EXHIBIT 99.3






                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Partners of
Nooney Income Fund Ltd. II, L.P.:


We have audited the  accompanying  balance  sheet of Nooney Income Fund Ltd. II,
L.P. (a Missouri  limited  partnership) as of December 31, 2000, and the related
statement of operations,  partners' equity (deficit) and cash flows for the year
ended  December  31,  2000.  Our audit also  included  the  financial  statement
schedules  listed in the index at Item 14(a)2.  These  financial  statements and
financial  statement  schedules  are  the  responsibility  of the  Partnership's
general partners. Our responsibility is to express an opinion on these financial
statements and financial  statement  schedules based on our audit. The financial
statements of Nooney Income Fund Ltd. II, L.P. as of December 31, 1999 and 1998,
were audited by other auditors  whose report dated February 22, 2000,  expressed
an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards  generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by the Partnership's  general  partners,  as well as evaluating the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of Nooney Income Fund Ltd. II,
L.P. as of December 31,  2000,  and the results of its  operations  and its cash
flows for the year ended  December  31,  2000,  in  conformity  with  accounting
principles generally accepted in the United States.  Also, in our opinion,  such
financial  statement  schedules,  when  considered  in  relation  to  the  basic
financial  statements taken as a whole,  present fairly in all material respects
the information set forth therein.



ARTHUR ANDERSEN LLP

St. Louis, Missouri,
   January 26, 2001


                                       22

<PAGE>

INDEPENDENT AUDITORS' REPORT


To the Partners of
Nooney Income Fund Ltd. II, L.P.:


We have audited the  accompanying  balance  sheet of Nooney Income Fund Ltd. II,
L.P. (a limited partnership) as of December 31, 1999, and the related statements
of  operations,  partners'  equity  (deficit) and cash flows for each of the two
years in the period  ended  December  31,  1999.  Our audits also  included  the
financial statement schedule of real estate and accumulated depreciation for the
two years ended  December  31, 1999  listed in the index at Item  14(a)2.  These
financial  statements and financial statement schedule are the responsibility of
the Partnership's general partners.  Our responsibility is to express an opinion
on these  financial  statements and financial  statement  schedules based on our
audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates made by the Partnership's  general  partners,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provides a reasonable basis for our opinion.

In our  opinion,  the  financial  statements  present  fairly,  in all  material
respects,  the  financial  position of Nooney  Income Fund,  Ltd. II, L.P. as of
December 31, 1999, and the results of its operations and its cash flows for each
of the two years in the  period  ended  December  31,  1999 in  conformity  with
accounting principles generally accepted in the United States of America.  Also,
in our opinion,  such financial statement schedule,  when considered in relation
to the  basic  financial  statements  taken as a whole,  present  fairly  in all
material respects the information set forth therein.



DELOITTE & TOUCHE LLP

February 22, 2000


                                       23

<PAGE>


                        NOONEY INCOME FUND LTD. II, L.P.
                        --------------------------------
                             (A Limited Partnership)


                 BALANCE SHEETS AS OF DECEMBER 31, 2000 AND 1999
                 -----------------------------------------------

                                                        2000           1999
                                                    ------------   ------------

                                     ASSETS
                                     ------

CASH AND CASH EQUIVALENTS                           $  1,667,825   $  1,190,211
                                                    ------------   ------------
ACCOUNTS RECEIVABLE (net of allowance of $326,163
  in 2000 and $273,506 in 1999)                          255,232        257,599
                                                    ------------   ------------

PREPAID EXPENSES AND OTHER ASSETS                         26,235         24,430
                                                    ------------   ------------
INVESTMENT PROPERTY:
   Land                                                2,618,857      2,618,857
   Buildings and improvements                         14,438,993     13,997,112
                                                    ------------   ------------
                                                      17,057,850     16,615,969

   Less-  Accumulated depreciation                    (5,647,553)    (5,162,333)
                                                    ------------   ------------
                                                      11,410,297     11,453,636

   Investment property held for sale                   2,804,205      2,860,890
                                                    ------------   ------------
                                                      14,214,502     14,314,526
                                                    ------------   ------------

DEFERRED EXPENSES, net                                   333,049        321,834
                                                    ------------   ------------
           Total assets                             $ 16,496,843   $ 16,108,600
                                                    ============   ============

                        LIABILITIES AND PARTNERS' EQUITY
                        --------------------------------

LIABILITIES:
   Accounts payable and accrued expenses            $    143,544   $    174,137
   Accrued real estate taxes                             491,547        485,507
   Refundable tenant deposits                            278,562        250,231
   Mortgage note payable                               6,756,201      6,871,246
                                                    ------------   ------------
           Total liabilities                           7,669,854      7,781,121
                                                    ------------   ------------
PARTNERS' EQUITY (DEFICIT):
   General partners                                     (125,594)      (130,589)
   Limited partners (19,221 units issued and
     outstanding)                                      8,952,583      8,458,068
                                                    ------------   ------------
           Total partners' equity                      8,826,989      8,327,479
                                                    ------------   ------------
           Total liabilities and partners' equity   $ 16,496,843   $ 16,108,600
                                                    ============   ============



      The accompanying notes are an integral part of these balance sheets.

                                       24
<PAGE>

                        NOONEY INCOME FUND LTD. II, L.P.
                        --------------------------------
                             (A Limited Partnership)


                            STATEMENTS OF OPERATIONS
                            ------------------------

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
              ----------------------------------------------------


<TABLE>
<CAPTION>
                                                              2000        1999        1998
                                                           ----------  ----------  ----------

<S>                                                        <C>         <C>         <C>
REVENUES:
   Rental and other income                                 $4,065,884  $3,723,962  $3,680,649
   Interest                                                     4,666       4,055        --
                                                           ----------  ----------  ----------
           Total revenues                                   4,070,550   3,728,017   3,680,649
                                                           ----------  ----------  ----------
EXPENSES:
   Interest                                                   617,879     554,283     584,329
   Depreciation and amortization                              836,454     765,982     755,447
   Real estate taxes                                          564,278     544,192     534,592
   Property management fees - related party                   241,121     216,862     215,198
   Repairs and maintenance                                    384,387     442,418     334,606
   Professional services                                      354,911     380,102     135,134
   Other operating expenses (includes $40,000 in
     each year to related party)                              572,010     759,242     757,247
                                                           ----------  ----------  ----------
           Total expenses                                   3,571,040   3,663,081   3,316,553
                                                           ----------  ----------  ----------
           Net income                                      $  499,510  $   64,936  $  364,096
                                                           ==========  ==========  ==========
NET INCOME ALLOCATION:
   General partners                                        $    4,995  $      649  $   21,480
                                                           ==========  ==========  ==========

   Limited partners                                        $  494,515  $   64,287  $  342,616
                                                           ==========  ==========  ==========
LIMITED PARTNERS DATA:
   Net income per unit                                     $    25.73  $     3.34  $    17.83
                                                           ==========  ==========  ==========

   Cash distributions - investment income per unit         $     --    $     --    $    17.83
                                                           ==========  ==========  ==========

   Cash distributions - return of capital per unit         $     --    $     --    $     0.92
                                                           ==========  ==========  ==========

   Weighted average limited partnership units outstanding      19,221      19,221      19,221
                                                           ==========  ==========  ==========
</TABLE>


        The accompanying notes are an integral part of these statements.

                                       25
<PAGE>

                        NOONEY INCOME FUND LTD. II, L.P.
                        --------------------------------
                             (A Limited Partnership)


                    STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
                    ----------------------------------------

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
              ----------------------------------------------------



                                  Limited       General
                                  Partners      Partners       Total
                                 -----------   -----------   -----------

PARTNERS' EQUITY (DEFICIT),
  December 31, 1997              $ 8,411,559   $  (130,672)  $ 8,280,887

   Net income                        342,616        21,480       364,096
   Cash distributions               (360,394)      (22,046)     (382,440)
                                 -----------   -----------   -----------
PARTNERS' EQUITY (DEFICIT),
  December 31, 1998                8,393,781      (131,238)    8,262,543

   Net income                         64,287           649        64,936
                                 -----------   -----------   -----------
PARTNERS' EQUITY (DEFICIT),
  December 31, 1999                8,458,068      (130,589)    8,327,479

   Net income                        494,515         4,995       499,510
                                 -----------   -----------   -----------
PARTNERS' EQUITY (DEFICIT),
  December 31, 2000              $ 8,952,583   $  (125,594)  $ 8,826,989
                                 ===========   ===========   ===========




        The accompanying notes are an integral part of these statements.

                                       26
<PAGE>


                        NOONEY INCOME FUND LTD. II, L.P.
                        --------------------------------
                             (A Limited Partnership)


                            STATEMENTS OF CASH FLOWS
                            ------------------------

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
              ----------------------------------------------------


<TABLE>
<CAPTION>
                                                          2000          1999          1998
                                                      -----------   -----------   -----------

<S>                                                   <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                         $   499,510   $    64,936   $   364,096
   Adjustments to reconcile net income to net cash
     provided by operating activities-
       Depreciation                                       726,439       677,201       660,875
       Amortization of deferred expenses                  110,015        88,781        94,572
       Net changes in accounts affecting operations-
         Accounts receivable                                2,367       (52,276)      (52,373)
         Prepaid expenses                                  (1,805)       (2,925)       (4,453)
         Deferred expenses                               (121,230)     (129,810)     (104,353)
         Accounts payable and accrued expenses            (30,593)       14,076      (320,548)
         Accrued real estate taxes                          6,040       (14,221)      (57,174)
         Refundable tenant deposits                        28,331        38,444        63,013
                                                      -----------   -----------   -----------
           Net cash provided by operating activities    1,219,074       684,206       643,655
                                                      -----------   -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Net additions to investment property                  (626,415)     (618,970)     (289,092)
                                                      -----------   -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Cash distributions to partners                            --            --        (382,440)
   Mortgage principal payments                           (115,045)     (124,630)     (100,656)
                                                      -----------   -----------   -----------
           Net cash used in financing activities         (115,045)     (124,630)     (483,096)
                                                      -----------   -----------   -----------
           Net increase (decrease) in cash and cash
             equivalents                                  477,614       (59,394)     (128,533)

CASH AND CASH EQUIVALENTS, beginning of year            1,190,211     1,249,605     1,378,138
                                                      -----------   -----------   -----------
CASH AND CASH EQUIVALENTS, end of year                $ 1,667,825   $ 1,190,211   $ 1,249,605
                                                      ===========   ===========   ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid during the year for interest           $   617,879   $   590,980   $   537,963
                                                      ===========   ===========   ===========
</TABLE>


        The accompanying notes are an integral part of these statements.

                                       27
<PAGE>

                        NOONEY INCOME FUND LTD. II, L.P.
                        --------------------------------
                             (A Limited Partnership)


                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------

                        DECEMBER 31, 2000, 1999 AND 1998
                        --------------------------------


1.  BUSINESS:
    --------

Nooney Income Fund Ltd. II, L.P. (the  "Partnership")  is a limited  partnership
organized  under the laws of the State of Missouri on February 13, 1985, for the
purpose of  investing  in  income-producing  real  properties,  such as shopping
centers, office buildings, warehouses and other commercial properties.

The  Partnership's  portfolio  is comprised  of a 24%  undivided  interest in an
office complex in Leawood,  Kansas (Leawood Fountain Plaza); an office warehouse
in  Mundelein,  Illinois  (Tower  Industrial  Building);  a single  story office
building in Palatine,  Illinois  (Countryside Office Park, formerly  Countryside
Executive Center);  an  office/warehouse/showroom  facility in Cincinnati,  Ohio
(Northeast  Commerce  Center);  and  an  office  complex  in  Cincinnati,   Ohio
(NorthCreek  Office Park). The proportionate  share of these properties owned by
the Partnership generated 8.6%, 5.5%, 38.1%, 11.9% and 35.9% of rental and other
income, respectively, for the year ended December 31, 2000. Effective October 1,
1998, the property known as Countryside Executive Center was renamed Countryside
Office Park.

It is management's  intent to sell Countryside Office Park (Countryside) as soon
as practicable because of local market conditions, tax burdens and other factors
related specifically to this property.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
    ------------------------------------------

Basis of Presentation
---------------------

The financial  statements include only those assets,  liabilities and results of
operations of the partners which relate to the business of the Partnership.  The
statements  do  not  include  any  assets,  liabilities,  revenues  or  expenses
attributable to the partners' individual activities.  No provision has been made
for  federal  and  state  income  taxes  since  these  taxes  are  the  personal
responsibility of the partners.

The  Partnership's  financial  statements  are prepared on the accrual  basis of
accounting in accordance with accounting  principles  generally  accepted in the
United  States.  The  preparation  of financial  statements in  conformity  with
accounting   principles   generally  accepted  in  the  United  States  requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

The Partnership's  properties are managed by American Spectrum Midwest,  Inc., a
wholly owned  subsidiary of CGS Real Estate  Company  (CGS).  Nooney  Investors,
Inc., a general partner in the Partnership,  is a wholly owned subsidiary of S-P
Properties, Inc. S-P Properties, Inc. is a wholly owned subsidiary of CGS.

In September 1999, Nooney Investors,  Inc. changed its name to American Spectrum
Midwest,  Inc.  and  began  doing  business  under  the new  name at that  time.
Ownership remained unchanged. Property management fees paid to American Spectrum
Midwest, Inc. were $241,121,  $216,862 and $215,198 for the years ended December
31,  2000,  1999 and 1998,  respectively.  Additionally,  the  Partnership  paid
American Spectrum Midwest,  Inc. $40,000 in 2000, 1999 and 1998 as reimbursement
for management  services and indirect expenses in connection with the management
of the Partnership.


                                       28
<PAGE>

Cash and Cash Equivalents
-------------------------

The Partnership  considers all highly liquid debt instruments with a maturity of
three months or less at date of purchase to be cash  equivalents.  Cash and cash
equivalents  include  $278,562 and $250,231 of  restricted  cash at December 31,
2000  and  1999,  respectively.  Restricted  cash  represents  deposits  paid by
tenants.

Investment Property
-------------------

Investment  property is recorded at the lower of cost or net  realizable  value.
The  Partnership  reviews  long-lived  assets for impairment  whenever events or
changes in circumstances indicate that the carrying amount of a property may not
be  recoverable.  The Partnership  considers a history of operating  losses or a
change in  occupancy  to be primary  indicators  of  potential  impairment.  The
Partnership  deems the  property to be  impaired  if a forecast of  undiscounted
future operating cash flows directly related to the property, including disposal
value if any, is less than its carrying amount. If the property is determined to
be impaired,  the loss is measured as the amount by which the carrying amount of
the property exceeds its fair value. Fair value is based on quoted market prices
in active markets, if available.  If quoted market prices are not available,  an
estimate  of fair value is based on the best  information  available,  including
prices for similar  properties  or the results of valuation  techniques  such as
discounting  estimated future cash flows.  Considerable  management  judgment is
necessary  to  estimate  fair  value.  Accordingly,  actual  results  could vary
significantly from such estimates.

Buildings and improvements are depreciated over their estimated useful lives (30
years) using the straight-line  method.  Tenant alterations are depreciated over
the term of the lease on a straight-line basis.

Property held for sale is recorded at the lower of carrying amount or fair value
less cost to sell.  If events or  changes  in  circumstances  indicate  that the
property may be impaired,  management  compares the carrying  amount to the fair
value  less  cost to sell  and the held for sale  property  is  written  down if
necessary.

Deferred Expenses
-----------------

Deferred  expenses consist  primarily of lease fees which are amortized over the
terms of their respective leases.

Revenue Recognition and Rent Concessions
----------------------------------------

Lease  agreements  are accounted  for as operating  leases and rentals from such
leases are  reported as revenues on the  straight-line  method over the terms of
the leases. Certain lease agreements provide for rent concessions.  Accrued rent
concessions  included in  accounts  receivable  were  $191,000  and  $145,000 at
December 31, 2000 and 1999, respectively.

Included in rental and other  income are amounts  received  from  tenants  under
provisions of lease  agreements which require the tenants to pay additional rent
equal to  specified  portions of certain  expenses  such as real  estate  taxes,
insurance,  utilities and common area maintenance. The income is recorded in the
same period that the related expense is incurred.

Repairs and Maintenance
-----------------------

Expenditures for ordinary repair and maintenance costs are charged to expense as
incurred.   Significant   expenditures   for   improvements,   renovations   and
replacements  related to the  acquisition  and improvement of real estate assets
are capitalized at cost and depreciated over their estimated useful lives.

Distributions and Allocations
-----------------------------

Net  Operating  Cash  Income,  as  defined  in  the  Partnership  Agreement,  is
distributed quarterly as follows: (1) 90% pro rata to the limited partners;  (2)
9% to the individual  general  partners as their annual  Partnership  Management
Fee; and (3) 1% to the individual general partners.


                                       29
<PAGE>

In the event it is determined  after the close of a fiscal year that the limited
partners have not received their 7-1/2%  noncumulative  preference as defined in
the Partnership  Agreement,  then the individual  general partners return to the
Partnership  a  portion  of their  distributions  received  as  their 9%  annual
Partnership Management Fee until the limited partners have received their 7-1/2%
noncumulative  preference.  The individual  general partners are not required to
return any amount in excess of one-half  of the 9%  Partnership  Management  Fee
received.  If Net Operating Cash Income for any fiscal year is not sufficient to
pay the limited partners any portion of their 7-1/2%  noncumulative  preference,
the unpaid amount does not accrue to future fiscal years. The annual Partnership
Management  Fee is a  cumulative  preference.  The  preferential  return  can be
distributed  only through cash  distributed as a result of a Major Capital Event
(as defined) or cash  distributed  upon  dissolution  of the  Partnership.  Such
preferred  distribution  is only allowed after the general and limited  partners
receive  amounts  equal to  their  adjusted  capital  accounts  and the  limited
partners receive an 11% cumulative return.

For financial statement and income tax reporting,  the income from operations is
allocated  as  follows:  first,  a  special  allocation  of gross  income to the
individual  general  partners  in the  amount  equal to the  annual  Partnership
Management Fee distributed to the individual general partners during the period;
then, the remainder is allocated 1% to the individual  general  partners and 99%
pro rata to the limited partners based upon the relationship of original capital
contributions of the limited partners.

Limited  partnership  per unit  computations  are based on the weighted  average
number of limited partnership units outstanding during the period.

Recent Accounting Pronouncements
--------------------------------

The Partnership  adopted SFAS No. 130,  Reporting  Comprehensive  Income,  which
requires  entities to report changes in equity that result from transactions and
economic events other than those with shareholders. The Partnership had no other
comprehensive income items,  accordingly net income and comprehensive income are
the same.

SFAS No. 133,  Accounting for Derivative  Instruments  and Hedging  Activity and
SFAS  No.  138,  Accounting  for  Certain  Derivative  Instruments  and  Hedging
Activities, provides standards for the recognition and measurement of derivative
and hedging activities.  It requires that derivatives be recorded on the balance
sheet at fair value and  establishes  criteria for hedges of changes in the fair
value and  establishes  criteria  for  hedges of  changes  in the fair  value of
assets,  liabilities or firm commitments and certain other items. Changes in the
fair value of derivatives are recorded in earnings or other comprehensive income
depending  on  whether  it is an  effective  part of a hedged  transaction.  The
adoption  of SFAS  No.  133 and  SFAS  No.  138 did not  have an  effect  on the
financial statements.

3.  MORTGAGE NOTE PAYABLE:
    ---------------------

Mortgage note payable at December 31 consists of the following:

                                                            2000         1999
                                                         ----------   ----------

Note payable to bank,  principal of $9,587, and
  interest due monthly at the bank's prime rate
  (9.50% at December 31, 2000) plus .75%, maturing
  December 28, 2002                                      $6,756,201   $6,871,246
                                                         ==========   ==========

The mortgage note is collateralized by deeds of trust and assignment of rents on
investment  property  (Countryside,  Northeast  Commerce  Center and  NorthCreek
Office Park) with a net book value of  $12,561,000  at December  31,  2000.  The
mortgage  note  agreement  provides  for a 3.25%  interest  rate on  outstanding
principal  if a  compensating  balance  is  maintained  during  the  immediately
preceding month. During 2000, 1999 and 1998, the Partnership  decreased interest
expense by approximately $75,000, $59,000 and $64,000, respectively, as a result
of the compensating balance clause.


                                       30
<PAGE>

Principal payments required are as follows:

          2001                                         $   132,000
          2002                                           6,624,201
                                                       -----------
                     Total                             $ 6,756,201
                                                       ===========

In  accordance  with  Statement  of  Financial  Accounting  Standards  No.  107,
Disclosures about Fair Value of Financial Instruments,  the estimated fair value
of mortgage  notes payable with  maturities  greater than one year is determined
based on rates  currently  available to the  Partnership for mortgage notes with
similar  terms and  remaining  maturities  as the present value of expected cash
flows.  The carrying  amount equals its estimated fair value due to the variable
nature of the debt and the terms are consistent with those the Partnership could
currently obtain.

4.  RENTAL REVENUES UNDER OPERATING LEASES:
    --------------------------------------

Minimum future rental revenues under noncancelable operating leases in effect as
of December 31, 2000, are as follows:

          2001                                         $ 3,385,000
          2002                                           2,562,000
          2003                                           1,786,000
          2004                                             866,000
          2005                                             439,000
          Thereafter                                       274,000
                                                       -----------
                     Total                             $ 9,312,000
                                                       ===========

In addition,  certain lease agreements  require tenant  participation in certain
operating  expenses.  Tenant  participation  in  expenses  included  in revenues
approximated  $160,000,  $45,000 and $61,000  for the years ended  December  31,
2000, 1999 and 1998.

5.  FEDERAL INCOME TAX STATUS:
    -------------------------

The general  partners  believe,  based on opinion of legal counsel,  that Nooney
Income Fund Ltd. II, L.P. is considered a partnership for income tax purposes.

During the year,  there are certain  expenses  that are not  deductible  for tax
purposes or there may be a timing  difference  between their  deductibility  for
financial  statement and income tax purposes.  Selling  commissions and offering
expenses  incurred in connection with the sale of limited  partnership units are
not  deductible  for income tax purposes and  therefore  increase the  partners'
bases. Investment properties are depreciated for income tax purposes using rates
which differ from rates used for computing  depreciation for financial statement
reporting.  Rents  received in advance are  includable in taxable  income in the
year  received.  Rent  concessions,  recognized  ratably  over  lease  terms for
financial statement purposes, are includable in taxable income in the year rents
are received.  Losses in connection  with the write-down of investment  property
are not recognized for income tax purposes until the property is disposed.


                                       31
<PAGE>

The comparison of financial statement and income tax reporting is as follows:

                                                 Financial            Income
                                                 Statement             Tax
                                               ------------        ------------
2000:
   Net income                                  $    499,510        $    557,276
   Partners' equity                               8,826,989          13,735,652

1999:
   Net income (loss)                           $     64,936        $   (145,635)
   Partners' equity                               8,327,479          13,178,376

1998:
   Net income (loss)                           $    364,096        $     (5,791)
   Partners' equity                               8,262,543          13,324,011

6.  MAJOR TENANT:
    ------------

A substantial  amount of the Partnership's  revenue in 1999 was derived from one
major tenant whose rental amounted to  approximately  $405,000,  or 11% of total
revenues. A substantial amount of the Partnership's  revenue in 1998 was derived
from two major  tenants  whose rentals  amounted to  approximately  $427,000 and
$367,000 or 11.6% and 10.0%, respectively, of total revenues.

7.  PENDING TRANSACTION:
    -------------------

CGS is  continuing  the  process  of  developing  a plan  pursuant  to which the
properties  owned by the  Partnership  would be combined with the  properties of
other real estate partnerships managed by CGS and its affiliates.  These limited
partnerships own office properties,  industrial properties, shopping centers and
residential  apartment  properties.  It is expected that CGS would in the future
qualify as a real estate investment trust. Limited partners would receive shares
of common stock in the acquiror  which would be listed on a national  securities
exchange or the NASDAQ national market system. The transaction is subject to the
approval of the limited  partners of the  Registrant  and  portions of the other
partnerships.  The  Registrant  has filed a  Registration  Statement on Form S-4
relating  to the  solicitation  of  consents  with  the  Security  and  Exchange
Commission.

8.  BUSINESS SEGMENTS:
    -----------------

The Partnership has five reportable operating segments:  Leawood Fountain Plaza,
Tower  Industrial,  Countryside  Office  Park,  Northeast  Commerce  Center  and
NorthCreek Office Park. The Partnership's  management  evaluates  performance of
each  segment  based on profit  or loss from  operations  before  allocation  of
property   writedowns,   general  and  administrative   expenses,   unusual  and
extraordinary  items, and interest.  The accounting policies of the segments are
the same as those  described in the summary of significant  accounting  policies
(see Note 2).

     (In Thousands)                         2000         1999         1998
                                         ----------   ----------   ----------
Revenues:
   Leawood Fountain Plaza                $    354.3   $    359.7   $    307.9
   Tower Industrial                           222.9        203.2        202.2
   Countryside Office Park                  1,545.3      1,220.6      1,025.4
   Northeast Commerce Center                  456.5        409.7        692.1
   NorthCreek Office Park                   1,445.4      1,509.1      1,377.3
                                         ----------   ----------   ----------
                                         $  4,024.4   $  3,702.2   $  3,604.9
                                         ==========   ==========   ==========


                                       32
<PAGE>

     (In Thousands)                        2000          1999          1998
                                       -----------   -----------   -----------

Operating profit (loss):
   Leawood Fountain Plaza              $      58.4   $      92.2   $      43.6
   Tower Industrial                           95.4          84.7          93.5
   Countryside Office Park                   409.8         (10.5)         36.5
   Northeast Commerce Center                (199.5)       (214.0)        (31.3)
   NorthCreek Office Park                    214.3         343.9         178.2
                                       -----------   -----------   -----------
                                       $     578.4   $     296.3   $     320.5
                                       ===========   ===========   ===========
Capital expenditures:
   Leawood Fountain Plaza              $      35.9   $      33.6   $      36.1
   Tower Industrial                         --             192.8        --
   Countryside Office Park                    71.1         128.9         138.0
   Northeast Commerce Center                 408.0         219.2        --
   NorthCreek Office Park                    111.4          44.5         115.0
                                       -----------   -----------   -----------
                                       $     626.4   $     619.0   $     289.1
                                       ===========   ===========   ===========
Depreciation and amortization:
   Leawood Fountain Plaza              $      60.6   $      69.2   $      90.8
   Tower Industrial                           43.5          45.2          41.6
   Countryside Office Park                   186.4         137.3         151.8
   Northeast Commerce Center                 234.2         192.4         265.4
   NorthCreek Office Park                    311.8         307.4         359.3
                                       -----------   -----------   -----------
                                       $     836.5   $     751.5   $     908.9
                                       ===========   ===========   ===========
Assets:
   Leawood Fountain Plaza              $     332.5   $     946.8
   Tower Industrial                        1,334.4         985.9
   Countryside Office Park                 2,284.3       3,126.2
   Northeast Commerce Center               2,444.2       3,512.7
   NorthCreek Office Park                  6,001.0       6,410.5
                                       -----------   -----------
                                       $  12,396.4   $  14,982.1
                                       ===========   ===========

Reconciliations of segment data to the Partnership's consolidated data follow:

     (In Thousands)                        2000          1999        1998
                                       -----------   ----------- -----------
Revenues:
   Segments                            $   4,024.4   $   3,702.2 $   3,604.9
   Corporate and other                        46.2          25.8        75.7
                                       -----------   ----------- -----------
                                       $   4,070.6   $   3,728.0 $   3,680.6
                                       ===========   =========== ===========
Net income:
   Segments operating profit           $     578.4   $     296.3 $     320.5
   Other income (expense)                     46.2          25.8        75.7
   General and administrative expenses      (125.1)       (257.2)      (32.1)
                                       -----------   ----------- -----------
                                       $     499.5   $      64.9 $     364.1
                                       ===========   =========== ===========

                                       33
<PAGE>

     (In Thousands)                        2000          1999        1998
                                       -----------   ----------- -----------
Depreciation and amortization:
   Segments                            $     836.5   $     751.5 $     908.9
   Corporate and other                      --              14.5      (153.5)
                                       -----------   ----------- -----------
                                       $     836.5   $     766.0 $     755.4
                                       ===========   =========== ===========
Assets:
   Segments                            $  12,396.4   $  14,982.1
   Corporate and other                     4,100.4       1,126.5
                                       -----------   -----------
                                       $  16,496.8   $  16,108.6
                                       ===========   ===========


                                       34
<PAGE>

                        NOONEY INCOME FUND LTD. II, L.P.
                        --------------------------------
                             (A Limited Partnership)


                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                 -----------------------------------------------

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
              ----------------------------------------------------



<TABLE>
<CAPTION>
                                     Balance at    Additions and
                                      Beginning   Charges to Costs                  Balance at
           Description               of Period      and Expenses     Write-offs     End of Period
           -----------               ----------   ----------------   ----------     -------------

<S>                                   <C>            <C>             <C>              <C>
December 31, 2000-  Allowance for
   doubtful accounts                  $273,506       $ 35,937        $ 16,720         $326,163

December 31, 1999-  Allowance for
   doubtful accounts                   255,409         58,564         (40,467)         273,506

December 31, 1998-  Allowance for
   doubtful accounts                   233,702         44,308         (22,601)         255,409
</TABLE>



For the years ending December 31, 2000, 1999 and 1998,  additions and write-offs
include activity relating to outstanding  tenants based receivables where it has
been  determined  such  receivables  are likely to be  uncollectible,  therefore
resulting in entries to allow for doubtful accounts.


                                       35
<PAGE>

                        NOONEY INCOME FUND LTD. II, L.P.
                        --------------------------------
                             (A Limited Partnership)


             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
             -------------------------------------------------------

                      FOR THE YEAR ENDED DECEMBER 31, 2000
                      ------------------------------------

<TABLE>
<CAPTION>
                 Column A                               Column B                 Column C                    Column D
                 --------                               --------                 --------                    --------

                                                                         Initial Cost to Partnership           Costs
                                                                   --------------------------------------   Capitalized
                                                                               Buildings and               Subsequent to
                                                      Encumbrances    Land      Improvements    Total      Acquisition(1)
                                                      ------------ ------------ ------------ ------------  ------------
<S>                                                   <C>          <C>          <C>          <C>          <C>
Leawood Fountain Plaza Office Complex (24% undivided
   interest), Leawood, Kansas                         $      --    $   318,962  $ 1,991,417  $ 2,310,379  $  (578,051)
Tower Industrial Building, Mundelein, Illinois               --        193,744    1,042,076    1,235,820      195,588
NorthCreek Office Park, Cincinnati, Ohio                     --        338,850    4,639,617    4,978,467    3,722,430
Northeast Commerce Center, Cincinnati, Ohio                  --        199,361    2,784,317    2,983,678    2,209,539
Countryside Office Park, NorthCreek Office Park and
   Northeast Commerce                                   6,756,201         --           --           --           --
                                                      -----------  -----------  -----------  -----------  -----------
                                                        6,756,201    1,050,917   10,457,427   11,508,344    5,549,506
Countryside Office Park, Palatine, Illinois                  --        623,919    4,302,911    4,926,830     (935,862)
                                                      -----------  -----------  -----------  -----------  -----------
           Total                                      $ 6,756,201  $ 1,674,836  $14,760,338  $16,435,174  $ 4,613,644
                                                      ===========  ===========  ===========  ===========  ===========


                                                                      Column E
                                                                      --------

                                                               Gross Amount of Which
                                                             Carried at Close of Period
                                                      ----------------------------------------
                                                                   Buildings and
                                                          Land     Improvements     Total
                                                      ------------ ------------  -----------

<S>                                                   <C>          <C>          <C>
Leawood Fountain Plaza Office Complex (24% undivided
   interest), Leawood, Kansas                         $   318,962  $ 1,413,366  $ 1,732,328
Tower Industrial Building, Mundelein, Illinois            193,744    1,237,664    1,431,408
NorthCreek Office Park, Cincinnati, Ohio                1,370,100    7,330,797    8,700,897
Northeast Commerce Center, Cincinnati, Ohio               736,051    4,457,166    5,193,217
Countryside Office Park, NorthCreek Office Park and
   Northeast Commerce                                        --           --           --
                                                      -----------  -----------  -----------
                                                        2,618,857   14,438,993   17,057,850
Countryside Office Park, Palatine, Illinois             1,356,419    2,634,549    3,990,968 (2)
                                                      -----------  -----------  -----------
           Total                                      $ 3,975,276  $17,073,542  $21,048,818
                                                      ===========  ===========  ===========


                                                        Column F      Column G      Column H      Column I
                                                        --------      --------      --------      --------

                                                                                                Life on Which
                                                                                                Depreciation
                                                                                                  in Latest
                                                                                                Statement of
                                                       Accumulated   Date of         Date       Operations is
                                                      Depreciation   Construction   Acquired      Computed
                                                      ------------  ------------  ------------  ------------
<S>                                                   <C>            <C>             <C>           <C>

Leawood Fountain Plaza Office Complex (24% undivided
   interest), Leawood, Kansas                         $  982,344     1982-1983       2/20/85       30 years
Tower Industrial Building, Mundelein, Illinois           528,048        1974         3/20/86       30 years
NorthCreek Office Park, Cincinnati, Ohio               2,597,643     1984-1986       12/29/86      30 years
Northeast Commerce Center, Cincinnati, Ohio            1,539,518        1985         12/29/86      30 years
                                                       ---------
                                                       5,647,553
Countryside Office Park, Palatine, Illinois            1,186,763 (2)
                                                      ----------
           Total                                      $6,834,316
                                                      ==========
</TABLE>

(1) Amounts shown are net of assets written-off and the following  writedowns to
reflect appraised values:

    Leawood Fountain Plaza Office Complex             $   754,000
    NorthCreek Office Park                                484,000
    Northeast Commerce Center                             761,000
    Countryside Office Park                             3,256,000

(2) Amount is shown net in the financial statements $2,804,205.

                 (Continued on following page)

                                       36
<PAGE>

                        NOONEY INCOME FUND LTD. II, L.P.
                        --------------------------------
                             (A Limited Partnership)


             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
             -------------------------------------------------------

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
              ----------------------------------------------------


<TABLE>
<CAPTION>
                                                      2000           1999           1998
                                                  ------------   ------------   ------------
<S>                                               <C>            <C>            <C>
(A) Reconciliation of amounts in Column E:

     Balance at beginning of period               $ 20,604,154   $ 20,130,482   $ 19,981,023
     Add-  Cost of improvements                        626,415        618,970        289,092
     Less-  Cost of disposals                         (181,751)      (145,298)      (139,633)
                                                  ------------   ------------   ------------
     Balance at end of period                     $ 21,048,818   $ 20,604,154   $ 20,130,482
                                                  ============   ============   ============

(B) Reconciliation of amounts in Column F:

     Balance at beginning of period               $  6,289,628   $  5,757,725   $  5,236,483
     Add-  Provision during the period                 726,439        677,201        660,875
     Less-  Depreciation on disposals                 (181,751)      (145,298)      (139,633)
                                                  ------------   ------------   ------------
     Balance at end of period                     $  6,834,316   $  6,289,628   $  5,757,725
                                                  ============   ============   ============
(C)  The aggregate cost of real estate owned for
       federal income tax purposes                $ 26,303,818   $ 25,859,154   $ 25,385,482
                                                  ============   ============   ============
</TABLE>


                                       37