblestone Court Shopping Center dated January
28, 2000 is incorporated by reference to the Form 8-K filed by the
Registrant under the Securities Act of 1933 (File No. 000-11023).
3.1 Amended and Restated Agreement and Certificate of Limited N/A Partnership
dated April 7, 1982.
3.2 Amendment of Certificate of Limited Partnership dated December 21, 1999 is
incorporated by reference to the Form 8-K filed by the Registrant under
the Securities Act of 1933 (File No. 000-11023).
10.1 Management Contract between Maxus Real Property Investors-Four, L.P. and
Maxus Properties, Inc. for the management of Cobblestone Court.
10.2 Management Contract between Maxus Real Property Investors-Four, L.P. and
Maxus Properties, Inc. for the management of Woodhollow Apartments.
27 Maxus Real Property Investors-Four, L.P. Financial Data Schedule at
November 30, 1999 for the year then ended.
99.1 List of Directorships filed in response to Item 10.
99.2 Financial Statements and Schedules.
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