| (Mark      One)                                                                                                                                                              |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| [x]      Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange      Act of 1934                                                                           |
| [Fee      Required]                                                                                                                                                          |
| For      the fiscal year ended                                                                                                                                               | December      31, 2008 |   |   |   |
|                                                                                                                                                                         |   |   |   |   |   |
| or                                                                                                                                                                           |   |   |   |   |   |
|                                                                                                                                                                         |   |   |   |   |   |
| [      ]Transition Report Pursuant to Section 13 or 15(d) of the Securities      Exchange Act of 1934                                                                        |
| [No      Fee Required]                                                                                                                                                       |
| For      the transition period from ____________________  to      ______________________                                                                           |
|                                                                                                                                                                         |   |   |   |   |   |
|                                                                                                                                                                         |   |   |   |   |   |
| Commission      file Number: 0-8952                                                                                                                                          |
|                                                                                                                                                                         |   |   |   |   |   |
| SB      Partners                                                                                                                                                             |
| (Exact      name of registrant as specified in its charter)                                                                                                                  |
|                                                                                                                                                                         |   |   |   |   |   |
| New      York                                                                                                                                                                |   | 13-6294787 |
|                                                                                                                                                                         |   |   |   |   |   |
| (State      of other Jurisdiction of                                                                                                                                         |   | (I.R.S.      Employer |
|  incorporation      or organization)                                                                                                                                    |   | Identification      No.) |
|                                                                                                                                                                         |   |   |   |   |   |
|                                                                                                                                                                         |   |   |   |   |   |
| 1      New Haven Avenue, Suite 207, Box 11, Milford, Ct.                                                                                                                     |   | 06460 |
| (Address      of principal executive offices)                                                                                                                                |   |   (Zip      Code) |
|                                                                                                                                                                         |   |   |   |   |   |
|                                                                                                                                                                         |   |   |   |   |   |
| Registrant's      telephone number, including area code                                                                                                                      |   | (203)      283-9593 |   |
|                                                                                                                                                                         |   |   |   |   |   |
|                                                                                                                                                                         |   |   |   |   |   |
| Securities      registered pursuant to Section 12(b) of the Act:                                                                                                             |
|                                                                                                                                                                         |   |   |   |   |   |
| Title      of each Class                                                                                                                                                     |   | Name      of each exchange on which registered |
| NONE                                                                                                                                                                         |   |   |   |
|                                                                                                                                                                         |   |   |   |   |   |
|                                                                                                                                                                         |   |   |   |   |   |
|                   Securities      registered pursuant to Section 12(g) of the Act: |
|                                                                                                                                                                         |   |   |   |   |   |
| Units      of Limited Partnership Interests                                                                                                                                  |
| (Title      of Class)                                                                                                                                                        |

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|                                |                 |   |         |    |   |   |   |   |   |    |                  |   |                                                                                                                                                                                                                                                        |        |   |       |   |   |                  |   |
|-------------------------------------|----------------------|--------|--------------|---------|--------|--------|--------|--------|--------|---------|-----------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|--------|------------|--------|--------|-----------------------|--------|
|                                |                 |   | Description  |    |   |   |   |   |   | Percent |                  |   | Occupancy      at                                        |
| Property                            | Location             |   | Sq.      Ft. |    |   | Units  |   |   | Acres  |    | Acquisition      Date |   | Ownership                                                                                                                                                                                                                                                   |        |   | 12/31/2008 |   |   | Mortgage      Payable |   |
|                                |                 |   |         |    |   |   |   |   |   |    |                  |   |                                                                                                                                                                                                                                                        |        |   |       |   |   |                  |   |
| Industrial      Flex:               |                 |   |         |    |   |   |   |   |   |    |                  |   |                                                                                                                                                                                                                                                        |        |   |       |   |   |                  |   |
| Eagle      Lake Business Center IV  | Maple      Grove, MN |   |         | 60,000  |   |   |   | n/a    |   |    |                  | 5.15   |                                                                                                                                                                                                                                                        | Jun      02 |   |       | 100    | %      |                  |   | 100 | % |   |   | $0 |   |
|                                |                 |   |         |    |   |   |   |   |   |    |                  |   |                                                                                                                                                                                                                                                        |        |   |       |   |   |                  |   |   |   |   |   |   |   |
| Warehouse      Distribution Center: |                 |   |         |    |   |   |   |   |   |    |                  |   |                                                                                                                                                                                                                                                        |        |   |       |   |   |                  |   |   |   |   |   |   |
| 435      Park Court (b)             | Lino      Lakes, MN  |   |         | 266,000 |   |   |   | n/a    |   |    |                  | 13.47  |                                                                                                                                                                                                                                                        | Oct      05 |   |       | 100    | %      |                  |   | 100 | % |   |   | $10,000,000 |   |
| 175      Ambassador Drive (c)       | Naperville,      IL  |   |         | 331,089 |   |   |   | n/a    |   |    |                  | 17.55  |                                                                                                                                                                                                                                                        | Nov      06 |   |       | 100    | %      |                  |   | 100 | % |   |   | $6,806,091 |   |

|                                   | 2008                                                                       |   | 2007                                                                       |   | 2006                                                                       |   | 2005                                                                                   |   | 2004                                                                        |   |
|----------------------------------------|----------------------------------------------------------------------------|--------|----------------------------------------------------------------------------|--------|----------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|
|                                   |                                                                       |   |                                                                       |   |                                                                       |   |                                                                                   |   |                                                                        |   |
| Average Occupancy (e)                  |                                                                       |   |                                                                       |   |                                                                       |   |                                                                                   |   |                                                                        |   |
|                                   |                                                                       |   |                                                                       |   |                                                                       |   |                                                                                   |   |                                                                        |   |
| Holiday      Park Apts.(f)             | n/a                                                                        |   | n/a                                                                        |   | 97.17%                                                                     |   | 93.50%                                                                                 |   | 94.50%                                                                      |   |
| Cypress      Key Apts. (g)             | n/a                                                                        |   | n/a                                                                        |   | n/a                                                                        |   | 98.20%                                                                                 |   | 91.70%                                                                      |   |
| Halton      Place Apts. (h)            | n/a                                                                        |   | n/a                                                                        |   | 96.59%                                                                     |   | 92.70%                                                                                 |   | 90.30%                                                                      |   |
| Le      Coeur du Monde Apts. (b)       | n/a                                                                        |   | 93.90%                                                                     |   | 95.97%                                                                     |   | 95.50%                                                                                 |   | 93.90%                                                                      |   |
| Eagle      Lake Business Center IV (a) | 100.00%                                                                    |   | 100.00%                                                                    |   | 100.00%                                                                    |   | 100.00%                                                                                |   | 100.00%                                                                     |   |
| 435      Park Court (c)                | 100.00%                                                                    |   | 100.00%                                                                    |   | 100.00%                                                                    |   | 100.00%                                                                                |   | n/a                                                                         |   |
| 175      Ambassador Drive (d)          | 100.00%                                                                    |   | 100.00%                                                                    |   | 100.00%                                                                    |   | n/a                                                                                    |   | n/a                                                                         |   |
|                                   |                                                                       |   |                                                                       |   |                                                                       |   |                                                                                   |   |                                                                        |   |
| Effective Annual Rent (e)              |                                                                       |   |                                                                       |   |                                                                       |   |                                                                                   |   |                                                                        |   |
|                                   |                                                                       |   |                                                                       |   |                                                                       |   |                                                                                   |   |                                                                        |   |
| Holiday      Park Apts. (f)(i)         |  n/a                                                                  |   |  n/a                                                                  |   |  $    6,583                                       |   |  $      5,796                                       |   |  $      5,522                            |   |
| Cypress      Key Apts. (g)(i)          |  n/a                                                                  |   |  n/a                                                                  |   |  n/a                                                                  |   |  $      8,214                                       |   |  $      7,656                            |   |
| Halton      Place Apts. (h)(i)         |  n/a                                                                  |   |  n/a                                                                  |   |  $    6,895                                       |   |  $      6,288                                       |   |  $      5,886                            |   |
| Le      Coeur du Monde Apts. (b)(i)    |  n/a                                                                  |   |  $    9,026                                       |   |  $    9,577                                       |   |  $      8,998                                       |   |  $      8,799                            |   |
| Eagle      Lake Business Center IV (j) |  $         13            |   |  $         14            |   |  $         15            |   |  $           14            |   |  $           14 |   |
| 435      Park Court (c)(j)             |  $         24            |   |  $         25            |   |  $         22            |   |  $             4 |   |  n/a                                                                   |   |
| 175      Ambassador Drive (d)(j)       |  $           4 |   |  $           4 |   |  $           4 |   |  n/a                                                                              |   |  n/a                                                                   |   |

|   | (j)      Per square foot.  Base rent plus escalations, divided by the      total number of square feet at |
|--------|---------------------------------------------------------------------------------------------------------------------|

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|                                                     |   | For      the Years Ended December 31, |     |
|----------------------------------------------------------|--------|---------------------------------------|----------|
|                                                     |   | 2008                                  |     |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                                     |   |                                  |     |   | (In      Thousands, Except Unit Data) |   |
|                                                     |   |                                  |     |   | (As      Restated) |   |   |   |   |   |   |   |   |   |   |
| Income      Statement Data:                              |   |                                  |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Rental,      Interest and Other Revenues                 |   |                                  | $2,891   |   |   |   | $3,558 |   |   |   | $2,216 |   |   |   | $368 |   |   |   | $9 |   |
| Operating      Expenses, Less Depreciation               |   |                                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and      Amortization                                    |   |                                  | (3,847   | ) |   |   | (3,454 | ) |   |   | (2,358 | ) |   |   | (1,393 | ) |   |   | (1,188 | ) |
| Depreciation      and Amortization                       |   |                                  | (903     | ) |   |   | (872 | ) |   |   | (400 | ) |   |   | (89 | ) |   |   | - |   |
|                                                     |   |                                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from Operations                                |   |                                  | (1,859   | ) |   |   | (768 | ) |   |   | (542 | ) |   |   | (1,114 | ) |   |   | (1,179 | ) |
| Equity      in Net (Loss) Income of Investments          |   |                                  | (13,370  | ) |   |   | (973 | ) |   |   | (26 | ) |   |   | 3,342 |   |   |   | (317 | ) |
|                                                     |   |                                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)      Income from Continuing Operations            |   |                                  | (15,229  | ) |   |   | (1,741 | ) |   |   | (568 | ) |   |   | 2,228 |   |   |   | (1,496 | ) |
|                                                     |   |                                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (Loss) from Discontinued Operations          |   |                                  | 312      |   |   |   | 333 |   |   |   | 1,236 |   |   |   | (929 | ) |   |   | 166 |   |
| Gain      on Sale of Investments in Real Estate          |   |                                  | -        |   |   |   | 2,518 |   |   |   | 12,376 |   |   |   | 6,351 |   |   |   | - |   |
|                                                     |   |                                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Income (Loss)                                   |   |                                  | $(14,917 | ) |   |   | $1,110 |   |   |   | $13,044 |   |   |   | $7,650 |   |   |   | $(1,330 | ) |
|                                                     |   |                                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (Loss) from Continuing Operations            |   |                                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| per      Unit of Partnership Interest:                   |   |                                  | $(1,964  | ) |   |   | $(225 | ) |   |   | $(73 | ) |   |   | $288 |   |   |   | $(193 | ) |
|                                                     |   |                                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Distributions      paid per Unit of Partnership Interest |   |                                  | $110     |   |   |   | $350 |   |   |   | $350 |   |   |   | $40 |   |   |   | $40 |   |
|                                                     |   |                                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      Average Number of                          |   |                                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Partnership      Units Outstanding           |   |                                  | 7,754    |   |   |   | 7,754 |   |   |   | 7,754 |   |   |   | 7,754 |   |   |   | 7,754 |   |
|                                                     |   |                                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      Sheet Data at Year End:                     |   |                                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                     |   |                                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real      Estate, net                                    |   |                                  | $34,200  |   |   |   | $35,041 |   |   |   | $35,768 |   |   |   | $15,224 |   |   |   | $- |   |
| Real      Estate Assets Held for Sale                    |   |                                  | $4,379   |   |   |   | $4,498 |   |   |   | $16,902 |   |   |   | $31,821 |   |   |   | $52,335 |   |
| Total      Assets                                        |   |                                  | $62,064  |   |   |   | $77,609 |   |   |   | $67,013 |   |   |   | $55,341 |   |   |   | $56,310 |   |
| Mortgage      Notes and Unsecured Loan Payable           |   |                                  | $38,806  |   |   |   | $38,943 |   |   |   | $17,085 |   |   |   | $10,000 |   |   |   | $- |   |
| Other      Liabilities in Discontinued Operations        |   |                                  | $111     |   |   |   | $67 |   |   |   | $9,710 |   |   |   | $15,461 |   |   |   | $33,528 |   |
|                                                     |   |                                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

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| For      the year ending December 31, |   |
|---------------------------------------|--------|
| 2009                                  |   |   | 22,158,198 |   |
| 2010                                  |   |   | 6,647,893 |   |
| 2011                                  |   |   | - |   |
| 2012                                  |   |   | - |   |
| 2013                                  |   |   |   |   |
| Thereafter                            |   |   | 10,000,000 |   |
|                                  |   |   |   |   |
| Total                                 |   |   | $38,806,091 |   |
|                                  |   |   |   |   |

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| (a)   | The      Chief Executive Officer and the Chief Financial Officer of the general      partner of SB Partners have evaluated the disclosure controls and      procedures relating to the Registrant’s Annual Report on Form 10-K for the      year ended December 31, 2008 as filed with the Securities and Exchange      Commission and have judged such controls and procedures to be      effective. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | There      have been no changes in the Registrant’s internal controls during the year      ended December 31, 2008 that could significantly affect those controls      subsequent to the date ofevaluation. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Name                         | Age                                                                                          | Position                           |
|------------------------------|----------------------------------------------------------------------------------------------|------------------------------------|
|                         |                                                                                         |                               |
|                         |                                                                                         |                               |
| John      H. Streicker       | 66                                                                                           | President      & Director      |
|                         |                                                                                         |                               |
| Millie      C. Cassidy       | 63                                                                                           | Vice      President & Director |
|                         |                                                                                         |                               |
| David      Weiner            | 73                                                                                           | Chief      Executive Officer       |
|                         |                                                                                         |                               |
| Anita      Breslin           | 52                                                                                           | First      Vice President          |
|                         |                                                                                         |                               |
| Robert      Leniart          | 52                                                                                           | Vice      President                |
|  George      N. Tietjen | 48                                                                                           | Vice      President                |
|  Martin      Cawley     | 52                                                                                           | Vice      President                |
|  Leland      J. Roth    |                     45 | Treasurer                          |
|  John      H. Zoeller   | 49                                                                                           | Chief      Financial Officer       |

----

| (a) | At      December 31, 2008, an institutional investor of record owned 7.13% of the      outstanding Units of Limited Partnership Interests.  On January      13, 1993, a group of Unit holders of record, including the institutional      investor referred to above, entered into a collective agreement with      respect to their ownership interest in the Registrant.  The      aggregate number of Units beneficially owned by the group is 606 Units,      representing 7.8% of the total number of outstanding Units of Limited      Partnership Interest on that date. Each Unitholder has disclaimed      beneficial ownership of all Units owned by the other Unitholders in this      group.  The foregoing information is based upon a 13-D filing      made by the respective Unitholders. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | As      of December 31, 2008, none of the Directors of the General Partner owned      any outstanding Units of Limited Partnership Interest.  However,      an Assistant Secretary of the General Partner owned four Units of Limited      Partnership Interest.  No Officers or Directors of SHC owned any      outstanding Units of Limited Partnership Interest.  SRE Clearing      Services, Inc., an affiliate of the General Partner, owned 2,572.5 Units      of Limited Partnership Interest, representing 33.18% of the outstanding      number of Units on December 31, 2008.  In accordance with SEC      regulations, SRE Clearing Services, Inc. filed Form 13-D/A on December 26,      2008, when the total number of Units held reached 33% of the outstanding      number of Units. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | During the year ended      December 31, 2008, there were no changes in control of the      Registrant or the GeneralPartner. |
|-----|------------------------------------------------------------------------------------------------------------------------------|

----

| 1.   | Audit      Fees.  The aggregate fees billed for professional      services rendered by the principal accountant for the audit of the      Partnership’s annual financial statements and review of financial      statements included in the Partnership’s Form 10-Q or services that are      normally provided by the accountant in connection with statutory and      regulatory filings or engagements for those fiscal years were      approximately $150,000 and $112,000 for the years ended December 31, 2008      and 2007, respectively.  $30,000 of the fees for 2008 were paid      to Deloitte & Touche, LLP, the former independent auditor for the      Partnership for their review of the 2007 audited financial statements as      it related to reclassifications reported to the 2005 Statement of      Operations.  Deloitte and Touche , LLP was the auditor for the      partnership in 2005.  The remaining 2008 and all of the 2007      fees were paid to Dworken, Hillman, LaMorte & Sterczala, P.C., the      current independent auditor for thePartnership. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | Audit-Related      Fees.  No fees were billed by the principal accountant      during the years ended December 31, 2008 and 2007 for assurance and      related services that are reasonably related to the performance of the      audit or review of the Partnership's financial statements that are not      reported under subparagraph (1) of thissection. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | Tax      Fees.  The aggregate fees billed for professional      services rendered by the principal accountant for tax compliance, tax      advice, and tax planning were $15,000 for the      years ended December 31, 2008 and 2007.  This work included      reviewing year-end tax projections as well as the Registrant’s tax returns      prepared by the Registrant for the respective  years. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. | All Other      Fees.  No other fees were billed in either of the last      two fiscal years for products and services provided by the principal      accountant, other than the services reported in subparagraphs (1) through      (3) of this section. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.   | (i)The      selection of the independent auditors to audit the annual financial      statements and perform review procedures on the quarterly reports filed      with the SEC by the Registrant is made by the general partner of the      partnership.  Fees quoted by the independent auditors are      approved by the general partner prior to their acceptance by the      Registrant. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.   | Not      Applicable. |
|----------------|----------------------|

| (a) | (1) | Financial      statements - The Registrant's 2008 Annual Audited Consolidated Financial      Statements are included in this Annual Report on Form  10-K. |
|-----|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Financial      statement schedules - See Index to Consolidated Financial Statement      Schedules on page 27.  All other financial statement schedules      are inapplicable or the required subject matter is contained in the      consolidated financial statements or notes  thereto. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                  |   | Incorporated      by                                                                                                            |   |   |   |
|---------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| Description                           |   | Reference      to                                                                                                               |   |   |   |
| Agreement      of Limited Partnership |   | Exhibit      A to Registration Statement on Form S-11 as filed with the Securities and      Exchange Commission on May 16, 1985 |

|   |   |
|--------|--------|

----

|                      |   | SB PARTNERS                                       |
|---------------------------|--------|---------------------------------------------------|
|                      |   |                                              |
|                      | By:    | SB PARTNERS REAL ESTATE      CORPORATION          |
|                      |   | General      Partner                              |
|                      |   |                                              |
|                      |   | Chief      Executive Officer                      |
| Dated:      June 15, 2009 | By:    | /s/ David Weiner                                  |
|                      |   | David      Weiner                                 |
|                      |   |                                              |
|                      |   | Principal      Financial & Accounting Officer |
| Dated:      June 15, 2009 | By:    | /s/ John H. Zoeller                               |
|                      |   | John      H. Zoeller                              |
|                      |   | Chief      Financial Officer                      |
|                      |   |                                              |

|                     |   |                                                |                         |               |   |               |   |
|--------------------------|--------|-----------------------------------------------------|------------------------------|--------------------|--------|--------------------|--------|
| Signature                |   |                                                | Position                     |               |   |               | Date   |
|                     |   |                                                |                         |               |   |               |   |
| /s/      David Weiner    |   |                                                | Chief      Executive Officer |               |   | June      15, 2009 |
| David      Weiner        |   |                                                |                         |               |   |               |
|                     |   |                                                |                         |               |   |
|                     |   |                                                | Chief      Financial Officer |               |   |
| /s/      John H. Zoeller |   | (Principal      Financial & Accounting Officer) |                         | June      15, 2009 |
| John      H. Zoeller     |   |                                                |                         |               |   |               |

----

| (1)   | I      have reviewed this annual report on Form 10-K of SB    Partners; |
|-----------------|-------------------------------------------------------------------------|

|   | (2)Based      on my knowledge, this annual report does not contain any untrue statement      of material fact or omit to state a material fact necessary to make the      statements made, in light of the circumstances under which such statements      were made, not misleading with respect to the year covered by this annual      report; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3)Based      on my knowledge, the financial statements, and other financial information      included in this annual report, fairly present in all material respects      the financial condition, results of operations and cash flows of the      registrant as of, and for, the periods presented in this annual      report; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | The      registrant’s other certifying officer and I are responsible for      establishing and maintaining disclosure controls and procedures (as      defined in Exchange Act Rule 13a-15(e)(4)and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | designed      such disclosure controls and procedures, or caused such disclosure      controls and procedures to be designed under our supervision, to ensure      that material information relating to the registrant, including its      consolidated subsidiaries, is made known to us by others within those      entities, particularly during the period in which this annual report is      being prepared; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | evaluated      the effectiveness of the registrant’s disclosure controls and procedures      and presented in this report our conclusions about the effectiveness of      the disclosure controls and procedures, as of the end of the period      covered by this annual report based on such evaluation;  and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | disclosed      in this report any change in the registrant’s internal control over      financial reporting that occurred during the registrant’s most recent      fiscal quarter (the registrant’s fourth fiscal quarter in the case of an      annual report) that has materially affected, or is reasonably likely to      materially affect, the registrant’s internal control over financing      reporting; and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | The      registrant’s other certifying officer and I have disclosed, based on our      most recent evaluation of internal control over financial reporting, to      the registrant’s auditors and the audit committee of the Registrant’s      board of directors (or persons performing the equivalent      functions): |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | all      significant deficiencies and material weaknesses in the design or      operation of internal control over financial reporting which are      reasonably likely to adversely affect the registrant’s ability to record,      process, summarize and report financial information ;  and |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | any      fraud, whether or not material, that involves management or other      employees who have a significant role in the registrant’s internal control      over financial reporting. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                      |   | Chief      Executive Officer |
|---------------------------|--------|------------------------------|
| Dated:      June 15, 2009 | By:    | /s/ David Weiner             |
|                      |   | David      Weiner            |
|                      |   |                         |

----

| (1)   | I      have reviewed this annual report on Form 10-K of SB    Partners; |
|-----------------|-------------------------------------------------------------------------|

|   | (2)Based      on my knowledge, this annual report does not contain any untrue statement      of material fact or omit to state a material fact necessary to make the      statements made, in light of the circumstances under which such statements      were made, not misleading with respect to the year covered by this annual      report; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3)Based      on my knowledge, the financial statements, and other financial information      included in this annual report, fairly present in all material respects      the financial condition, results of operations and cash flows of the      registrant as of, and for, the periods presented in this annual      report; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4)The      registrant’s other certifying officer and I are responsible for      establishing and maintaining disclosure controls and procedures (as      defined in Exchange Act Rule 13a-15(e)(4)and |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 15d-15(e)(4))      for the registrant and have: |
|--------|-------------------------------------------------|

| (a)   | designed      such disclosure controls and procedures, or caused such disclosure      controls and procedures to be designed under our supervision, to ensure      that material information relating to the registrant, including its      consolidated subsidiaries, is made known to us by others within those      entities, particularly during the period in which this annual report is      being prepared; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | evaluated      the effectiveness of the registrant’s disclosure controls and procedures      as of a date within 90 days prior to the filing date of this annual report      (the “Evaluation Date”); and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c)disclosed      in this report any change in the registrant’s internal control over      financial reporting that occurred during the registrant’s most recent      fiscal quarter (the registrant’s fourth fiscal quarter in the case of an      annual report) that has materially affected, or is reasonably likely to      materially affect, the registrant’s internal control over financing      reporting; |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | The      registrant’s other certifying officer and I have disclosed, based on our      most recent evaluation of internal control over financial reporting, to      the Registrant’s auditors and the audit committee of the Registrant’s      board of directors (or persons performing the equivalent      functions): |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a)all      significant deficiencies and material weaknesses in the design or      operation of internal control over financial reporting which are      reasonably likely to adversely affect the Registrant’s ability to record,      process, summarize and report financial information;  and |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b)any      fraud, whether or not material, that involves management or other      employees who have a significant role in the registrant’s internal control      over financial reporting. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  Dated:      June 15, 2009 |  By: | Principal      Financing & Accounting Officer |
|---------------------------------|-----------|---------------------------------------------------|
| /s/ John H. Zoeller             |
|                            |      | John      h. Zoeller                              |
|                            |      | Chief      Financial Officer                      |

----

|   | (1)the      Annual Report on Form 10-K of the registrant for the annual period ended      December 31, 2008, as filed with the Securities and Exchange Commission      (the “Report”), fully complies with the requirements of Section 13(a) or      15(d) of the Securities Exchange Act of1934; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | the      information contained in the Report fairly presents, in all material      respects, the financial condition and results of operations of the      registrant. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                      |   | Chief      Executive Officer |
|---------------------------|--------|------------------------------|
| Dated:      June 15, 2009 | By:    | /s/ David Weiner             |
|                      |   | David      Weiner            |
|                      |   |                         |

|   | (1) | the      Annual Report on Form 10-K of the registrant for the annual period ended      December 31, 2008, as filed with the Securities and Exchange Commission      (the “Report”), fully complies with the requirements of Section 13(a) or      15(d) of the Securities Exchange Act of1934; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | the      information contained in the Report fairly presents, in all material      respects, the financial condition and results of operations of the      registrant. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  Dated:      June 15, 2009 |  By: | Principal      Financing & Accounting Officer |
|---------------------------------|-----------|---------------------------------------------------|
| /s/ John H. Zoeller             |
|                            |      | John      H. Zoeller                              |
|                            |      | Chief      Financial Officer                      |

----

| SB      PARTNERS                                                                                                       |
|------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                   |   |
| ITEMS      8 and 14 (a) (1) and (2)                                                                                    |
|                                                                                                                   |   |
|                                                                                                                   |   |
| FINANCIAL STATEMENTS AND SUPPLEMENTARY      DATA                                                                       |
|                                                                                                                   |   |
| INDEX TO CONSOLIDATED FINANCIAL STATEMENTS      AND                                                                    |
| SUPPLEMENTAL FINANCIAL STATEMENT      SCHEDULE                                                                         |
|                                                                                                                   |   |
|                                                                                                                   |   |
| Report      of Independent Registered Public Accounting Firm                                                           | 27 |
|                                                                                                                   |   |
| Consolidated      Balance Sheets as of December 31, 2008 and 2007                                                      | 28 |
|                                                                                                                   |   |
| Consolidated      Statements of Operations for the years ended December 31, 2008, 2007 and      2006                   | 29 |
|                                                                                                                   |   |
| Consolidated      Statements of Changes in Partners' Capital for the years ended December      31, 2008, 2007 and 2006 | 30 |
|                                                                                                                   |   |
| Consolidated      Statements of Cash Flows for the years ended December 31, 2008, 2007 and      2006                   | 31 |
|                                                                                                                   |   |
| Notes      to Consolidated Financial Statements                                                                        | 32      – 42 |
|                                                                                                                   |   |
| Supplemental      Financial Statement schedule:                                                                        |   |
|                                                                                                                   |   |
| Schedule      III – Real Estate and Accumulated Depreciation as of December 31,      2008                        | 43-44 |
|                                                                                                                   |   |

----

----

| SB      PARTNERS                                    |                                                                       |                                         |   |              |        |   |
|-----------------------------------------------------|----------------------------------------------------------------------------|----------------------------------------------|--------|-------------------|-------------|--------|
| (A New York Limited      Partnership)               |                                                                       |                                         |   |              |        |   |
|                                                |                                                                       |                                         |   |              |        |   |   |   |
| CONSOLIDATED BALANCE SHEETS                         |                                                                       |                                         |   |              |        |   |
|                                                |                                                                       |                                         |   |              |        |   |   |   |
|                                                |                                                                       |                                         |   | December      31, |        |
|                                                |                                                                       |                                         |   | 2008              |        |   | 2007 |   |
|                                                |                                                                       |                                         |   |              |        |   | (As      Restated) |   |
| Assets:                                             |                                                                       |                                         |   |              |        |   |   |   |
|    Investments      -                |                                                                       |                                         |   |              |        |   |
|                                                | Real      estate, at cost                                                  |                                         |   |              |        |   |   |
|                                                |      Land                                         |                                         |   | $3,595,000        |        |   |   | $3,595,000 |   |
|                                                |      Buildings,      furnishings and improvements |                                         |   | 32,771,710        |        |   |   | 32,771,710 |   |
|                                                |      Less      - accumulated depreciation         |                                         |   | (2,166,282        | )           |   |   | (1,326,140 | ) |
|                                                |                                                                       |                                         |   |              | 34,200,428  |   |   |   | 35,040,570 |   |
|                                                |                                                                       |                                         |   |              |        |   |   |   |   |   |
|                                                | Real      estate held for sale                                             |                                         |   | 4,379,087         |        |   |   | 4,498,022 |   |
|                                                | Investment      in Sentinel Omaha, LLC                                     |                                         |   | 22,851,207        |        |   |   | 36,227,213 |   |
|                                                |                                                                       |                                         |   |              | 61,430,722  |   |   |   | 75,765,805 |   |
|                                                |                                                                       |                                         |   |              |        |   |   |   |   |   |
|    Other      Assets -               |                                                                       |                                         |   |              |        |   |   |   |
|                                                | Cash      and cash equivalents                                             |                                         |   | 544,241           |        |   |   | 1,679,152 |   |
|                                                | Other                                                                      |                                         |   |              | 88,561      |   |   |   | 163,546 |   |
|                                                |                                                                       |                                         |   |              |        |   |   |   |   |   |
|                                                |                                                                       | Total      assets                            |   |              | $62,063,524 |   |   |   | $77,608,503 |   |
|                                                |                                                                       |                                         |   |              |        |   |   |   |   |   |
| Liabilities:                                        |                                                                       |                                         |   |              |        |   |   |   |   |
|                                                | Mortgage      notes and unsecured loan payable                             |                                         |   | $38,806,090       |        |   |   | $38,943,176 |   |
|                                                | Accounts      payable and accrued expenses                                 |                                         |   | 556,892           |        |   |   | 238,672 |   |
|                                                | Tenant      security deposits                                              |                                         |   | 25,580            |        |   |   | 25,580 |   |
|                                                | Other      liabilities in discontinued operations                          |                                         |   | 110,753           |        |   |   | 67,261 |   |
|                                                |                                                                       |                                         |   |              |        |   |   |   |   |   |
|                                                |                                                                       | Total      liabilities                       |   |              | 39,499,315  |   |   |   | 39,274,689 |   |
|                                                |                                                                       |                                         |   |              |        |   |   |   |   |   |
| Partners'      Capital:                             |                                                                       |                                         |   |              |        |   |   |   |
|                                                | Units      of partnership interest without par value;                      |                                         |   |              |        |   |   |   |   |
|                                                | Limited      partner - 7,753 units                                         |                                         |   | 22,579,734        |        |   |   | 38,347,305 |   |
|                                                | General      partner - 1 unit                                              |                                         |   | (15,525           | )           |   |   | (13,491 | ) |
|                                                |                                                                       |                                         |   |              |        |   |   |   |   |   |
|                                                |                                                                       | Total      partners' capital                 |   |              | 22,564,209  |   |   |   | 38,333,814 |   |
|                                                |                                                                       |                                         |   |              |        |   |   |   |   |   |
|                                                |                                                                       | Total      liabilities and partners' capital |   |              | $62,063,524 |   |   |   | $77,608,503 |   |
|                                                |                                                                       |                                         |   |              |        |   |   |   |   |   |
| See      notes to consolidated financial statements |                                                                       |                                         |   |              |        |   |   |   |

----

| SB      PARTNERS                                              |                |   |                                  |      |   |               |       |      |   |
|---------------------------------------------------------------|---------------------|--------|---------------------------------------|-----------|--------|--------------------|------------|-----------|--------|
| (A New York Limited      Partnership)                         |                |   |                                  |      |   |               |       |      |   |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |
| CONSOLIDATED STATEMENTS OF      OPERATIONS                    |                |   |                                  |      |   |               |       |      |   |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |
|                                                          |                |   | For      the Years Ended December 31, |      |   |               |       |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |
|                                                          |                |   | 2008                                  |      |   | 2007               |       |      | 2006   |   |
| Revenues:                                                     |                |   |                                  |      |   | (As      Restated) |       |      |   |   |
| Base      rental income                                       |                |   | $2,417,825                            |      |   |               | $2,396,507 |      |   |   | $1,337,928 |   |
| Other      rental income                                      |                |   | 462,118                               |      |   |               | 660,038    |      |   |   | 367,790 |   |
| Interest      on short-term investments and other             |                |   | 11,120                                |      |   |               | 501,395    |      |   |   | 510,509 |   |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
|                                                          | Total      revenues |   |                                  | 2,891,063 |   |               |       | 3,557,940 |   |   |   | 2,216,227 |   |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| Expenses:                                                     |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| Real      estate operating expenses                           |                |   | 450,521                               |      |   |               | 591,819    |      |   |   | 405,612 |   |
| Interest      on mortgage notes and unsecured loan payable    |                |   | 2,022,608                             |      |   |               | 1,505,580  |      |   |   | 696,768 |   |
| Depreciation      and amortization                            |                |   | 903,550                               |      |   |               | 873,711    |      |   |   | 400,608 |   |
| Real      estate taxes                                        |                |   | 326,776                               |      |   |               | 446,514    |      |   |   | 353,438 |   |
| Management      fees                                          |                |   | 851,590                               |      |   |               | 734,094    |      |   |   | 709,655 |   |
| Other                                                         |                |   |                                  | 195,454   |   |               |       | 174,816   |   |   |   | 192,181 |   |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| Total      expenses                                           |                |   | 4,750,499                             |      |   |               | 4,326,534  |      |   |   | 2,758,262 |   |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| Loss      from  operations                          |                |   | (1,859,436                            | )         |   |               | (768,594   | )         |   |   | (542,035 | ) |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| Equity      in net loss of investments                        |                |   | (13,369,669                           | )         |   |               | (972,787   | )         |   |   | (26,133 | ) |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| Loss      from continuing operations                          |                |   | (15,229,105                           | )         |   |               | (1,741,381 | )         |   |   | (568,168 | ) |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| Income      from discontinued operations                      |                |   | 312,385                               |      |   |               | 333,329    |      |   |   | 1,236,615 |   |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| Net      gain on sale of investment in real estate property   |                |   | -                                     |      |   |               | 2,518,418  |      |   |   | 12,375,850 |   |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| Net      income (loss)                                        |                |   | (14,916,720                           | )         |   |               | 1,110,366  |      |   |   | 13,044,297 |   |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| Income      (loss) allocated to general partner               |                |   | (1,924                                | )         |   |               | 143        |      |   |   | 1,682 |   |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| Income      (loss) allocated to limited partners              |                |   | $(14,914,796                          | )         |   |               | $1,110,223 |      |   |   | $13,042,615 |   |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| Earnings      (loss) per unit of limited partnership interest |                |   |                                  |      |   |               |       |      |   |   |   |   |
| (basic      and diluted)                                      |                |   |                                  |      |   |               |       |      |   |   |   |   |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| Continuing      operations                                    |                |   | $(1,964.29                            | )         |   |               | $(224.61   | )         |   |   | $(73.28 | ) |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| Discontinued      operations (including gain on sale)         |                |   | $40.29                                |      |   |               | $367.82    |      |   |   | $1,755.77 |   |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| Net  income      (loss)                             |                |   | $(1,923.99                            | )         |   |               | $143.22    |      |   |   | $1,682.48 |   |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| Weighted      Average Number of Units of Limited              |                |   |                                  |      |   |               |       |      |   |   |   |   |
|    Partnership      Interest Outstanding       |                |   | 7,753                                 |      |   |               | 7,753      |      |   |   | 7,753 |   |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
|                                                          |                |   |                                  |      |   |               |       |      |   |   |   |   |   |
| See      notes to consolidated financial statements           |                |   |                                  |      |   |               |       |      |   |   |   |   |

----

| SB      PARTNERS                                             |   |
|--------------------------------------------------------------|--------|
| (A New York Limited      Partnership)                        |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CONSOLIDATED      STATEMENTS OF CHANGES IN PARTNERS' CAPITAL |   |
| For the years ended December 31, 2008, 2007, and      2006   |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Limited      Partners:                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   | Units      of Partnership Interest |   |   |   |   |   |   |   |   |   |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   | Number |   |   | Amount |   |   | Cumulative      Cash Distributions |   | Accumulated      Earnings |   | Total |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      January 1, 2006                                |   |   | 7,753 |   |   |   | 119,968,973 |   |   |   | (105,442,061 | ) |   |   | 15,094,305 |   |   |   | 29,621,217 |   |
| Cash      distributions                                      |   |   | - |   |   |   | - |   |   |   | (2,713,375 | ) |   |   | - |   |   |   | (2,713,375 | ) |
| Net      income for the year                                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 13,042,615 |   |   |   | 13,042,615 |   |
| Balance,      December 31, 2006                              |   |   | 7,753 |   |   |   | 119,968,973 |   |   |   | (108,155,436 | ) |   |   | 28,136,920 |   |   |   | 39,950,457 |   |
| Cash      distributions                                      |   |   | - |   |   |   | - |   |   |   | (2,713,375 | ) |   |   | - |   |   |   | (2,713,375 | ) |
| Net      income for the year                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (As      Restated)                                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,110,223 |   |   |   | 1,110,223 |   |
| Balance,      December 31, 2007                              |   |   | 7,753 |   |   |   | 119,968,973 |   |   |   | (110,868,811 | ) |   |   | 29,247,143 |   |   |   | 38,347,305 |   |
| Cash      distributions                                      |   |   |   |   |   |   |   |   |   |   | (852,775 | ) |   |   |   |   |   |   | (852,775 | ) |
| Net      loss for the year                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (14,914,796 | ) |   |   | (14,914,796 | ) |
| Balance,      December 31, 2008                              |   |   | 7,753 |   |   |   | $119,968,973 |   |   |   | $(111,721,586 | ) |   |   | $14,332,347 |   |   |   | $22,579,734 |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      Partner:                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   | Units      of Partnership Interest |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   | Number |   |   | Amount |   |   | Cumulative      Cash Distributions |   | Accumulated      Earnings |   | Total |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      January 1, 2006                                |   |   | 1 |   |   |   | 10,000 |   |   |   | (25,554 | ) |   |   | 938 |   |   |   | (14,616 | ) |
| Cash      distributions                                      |   |   | - |   |   |   | - |   |   |   | (350 | ) |   |   | - |   |   |   | (350 | ) |
| Net      income for the year                                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,682 |   |   |   | 1,682 |   |
| Balance,      December 31, 2006                              |   |   | 1 |   |   |   | 10,000 |   |   |   | (25,904 | ) |   |   | 2,620 |   |   |   | (13,284 | ) |
| Cash      distributions                                      |   |   | - |   |   |   | - |   |   |   | (350 | ) |   |   | - |   |   |   | (350 | ) |
| Net      income for the year                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (As      Restated)                                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 143 |   |   |   | 143 |   |
| Balance,      December 31, 2007                              |   |   | 1 |   |   |   | 10,000 |   |   |   | (26,254 | ) |   |   | 2,763 |   |   |   | (13,491 | ) |
| Cash      distributions                                      |   |   | - |   |   |   | - |   |   |   | (110 | ) |   |   | - |   |   |   | (110 | ) |
| Net      loss for the year                                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,924 | ) |   |   | (1,924 | ) |
| Balance,      December 31, 2008                              |   |   | 1 |   |   |   | $10,000 |   |   |   | $(26,364 | ) |   |   | $839 |   |   |   | $(15,525 | ) |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See      notes to consolidated financial statements.         |   |   |

----

| SB      PARTNERS                                                  |   |
|-------------------------------------------------------------------|--------|
| (A New York Limited      Partnership)                             |   |
|                                                              |   |   |   |   |   |   |   |   |   |
| CONSOLIDATED STATEMENTS OF CASH      FLOWS                        |   |
|                                                              |   |   |   |   |   |   |   |   |   |
|                                                              |   | For      the Years Ended December 31, |   |
|                                                              |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                              |   |   |   |   | (As      Restated) |   |   |   |   |
| Cash      Flows From Operating Activities:                        |   |   |   |   |   |   |   |   |   |
|   Net      income (loss)                                |   |   | $(14,916,720 | ) |   |   | $1,110,366 |   |   |   | $13,044,297 |   |
| Adjustments      to reconcile net income (loss) to net cash       |   |   |   |   |   |   |   |   |   |   |   |   |
| (used      in) provided by operating activities:                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      gain on sale of investment in real estate property       |   |   | - |   |   |   | (2,518,418 | ) |   |   | (12,375,850 | ) |
| Equity      in net loss of investment and joint venture           |   |   | 13,369,669 |   |   |   | 972,787 |   |   |   | 26,133 |   |
| Depreciation      and amortization                                |   |   | 1,036,588 |   |   |   | 1,056,132 |   |   |   | 761,559 |   |
| Distributions      received from joint venture                    |   |   | - |   |   |   | - |   |   |   | 686,667 |   |
| Net      (decrease) increase in deferred revenue                  |   |   | - |   |   |   | (23,314 | ) |   |   | 23,314 |   |
| Net      (increase) decrease in operating assets                  |   |   | 18,911 |   |   |   | 139,509 |   |   |   | (117,956 | ) |
| Net      increase (decrease) in operating liabilities             |   |   | 360,714 |   |   |   | (152,643 | ) |   |   | (216,851 | ) |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash (used in) provided by operating activites           |   |   | (130,838 | ) |   |   | 584,419 |   |   |   | 1,831,313 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      Flows From Investing Activities:                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      proceeds from sale of investment in real estate property |   |   | - |   |   |   | 15,085,446 |   |   |   | 27,448,306 |   |
| Investment      in Sentinel Omaha, LLC                            |   |   | - |   |   |   | (37,200,000 | ) |   |   | - |   |
| Acquisition      of real estate property                          |   |   |   |   |   |   | - |   |   |   | (13,823,943 | ) |
| Decrease      in cash held in escrow                              |   |   | - |   |   |   | 24,112 |   |   |   | 239,371 |   |
| Purchase      of marketable securities                            |   |   | - |   |   |   | (19,999,226 | ) |   |   | (12,999,198 | ) |
| Proceeds      from sale of marketable securities                  |   |   | - |   |   |   | 32,998,424 |   |   |   | - |   |
| Capital      additions to real estate owned                       |   |   | (14,102 | ) |   |   | (423,873 | ) |   |   | (492,362 | ) |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash (used in) provided by investing activites           |   |   | (14,102 | ) |   |   | (9,515,117 | ) |   |   | 372,174 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      Flows From Financing Activities:                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds      of bank loan                                        |   |   | - |   |   |   | 22,000,000 |   |   |   | - |   |
| Repayments      of mortgage notes payable                         |   |   | - |   |   |   | (9,427,012 | ) |   |   | (3,383,118 | ) |
| Principal      payments on mortgage notes payable                 |   |   | (137,086 | ) |   |   | (192,105 | ) |   |   | (189,278 | ) |
| Repayments      of borrowings under revolving credit facility     |   |   |   |   |   |   | - |   |   |   | (2,000,000 | ) |
| Payment      of deferred financing cost                           |   |   | - |   |   |   | (56,650 | ) |   |   | - |   |
| Distributions      paid to partners                               |   |   | (852,885 | ) |   |   | (2,713,725 | ) |   |   | (2,713,725 | ) |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided by (used in) financing activities          |   |   | (989,971 | ) |   |   | 9,610,508 |   |   |   | (8,286,121 | ) |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      change in cash and cash equivalents                      |   |   | (1,134,911 | ) |   |   | 679,810 |   |   |   | (6,082,634 | ) |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents at beginning of year               |   |   | 1,679,152 |   |   |   | 999,342 |   |   |   | 7,081,976 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents at end of year                     |   |   | $544,241 |   |   |   | $1,679,152 |   |   |   | $999,342 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosure of cash flow information:            |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      paid during the year for interest                       |   |   | $1,940,925 |   |   |   | $1,812,747 |   |   |   | $1,616,635 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage      assumed in connection with acquisition of real      |   |   |   |   |   |   |   |   |   |   |   |   |
| estate      property                                              |   |   | $- |   |   |   | $- |   |   |   | $7,107,319 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| See      notes to consolidated financial statements               |   |   |   |   |   |   |   |   |   |   |   |   |

----

| (a)   | The      accompanying consolidated financial statements include the accounts of SB      Partners and its subsidiaries.  All significant intercompany      accounts and transactions have been eliminated.  The      consolidated financial statements are prepared using the accrual basis of      accounting in accordance with accounting principles generally accepted in      the United States of America.  Revenues are recognized as earned      and expenses are recognized as incurred.  The preparation of      financial statements in conformity with such principles 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 thoseestimates. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | In      connection with the mortgage financing on certain of its properties, the      Partnership placed the assets and liabilities of the properties into      single asset limited partnerships, limited liability companies or land      trusts which hold title to the properties.  The Partnership has      effective control over such entities and holds 100% of the beneficial      interest.  Accordingly, the financial statements of these      subsidiaries are consolidated with those of the    Partnership. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Depreciation      of buildings, furnishings and improvements is computed using the      straight-line method of depreciation, based upon the estimated useful      lives of the related properties, asfollows: |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Buildings      and Improvements | 5      to 40 years |
|---------------------------------|--------------------|
| Furnishings                     | 5      to 7 years  |

| (d)   | Real      estate properties are regularly evaluated on a property by property basis      to determine if it is appropriate to write down carrying values to      recognize an impairment of value.  Impairment is determined by      calculating the sum of the estimated undiscounted future cash flows      including the projected undiscounted future net proceeds from the sale of      the property.  In the event such sum is less than the net      carrying value of the property, the property will be written down to      estimated fair value.  Based on the Partnership’s long-term hold      strategy for its investments in real estate, the carrying value of its      properties at December 31, 2008 is estimated to be fully      realizable. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | Real      estate held for sale is carried at the lower of cost or fair value less      selling costs.  Upon determination that a property is held for      sale, depreciation of such property is no longer  recorded. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | For      financial reporting purposes, the Partnership considers all highly liquid,      short-term investments with original maturities of three months or less      when purchased to be cashequivalents. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | Marketable      securities consist of corporate paper, which are classified as held to      maturity and purchased at a discount, which will be accreted over the life      of the security. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h)   | The      Partnership accounts for its investment in Sentinel Omaha, LLC at fair      value.   Determination of the fair value of Omaha involves      numerous estimates and subjective judgments that are subject to change in      response to current and future economic and market conditions, including,      among other things, demand for residential apartments, competition, and      operating cost levels such as labor, energy costs and real estate      taxes.  Judgments regarding these factors are not subject to      precise quantification or verification and may change from time to time as      economic and market factors change.  (see Note  9) |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | Deferred      revenue represents amounts received under a contract that are recognized      as earned over the contract period. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------|

----

| (j)   | Tenant      leases at the multifamily properties owned by Omaha generally have terms      of one year or less.  Rental income at the multifamily      properties is recognized when earned pursuant to the terms of the leases      with tenants.  Tenant leases at the industrial flex and      warehouse distribution properties have terms that exceed one      year.  Rental income at the industrial flex and warehouse      distribution properties is recognized on a straight-line basis over the      terms of the leases. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (k)   | Gains      on sales of investments in real estate are recognized in accordance with      accounting principles generally accepted in the United States of America      applicable to sales of real estate which require minimum levels of initial      and continuing investment by the purchaser, and certain other tests be      met, prior to the full recognition of profit at the time of the      sale.  When the tests are not met, gains on sales are recognized      on either the installment or cost recovery  methods. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (l)   | Each      partner is individually responsible for reporting its share of the      Partnership's taxable income or loss.  Accordingly, no provision      has been made in the accompanying consolidated financial statements for      Federal, state or local incometaxes. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (m)   | Net      income per unit of partnership interest has been computed based on the      weighted average number of units of partnership interest outstanding      during each year.  There were no potentially dilutive securities      outstanding during each year. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (n)   | The      Partnership is engaged in only one industry segment, real estate      investment, and therefore information regarding industry segments is not      applicable and is not included in these consolidated financial      statements. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (o)   | Certain      prior year amounts have been reclassified to conform with the current year      presentation (see note 2). |
|-----------------|-------------------------------------------------------------------------------------------------------------------------|

----

|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                             |
|------------------------|---------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------|
|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          | December      31, 2007                                                                                                                                                                                                                                        |
|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                             |
|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          | As                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                          |                                                             |
|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          | originally                                                                                                                                                                                                                                                    | To      reflect reclassification                                                                                                                                                                                                                              | As                                                               |
|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          | reported                                                                                                                                                                                                                                                      | to      real estate held for sale                                                                                                                                                                                                                             | retrospectively                                                  |
|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          | (As      Restated)                                                                                                                                                                                                                                            | as      of December 18, 2008                                                                                                                                                                                                                                  | adjusted                                                         |
| Assets                 |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |
| Investments      -     |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          |
|                   | Real      estate, at cost                         |                                                                                                                                        |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |
|                   |                                              | Land                                                                                                                                        |                                                                                                                                                                                                                                                          |  $       4,065,000                                                                                                                                                                                                    |  $                           (470,000)                                                                            |  $        3,595,000 |
|                   |                                              | Buildings,      furnishings and improvements                                                                                                | 37,474,216                                                                                                                                                                                                                                                    | (4,702,506)                                                                                                                                                                                                                                                   | 32,771,710                                                                                                                                                                                                                                                    |
|                   |                                              | Less      - accumulated depreciation                                                                                                        | (2,000,624)                                                                                                                                                                                                                                                   | 674,484                                                                                                                                                                                                                                                       | (1,326,140)                                                                                                                                                                                                                                                   |
|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          | 39,538,592                                                                                                                                                                                                                                                    | (4,498,022)                                                                                                                                                                                                                                                   | 35,040,570                                                       |
|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                             |
|                   | Real      estate held for sale                    |                        - | 4,498,022                                                                                                                                                                                                                                                     | 4,498,022                                                                                                                                                                                                                                                     |
|                   | Investment      in joint venture                  | 36,227,213                                                                                                                                  |                                           - | 36,227,213                                                                                                                                                                                                                                                    |
|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          | 75,765,805                                                                                                                                                                                                                                                    |                                           - | 75,765,805                                                       |
| Other      Assets -    |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          |
|                   | Cash      and cash equivalents                    | 1,679,152                                                                                                                                   |                                           - | 1,679,152                                                                                                                                                                                                                                                     |
|                   | Other                                             |                                                                                                                                        | 169,871                                                                                                                                                                                                                                                       | (6,325)                                                                                                                                                                                                                                                       | 163,546                                                                                                                                                                                                                                                       |
|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                             |
|                   |                                              | Total      assets                                                                                                                           |  $     77,614,828                                                                                                                                                                                                               |  $                               (6,325)                                                      |  $      77,608,503                                                                                                                                                                                                         |
|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                             |
| Liabilities            |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          |
|                   | Mortgage      notes payable                       |  $     38,943,176                                                                                             |  $                                       -            |  $      38,943,176                                                                                                                                                                                                         |
|                   | Accounts      payable and accrued expenses        | 238,821                                                                                                                                     | (149)                                                                                                                                                                                                                                                         | 238,672                                                                                                                                                                                                                                                       |
|                   | Tenant      security deposits                     | 99,017                                                                                                                                      | (73,437)                                                                                                                                                                                                                                                      | 25,580                                                                                                                                                                                                                                                        |
|                   | Other      liabilities in discontinued operations |                        - |                                   67,261                                            | 67,261                                                                                                                                                                                                                                                        |
|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                             |
|                   |                                              | Total      liabilities                                                                                                                      | 39,281,014                                                                                                                                                                                                                                                    |                                   (6,325)                                           | 39,274,689                                                                                                                                                                                                                                                    |
|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                             |
| Partners'      Capital |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          |
|                   | Limited      partners - 7,753 units               | 38,347,305                                                                                                                                  |                                           - | 38,347,305                                                                                                                                                                                                                                                    |
|                   | General      partners - 1 unit                    | (13,491)                                                                                                                                    |                                           - | (13,491)                                                                                                                                                                                                                                                      |
|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                             |
|                   |                                              | Total      partners' capital                                                                                                                | 38,333,814                                                                                                                                                                                                                                                    |                                           - | 38,333,814                                                                                                                                                                                                                                                    |
|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                             |
|                   |                                              | Total      liabilities and partners' capital                                                                                                |  $     77,614,828                                                                                                                                                                                                               |  $                               (6,325)                                                      |  $      77,608,503                                                                                                                                                                                                         |
|                   |                                              |                                                                                                                                        |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                          |                                                             |

----

|                                                                           |   |                                      |       |                              |                             |   |            |     |   |
|--------------------------------------------------------------------------------|--------|-------------------------------------------|------------|-----------------------------------|----------------------------------|--------|-----------------|----------|--------|
|                                                                           |   |                                      |       |                              |                             |   |            |     |   |
|                                                                           |   | For      the Year Ended December 31, 2007 |       |
|                                                                           |   |                                      |       |                              |                             |   |            |     |   |
|                                                                           |   | As                                        |       |                              | To      reflect reclassification |   |            | As       |   |
|                                                                           |   | originally                                |       | to      real estate held for sale |                             |   | retrospectively |     |
|                                                                           |   | reported                                  |       |                              | as      of December 18, 2008     |   |            | adjusted |   |
| Revenues:                                                                      |   |                                      |       |                              |                             |   |            |     |   |
| Base      rental income                                                        |   |                                      | $2,946,866 |                              |                             |   | $(550,359       | )        |   |   | $2,396,507 |   |
| Other      rental income                                                       |   |                                      | 947,417    |                              |                             |   | (287,379        | )        |   |   | 660,038 |   |
| Interest      on short-term investments and other                              |   |                                      | 498,599    |                              |                             |   | 2,796           |     |   |   | 501,395 |   |
|                                                                           |   |                                      |       |                              |                             |   |            |     |   |   |   |   |
| Total      revenues                                                            |   |                                      | 4,392,882  |                              |                             |   | (834,942        | )        |   |   | 3,557,940 |   |
|                                                                           |   |                                      |       |                              |                             |   |            |     |   |   |   |   |
| Expenses:                                                                      |   |                                      |       |                              |                             |   |            |     |   |   |   |   |
| Real      estate operating expenses                                            |   |                                      | 722,016    |                              |                             |   | (130,197        | )        |   |   | 591,819 |   |
| Interest      on mortgage notes and unsecured                                  |   |                                      |       |                              |                             |
| loan      payable                                                              |   |                                      | 1,505,580  |                              |                             |   | -               |     |   |   | 1,505,580 |   |
| Depreciation      and amortization                                             |   |                                      | 1,022,074  |                              |                             |   | (148,363        | )        |   |   | 873,711 |   |
| Real      estate taxes                                                         |   |                                      | 626,286    |                              |                             |   | (179,772        | )        |   |   | 446,514 |   |
| Management      fees                                                           |   |                                      | 734,094    |                              |                             |   | -               |     |   |   | 734,094 |   |
| Other                                                                          |   |                                      | 176,466    |                              |                             |   | (1,650          | )        |   |   | 174,816 |   |
|                                                                           |   |                                      |       |                              |                             |   |            |     |   |   |   |   |
| Total      expenses                                                            |   |                                      | 4,786,516  |                              |                             |   | (459,982        | )        |   |   | 4,326,534 |   |
|                                                                           |   |                                      |       |                              |                             |   |            |     |   |   |   |   |
| Loss      from operations                                                      |   |                                      | (393,634   | )                                 |                             |   | (374,960        | )        |   |   | (768,594 | ) |
| Equity      in net loss of investments                                         |   |                                      | (972,787   | )                                 |                             |   | -               |     |   |   | (972,787 | ) |
|                                                                           |   |                                      |       |                              |                             |   |            |     |   |   |   |   |
| Loss      from continuing operations                                           |   |                                      | (1,366,421 | )                                 |                             |   | (374,960        | )        |   |   | (1,741,381 | ) |
| Income      (loss) from discontinued operations                                |   |                                      | (41,631    | )                                 |                             |   | 374,960         |     |   |   | 333,329 |   |
| Net      gain on sale of investment                                            |   |                                      |       |                              |                             |   |            |     |   |   |   |   |
| in      real estate property                                                   |   |                                      | 2,518,418  |                              |                             |   | -               |     |   |   | 2,518,418 |   |
|                                                                           |   |                                      |       |                              |                             |   |            |     |   |   |   |   |
| Net      income                                                                |   |                                      | 1,110,366  |                              |                             |   | -               |     |   |   | 1,110,366 |   |
|                                                                           |   |                                      |       |                              |                             |   |            |     |   |   |   |   |
| Income      allocated to general partner                                       |   |                                      | 143        |                              |                             |   | -               |     |   |   | 143 |   |
| Income      allocated to limited partners                                      |   |                                      | $1,110,223 |                              |                             |   | $-              |     |   |   | $1,110,223 |   |
|                                                                           |   |                                      |       |                              |                             |   |            |     |   |   |   |   |
| Earnings      per unit of limited partnership interest (basic and    diluted): |   |
| Continuing      operations                                                     |   |                                      | $(176.24   | )                                 |                             |   | $(48.36         | )        |   |   | $(224.61 | ) |
| Discontinued      operations (including gain on sale)                          |   |                                      | $319.46    |                              |                             |   | $48.36          |     |   |   | $367.82 |   |
| Net      income per unit of Limited Partnership Interest                       |   |                                      | $143.22    |                              |                             |   | $-              |     |   |   | $143.22 |   |
|                                                                           |   |                                      |       |                              |                             |   |            |     |   |   |   |   |

----

|                                                                           |   |                                      |        |   |                              |   |      |            |   |
|--------------------------------------------------------------------------------|--------|-------------------------------------------|-------------|--------|-----------------------------------|--------|-----------|-----------------|--------|
|                                                                           |   |                                      |        |   |                              |   |      |            |   |
|                                                                           |   | For      the Year Ended December 31, 2006 |        |
|                                                                           |   |                                      |        |   |                              |   |      |            |   |
|                                                                           |   | As                                        |        |   | To      reflect reclassification  |   |      | As              |   |
|                                                                           |   | originally                                |        |   | to      real estate held for sale |   |      | retrospectively |   |
|                                                                           |   | reported                                  |        |   | as      of December 18, 2008      |   |      | adjusted        |   |
| Revenues:                                                                      |   |                                      |        |   |                              |   |      |            |   |
| Base      rental income                                                        |   |                                      | $1,938,947  |   |                              |   | $(601,019 | )               |   |   | $1,337,928 |   |
| Other      rental income                                                       |   |                                      | 657,533     |   |                              |   | (289,743  | )               |   |   | 367,790 |   |
| Interest      on short-term investments and other                              |   |                                      | 496,654     |   |                              |   | 13,855    |            |   |   | 510,509 |   |
|                                                                           |   |                                      |        |   |                              |   |      |            |   |   |   |   |
| Total      revenues                                                            |   |                                      | 3,093,134   |   |                              |   | (876,907  | )               |   |   | 2,216,227 |   |
|                                                                           |   |                                      |        |   |                              |   |      |            |   |   |   |   |
| Expenses:                                                                      |   |                                      |        |   |                              |   |      |            |   |   |   |   |
| Real      estate operating expenses                                            |   |                                      | 525,832     |   |                              |   | (120,220  | )               |   |   | 405,612 |   |
| Interest      on mortgage notes payable                                        |   |                                      | 696,768     |   |                              |   | -         |            |   |   | 696,768 |   |
| Depreciation      and amortization                                             |   |                                      | 531,708     |   |                              |   | (131,100  | )               |   |   | 400,608 |   |
| Real      estate taxes                                                         |   |                                      | 521,292     |   |                              |   | (167,854  | )               |   |   | 353,438 |   |
| Management      fees                                                           |   |                                      | 709,655     |   |                              |   | -         |            |   |   | 709,655 |   |
| Other                                                                          |   |                                      | 194,738     |   |                              |   | (2,557    | )               |   |   | 192,181 |   |
|                                                                           |   |                                      |        |   |                              |   |      |            |   |   |   |   |
| Total      expenses                                                            |   |                                      | 3,179,993   |   |                              |   | (421,731  | )               |   |   | 2,758,262 |   |
|                                                                           |   |                                      |        |   |                              |   |      |            |   |   |   |   |
| Loss      from operations                                                      |   |                                      | (86,859     | )      |                              |   | (455,176  | )               |   |   | (542,035 | ) |
| Equity      in net loss of investments                                         |   |                                      | (26,133     | )      |                              |   | -         |            |   |   | (26,133 | ) |
|                                                                           |   |                                      |        |   |                              |   |      |            |   |   |   |   |
| Loss      from continuing operations                                           |   |                                      | (112,992    | )      |                              |   | (455,176  | )               |   |   | (568,168 | ) |
| Income from      discontinued operations                                  |   |                                      | 781,439     |   |                              |   | 455,176   |            |   |   | 1,236,615 |   |
| Net      gain on sale of investment in real estate property                    |   |                                      | 12,375,850  |   |                              |   | -         |            |   |   | 12,375,850 |   |
|                                                                           |   |                                      |        |   |                              |   |      |            |   |   |   |   |
| Net      income                                                                |   |                                      | 13,044,297  |   |                              |   | -         |            |   |   | 13,044,297 |   |
|                                                                           |   |                                      |        |   |                              |   |      |            |   |   |   |   |
| Income      allocated to general partner                                       |   |                                      | 1,682       |   |                              |   | -         |            |   |   | 1,682 |   |
| Income      allocated to limited partners                                      |   |                                      | $13,042,615 |   |                              |   | $-        |            |   |   | $13,042,615 |   |
|                                                                           |   |                                      |        |   |                              |   |      |            |   |   |   |   |
| Earnings      per unit of limited partnership interest (basic and    diluted): |   |
| Continuing      operations                                                     |   |                                      | $(14.57     | )      |                              |   | $(58.71   | )               |   |   | $(73.28 | ) |
| Discontinued      operations (including gain on sale)                          |   |                                      | $1,697.06   |   |                              |   | $58.71    |            |   |   | $1,755.77 |   |
| Net      income per unit of Limited Partnership Interest                       |   |                                      | $1,682.48   |   |                              |   | $-        |            |   |   | $1,682.48 |   |
|                                                                           |   |                                      |        |   |                              |   |      |            |   |   |   |   |

----

| 1)   | On      the Consolidated Balance Sheets a decrease in the Investment in Sentinel      Omaha, LLC and of Total Partners Capital of  $732,399. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------|

| 2)   | On      the Consolidated Statement of Operations an increase in Equity in Net Loss      of Investments of $732,399. |
|----------------|---------------------------------------------------------------------------------------------------------------------|

|   | The      Partnership entered into a management agreement with the General      Partner.  Under the terms of this agreement, the General Partner      is responsible for the acquisition, management and disposition of all      investments, as well as performance of the day-to-day administrative      operations and provision of office space for the    Partnership. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                   |   |        |   |   |         |   |        |   |                     |   |   |        |   |
|----------------------------------------|--------|-------------|--------|--------|--------------|--------|-------------|--------|--------------------------|--------|--------|-------------|--------|
|                                   |   |        |   |   |         |   |        |   | Real      Estate at Cost |   |
|                                   |   | No.      of |   |   | Year      of |   |        |   |                     |   |   |        |   |
| Type                                   |   | Prop.       |   |   | Acquisition  |   | Description |   | 12/31/08                 |   |   | 12/31/07    |   |
|                                   |   |        |   |   |         |   |        |   |                     |   |   |        |   |
| Warehouse      distribution properties |   |        | 2      |   |         |   | 2005-06     |   | 596,605      sf          |   |   | 36,366,710  |   |   |   | 36,366,710 |   |
|                                   |   |        |   |   |         |   |        |   |                     |   |   |        |   |   |   |   |   |
| Less:      Accumulated depreciation    |   |        |   |   |         |   |        |   |                     |   |   | (2,166,282  | )      |   |   | (1,326,140 | ) |
|                                   |   |        |   |   |         |   |        |   |                     |   |   |        |   |   |   |   |   |
|                                   |   |        |   |   |         |   |        |   |                     |   |   | 34,200,428  |   |   |   | 35,040,570 |   |
|                                   |   |        |   |   |         |   |        |   |                     |   |   |        |   |   |   |   |   |
| Real      estate held for sale         |   |        |   |   |         |   |        |   |                     |   |   | 4,379,087   |   |   |   | 4,498,022 |   |
|                                   |   |        |   |   |         |   |        |   |                     |   |   |        |   |   |   |   |   |
| Net      book value                    |   |        |   |   |         |   |        |   |                     |   |   | $38,579,515 |   |   |   | $39,538,592 |   |
|                                   |   |        |   |   |         |   |        |   |                     |   |   |        |   |   |   |   |   |
|                                   |   |        |   |   |         |   |        |   |                     |   |   |        |   |   |   |   |   |

----

|                                     |   | 2008   |     |   | 2007   |   |       | 2006   |   |
|------------------------------------------|--------|--------|----------|--------|--------|--------|------------|--------|--------|
|                                     |   |   |     |   |   |   |       |   |   |
| Operating      revenue                   |   |   | $793,924 |   |   |   | $1,430,797 |   |   |   | $5,060,225 |   |
|                                     |   |   |     |   |   |   |       |   |   |   |   |   |
| Operating      expenses                  |   |   | 481,539  |   |   |   | 1,097,468  |   |   |   | 3,823,610 |   |
|                                     |   |   |     |   |   |   |       |   |   |   |   |   |
| Income      from discontinued operations |   |   | $312,385 |   |   |   | $333,329   |   |   |   | $1,236,615 |   |

----

----

|                                                 |   | (Audited) |     |   | (Audited) |   |
|------------------------------------------------------|--------|-----------|----------|--------|-----------|--------|
| Balance      Sheet                                   |   | 2008      |     |   | 2007      |   |
|                                                 |   |      |     |   |      |   |
| Investment      in real estate, net                  |   |      | $444,500 |   |      |   | $545,304 |   |
| Other      assets                                    |   |      | 12,536   |   |      |   | 24,609 |   |
| Debt                                                 |   |      | (373,035 | )      |      |   | (435,621 | ) |
| Other      liabilities                               |   |      | (7,810   | )      |      |   | (11,093 | ) |
| Member's      Equity                                 |   |      | $76,191  |   |      |   | $123,199 |   |
|                                                 |   |      |     |   |      |   |   |   |
|                                                 |   | (Audited) |     |   | (Audited) |   |
| Statement      of Operations                         |   | 2008      |     |   | 2007      |   |
|                                                 |   |      |     |   |      |   |   |   |
| Rent      and other income                           |   |      | $54,555  |   |      |   | $17,105 |   |
| Real      estate operating expenses                  |   |      | (30,250  | )      |      |   | (8,276 | ) |
| Other      income and expenses                       |   |      | (22,432  | )      |      |   | (7,639 | ) |
| Unrealized      losses                               |   |      | (44,755  | )      |      |   | (1,960 | ) |
| Realized      loss on sale of real estate properties |   |      | (1,683   | )      |      |   | - |   |
| Loss      on sale of securities                      |   |      | -        |   |      |   | (31 | ) |
|                                                 |   |      |     |   |      |   |   |   |
| Net      loss                                        |   |      | $(44,565 | )      |      |   | $(801 | ) |
|                                                 |   |      |     |   |      |   |   |   |

|                      |   |                                                                                                                                                                                                                                                                                                                                         |   |               |               |     |            |     |             |   |   | Net      Carrying Amount |   |
|---------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------------------|----------|-----------------|----------|------------------|--------|--------|--------------------------|--------|
|                      |   |                                                                                                                                                                                                                                                                                                                                         |   |               |               | Annual   |            |     |             |   |   | December      31,        |   |
|                      |   | Interest                                                       |   | Installment        |               |     | Amount      Due |     |             |   |   |                     |   |   |
| Property                  |   | Rate                                                                                                                                                                                                                                                                                                                                         |   | Maturity      Date |               | Payments |            |     | at      Maturity |   |   | 2008                     |   |   | 2007 |   |
|                      |   |                                                                                                                                                                                                                                                                                                                                         |   |               |               |     |            |     |             |   |   |                     |   |   |   |   |
| Lino      Lakes (a)       |   |                                                                                                                                                                                                                                                                                                                                         | 5.800  | %                  | October,      2015 |     |            | $580,000 |             |   |   | $10,000,000              |   |   |   | $10,000,000 |   |   |   | $10,000,000 |   |
|                      |   |                                                                                                                                                                                                                                                                                                                                         |   |               |               |     |            |     |             |   |   |                     |   |   |   |   |   |   |   |   |   |
| Ambassador      Drive (b) |   |                                                                                                                                                                                                                                                                                                                                         | 5.880  | %                  | October,      2010 |     |            | 554,178  |             |   |   | 6,508,785                |   |   |   | 6,806,090 |   |   |   | 6,943,176 |   |
|                      |   |                                                                                                                                                                                                                                                                                                                                         |   |               |               |     |            |     |             |   |   |                     |   |   |   | 16,806,090 |   |   |   | 16,943,176 |   |
|                      |   |                                                                                                                                                                                                                                                                                                                                         |   |               |               |     |            |     |             |   |   |                     |   |   |   |   |   |   |   |   |   |
| Bank      Loan:           |   |                                                                                                                                                                                                                                                                                                                                         |   |               |               |     |            |     |             |   |   |                     |   |   |   |   |   |   |   |   |   |
| Unsecured      (c )       |   |                                                                                                                                                                                                                                                                                                                                         |   |               |               |     |            |     |             |   |   |                     |   |   |   | 22,000,000 |   |   |   | 22,000,000 |   |
|                      |   |                                                                                                                                                                                                                                                                                                                                         |   |               |               |     |            |     |             |   |   |                     |   |   |   |   |   |   |   |   |   |
|                      |   |                                                                                                                                                                                                                                                                                                                                         |   |               |               |     |            |     |             |   |   |                     |   |   |   | $38,806,090 |   |   |   | $38,943,176 |   |

----

|                                                                                                |       |   |                                                                                                                                  |   |   |   |   |   |
|-----------------------------------------------------------------------------------------------------|------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| Scheduled      principal payments on mortgage notes and unsecured loan payable are as      follows: |
|                                                                                                |       |   |                                                                                                                                  |   |   |   |   |   |
|                                                                                                | 2009       |   |  $     22,158,198                                                                                       |   |   |   |   |   |
|                                                                                                | 2010       |   |           6,647,892                                                                 |   |   |   |   |   |
|                                                                                                | 2011       |   |                       - |   |   |   |   |   |
|                                                                                                | 2012       |   |                       - |   |   |   |   |   |
|                                                                                                | 2013       |   |                       - |   |   |   |   |   |
|                                                                                                | Thereafter |   |         10,000,000                                                                            |   |   |   |   |   |
|                                                                                                |       |   |                                                                                                                                  |   |   |   |   |   |
|                                                                                                | Total      |   |  $     38,806,090                                                                                       |   |   |   |   |   |

|                        |   |      |   |                    |   | Income      (Loss) from |                             |
|-----------------------------|--------|-----------|--------|-------------------------|--------|-------------------------|----------------------------------|
|                        |   |      |   | Income      (Loss) from |   | Operations              |  Equity      Income (Loss)  |
| Year ended December 31,2008 |   | Revenues  |   | Operations              |   | Per      Unit           |  On      Investment         |
|                        |   |      |   |                    |   |                    |                             |
| First      Quarter          |   | $755,123  |   | ($449,591)              |   | ($57.99)                | ($1,586,091)                |
| Second      Quarter         |   | 727,746   |   | (426,095)               |   | (54.96)                 | 970,810                     |
| Third      Quarter          |   | 674,399   |   | (458,796)               |   | (59.18)                 | 589,813                     |
| Fourth      Quarter         |   | 733,795   |   | (524,954)               |   | (78.39)                 | (13,344,201)                |
|                        |   |      |   |                    |   |                    |                             |
|                        |   |      |   |                    |   |                    |                             |
| Year ended December 31,2007 |   |      |   |                    |   |                    |                             |
|                        |   |      |   |                    |   |                    |                             |
| First      Quarter          |   | $900,100  |   | $10,130                 |   | $1.31                   |  $        -  |
| Second      Quarter         |   | 1,012,056 |   | 71,684                  |   | 9.25                    | -                           |
| Third      Quarter          |   | 876,947   |   | (132,178)               |   | (17.05)                 | -                           |
| Fourth      Quarter         |   | 768,837   |   | (718,230)               |   | (92.63)                 | (972,787)                   |

|                                                                                             |   | For      the Years Ended December 31, |         |
|--------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------------|
|                                                                                             |   |                                  | 2008         |   |   | 2007 |   |   | 2006 |   |
|                                                                                             |   |                                  |         |   |   |   |   |   |   |   |
| Net      income (loss) for financial reporting purposes                                          |   |                                  | $(14,916,720 | ) |   |   | $1,110,366 |   |   |   | $13,044,297 |   |
|                                                                                             |   |                                  |         |   |   |   |   |   |   |   |   |   |
| Adjustment      to net gain on sale of investment in real estate                                 |   |                                  |         |   |   |   |   |   |   |   |   |   |
| property      to reflect differences between tax and financial                                   |   |                                  |         |   |   |   |   |   |   |   |   |   |
| reporting      bases of assets and liabilities                                                   |   |                                  | 1,130,134    |   |   |   | 654,693 |   |   |   | 393,157 |   |
|                                                                                             |   |                                  |         |   |   |   |   |   |   |   |   |   |
| Difference      between tax and financial statement equity in net                                |   |                                  |         |   |   |   |   |   |   |   |   |   |
| loss      of joint venture                                                                       |   |                                  | 7,236,549    |   |   |   | 156,664 |   |   |   | (519 | ) |
|                                                                                             |   |                                  |         |   |   |   |   |   |   |   |   |   |
| Difference      between tax and financial statement depreciation                                 |   |                                  | (321,619     | ) |   |   | (395,676 | ) |   |   | (892,510 | ) |
|                                                                                             |   |                                  |         |   |   |   |   |   |   |   |   |   |
| Net      income (loss) for Federal income tax reporting purposes                                 |   |                                  | $(6,871,656  | ) |   |   | $1,526,047 |   |   |   | $12,544,425 |   |
|                                                                                             |   |                                  |         |   |   |   |   |   |   |   |   |   |
| Net      ordinary loss for Federal income tax reporting purposes:                                |   |                                  | $(6,871,656  | ) |   |   | $(1,637,867 | ) |   |   | $(224,582 | ) |
| Net      capital (Sec. 1231) gain for Federal income tax reporting      purposes:                |   |                                  | -            |   |   |   | 3,173,110 |   |   |   | 12,769,007 |   |
| Short-term      capital gain                                                                     |   |                                  | -            |   |   |   | (9,200 | ) |   |   | - |   |
|                                                                                             |   |                                  |         |   |   |   |   |   |   |   |   |   |
|                                                                                             |   |                                  | $(6,871,656  | ) |   |   | $1,526,043 |   |   |   | $12,544,425 |   |
|                                                                                             |   |                                  |         |   |   |   |   |   |   |   |   |   |
|                                                                                             |   |                                  |         |   |   |   |   |   |   |   |   |   |
| Weighted      average number of units of limted partnership  interest      outstanding |   |                                  | 7,753        |   |   |   | 7,753 |   |   |   | 7,753 |   |

----

|   | 42 |
|--------|----|

|   | As      of December 31, 2008 and 2007, the tax bases of the Partnership's assets      and liabilities were approximately $71,807,242 and $79,531,681 of assets,      and $39,281,103 and $39,281,013 of liabilities,    respectively. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Certain      affiliates of the General Partner oversee the management and operation 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, 2008, 2007 and 2006 billings to the Partnership      amounting to $186,594, $329,174 and $273,078,      respectively, and are included in real estate operating      expenses.  For the years ended December 31, 2008, 2007 and 2006      billings to the partnership which relate to Le Coeur Du Monde, Halton      Place Apartments, Cypress Key Apartments and Holiday Park, amount      to  $0, $29,189, and  $208,191,      respectively, and are included in loss from discontinued      operations. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Partnership is a party to certain actions directly arising from 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 adverse effect on its      financial statements. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Partnership leases its properties to tenants under operating lease      agreements, certain of which require tenants at the industrial flex and      warehouse distribution properties to pay all or part of certain operating      and other expenses of the property.  The minimum future rentals      to be received in respect of non-cancelable commercial operating leases      with unexpired terms in excess of one year as of December 31, 2008 are      $3,318,647 for 2008; $3,318,647 for 2009; $3,318,647 for 2010; $3,318,647      for 2011; $3,318,647 for 2012; $3,318,647 for 2013 and $24,189,537      thereafter. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Registrant has agreed to contribute, in cash, an additional $3,720,000 to      the capital of Omaha, as and when required, as determined by the      Manager.  In addition, the Registrant shall not have any      liability to restore any negative balance in its capital      account. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 43 |
|--------|----|

|  SB      PARTNERS                                       |   |          |        |   |                                |   |         |               |   |   |        |                |       |          |        |
|--------------------------------------------------------------|--------|---------------|-------------|--------|-------------------------------------|--------|--------------|--------------------|--------|--------|-------------|---------------------|------------|---------------|-------------|
| SCHEDULE      III - REAL ESTATE AND ACCUMULATED DEPRECIATION |   |          |        |   |                                |   |         |               |   |   |
|  DECEMBER      31, 2008                                 |   |          |        |   |                                |   |         |               |   |   |        |                |       |          |        |
|                                                         |   |          |        |   |                                |   |         |               |   |   |        |                |       |          |        |
| Column      A                                                |   | Column      B |        |   |                                |   |         | Column      C      |   |   |        |                |       | Column      D |        |
|                                                         |   |          |        |   | Initial      Cost to the Registrant |   |         | Costs              |   |
|                                                         |   |          |        |   |                                |   |         |               |   |   |        |                |       | Capitalized   |        |
|                                                         |   |          |        |   |                                |   |         | Buildings      and |   |   |        |                | Subsequent |          |
| Description                                                  |   | Encumbrances  |        | Land   |                                |   | Improvements |               | Total  |   |        | to      Acquisition |       |
|                                                         |   |          |        |   |                                |   |         |               |   |   |        |                |       |          |        |
| INDUSTRIAL      FLEX                                         |   |          |        |   |                                |   |         |               |   |   |        |                |       |          |        |
| Minnesota      -                                             |   |          |        |   |                                |   |         |               |   |   |        |                |       |          |        |
| Maple      Grove (Eagle Lake Business Center IV)             |   |          | $-          |   |                                |   | $470,000     |               |   |   | $4,243,385  |                |       |          | $4,713,385  |   |   |   | $473,223 |   |
|                                                         |   |          |        |   |                                |   |         |               |   |   |        |                |       |          |        |   |   |   |   |   |
| DISTRIBUTION      CENTER                                     |   |          |        |   |                                |   |         |               |   |   |        |                |       |          |        |   |   |   |   |   |
| Minnesota      -                                             |   |          |        |   |                                |   |         |               |   |   |        |                |       |          |        |   |   |   |   |   |
| Lino      Lakes (435 Park Court)                             |   |          | 10,000,000  |   |                                |   | 1,515,000    |               |   |   | 13,797,160  |                |       |          | 15,312,160  |   |   |   | 10,833 |   |
| Illinois      -                                              |   |          |        |   |                                |   |         |               |   |   |        |                |       |          |        |   |   |   |   |   |
| Naperville      (175 Ambassador Drive)                       |   |          | 6,806,090   |   |                                |   | 2,080,000    |               |   |   | 18,851,262  |                |       |          | 20,931,262  |   |   |   | 112,455 |   |
|                                                         |   |          |        |   |                                |   |         |               |   |   |        |                |       |          |        |   |   |   |   |   |
|                                                         |   |          |        |   |                                |   |         |               |   |   |        |                |       |          |        |   |   |   |   |   |
|                                                         |   |          | $16,806,090 |   |                                |   | $4,065,000   |               |   |   | $36,891,807 |                |       |          | $40,956,807 |   |   |   | $596,511 |   |
|                                                         |   |          |        |   |                                |   |         |               |   |   |        |                |       |          |        |   |   |   |   |   |

|                                             |   |                                              |       |   |               |   |        |   |   |   |                   |   |
|--------------------------------------------------|--------|---------------------------------------------------|------------|--------|--------------------|--------|-------------|--------|--------|--------|------------------------|--------|
|                                             |   |                                              |       |   |               |   |        |   |   |   |                   |   |
| Column      A                                    |   |                                              |       |   | Column      E      |   |        |   |   |   | Column      F          |   |
|                                             |   |                                              |       |   |               |   |        |   |   |   |                   |   |
|                                             |   | Gross      amount at which Carried at End of Year |       |   |               |   |
|                                             |   | (Notes      a & c)                            |       |   |               |   |        |   |   |   |                   |   |
|                                             |   |                                              |       |   |               |   |        |   |   |   | Accumulated            |   |
|                                             |   |                                              |       |   | Buildings      and |   |        |   |   |   | Depreciation           |   |
| Description                                      |   | Land                                              |       |   | Improvements       |   |        | Total  |   |   | (Notes      b & d) |   |
|                                             |   |                                              |       |   |               |   |        |   |   |   |                   |   |
| INDUSTRIAL      FLEX                             |   |                                              |       |   |               |   |        |   |   |   |                   |   |
| Minnesota      -                                 |   |                                              |       |   |               |   |        |   |   |   |                   |   |
| Maple      Grove (Eagle Lake Business Center IV) |   |                                              | $470,000   |   |               |   | $4,716,608  |   |   |   | $5,186,608             |   |   |   | $807,521 |   |
|                                             |   |                                              |       |   |               |   |        |   |   |   |                   |   |   |   |   |   |
| DISTRIBUTION      CENTER                         |   |                                              |       |   |               |   |        |   |   |   |                   |   |   |   |   |   |
| Minnesota      -                                 |   |                                              |       |   |               |   |        |   |   |   |                   |   |   |   |   |   |
| Lino      Lakes (435 Park Court)                 |   |                                              | 1,515,000  |   |               |   | 13,807,993  |   |   |   | 15,322,993             |   |   |   | 1,150,480 |   |
| Illinois      -                                  |   |                                              |       |   |               |   |        |   |   |   |                   |   |   |   |   |   |
| Naperville      (175 Ambassador Drive)           |   |                                              | 2,080,000  |   |               |   | 18,963,717  |   |   |   | 21,043,717             |   |   |   | 1,015,802 |   |
|                                             |   |                                              |       |   |               |   |        |   |   |   |                   |   |   |   |   |   |
|                                             |   |                                              | $4,065,000 |   |               |   | $37,488,318 |   |   |   | $41,553,318            |   |   |   | $2,973,803 |   |
|                                             |   |                                              |       |   |               |   |        |   |   |   |                   |   |   |   |   |   |

----

|  SB      PARTNERS                                                          |             |                                             |   |          |   |             |
|---------------------------------------------------------------------------------|------------------|--------------------------------------------------|--------|---------------|--------|------------------|
|  SCHEDULE      III - REAL ESTATE AND ACCUMULATED DEPRECIATION -  CONTINUED |
|  DECEMBER      31, 2008                                                    |             |                                             |   |          |   |             |
|                                                                            |             |                                             |   |          |   |             |   |   |
| 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 |
|                                                                            |             |                                             |   |          |   |             |   |   |
| INDUSTRIAL      FLEX                                                            |             |                                             |   |          |   |             |
|                                                                            | Minnesota      - |                                             |   |          |   |             |   |
|                                                                            |             | Maple      Grove (Eagle Lake Business Center IV) |   | 2000          |   | Jun      2002    |   | 7      to 39 years |
|                                                                            |             |                                             |   |          |   |             |   |   |
| DISTRIBUTION      CENTER                                                        |             |                                             |   |          |   |             |
|                                                                            | Minnesota      - |                                             |   |          |   |             |   |
|                                                                            |             | Lino      Lakes (435 Park Court)                 |   | 2004          |   | Oct      2005    |   | 7      to 39 years |
|                                                                            | Illinois      -  |                                             |   |          |   |             |   |
|                                                                            |             | Naperville      (175 Ambassador Drive)           |   | 1995          |   | Nov      2006    |   | 7      to 39 years |
|                                                                            |             |                                             |   |          |   |             |   |   |

| NOTES      TO SCHEDULE III: |                                              |   |   |        |   |   |   |        |   |
|-----------------------------|---------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|
|                        |                                              |   |   |        |   |   |   |        |   |   |
|                        |                                              |   | 2008   |        |   | 2007   |   |        | 2006   |   |
|                        |                                              |   |   |        |   |   |   |        |   |   |
| (a)                         | Reconciliation      of amounts shown in Column E: |   |   |        |   |   |   |        |   |   |
|                        | Balance      at beginning of year                 |   |   | $41,539,216 |   |   |   | $55,986,587 |   |   |   | $54,869,652 |   |
|                        | Additions      -                                  |   |   |        |   |   |   |        |   |   |   |   |   |
|                        | Acquisitions                                      |   |   | 0           |   |   |   | 0           |   |   |   | 20,931,262 |   |
|                        | Cost      of improvements                         |   |   | 14,102      |   |   |   | 423,873     |   |   |   | 492,362 |   |
|                        |                                              |   |   |        |   |   |   |        |   |   |   |   |   |
|                        | Deductions      -                                 |   |   |        |   |   |   |        |   |   |   |   |   |
|                        | Sales                                             |   |   | 0           |   |   |   | (14,871,244 | )      |   |   | (20,306,689 | ) |
|                        |                                              |   |   |        |   |   |   |        |   |   |   |   |   |
|                        | Balance      at end of year                       |   |   | $41,553,318 |   |   |   | $41,539,216 |   |   |   | $55,986,587 |   |
|                        |                                              |   |   |        |   |   |   |        |   |   |   |   |   |
|                        |                                              |   |   |        |   |   |   |        |   |   |   |   |   |
| (b)                         | Reconciliation      of amounts shown in Column F: |   |   |        |   |   |   |        |   |   |   |   |   |
|                        | Balance      at beginning of year                 |   |   | $2,000,624  |   |   |   | $3,317,024  |   |   |   | $7,824,567 |   |
|                        | Additions      -                                  |   |   |        |   |   |   |        |   |   |   |   |   |
|                        | Depreciation      expense for the year            |   |   | 973,179     |   |   |   | 987,816     |   |   |   | 726,690 |   |
|                        |                                              |   |   |        |   |   |   |        |   |   |   |   |   |
|                        | Deductions      -                                 |   |   |        |   |   |   |        |   |   |   |   |   |
|                        | Sales                                             |   |   | 0           |   |   |   | (2,304,216  | )      |   |   | (5,234,233 | ) |
|                        |                                              |   |   |        |   |   |   |        |   |   |   |   |   |
|                        |                                              |   |   | $2,973,803  |   |   |   | $2,000,624  |   |   |   | $3,317,024 |   |
|                        |                                              |   |   |        |   |   |   |        |   |   |   |   |   |
| (c)                         | Aggregate      cost basis for Federal             |   |   |        |   |   |   |        |   |   |   |   |   |
|                        | income      tax reporting purposes                |   |   | $-          |   |   |   | $41,408,208 |   |   |   | $55,914,162 |   |
|                        |                                              |   |   |        |   |   |   |        |   |   |   |   |   |
| (d)                         | Accumulated      depreciation for Federal         |   |   |        |   |   |   |        |   |   |   |   |   |
|                        | income      tax reporting purposes                |   |   | $-          |   |   |   | $2,544,257  |   |   |   | $4,156,499 |   |
|                        |                                              |   |   |        |   |   |   |        |   |   |   |   |   |