ITEM 1. BUSINESS
Description of SB Partners (the "Registrant")
The Registrant is an existing New York limited partnership, which has been engaged in acquiring, operating and holding for investment a varying portfolio of real properties since April, 1971. The Registrant's initial public offering was in 1971. In 1973, 1978, 1980, 1982 and 1985, the Registrant sold additional limited partnership interests. As of December 31, 1994, the Registrant owned a shopping center in Plantation, Florida, office buildings in St. Louis, Missouri, Cherry Hill, New Jersey and Los Angeles, California, and apartment projects in Holiday, Florida, and Las Vegas and Reno, Nevada. In addition, the Registrant owned an undivided 10% interest in an apartment project in Orlando, Florida, a 60% interest in an apartment project in Atlanta, Georgia, and 13.9 acres of land in Holiday, Florida.
The principal objectives of the Registrant are, first, to obtain capital appreciation through equity investments in real estate, second, to generate cash available for distribution, a portion of which may not be currently taxable, and third, to the extent still permitted under the Internal Revenue Code of 1986, as amended, to generate tax losses which may offset the Limited Partners' income from the Registrant and certain other sources. In recent years, the ability of the Registrant to meet these objectives has been impacted negatively by factors discussed elsewhere in this annual report on Form 10-K, among other things.
The Registrant incurred losses before gain or loss on sale of investments in real estate during each year of its existence, except for calendar years 1982, 1987, and 1988. The accumulated tax losses and accumulated financial statement losses before gain on sale of investments in real estate as of December 31, 1994 were $143,420,919, and $96,070,606, respectively. The accumulated tax gains and the accumulated financial statement gains on sale of investments in real estate as of December 31, 1994, were $97,113,700 and $88,462,425,respectively. Aggregate cash distributions made to partners as of December 31, 1994 were $ 97,752,882. Refer to the Registrant's 1994 Annual Audited Financial Statements, which is contained in this annual report on Form 10-K, Note 9 of Notes to Financial Statements, for a reconciliation of net loss for financial reporting purposes to net loss for Federal income tax reporting purposes for each of the three years in the period ended December 31, 1994.
Recent Developments and Real Estate Investment Factors
Numerous events which have affected the real estate industry over the last several years including significant changes in federal income tax legislation, stricter government regulations with respect to lending practices of banking and savings and loan institutions, the Resolution Trust Corporation's administration and disposition of billions of dollars of real estate and overbuilding in many markets have had a significant negative impact on the value and operation of real estate investments. During such periods of declining real estate values, the use of leverage causes equity values and property cash flow to decrease more rapidly and more substantially than instances where leverage is not used. The use of leverage by the Registrant and other owners of real estate has had a negative impact on equity values and cash flow during this period of declining real estate values. Due to the tendency of real estate to be relatively non-liquid, the ability of the Registrant and other owners of real estate to vary their portfolios in response to these changing general and local economic, financial and investment conditions has been limited in the past and may be limited in the future.
Certain markets and real estate asset classes have stabilized or exhibited improvement during the last year from improved tenant demand, lower debt and equity capital costs and more potential buyers of real estate, including real estate investment trusts, among other factors. Apartment properties are typical of an improving asset class. Yet, many markets and asset classes remain unstable or have stabilized at a level where current rental rates less operating, financing and tenanting costs are insufficient to support debt and equity structures created in the 1980's and early 1990's. Central business district office buildings are typical of these later situations.
In the event that cash flow from the properties is not sufficient to cover operating, financing and improvement costs, owners of real estate properties, including the Registrant, may be required to generate funds from other than internal sources. The sources may include, but are not limited to, obtaining funds from sales or joint venturing of its real estate investments, or additional secured or unsecured borrowing (Refer also to Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations.)
The Registrant has, until recently, owned investments in senior and junior mortgage notes receivable that resulted from the sales of previously owned real estate properties. The recent events discussed above have also contributed to problems experienced by these borrowers, resulting in filings for protection from creditors under Chapter XI of the United States Bankruptcy Code, reduced or non-payment of monthly installments of principal and interest, foreclosure actions and loan restructuring on less favorable terms to lenders, including the Registrant.
Competition
The Registrant competes for tenants with many other real estate owners. The success of the Registrant in attracting tenants for its properties will depend upon its ability to maintain its properties and their attractiveness to tenants, neighborhood conditions and changing demographic trends, among other things. The recent recession and other factors resulted, and may continue to result, in the inability of existing tenants to meet their obligations under the terms of their leases, which may in turn adversely affect the performance and financial condition of the Registrant.
Tax Matters
In August 1993, Congress passed and President Clinton signed into law the Omnibus Budget Reconciliation Act of 1993 (the "Act"). The Act includes several provisions designed to help revive the real estate industry, including relaxed rules for pension fund investments in real estate, passive-loss relief for developers, extension of the low-income housing credit and an easing of the rules on recognizing cancellation of certain real estate debt. On the negative side, the Act extended the recovery period for nonresidential real estate by 7.5 years (from 31.5 to 39).
The Act relaxes the "per se" passive characterization of certain rental real estate operations. For tax years beginning after 1993, eligible taxpayers, who materially participate in rental real estate activities, are able to deduct losses from rental activities against other income. For all other nonmaterial participating taxpayers, the provisions enacted as part of the Tax Reform Act of 1986 and Miscellaneous Revenue Act of 1988 (as discussed below) continue to apply. The Act also provides some relief by allowing taxpayers, other than corporations, to elect to exclude from income some cancellation of "qualified real property business indebtedness", effective for certain discharges after December 31, 1992. The amount of the exclusion is limited to the basis of the taxpayer's business real property or the excess of the principal amount of the debt over the fair market value of business real property that secures the debt, whichever is less. The basis of the taxpayer's business real property must be reduced by the amount of excluded income. The new provision does not apply to foreclosures or "deeds in lieu" with respect to nonrecourse debt.
Tax Reform Act of 1986 and the Technical and Miscellaneous Revenue Act of 1988
On October 22, 1986, the Tax Reform Act of 1986 ("the '86 Act") was signed into law. The Technical and Miscellaneous Revenue Act of 1988 ("TAMRA 88") was enacted on November 10, 1988. Generally the principal provisions of the 1986 Act and TAMRA 88 impacting the Registrant and its Limited Partners are:
- Passive activity loss limitations have limited the ability of the partners to offset their allocated share of taxable passive losses (essentially losses from rental real estate operations) of the Registrant against other earned or portfolio income.
- The limitation of losses to amounts that partners have "at risk" was extended to passive real estate investments. The amount a partner has "at risk" generally includes their proportionate share of qualified non-recourse financing, and is also subject to other limitations.
- The '86 Act limits the deduction of investment interest expense, as defined, to the amount of net investment income generated for the year, as defined, with an unlimited carryover for excess expense.
The effect of these and other changes in income tax laws will vary depending upon each partner's individual tax situation. The Registrant believes that its characterization of and allocation of passive and portfolio income and losses from its operations are in compliance with existing regulations, but it can provide no assurances that the Internal Revenue Service ("IRS") will not challenge such treatment and allocations in the event of an audit.
Other Tax Matters
The Revenue Act of 1987 retroactively changed the treatment of income and loss of publicly-traded partnerships ("PTP") to characterize a partner's share of income as portfolio instead of passive, and limits the current deductibility of losses.
The term PTP refers to any partnership whose interests are traded on an established securities market or are readily tradeable on a secondary market (or the substantial equivalent thereof). The Registrant believes that it is not a PTP pursuant to such definition and therefore its holders will not be subject to the Revenue Act of 1987 provisions. However, due to the complexities of the regulations, no assurance can be provided that the IRS may not challenge the treatment of income and losses in the event of an audit.
In 1989, the Registrant made an election under IRC Section 754 which provides for an adjustment of the adjusted tax basis of depreciable property which may result in additional depreciation deductions to purchasing partners and those partners who inherit their interests in the Registrant. These adjustments, however, are subject to the passive loss rules discussed above and may or may not provide current benefit to a particular partner. The Registrant will be bound by the Section 754 election for all subsequent years.
General
Efforts required in complying with Federal, state and local environmental regulations may have an adverse effect on the Registrant's operations in the future, although such costs have not historically been significant in amount.
There are approximately 45 full and part-time on site project personnel employed at the Registrant's properties.
The Registrant's real estate investments are not generally subject to seasonal fluctuations, although net income (loss) may vary somewhat from quarter to quarter based upon changes in utility consumption and seasonal maintenance expenditures at each property.
The Registrant considers itself to be engaged in only one industry segment, real estate investment, and therefore information regarding industry segments is not applicable and has not been provided.
ITEM 2.
ITEM 2. PROPERTIES
The properties owned by the Registrant as of December 31, 1994 are set forth on the Summary of Properties Schedule on the page immediately following.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
Refer to Footnote 11 in the Registrant's 1994 Annual Audited Financial Statements included elsewhere in this annual report on Form 10-K.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF UNITHOLDERS
NONE.
(4) Real Estate Transactions
In June 1994, the Partnership sold Woodlake Apartments for $22,055,000. In connection with the sale, the buyer assumed the existing first mortgage note in the amount of approximately $17,476,000 and the balance paid in cash. In July 1994, the Partnership reacquired Nob Hill Apartments for $700,000 cash, subject to existing liens secured by the property. The property was recorded at $6,803,000 which in addition to cash paid was the aggregate carrying amount of the liens, including those owned by the Partnership on the date of acquisition, net of a deferred gain of $5,179,000 and allowance for possible loan losses of $5,212,000. The junior liens owned by the Partnership were effectively extinguished. In December 1994, Nob Hill was sold for $7,400,000. The buyer assumed an existing first mortgage note of $5,873,000, and paid the balance in cash. The Partnership recognized net gains on sale of real estate investments of $6,859,000 for the year ended December 31, 1994.
During 1993, the Partnership sold 400 Office Park for $500,000 all cash and recognized a loss on the sale of $71,655. Additionally, the Partnership reacquired Cherry Hill Office Center by credit bid of its mortgage after the borrower failed to perform under the terms of a bankruptcy court approved reorganization plan. The property was recorded at $3,722,248, representing the carrying value of its mortgage note receivable of $7,050,000, net of deferred gain of $3,327,752, which amount approximated the estimated market value on that date. Acquisition costs paid in cash were $9,896. There were no sales of real estate for the year ended December 31, 1992. Gain on sale of investments in real estate in 1992 relates to recognition of previously deferred gains of $125,263.
The sales of Woodlake Apartments and Nob Hill Apartments, to the extent of the assumption of mortgage notes payable by the purchasers and the foreclosure of Cherry Hill, and the portion of the reacquisition of Nob Hill Apartments in exchange for mortgage notes receivable represent non- cash investing and financing activities and have been excluded from the statements of cash flow.
(5) Mortgage and Other Notes Receivable
During 1994, the Partnership reacquired Nob Hill Apartments and all of the junior liens owned were effectively extinguished (Refer to Note 4). During 1993, the Partnership sold its interest in a mortgage note for $725,000 to an affiliate of the borrower which had previously filed for protection from creditors under Chapter XI of the United States Bankruptcy Code.
(6) Investment in Joint Venture
During 1992, the Partnership and an institutional investor (the "Investor") entered into a joint venture agreement where the Partnership contributed Riverbend Apartments for an agreed equity value of $14,250,000 and the Investor contributed $9,500,000 in cash. The Partnership and the Investor hold interests in the venture of 60% and 40%, respectively, and the Investor is entitled to a guaranteed return of 9.5% of its average investment, as defined in the joint venture agreement. For financial reporting purposes, the Partnership recorded its investment in the joint venture at its net carrying amount of the property contributed, and no gain or loss was recognized. All significant matters affecting the joint venture require the unanimous consent of the venturers.
The following are the condensed financial statements (000's omitted) of the joint venture as of and for the years ended December 31, 1994 and 1993 (See Note 1):
BALANCE SHEETS
1994 1993 1992
Investment in real estate, net $20,532 $21,071 $20,472 Other assets and liabilities, net (61) 64 1,209 ------- ------- ------- Partners capital $20,471 $21,135 $21,681 ======= ======= =======
STATEMENTS OF OPERATIONS
Rent and other income $ 3,815 $ 3,357 $ 2,986 Real estate operating expenses (3,264) (2,827) (3,006) ------- ------- ------- Net income (loss) $ 551 $ 530 ($ 20) ======= ======= =======
(7) Mortgage Notes Payable
Mortgage notes payable consist of the following nonrecourse first liens:
Net Carrying Amount Interest rate Annual December 31, Original ------------- Installment Amount Due ------------ Property Principal Coupon Effective Maturity date Payments at Maturity 1994 1993
Holiday Park $ 3,700,000 9% 9% March 1, 1999 $ 357,252 $3,494,467 $ 3,624,412 $ 3,654,219
Sahara Palms 8,614,000 10 10 October 1, 1997 888,626 8,413,634 8,473,981 8,513,061
Woodlake Village/ Redwood Village 17,717,000 9.75 9.75 December 1, 1997 1,787,127 --- --- 17,509,857
Meadowwood 18,396,000 9.5 9.5 December 1, 1997 1,813,724 17,893,476 18,075,849 18,167,579
Nob Hill 6,200,000 10.5 10.5 August 1, 1997 680,760 --- --- 5,933,929
International Jewelry Center (a) 35,000,000 12.4 12.4 August, 2018 4,398,634 --- 33,898,519 33,898,519
Plantation Center Shopping Plaza 7,725,000 10.25 16.5 November, 1995 813,540 6,792,691 6,575,433 6,333,562
1010 Market Street 42,000,000 8 8 August, 1997 3,698,173 42,000,000 41,169,351 41,556,975
Cherry Hill 2,900,000 9.5 9.5 September, 2000 39,261 436,233 436,233 436,233 ------------ ------------ $112,253,778 $136,003,934 ============ ============
FN
a) Mortgage is currently in default, refer to Note 11. /TABLE
Principal payments including the accelerated maturity of the note secured by International Jewelry Center are due as follows: 1995-$41,070,100, 1996-$648,553, 1997-$66,580,909, 1998-$42,331, 1999-$3,475,652 and thereafter $436,233.
(8) Fair Value of Financial Instruments
The Partnership's financial instruments consist of mortgage notes receivable, mortgage notes payable and cash equivalents. For cash equivalents, their carrying amount is a reasonable estimate of fair value. The fair value of mortgage notes receivable (which are secured by liens on residential apartments) have been estimated by assessing the underlying value of the Partnership's investment in the collateral, which was equal to the mortgage notes receivable net carrying amount at December 31, 1993. The Partnership did not own any mortgage notes receivable at December 31, 1994. Mortgage notes payable have been valued by discounting future payments required under the terms of these obligations at rates currently available to the Partnership for debt with similar maturities, terms and underlying collateral, and is estimated at $104,800,000 and $157,000,000 at December 31, 1994 and 1993, respectively.
(9) Federal Income Tax Information
A reconciliation of net loss for financial reporting purposes to net loss for Federal income tax reporting purposes is as follows:
For the Years Ended December 31,
1994 1993 1992 ----------- ----------- -----------
Net loss for financial reporting purposes ($7,758,686) ($8,977,994) ($9,417,161) Adjustment to net gains on sale of investments in real estate to reflect gains recognized in different periods under the installment and cost recovery methods 360,131 13,939 1,812,820 Adjustment for provision for loan and reserves for real estate losses 4,161,531 (624,342) 2,543,597 Difference between tax and financial statement equity in net loss of joint venture 140,227 (103,555) 177,153 Adjustment for writedown of investments in real estate - - 1,295,122 Adjustment to interest income to reflect amortization of discount on mortgage notes receivable for financial reporting purposes, net of imputed interest recognized for tax purposes - (43,864) (43,864) Adjustment to interest expense to reflect non-deductibility of interest and amortization of discount on mortgage notes payable recognized for financial reporting purposes 3,635,561 300,777 265,790 Difference between tax and financial statement depreciation (5,135,849) (5,691,378) (5,408,799) Net change in accrual entries not recorded on tax basis and prior tax adjustments 754,969 (319,168) (17,837) ----------- ------------- ------------- Net loss for Federal income tax reporting purposes ($3,842,116) ($15,445,585) ($ 8,793,179) =========== ============= =============
Net loss per weighted average limited partnership unit for Federal income tax reporting purposes: Net ordinary loss per unit of Partnership interest ($ 1,333) ($ 2,078) ($ 1,384) Average Capital (Sec.1231) gain per unit of Partnership Interest 838 86 250 ----------- ------------- ------------ ($ 495) ($ 1,992) ($ 1,134) =========== ============= ============ Weighted average number of units of limited partnership interest outstanding 7,753 7,753 7,753 =========== ============= ============ /TABLE
As of December 31, 1994 and 1993, the tax bases of the Partnership's assets and liabilities amounted to $96,877,000 and $130,463,000 of assets, and $117,639,000 and $147,383,000 of liabilities, respectively.
(10) Property Management Services
Certain affiliates of the General Partner oversee the management and operations of various real estate properties, including those owned by the Partnership. Services performed by affiliates are billed at actual or allocated cost, percentage of revenues or net equity. For the years ended December 31, 1994, 1993 and 1992, billings to the Partnership amounted to $2,207,425, $2,509,414, and $2,887,155, respectively, and are included in real estate operating expenses.
(11) Commitments and Contingencies
During 1993, the Partnership stopped making regular monthly payments of debt service to its lender on the mortgage note secured by the International Jewelry Center. In the interim, the Partnership has paid available cash flow from the building to the lender under an informal agreement. In November 1993, the lender declared the loan in default and subsequent to December 31, 1994 filed a Notice of Default and Election to Sell. It is presently uncertain whether the Partnership will be able to successfully continue to hold the property or obtain some other resolution that would be beneficial to it. Accordingly, the Partnership has recorded a reserve for real estate losses of $4,162,000 for the year ended December 31, 1994 which amount reduces the carrying amount of the property and related assets to the carrying amount of all liabilities associated with the property.
The Partnership is a party to certain actions directly related to its normal business operations. While the ultimate outcome is not presently determinable with certainty, the Partnership believes that the resolution of these matters will not have a material effect on its financial position and operations.
The Partnership has secured irrevocable letters of credit in the amount of approximately $1,000,000 which primarily serve as additional collateral securing certain financing.
The Partnership has incurred cash flow losses from operations in recent years. Office markets where the Registrant owns properties have experienced extended periods of high vacancy rates, significantly lower effective rental rates, reduced demand, and higher risks of tenant failure. This has resulted in revenues that have been insufficient to pay for operating expenses, debt service and required capital expenditures at those properties. The Partnership has historically covered the cash flow deficits of these commercial properties with cash flow from its residential and other commercial properties, proceeds from secured and unsecured financing, and sales and joint venturing of real estate properties.
The general partner projects that it will be able to generate sufficient cash flow to cover the deficits at these properties in 1995.
(12) Commercial Operating Leases
Minimum future rentals on noncancelable commercial operating leases in respect of space leased by the Partnership to occupancy tenants for each of the five succeeding fiscal years are as follows: 1995 -$13,171,579, 1996 - $11,509,819, 1997 - $8,908,456, 1998 - $7,101,471, 1999 - $5,511,025 and thereafter $12,711,347. The minimum rentals received on noncancelable commercial operating leases for the year ended December 31, 1994 was $12,886,929.
SB PARTNERS SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1994
Column A Column B Column C Column D Initial Cost to the Registrant Costs Capitalized Buildings and Subsequent to
Description Encumbrances Land Improvements Total Acquisition
MULTI FAMILY RESIDENTIAL Nevada - Las Vegas (Sahara Palms) $8,473,981 $1,604,919 $9,010,416 $10,615,335 $1,637,084 Reno (Meadow Wood) 18,075,849 2,466,311 19,057,859 21,524,170 3,613,916 Florida - Holiday (Holiday Park - including undeveloped land) 3,624,412 458,344 4,043,352 4,501,696 509,260 Orlando (Villa Cordova) - 30,456 370,284 400,740 22,415 ------------ ----------- ------------ ------------ ----------- 30,174,242 4,560,030 32,481,911 37,041,941 5,782,675 ------------ ----------- ------------ ------------ ----------- SHOPPING CENTER Plantation (Plantation Shopping Center) 6,575,433 1,510,714 9,668,665 11,179,379 1,989,915 ------------ ----------- ------------ ------------ ----------- OFFICE BUILDINGS California - Los Angeles (Int'l Jewelry Center) 33,898,519 - 47,489,120 47,489,120 6,856,240 Missouri - St Louis (1010 Market Street) 41,169,351 6,978,673 37,251,102 44,229,775 3,217,048 New Jersey - Cherry Hill (Cherry Hill Office Park) 436,233 647,867 3,163,115 3,810,982 251,352 ------------ ----------- ------------ ------------ ----------- 75,504,103 7,626,540 87,903,337 95,529,877 10,324,640 ------------ ----------- ------------ ------------ ----------- $112,253,778 $13,697,284 $130,053,913 $143,751,197 $18,097,230 ============ =========== ============ ============ =========== /TABLE
SB PARTNERS SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED DECEMBER 31, 1994
Column A Column E Column F
Gross amount at which Carried Accumulated at End of Year (Notes a & c) Depreciation and Valuation
Buildings and Allowance Description Land Improvements Total (Notes b & d)
MULTI FAMILY RESIDENTIAL Nevada - Las Vegas (Sahara Palms) $1,604,919 $10,647,500 $12,252,419 $4,345,003 Reno (Meadow Wood) 2,466,311 22,671,775 25,138,086 9,396,390 Florida - Holiday (Holiday Park - including undeveloped land) 458,344 4,552,612 5,010,956 703,236 Orlando (Villa Cordova) 30,456 392,699 423,155 294,059 ----------- ------------ ------------ ----------- 4,560,030 38,264,586 42,824,616 14,738,688 ----------- ------------ ------------ ----------- SHOPPING CENTER Plantation (Plantation Shopping Center) 1,510,714 11,658,580 13,169,294 4,568,150 ----------- ------------ ------------ ----------- OFFICE BUILDINGS California - Los Angeles (Int'l Jewelry Center) - 54,345,360 54,345,360 16,089,016 Missouri - St Louis (1010 Market Street) 6,978,673 40,468,150 47,446,823 10,079,918 New Jersey - Cherry Hill (Cherry Hill Office Park) 647,867 3,414,467 4,062,334 119,942 ----------- ------------ ------------ ----------- 7,626,540 98,227,977 105,854,517 26,288,876 ----------- ------------ ------------ ----------- $13,697,284 $148,151,143 $161,848,427 $45,595,714 =========== ============ ============ =========== /TABLE
SB PARTNERS SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED DECEMBER 31, 1994
Column A Column G Column H Column I
Life on which Depreciation in Latest Statement
Date of Date of Operations Description Construction Acquired is Computed
MULTI FAMILY RESIDENTIAL Nevada - Las Vegas (Sahara Palms) 1978 May 1983 5 to 30 years Reno (Meadow Wood) 1974 - 1977 May 1983 5 to 30 years Florida - Holiday (Holiday Park - including undeveloped land) Jan 1991 7 to 27.5 years Orlando (Villa Cordova) 1974 March 1978 7 to 31 years
SHOPPING CENTER Plantation (Plantation Shopping Center) 1980 July 1981 5 to 40 years
OFFICE BUILDINGS California - Los Angeles (Int'l Jewelry Center) 1982 Nov 1984 15 to 50 years Missouri - St Louis (1010 Market Street) 1982 Nov 1984 5 to 50 years New Jersey - Cherry Hill (Cherry Hill Office Park) 1970 Sept 1993 40 years
/TABLE
NOTES TO SCHEDULE III:
1994 1993 1992 ---- ---- ----
(a)Reconciliation of amounts shown in Column E:
Balance at beginning of year $181,145,969 $175,788,025 $196,219,532 ------------ ------------ ------------ Additions - Acquisitions of real estate 6,803,413 3,810,982 - Cost of improvements and adjustments 2,636,253 2,177,609 1,650,928 ------------ ------------ ------------ Total additions 9,439,666 5,988,591 1,650,928 ------------ ------------ ------------ Deductions - Writedown of investment in real estate - 1,295,122 Contribution of property to 60% owned joint venture - 20,787,313 Sale of property 28,737,208 630,647 - ------------ ------------ ------------ Total deductions 28,737,208 630,647 22,082,435 ------------ ------------ ------------ Balance at end of year $161,848,427 $181,145,969 $175,788,025 ============ ============ ============
(b)Reconciliation of amounts shown in Column F:
Balance at beginning of year $44,396,664 $39,718,856 $36,909,052
Additions -
Depreciation expense for year 4,819,525 4,758,739 4,911,127 Reserve for real estate loss 4,161,531 - -
Deductions - Accumulated depreciation on property contributed to 60% owned joint venture - - 2,101,323 Accumulated depreciation on sold property 7,782,006 80,931 - ------------- ------------ ------------ Balance at end of year $45,595,714 $44,396,664 $39,718,856 ============ ============ ============ (c)Aggregate cost basis for Federal income tax reporting purposes $170,642,020 $192,210,382 $186,020,919 ============ ============ ============ (d)Accumulated depreciation for Federal income tax reporting purposes $93,789,347 $98,904,491 $88,627,587 ============ ============ ============ /TABLE
SB PARTNERS
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1994
Column A Column B Column C Column D Column E
Periodic Final Payment Balloon Description Coupon Effective Maturity Date Terms Payment
NONE NONE NONE NONE NONE NONE
SB PARTNERS
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE - CONTINUED
DECEMBER 31, 1994
Column A Column F Column G Column H Column I
Prior Liens Underlying Carrying Mortgages on Face Amount of Wraparound Amount of Deferred Mortgages Description Mortgage Notes Mortgages Gain (Notes a & b)
NONE NONE NONE NONE NONE
NOTES TO SCHEDULE IV:
1994 1993 1992
(a)Reconciliation of the carrying amount of mortgages:
Balance at beginning of year $10,446,709 $14,790,514 $27,614,370 ----------- ----------- -----------
Advances secured by junior liens - 803,433 640,524 Recognition of deferred gains - - 125,263 Amortization of discount - - 1,142 ----------- ----------- ----------- Total additions - 803,433 766,929 ----------- ----------- -----------
Principal payments received - 725,000 13,290,785 Other decreases in mortgage notes - - 300,000
Application of loan loss allowance to note extinguished - 1,503,422 - Net carrying amount recorded as the basis of property on reacquisition 10,446,709 2,918,816 - ----------- ----------- ----------- Total deductions 10,446,709 5,147,238 13,590,785 ----------- ----------- ----------- Balance at end of year - $10,446,709 $14,790,514 =========== =========== ===========
(b)Reconciliation of carrying amount shown in schedule to carrying amounts reported in financial statements:
1994 1993 1992
As shown in schedule - $10,446,709 $14,790,514
Add: Other note receivable - - 300,000
Less: Allowance for possible loan losses - (4,512,780) (5,083,597) ----------- ----------- ----------- Net carrying amount in financial statements - $5,933,929 $10,006,917 =========== =========== =========== /TABLE