| (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, 2009 |   |   |   |
|                                                                                                                                                                    |   |   |   |   |   |
| 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 ______________________                                                                                |
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| Commission file Number: 0-8952                                                                                                                                          |
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| 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 |             |
|--------------------------------|-----------------|--------|-------------|---------|--------|--------|---------|--------|--------|-----------------------|------------------|
| Property                       | Location        |   | Sq. Ft.     |    |   | Units  |    |   | Acres  |                  | Acquisition Date |   | Ownership |   |   | 12/31/2009 |   |   | 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 | % |   | $ | 6,634,550 |   |

|                              |   | 2009   |   |   | 2008   |   |   | 2007   |   |   | 2006   |   |   | 2005   |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average Occupancy (d)             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Holiday Park Apts.(e)             |   |   | n/a    |   |   |   | n/a    |   |   |   | n/a    |   |   |   | 97.17  | % |   |   | 93.50 | % |
| Cypress Key Apts. (f)             |   |   | n/a    |   |   |   | n/a    |   |   |   | n/a    |   |   |   | n/a    |   |   |   | 98.20 | % |
| Halton Place Apts. (g)            |   |   | n/a    |   |   |   | n/a    |   |   |   | n/a    |   |   |   | 96.59  | % |   |   | 92.70 | % |
| Le Coeur du Monde Apts. (a)       |   |   | n/a    |   |   |   | n/a    |   |   |   | 93.90  | %      |   |   | 95.97  | % |   |   | 95.50 | % |
| Eagle Lake Business Center IV     |   |   | 100.00 | %      |   |   | 100.00 | %      |   |   | 100.00 | %      |   |   | 100.00 | % |   |   | 100.00 | % |
| 435 Park Court (b)                |   |   | 100.00 | %      |   |   | 100.00 | %      |   |   | 100.00 | %      |   |   | 100.00 | % |   |   | 100.00 | % |
| 175 Ambassador Drive (c)          |   |   | 100.00 | %      |   |   | 100.00 | %      |   |   | 100.00 | %      |   |   | 100.00 | % |   |   | n/a |   |
|                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effective Annual Rent (d)         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Holiday Park Apts. (e)(h)         |   |   | n/a    |   |   |   | n/a    |   |   |   | n/a    |   |   | $      | 6,583  |   |   | $ | 5,796 |   |
| Cypress Key Apts. (f)(h)          |   |   | n/a    |   |   |   | n/a    |   |   |   | n/a    |   |   |   | n/a    |   |   | $ | 8,214 |   |
| Halton Place Apts. (g)(h)         |   |   | n/a    |   |   |   | n/a    |   |   |   | n/a    |   |   | $      | 6,895  |   |   | $ | 6,288 |   |
| Le Coeur du Monde Apts. (a)(h)    |   |   | n/a    |   |   |   | n/a    |   |   | $      | 9,026  |   |   | $      | 9,577  |   |   | $ | 8,998 |   |
| Eagle Lake Business Center IV (i) |   | $      | 15     |   |   | $      | 13     |   |   | $      | 14     |   |   | $      | 15     |   |   | $ | 14 |   |
| 435 Park Court (b)(i)             |   | $      | 26     |   |   | $      | 24     |   |   | $      | 25     |   |   | $      | 22     |   |   | $ | 4 |   |
| 175 Ambassador Drive (c)(i)       |   | $      | 4      |   |   | $      | 4      |   |   | $      | 4      |   |   | $      | 4      |   |   |   | n/a |   |

|   | (i) 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,       |    |   |          |   |    |          |   |
|-----------------------------------------------------|--------|----------------------------------------|---------|--------|---------------|--------|---------|---------------|--------|
|                                                |   | 2009                                   |    |   | 2008          |   |    | 2007          |   |   | 2006 |   |   | 2005 |   |
|                                                |   |  (In Thousands, Except Unit Data) |    |
|                                                |   |                                   |    |   | (As Restated) |   |    | (As Restated) |   |   |   |   |   |   |   |
| Income Statement Data:                              |   |                                   |    |   |          |   |    |          |   |   |   |   |   |   |   |
| Rental, Interest and Other Revenues                 |   | $                                      | 3,983   |   |          | $      | 3,760   |          |   | $ | 4,393 |   |   | $ | 3,093 |   |   | $ | 1,236 |   |
| Operating Expenses, Less Depreciation               |   |                                   |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| and Amortization                                    |   |                                   | (3,735  | )      |          |   | (4,270  | )             |   |   | (3,764 | ) |   |   | (2,648 | ) |   |   | (1,676 | ) |
| Depreciation and Amortization                       |   |                                   | (1,002  | )      |          |   | (1,037  | )             |   |   | (1,022 | ) |   |   | (532 | ) |   |   | (200 | ) |
|                                                |   |                                   |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from Operations                                |   |                                   | (754    | )      |          |   | (1,547  | )             |   |   | (393 | ) |   |   | (87 | ) |   |   | (640 | ) |
| Equity in Net (Loss) Income of Investments          |   |                                   | (18,326 | )      |          |   | (13,370 | )             |   |   | (973 | ) |   |   | (26 | ) |   |   | 3,342 |   |
| Reserve for Value of Investment                     |   |                                   | (4,525  | )      |          |   | 0       |          |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
|                                                |   |                                   |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) Income from Continuing Operations            |   |                                   | (23,605 | )      |          |   | (14,917 | )             |   |   | (1,366 | ) |   |   | (113 | ) |   |   | 2,702 |   |
|                                                |   |                                   |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (Loss) from Discontinued Operations          |   |                                   | 0       |   |          |   | 0       |          |   |   | (42 | ) |   |   | 781 |   |   |   | (1,403 | ) |
| Gain on Sale of Investments in Real Estate          |   |                                   | 0       |   |          |   | 0       |          |   |   | 2,518 |   |   |   | 12,376 |   |   |   | 6,351 |   |
|                                                |   |                                   |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (Loss)                                   |   | $                                      | (23,605 | )      |          | $      | (14,917 | )             |   | $ | 1,110 |   |   | $ | 13,044 |   |   | $ | 7,650 |   |
|                                                |   |                                   |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (Loss) from Continuing Operations            |   |                                   |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| per Unit of Partnership Interest:                   |   | $                                      | (3,044  | )      |          | $      | (1,924  | )             |   | $ | (176 | ) |   | $ | (15 | ) |   | $ | 348 |   |
|                                                |   |                                   |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Distributions paid per Unit of Partnership Interest |   | $                                      | -       |   |          | $      | 110     |          |   | $ | 350 |   |   | $ | 350 |   |   | $ | 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                                    |   | $                                      | 37,634  |   |          | $      | 38,580  |          |   | $ | 39,539 |   |   | $ | 40,143 |   |   | $ | 19,658 |   |
| Real Estate Assets Held for Sale                    |   | $                                      | -       |   |          | $      | -       |          |   | $ | - |   |   | $ | 12,527 |   |   | $ | 27,387 |   |
| Total Assets                                        |   | $                                      | 37,895  |   |          | $      | 62,069  |          |   | $ | 78,347 |   |   | $ | 67,013 |   |   | $ | 55,341 |   |
| Mortgage Notes and Unsecured Loan Payable           |   | $                                      | 38,635  |   |          | $      | 38,806  |          |   | $ | 38,943 |   |   | $ | 17,085 |   |   | $ | 10,000 |   |

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| For the year ending December 31, |   |
|----------------------------------|--------|
| 2010                             |   |  $ | 28,634,550 |   |
| 2011                             |   |   | - |   |
| 2012                             |   |   | - |   |
| 2013                             |   |   | - |   |
| 2014                             |   |   |   |   |
| Thereafter                       |   |   | 10,000,000 |   |
|                             |   |   |   |   |
| Total                            |   | $ | 38,634,550 |   |

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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, 2009 as filed with the Securities and Exchange Commission and have judged such controls and procedures to be effective. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (b)   | There have been no changes in the Registrant’s internal controls during the year ended December 31, 2009 that could significantly affect those controls subsequent to the date of evaluation. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Name                    | Age                                                                               | Position                      |
|-------------------------|-----------------------------------------------------------------------------------|-------------------------------|
|                    |                                                                              |                          |
|                    |                                                                              |                          |
| John H. Streicker       | 67                                                                                | President & Director      |
|                    |                                                                              |                          |
| Millie C. Cassidy       | 64                                                                                | Vice President & Director |
|                    |                                                                              |                          |
| David Weiner            | 74                                                                                | Chief Executive Officer       |
|                    |                                                                              |                          |
| Anita Breslin           | 53                                                                                | First Vice President          |
|                    |                                                                              |                          |
| Robert Leniart          | 53                                                                                | Vice President                |
|  George N. Tietjen | 49                                                                                | Vice President                |
|  Martin Cawley     | 53                                                                                | Vice President                |
|  Leland J. Roth    |               46 | Treasurer                     |
|  John H. Zoeller   | 50                                                                                | Chief Financial Officer       |

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| (a) | At December 31, 2009, 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 Unit holder has disclaimed beneficial ownership of all Units owned by the other Unit holders in this group.  The foregoing information is based upon a 13-D filing made by the respective Unit holders. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | As of December 31, 2009, 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 2,642 Units of Limited Partnership Interest, representing 34.07% of the outstanding number of Units on December 31, 2009. In accordance with SEC regulations, SRE Clearing Services, Inc. filed Form 13-D/A on October 15, 2009, when the total number of Units held reached 34% of the outstanding number of Units. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | During the year ended December 31, 2009, there were no changes in control of the Registrant or the General Partner. |
|-----|---------------------------------------------------------------------------------------------------------------------|

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| 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 $113,000 and $150,000 for the years ended December 31, 2009 and 2008, 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.  All of the 2009 and the remaining 2008 fees were paid to Dworken, Hillman, LaMorte & Sterczala, P.C., the current independent auditor for the Partnership. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    2. | Audit-Related Fees.  No fees were billed by the principal accountant during the years ended December 31, 2009 and 2008 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 this section. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    3. | Tax Fees.  The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were approximately $16,000 and $15,000 each for the years ended December 31, 2009 and 2008, respectively.  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 2009 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 25.  All other financial statement schedules are inapplicable or the required subject matter is contained in the consolidated financial statements or notes thereto. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.1 | Agreement of Limited Partnership (incorporated by reference to Exhibit A to Registration Statement on form S-11 as filed with the Securities and Exchange Commission on May 16, 1985) |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                 |   | SB PARTNERS                                  |
|----------------------|--------|----------------------------------------------|
|                 |   |                                         |
|                 | By:    | SB PARTNERS REAL ESTATE CORPORATION          |
|                 |   | General Partner                              |
|                 |   |                                         |
|                 |   | Chief Executive Officer                      |
| Dated: June 10, 2010 | By:    | /s/ David Weiner                             |
|                 |   | David Weiner                                 |
|                 |   |                                         |
|                 |   | Principal Financial & Accounting Officer |
| Dated: June 10, 2010 | By:    | /s/ John H. Zoeller                          |
|                 |   | John H. Zoeller                              |
|                 |   | Chief Financial Officer                      |
|                 |   |                                         |

|                |   |                                           |                    |          |   |          |   |
|---------------------|--------|------------------------------------------------|-------------------------|---------------|--------|---------------|--------|
| Signature           |   |                                           | Position                |          |   |          | Date   |
|                |   |                                           |                    |          |   |          |   |
| /s/ David Weiner    |   |                                           | Chief Executive Officer |          |   | June 10, 2010 |
| David Weiner        |   |                                           |                    |          |   |          |
|                |   |                                           |                    |          |   |
|                |   |                                           | Chief Financial Officer |          |   |
| /s/ John H. Zoeller |   | (Principal Financial & Accounting Officer) |                    | June 10, 2010 |
| John H. Zoeller     |   |                                           |                    |          |   |          |

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| (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; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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)   | designed such internal control over financial reporting, caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | 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 |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | 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 10, 2010 | By:    | /s/ David Weiner        |
|                 |   | David Weiner            |
|                 |   |                    |

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| (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) and 15d-15(e)(4)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15f for the registrant and have: |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) 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 10, 2010 |  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, 2009, 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 of 1934; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (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 10, 2010 | By:    | /s/ David Weiner        |
|                 |   | David Weiner            |
|                 |   |                    |

|   | (1) | the Annual Report on Form 10-K of the registrant for the annual period ended December 31, 2009, 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 of 1934; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (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 10, 2010 |  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                                                                | 26 |
|                                                                                                                   |   |
| Consolidated Balance Sheets as of December 31, 2009 and 2008                                                           | 27 |
|                                                                                                                   |   |
| Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007                             | 28 |
|                                                                                                                   |   |
| Consolidated Statements of Changes in Partners' Capital (Deficit) for the years ended December 31, 2009, 2008 and 2007 | 29 |
|                                                                                                                   |   |
| Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007                             | 30 |
|                                                                                                                   |   |
| Notes to Consolidated Financial Statements                                                                             | 31 – 42 |
|                                                                                                                   |   |
| Supplemental Financial Statement schedule:                                                                             |   |
|                                                                                                                   |   |
| Schedule III – Real Estate and Accumulated Depreciation as of December 31, 2009                                  | 43-44 |
|                                                                                                                   |   |

----

----

| SB PARTNERS                                    |                                                                  |                                              |   |         |       |   |
|------------------------------------------------|-----------------------------------------------------------------------|---------------------------------------------------|--------|--------------|------------|--------|
| (A New York Limited Partnership)               |                                                                  |                                              |   |         |       |   |
|                                           |                                                                  |                                              |   |         |       |   |   |   |
| CONSOLIDATED BALANCE SHEETS                    |                                                                  |                                              |   |         |       |   |
|                                           |                                                                  |                                              |   |         |       |   |   |   |
|                                           |                                                                  |                                              |   | December 31, |       |
|                                           |                                                                  |                                              |   | 2009         |       |   | 2008 |   |
|                                           |                                                                  |                                              |   |         |       |   | (As Restated) |   |
| Assets:                                        |                                                                  |                                              |   |         |       |   |   |   |
|    Investments -                |                                                                  |                                              |   |         |       |   |
|                                           | Real estate, at cost                                                  |                                              |   |         |       |   |   |
|                                           |      Land                                    |                                              | $      | 4,065,000    |       |   | $ | 4,065,000 |   |
|                                           |      Buildings, furnishings and improvements |                                              |   | 37,524,235   |       |   |   | 37,488,318 |   |
|                                           |      Less - accumulated depreciation         |                                              |   | (3,955,187   | )          |   |   | (2,973,803 | ) |
|                                           |                                                                  |                                              |   |         | 37,634,048 |   |   |   | 38,579,515 |   |
|                                           |                                                                  |                                              |   |         |       |   |   |   |   |   |
|                                           | Investment in Sentinel Omaha, LLC, net of reserve for fair            |                                              |   |         |       |   |   |   |   |
|                                           | value of $4,525,416 at December 31, 2009                              |                                              |   | -            |       |   |   | 22,851,207 |   |
|                                           |                                                                  |                                              |   |         | 37,634,048 |   |   |   | 61,430,722 |   |
|                                           |                                                                  |                                              |   |         |       |   |   |   |   |   |
|    Other Assets -               |                                                                  |                                              |   |         |       |   |   |   |
|                                           | Cash and cash equivalents                                             |                                              |   | 148,077      |       |   |   | 544,241 |   |
|                                           | Other                                                                 |                                              |   |         | 112,700    |   |   |   | 93,888 |   |
|                                           |                                                                  |                                              |   |         |       |   |   |   |   |   |
|                                           |                                                                  | Total assets                                      |   | $            | 37,894,825 |   |   | $ | 62,068,851 |   |
|                                           |                                                                  |                                              |   |         |       |   |   |   |   |   |
| Liabilities:                                   |                                                                  |                                              |   |         |       |   |   |   |   |
|                                           | Mortgage notes and unsecured loan payable                             |                                              | $      | 38,634,550   |       |   | $ | 38,806,090 |   |
|                                           | Accounts payable and accrued expenses                                 |                                              |   | 196,567      |       |   |   | 596,737 |   |
|                                           | Tenant security deposits                                              |                                              |   | 104,032      |       |   |   | 101,815 |   |
|                                           |                                                                  |                                              |   |         |       |   |   |   |   |   |
|                                           |                                                                  | Total liabilities                                 |   |         | 38,935,149 |   |   |   | 39,504,642 |   |
|                                           |                                                                  |                                              |   |         |       |   |   |   |   |   |
| Partners' Capital (Deficit):                   |                                                                  |                                              |   |         |       |   |   |   |
|                                           | Units of partnership interest without par value;                      |                                              |   |         |       |   |   |   |   |
|                                           | Limited partner - 7,753 units                                         |                                              |   | (1,021,754   | )          |   |   | 22,579,734 |   |
|                                           | General partner - 1 unit                                              |                                              |   | (18,570      | )          |   |   | (15,525 | ) |
|                                           |                                                                  |                                              |   |         |       |   |   |   |   |   |
|                                           |                                                                  | Total partners' capital (deficit)                 |   |         | (1,040,324 | )      |   |   | 22,564,209 |   |
|                                           |                                                                  |                                              |   |         |       |   |   |   |   |   |
|                                           |                                                                  | Total liabilities and partners' capital (deficit) |   | $            | 37,894,825 |   |   | $ | 62,068,851 |   |
|                                           |                                                                  |                                              |   |         |       |   |   |   |   |   |
| See notes to consolidated financial statements |                                                                  |                                              |   |         |       |   |   |   |

----

| SB PARTNERS                                                                                                                                                                                                                                                                                            |           |   |                             |      |   |          |        |      |          |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------|--------|----------------------------------|-----------|--------|---------------|-------------|-----------|---------------|
| (A New York Limited Partnership)                                                                                                                                                                                                                                                                       |           |   |                             |      |   |          |        |      |          |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |
| CONSOLIDATED STATEMENTS OF OPERATIONS                                                                                                                                                                                                                                                                  |           |   |                             |      |   |          |        |      |          |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |
|                                                                                                                                                                                                                                                                                                   |           |   | For the Years Ended December 31, |      |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   | (As Restated) |        |      | (As Restated) |   |
|                                                                                                                                                                                                                                                                                                   |           |   | 2009                             |      |   | 2008          |        |      | 2007          |   |
| Revenues:                                                                                                                                                                                                                                                                                              |           |   |                             |      |   |          |        |      |          |   |
| Base rental income                                                                                                                                                                                                                                                                                     |           | $      | 3,023,526                        |      |   | $             | 2,901,867   |      |          | $ | 2,946,866 |   |
| Other rental income                                                                                                                                                                                                                                                                                    |           |   | 959,854                          |      |   |          | 846,950     |      |          |   | 947,417 |   |
| Interest on short-term investments and other                                                                                                                                                                                                                                                           |           |   | 165                              |      |   |          | 11,120      |      |          |   | 498,599 |   |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
|                                                                                                                                                                                                                                                                                                   | Total revenues |   |                             | 3,983,545 |   |          |        | 3,759,937 |          |   |   | 4,392,882 |   |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
| Expenses:                                                                                                                                                                                                                                                                                              |           |   |                             |      |   |          |        |      |          |   |   |   |   |
| Real estate operating expenses                                                                                                                                                                                                                                                                         |           |   | 557,015                          |      |   |          | 596,053     |      |          |   | 722,016 |   |
| Interest on mortgage notes and unsecured loan payable                                                                                                                                                                                                                                                  |           |   | 1,493,958                        |      |   |          | 2,025,406   |      |          |   | 1,505,580 |   |
| Depreciation and amortization                                                                                                                                                                                                                                                                          |           |   | 1,001,891                        |      |   |          | 1,036,588   |      |          |   | 1,022,074 |   |
| Real estate taxes                                                                                                                                                                                                                                                                                      |           |   | 649,996                          |      |   |          | 601,474     |      |          |   | 626,286 |   |
| Management fees                                                                                                                                                                                                                                                                                        |           |   | 826,573                          |      |   |          | 851,590     |      |          |   | 734,094 |   |
| Other                                                                                                                                                                                                                                                                                                  |           |   |                             | 207,438   |   |          |        | 195,877   |          |   |   | 176,466 |   |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
|                                                Total expenses    |           |   | 4,736,871                        |      |   |          | 5,306,988   |      |          |   | 4,786,516 |   |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
| Loss from  operations                                                                                                                                                                                                                                                                        |           |   | (753,326                         | )         |   |          | (1,547,051  | )         |          |   | (393,634 | ) |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
| Equity in net loss of investment                                                                                                                                                                                                                                                                       |           |   | (18,325,791                      | )         |   |          | (13,369,669 | )         |          |   | (972,787 | ) |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
| Reserve for value of investment                                                                                                                                                                                                                                                                        |           |   | (4,525,416                       | )         |   |          | -           |      |          |   | - |   |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
| Loss from continuing operations                                                                                                                                                                                                                                                                        |           |   | (23,604,533                      | )         |   |          | (14,916,720 | )         |          |   | (1,366,421 | ) |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
| Loss from discontinued operations                                                                                                                                                                                                                                                                      |           |   | -                                |      |   |          | -           |      |          |   | (41,631 | ) |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
| Net gain on sale of investment in real estate property                                                                                                                                                                                                                                                 |           |   | -                                |      |   |          | -           |      |          |   | 2,518,418 |   |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
|                                                Net (loss) income |           |   | (23,604,533                      | )         |   |          | (14,916,720 | )         |          |   | 1,110,366 |   |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
| (Loss) income allocated to general partner                                                                                                                                                                                                                                                             |           |   | (3,045                           | )         |   |          | (1,924      | )         |          |   | 143 |   |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
| (Loss) income allocated to limited partners                                                                                                                                                                                                                                                            |           | $      | (23,601,488                      | )         |   | $             | (14,914,796 | )         |          | $ | 1,110,223 |   |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
| (Loss) earnings per unit of limited partnership interest                                                                                                                                                                                                                                               |           |   |                             |      |   |          |        |      |          |   |   |   |
| (basic and diluted)                                                                                                                                                                                                                                                                                    |           |   |                             |      |   |          |        |      |          |   |   |   |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
| Continuing operations                                                                                                                                                                                                                                                                                  |           | $      | (3,044.57                        | )         |   | $             | (1,923.99   | )         |          | $ | (176.24 | ) |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
| Discontinued operations (including gain on sale)                                                                                                                                                                                                                                                       |           | $      | -                                |      |   | $             | -           |      |          | $ | 319.46 |   |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
| Net (loss) income                                                                                                                                                                                                                                                                                      |           | $      | (3,044.57                        | )         |   | $             | (1,923.99   | )         |          | $ | 143.22 |   |
|                                                                                                                                                                                                                                                                                                   |           |   |                             |      |   |          |        |      |          |   |   |   |   |
| 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 (DEFICIT) |   |                          |   |   |
| For the years ended December 31, 2009, 2008, and 2007             |   |                          |   |   |
|                                                              |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Limited Partners:                                                 |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   | Units of Partnership Interest |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   | Number                        |   |   | Amount |   |   | Cumulative Cash Distributions |   | Accumulated Earnings (Losses) |   | Total |   |
|                                                              |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, January 1, 2007                                          |   |                          | 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                                           |   |                          | -      |   |   |   | - |   |   |   | - |   |   |   | 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 |   |
| Net loss for the year                                             |   |                          |   |   |   |   |   |   |   |   |   |   |   |   | (23,601,488 | ) |   |   | (23,601,488 | ) |
| Balance, December 31, 2009                                        |   |                          | 7,753  |   |   | $ | 119,968,973 |   |   | $ | (111,721,586 | ) |   | $ | (9,269,141 | ) |   | $ | (1,021,754 | ) |
|                                                              |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General Partner:                                                  |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   | Units of Partnership Interest |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   | Number                        |   |   | Amount |   |   | Cumulative Cash Distributions |   | Accumulated Earnings (Losses) |   | Total |   |
|                                                              |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, January 1, 2007                                          |   |                          | 1      |   |   |   | 10,000 |   |   |   | (25,904 | ) |   |   | 2,620 |   |   |   | (13,284 | ) |
| Cash distributions                                                |   |                          | -      |   |   |   | - |   |   |   | (350 | ) |   |   | - |   |   |   | (350 | ) |
| Net income for the year                                           |   |                          | -      |   |   |   | - |   |   |   | - |   |   |   | 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 | ) |
| Net loss for the year                                             |   |                          | -      |   |   |   | - |   |   |   | - |   |   |   | (3,045 | ) |   |   | (3,045 | ) |
| Balance, December 31, 2009                                        |   |                          | 1      |   |   | $ | 10,000 |   |   | $ | (26,364 | ) |   | $ | (2,206 | ) |   | $ | (18,570 | ) |
|                                                              |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See notes to consolidated financial statements.                   |   |                          |   |   |   |   |   |   |   |   |   |   |   |

----

| SB PARTNERS                                                  |   |                             |        |   |   |   |        |   |   |
|--------------------------------------------------------------|--------|----------------------------------|-------------|--------|--------|--------|-------------|--------|--------|
| (A New York Limited Partnership)                             |   |                             |        |   |   |   |        |   |   |
|                                                         |   |                             |        |   |   |   |        |   |   |
| CONSOLIDATED STATEMENTS OF CASH FLOWS                        |   |                             |        |   |   |   |        |   |   |
|                                                         |   |                             |        |   |   |   |        |   |   |
|                                                         |   | For the Years Ended December 31, |        |
|                                                         |   | 2009                             |        |   | 2008   |   |        | 2007   |   |
|                                                         |   |                             |        |   |   |   |        |   |   |
| Cash Flows From Operating Activities:                        |   |                             |        |   |   |   |        |   |   |
|   Net (loss) income                                |   | $                                | (23,604,533 | )      |   | $      | (14,916,720 | )      |   | $ | 1,110,366 |   |
| Adjustments to reconcile net (loss) income to net cash       |   |                             |        |   |   |   |        |   |   |   |   |   |
| (used in) provided by operating activities:                  |   |                             |        |   |   |   |        |   |   |   |   |   |
| Net gain on sale of investment in real estate property       |   |                             | -           |   |   |   | -           |   |   |   | (2,518,418 | ) |
| Equity in net loss of investment and joint venture           |   |                             | 18,325,791  |   |   |   | 13,369,669  |   |   |   | 972,787 |   |
| Reserve for fair value of investment                         |   |                             | 4,525,416   |   |   |   | -           |   |   |   | - |   |
| Depreciation and amortization                                |   |                             | 1,001,891   |   |   |   | 1,036,588   |   |   |   | 1,056,132 |   |
| Net (decrease) in deferred revenue                           |   |                             | -           |   |   |   | -           |   |   |   | (23,314 | ) |
| Net (increase) decrease in operating assets                  |   |                             | (39,319     | )      |   |   | 18,911      |   |   |   | 139,509 |   |
| Net increase (decrease) in operating liabilities             |   |                             | (400,170    | )      |   |   | 360,714     |   |   |   | (152,643 | ) |
| Net increase in tenant security deposits                     |   |                             | 2,217       |   |   |   | -           |   |   |   | - |   |
|                                                         |   |                             |        |   |   |   |        |   |   |   |   |   |
| Net cash (used in) provided by operating activites           |   |                             | (188,707    | )      |   |   | (130,838    | )      |   |   | 584,419 |   |
|                                                         |   |                             |        |   |   |   |        |   |   |   |   |   |
| Cash Flows From Investing Activities:                        |   |                             |        |   |   |   |        |   |   |   |   |   |
| Net proceeds from sale of investment in real estate property |   |                             | -           |   |   |   | -           |   |   |   | 15,085,446 |   |
| Investment in Sentinel Omaha, LLC                            |   |                             | -           |   |   |   | -           |   |   |   | (37,200,000 | ) |
| Decrease in cash held in escrow                              |   |                             | -           |   |   |   | -           |   |   |   | 24,112 |   |
| Purchase of marketable securities                            |   |                             | -           |   |   |   | -           |   |   |   | (19,999,226 | ) |
| Proceeds from sale of marketable securities                  |   |                             | -           |   |   |   | -           |   |   |   | 32,998,424 |   |
| Capital additions to real estate owned                       |   |                             | (35,917     | )      |   |   | (14,102     | )      |   |   | (423,873 | ) |
|                                                         |   |                             |        |   |   |   |        |   |   |   |   |   |
| Net cash used in investing activites                         |   |                             | (35,917     | )      |   |   | (14,102     | )      |   |   | (9,515,117 | ) |
|                                                         |   |                             |        |   |   |   |        |   |   |   |   |   |
| Cash Flows From Financing Activities:                        |   |                             |        |   |   |   |        |   |   |   |   |   |
| Proceeds of bank loan                                        |   |                             | -           |   |   |   | -           |   |   |   | 22,000,000 |   |
| Repayments of mortgage notes payable                         |   |                             | -           |   |   |   | -           |   |   |   | (9,427,012 | ) |
| Principal payments on mortgage notes payable                 |   |                             | (171,540    | )      |   |   | (137,086    | )      |   |   | (192,105 | ) |
| Payment of deferred financing cost                           |   |                             | -           |   |   |   | -           |   |   |   | (56,650 | ) |
| Distributions paid to partners                               |   |                             | -           |   |   |   | (852,885    | )      |   |   | (2,713,725 | ) |
|                                                         |   |                             |        |   |   |   |        |   |   |   |   |   |
| Net cash provided by (used in) financing activities          |   |                             | (171,540    | )      |   |   | (989,971    | )      |   |   | 9,610,508 |   |
|                                                         |   |                             |        |   |   |   |        |   |   |   |   |   |
| Net change in cash and cash equivalents                      |   |                             | (396,164    | )      |   |   | (1,134,911  | )      |   |   | 679,810 |   |
|                                                         |   |                             |        |   |   |   |        |   |   |   |   |   |
| Cash and cash equivalents at beginning of year               |   |                             | 544,241     |   |   |   | 1,679,152   |   |   |   | 999,342 |   |
|                                                         |   |                             |        |   |   |   |        |   |   |   |   |   |
| Cash and cash equivalents at end of year                     |   | $                                | 148,077     |   |   | $      | 544,241     |   |   | $ | 1,679,152 |   |
|                                                         |   |                             |        |   |   |   |        |   |   |   |   |   |
|                                                         |   |                             |        |   |   |   |        |   |   |   |   |   |
| Supplemental disclosure of cash flow information:            |   |                             |        |   |   |   |        |   |   |   |   |   |
| Cash paid during the year for interest                       |   | $                                | 1,412,275   |   |   | $      | 1,940,925   |   |   | $ | 1,812,747 |   |
|                                                         |   |                             |        |   |   |   |        |   |   |   |   |   |
|                                                         |   |                             |        |   |   |   |        |   |   |   |   |   |
| 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 those estimates. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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, as follows: |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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, 2009 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 cash equivalents. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | 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 7) |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h)   | 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 |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (i)   | 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. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (j)   | 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 income taxes. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (k)   | 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. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (l)   | 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. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (m)   | Certain prior year amounts have been reclassified to conform with the current year presentation (see Notes 2 and 3). |
|-----------------|----------------------------------------------------------------------------------------------------------------------|

----

|               |                                         |                                            |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                             |
|--------------------|----------------------------------------------|-------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------|
|               |                                         |                                            |                                                                                                                                                                                                                                                                                              | December 31, 2008                                                                                                                                                                                                                                                                                 |
|               |                                         |                                            |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                             |
|               |                                         |                                            |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                             |
|               |                                         |                                            |                                                                                                                                                                                                                                                                                              | As                                                                                                                                                                                                                                                                                                | To reflect reclassification                                                                                                                                                                                                                                                                       | As                                                               |
|               |                                         |                                            |                                                                                                                                                                                                                                                                                              | originally                                                                                                                                                                                                                                                                                        | back to continuing operations                                                                                                                                                                                                                                                                     | retrospectively                                                  |
|               |                                         |                                            |                                                                                                                                                                                                                                                                                              | reported                                                                                                                                                                                                                                                                                          | as of December 31, 2009                                                                                                                                                                                                                                                                           | adjusted                                                         |
| Assets:            |                                         |                                            |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |
| Investments -      |                                         |                                            |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |
|               | Real estate, at cost                         |                                            |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |
|               |                                         | Land                                            |                                                                                                                                                                                                                                                                                              |  $       3,595,000                                                                                                                                                                                                                                        |                        $             470,000                                                                  |  $        4,065,000 |
|               |                                         | Buildings, furnishings and improvements         | 32,771,710                                                                                                                                                                                                                                                                                        | 4,716,608                                                                                                                                                                                                                                                                                         | 37,488,318                                                                                                                                                                                                                                                                                        |
|               |                                         | Less - accumulated depreciation                 | (2,166,282)                                                                                                                                                                                                                                                                                       | (807,521)                                                                                                                                                                                                                                                                                         | (2,973,803)                                                                                                                                                                                                                                                                                       |
|               |                                         |                                            |                                                                                                                                                                                                                                                                                              | 34,200,428                                                                                                                                                                                                                                                                                        | 4,379,087                                                                                                                                                                                                                                                                                         | 38,579,515                                                       |
|               |                                         |                                            |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                             |
|               | Real estate held for sale                    | 4,379,087                                       | (4,379,087)                                                                                                                                                                                                                                                                                       |                         -                                                                                                                                                 |
|               | Investment in Sentinel Omaha, LLC            | 22,851,207                                      |                                                 - | 22,851,207                                                                                                                                                                                                                                                                                        |
|               |                                         |                                            |                                                                                                                                                                                                                                                                                              | 61,430,722                                                                                                                                                                                                                                                                                        |                                                 - | 61,430,722                                                       |
| Other Assets -     |                                         |                                            |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |
|               | Cash and cash equivalents                    | 544,241                                         |                                                 - | 544,241                                                                                                                                                                                                                                                                                           |
|               | Other                                        |                                            | 88,561                                                                                                                                                                                                                                                                                            |                                           5,327                                 | 93,888                                                                                                                                                                                                                                                                                            |
|               |                                         |                                            |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                             |
|               |                                         | Total assets                                    |  $     62,063,524                                                                                                                                                                                                                                                   |                          $               5,327                                            |  $      62,068,851                                                                                                                                                                                                                                             |
|               |                                         |                                            |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                             |
| Liabilities:       |                                         |                                            |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |
|               | Mortgage notes and unsecured loan payable    |  $     38,806,090 |  $                      -                                                                                                                                                      |  $      38,806,090                                                                                                                                                                                                                                             |
|               | Accounts payable and accrued expenses        | 556,892                                         | 39,845                                                                                                                                                                                                                                                                                            | 596,737                                                                                                                                                                                                                                                                                           |
|               | Tenant security deposits                     | 25,580                                          | 76,235                                                                                                                                                                                                                                                                                            | 101,815                                                                                                                                                                                                                                                                                           |
|               | Other liabilities in discontinued operations | 110,753                                         |                                      (110,753)                                                           |                         -                                                                                                                                                 |
|               |                                         |                                            |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                             |
|               |                                         | Total liabilities                               | 39,499,315                                                                                                                                                                                                                                                                                        |                                           5,327                                 | 39,504,642                                                                                                                                                                                                                                                                                        |
|               |                                         |                                            |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                             |
| Partners' Capital: |                                         |                                            |                                                                                                                                                                                                                                                                                              |
|               | Limited partner - 7,753 units                | 22,579,734                                      |                                                 - | 22,579,734                                                                                                                                                                                                                                                                                        |
|               | General partner - 1 unit                     | (15,525)                                        |                                                 - | (15,525)                                                                                                                                                                                                                                                                                          |
|               |                                         |                                            |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                             |
|               |                                         | Total partners' capital                         | 22,564,209                                                                                                                                                                                                                                                                                        |                                                 - | 22,564,209                                                                                                                                                                                                                                                                                        |
|               |                                         |                                            |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                             |
|               |                                         | Total liabilities and partners' capital         |  $     62,063,524                                                                                                                                                                                                                                                   |  $            5,327                                                                                                                                                                                                              |  $      62,068,851                                                                                                                                                                                                                                             |
|               |                                         |                                            |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                             |

----

|                                                                                                     |   | For the Year Ended December 31, 2008 |        |
|----------------------------------------------------------------------------------------------------------|--------|--------------------------------------|-------------|
|                                                                                                     |   |                                 |        |   |   |   |   |   |   |
|                                                                                                     |   | As                                   |        |   | To reflect reclassification |   |   | As |   |
|                                                                                                     |   | originally                           |        |   | back to continuing operations |   |   | retrospectively |   |
|                                                                                                     |   | reported                             |        |   | as of December 31, 2009 |   |   | adjusted |   |
| Revenues:                                                                                                |   |                                 |        |   |   |   |   |   |   |
|   Rental income                                                                                     |   | $                                    | 2,417,825   |   |   | $ | 484,042 |   |   | $ | 2,901,867 |   |
|       Other rental income                                                       |   |                                 | 462,118     |   |   |   | 384,832 |   |   |   | 846,950 |   |
|           Interest on short-term investments and other |   |                                 | 11,120      |   |   |   | - |   |   |   | 11,120 |   |
|                                                                                                     |   |                                 |        |   |   |   |   |   |   |   |   |   |
| Total revenues                                                                                           |   |                                 | 2,891,063   |   |   |   | 868,874 |   |   |   | 3,759,937 |   |
|                                                                                                     |   |                                 |        |   |   |   |   |   |   |   |   |   |
| Expenses:                                                                                                |   |                                 |        |   |   |   |   |   |   |   |   |   |
|         Real estate operating expenses                                |   |                                 | 450,521     |   |   |   | 145,532 |   |   |   | 596,053 |   |
|           Interest on mortgage notes and unsecured          |   |                                 |        |   |   |   |   |   |   |   |   |   |
|      loan payable                                                                    |   |                                 | 2,022,608   |   |   |   | 2,798 |   |   |   | 2,025,406 |   |
|         Depreciation and amortization                                 |   |                                 | 903,550     |   |   |   | 133,038 |   |   |   | 1,036,588 |   |
|       Real estate taxes                                                         |   |                                 | 326,776     |   |   |   | 274,698 |   |   |   | 601,474 |   |
|       Management fees                                                           |   |                                 | 851,590     |   |   |   | - |   |   |   | 851,590 |   |
|  Other                                                                                              |   |                                 | 195,454     |   |   |   | 423 |   |   |   | 195,877 |   |
|                                                                                                     |   |                                 |        |   |   |   |   |   |   |   |   |   |
| Total expenses                                                                                           |   |                                 | 4,750,499   |   |   |   | 556,489 |   |   |   | 5,306,988 |   |
|                                                                                                     |   |                                 |        |   |   |   |   |   |   |   |   |   |
|          Loss from operations                                    |   |                                 | (1,859,436  | ) |   |   | 312,385 |   |   |   | (1,547,051 | ) |
|         Equity in net loss of investment                              |   |                                 | (13,369,669 | ) |   |   | - |   |   |   | (13,369,669 | ) |
|                                                                                                     |   |                                 |        |   |   |   |   |   |   |   |   |   |
|            Loss from continuing operations             |   |                                 | (15,229,105 | ) |   |   | 312,385 |   |   |   | (14,916,720 | ) |
|         Income from discontinued operations                      |   |                                 | 312,385     |   |   |   | (312,385 | ) |   |   | - |   |
|                                                                                                     |   |                                 |        |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                 |   |                                 | (14,916,720 | ) |   |   | - |   |   |   | (14,916,720 | ) |
|                                                                                                     |   |                                 |        |   |   |   |   |   |   |   |   |   |
| Loss allocated to general partner                                                                        |   |                                 | (1,924      | ) |   |   | - |   |   |   | (1,924 | ) |
| Loss allocated to limited partners                                                                       |   | $                                    | (14,914,796 | ) |   | $ | - |   |   | $ | (14,914,796 | ) |
|                                                                                                     |   |                                 |        |   |   |   |   |   |   |   |   |   |
| Earnings per unit of limited partnership interest (basic and diluted):                                   |   |                                 |        |   |   |   |   |   |   |
| Continuing operations                                                                                    |   | $                                    | (1,964.29   | ) |   | $ | 40.29 |   |   | $ | (1,923.99 | ) |
| Discontinued operations (including gain on sale)                                                         |   | $                                    | 40.29       |   |   | $ | (40.29 | ) |   | $ | - |   |
| Net Loss per unit of Limited Partnership Interest                                                        |   | $                                    | (1,923.99   | ) |   | $ | - |   |   | $ | (1,923.99 | ) |
|                                                                                                     |   |                                 |        |   |   |   |   |   |   |   |   |   |
|                                                                                                     |   |                                 |        |   |   |   |   |   |   |   |   |   |
|                                                                                                     |   |                                 |        |   |   |   |   |   |   |   |   |   |

----

|       |                                                                   |                                              |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                 |                                          |                                           |            |
|------------|------------------------------------------------------------------------|---------------------------------------------------|---------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------|-----------------------------------------------|------------------------------------------------|-----------------|
|       |                                                                   |                                              |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                              | For the Year Ended December 31, 2007                                                                                                                                                                                                                                                              |
|       |                                                                   |                                              |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                 |                                          |                                           |            |
|       |                                                                   |                                              |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                              | As                                                                                                                                                                                                                                                                                                |                                                                 | To reflect reclassification                   |                                           | As              |
|       |                                                                   |                                              |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                              | originally                                                                                                                                                                                                                                                                                        |                                                                 | back to continuing operations                 |                                           | retrospectively |
|       |                                                                   |                                              |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                              | reported                                                                                                                                                                                                                                                                                          |                                                                 | as of December 31, 2009                       |                                           | adjusted        |
| Revenues:  |                                                                   |                                              |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                 |                                          |
|       | Rental income                                                          |                                              |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          |  $    2,396,507                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                              |  $         550,359 |                                          |  $     2,946,866 |
|       | Other rental income                                                    |                                              |                                              |                                                                                                                                                                                                                                                                                              | 660,038                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                              | 287,379                                                                                                                                                                                                                                                                                           |                                                                 | 947,417                                       |
|       | Interest on short-term investments and other                           |                                              | 501,395                                           |                                                                                                                                                                                                                                                                                              |                                          (2,796) |                                                                                                                                                                                                                                                                                              | 498,599                                                                                                                                                                                                                                                                                           |
|       |                                                                   |                                              |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                 |                                          |                                           |            |
|       |                                                                   | Total revenues                                    |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          | 3,557,940                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                              | 834,942                                                              |                                          | 4,392,882                                      |
|       |                                                                   |                                              |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                 |                                          |                                           |            |
| Expenses:  |                                                                   |                                              |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                 |                                          |
|       | Real estate operating expenses                                         |                                              |                                              | 591,819                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                          | 130,197                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                              | 722,016                                                              |
|       | Interest on mortgage notes and                                         |                                              |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                 |
|       |   unsecured loan payable                                     |                                              |                                              |                                                                                                                                                                                                                                                                                              | 1,505,580                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                              |                                                 - |                                                                 | 1,505,580                                     |
|       | Depreciation and amortization                                          |                                              |                                              | 873,711                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                          | 148,363                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                              | 1,022,074                                                            |
|       | Real estate taxes                                                      |                                              |                                              |                                                                                                                                                                                                                                                                                              | 446,514                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                              | 179,772                                                                                                                                                                                                                                                                                           |                                                                 | 626,286                                       |
|       | Management fees                                                        |                                              |                                              |                                                                                                                                                                                                                                                                                              | 734,094                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                              |                                                 - |                                                                 | 734,094                                       |
|       | Other                                                                  |                                              |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          | 174,816                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                              | 1,650                                                                |                                          | 176,466                                        |
|       |                                                                   |                                              |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                 |                                          |                                           |            |
|       |                                                                   | Total expenses                                    |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          | 4,326,534                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                              | 459,982                                                              |                                          | 4,786,516                                      |
|       |                                                                   |                                              |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                 |                                          |                                           |            |
|       | Loss from operations                                                   |                                              |                                              |                                                                                                                                                                                                                                                                                              | (768,594)                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                              | 374,960                                                                                                                                                                                                                                                                                           |                                                                 | (393,634)                                     |
|       | Equity in net loss of investment                                       |                                              |                                              | (972,787)                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                          |                                                 - |                                                                                                                                                                                                                                                                                              | (972,787)                                                            |
|       |                                                                   |                                              |                                              |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                              |                                                                 |                                          |                                           |            |
|       | Loss from continuing operations                                        |                                              |                                              | (1,741,381)                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                          | 374,960                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                              | (1,366,421)                                                          |
|       | Income (loss) from discontinued operations                             |                                              | 333,329                                           |                                                                                                                                                                                                                                                                                              | (374,960)                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                              | (41,631)                                                                                                                                                                                                                                                                                          |
|       | 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                                                  |                                              |                                              |                                                                                                                                                                                                                                                                                              |  $    (224.61)                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                              |  $       48.36                                                                                                                                                                                                                                            |                                                                 |  $     (176.24) |
|       | Discontinued operations (including gain on sale)                       |                                              |  $      367.82 |                                                                                                                                                                                                                                                                                              |  $    (48.36)                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                              |  $       319.46                                                                                                                                                                                                                                           |
|       | Net income per unit of Limited Partnership Interest                    |  $      143.22 |                                              |  $              -                                                                                                                                                                                                      |                                                                                                                                                                                                                                                          |  $       143.22                                                                                                                                                                                                                                           |

----

| 1)   | 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 |   | 12/31/09            |   |   | 12/31/08   |   |
|                              |   |   |   |   |        |   |        |   |                |   |   |       |   |
|                              |   |   |   |   |        |   |        |   |                |   |   |       |   |
| Industrial flex property          |   |   | 1      |   |        |   | 2002        |   | 60,345 sf           |   | $      | 5,270,128  |   |   | $ | 5,186,608 |   |
|                              |   |   |   |   |        |   |        |   |                |   |   |       |   |   |   |   |   |
| Warehouse distribution properties |   |   | 2      |   |        |   | 2005-06     |   | 596,605 sf          |   |   | 36,319,107 |   |   |   | 36,366,710 |   |
|                              |   |   |   |   |        |   |        |   |                |   |   |       |   |   |   |   |   |
| Total cost                        |   |   |   |   |        |   |        |   |                |   |   | 41,589,235 |   |   |   | 41,553,318 |   |
|                              |   |   |   |   |        |   |        |   |                |   |   |       |   |   |   |   |   |
| Less: Accumulated depreciation    |   |   |   |   |        |   |        |   |                |   |   | (3,955,187 | )      |   |   | (2,973,803 | ) |
|                              |   |   |   |   |        |   |        |   |                |   |   |       |   |   |   |   |   |
| Net book value                    |   |   |   |   |        |   |        |   |                |   | $      | 37,634,048 |   |   | $ | 38,579,515 |   |
|                              |   |   |   |   |        |   |        |   |                |   |   |       |   |   |   |   |   |

----

|                                                       |   |   |     |   |   |   |     |   |   |
|------------------------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|
| Balance Sheet                                              |   | 2009   |     |   | 2008   |   |     |   |   |
|                                                       |   |   |     |   |   |   |     |   |   |
| Investment in real estate properties, at fair value        |   | $      | 355,200  |   |   | $      | 444,500  |   |   |   |   |
| Other assets                                               |   |   | 13,787   |   |   |   | 15,156   |   |   |   |   |
| Debt                                                       |   |   | (344,361 | )      |   |   | (373,035 | )      |   |   |   |
| Other liabilities                                          |   |   | (9,541   | )      |   |   | (10,429  | )      |   |   |   |
| Members' equity                                            |   | $      | 15,085   |   |   | $      | 76,192   |   |   |   |   |
|                                                       |   |   |     |   |   |   |     |   |   |   |   |
|                                                       |   |   |     |   |   |   |     |   |   |   |   |
| Statement of Operations                                    |   |   | 2009     |   |   | 2008   |     |   | 2007   |   |
|                                                       |   |   |     |   |   |   |     |   |   |   |   |   |
| Rent and other income                                      |   | $      | 50,119   |   |   | $      | 54,555   |   |   | $ | 17,105 |   |
| Real estate operating expenses                             |   |   | (28,131  | )      |   |   | (30,257  | )      |   |   | (8,276 | ) |
| Other income and expenses                                  |   |   | (19,705  | )      |   |   | (22,425  | )      |   |   | (7,639 | ) |
| Net unrealized losses                                      |   |   | (63,923  | )      |   |   | (44,755  | )      |   |   | (1,960 | ) |
| Net realized gain (loss) on sale of real estate properties |   |   | 533      |   |   |   | (1,683   | )      |   |   | - |   |
| Loss on sale of securities                                 |   |   | -        |   |   |   | -        |   |   |   | (31 | ) |
|                                                       |   |   |     |   |   |   |     |   |   |   |   |   |
| Net loss                                                   |   | $      | (61,107  | )      |   | $      | (44,565  | )      |   | $ | (801 | ) |
|                                                       |   |   |     |   |   |   |     |   |   |   |   |   |

----

----

|                 |   |          |   |          |          |     |       |    |        |   |   | Net Carrying Amount |   |
|----------------------|--------|---------------|--------|---------------|---------------|----------|------------|---------|-------------|--------|--------|---------------------|--------|
|                 |   |          |   |          |          | Annual   |       |    |        |   |   | December 31,        |   |
|                 |   |          |   | Installment   |          |     | Amount Due |    |        |   |   |                |   |   |
| Property             |   | Interest Rate |   | Maturity Date |          | Payments |       |    | at Maturity |   |   | 2009                |   |   | 2008 |   |
|                 |   |          |   |          |          |     |       |    |        |   |   |                |   |   |   |   |
| 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           |   |   |   | 6,634,550 |   |   |   | 6,806,090 |   |
|                 |   |          |   |          |          |     |       |    |        |   |   |                |   |   |   | 16,634,550 |   |   |   | 16,806,090 |   |
|                 |   |          |   |          |          |     |       |    |        |   |   |                |   |   |   |   |   |   |   |   |   |
| Bank Loan:           |   |          |   |          |          |     |       |    |        |   |   |                |   |   |   |   |   |   |   |   |   |
| Unsecured (c )       |   |          |   |          |          |     |       |    |        |   |   |                |   |   |   | 22,000,000 |   |   |   | 22,000,000 |   |
|                 |   |          |   |          |          |     |       |    |        |   |   |                |   |   |   |   |   |   |   |   |   |
|                 |   |          |   |          |          |     |       |    |        |   |   |                |   |   | $ | 38,634,550 |   |   | $ | 38,806,090 |   |
|                 |   |          |   |          |          |     |       |    |        |   |   |                |   |   |   |   |   |   |   |   |   |

|   | (b) Annual installment payments include principal and interest.  The mortgage matures in October 2010.  The Partnership has begun discussions with potential lenders to refinance the existing mortgage.  There can be no assurance that Registrant will be able to obtain a new loan to satisfy the existing mortgage nor obtain an extension of the existing mortgage beyond the maturity date.  The Partnership may have to market the property for a sale in order to pay off the existing mortgage. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2010       |   |  $     28,634,550                                                                                       |
|------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|
| 2011       |   |                       - |
| 2012       |   |                       - |
| 2013       |   |                       - |
| 2014       |   |                       - |
| Thereafter |   |         10,000,000                                                                            |
|       |   |                                                                                                                                  |
| Total      |   |  $     38,634,550                                                                                       |
|       |   |                                                                                                                                  |

----

|                         |   |     |      |   |       |   |     | Loss from  |   |   | Equity Income |   |
|------------------------------|--------|----------|-----------|--------|------------|--------|----------|------------|--------|--------|---------------|--------|
|                         |   |     |      |   | Loss from  |   |     | Operations |   |   | (Loss) on     |   |
| Year ended December 31, 2009 |   | Revenues |      |   | Operations |   |     | Per Unit   |   |   | Investment    |   |
|                         |   |     |      |   |       |   |     |       |   |   |          |   |
| First Quarter                |   | $        | 963,090   |   |       | $      | (163,476 | )          |   | $      | (21.09        | )      |   | $ | (5,942,376 | ) |
| Second Quarter               |   |     | 1,075,899 |   |       |   | (77,077  | )          |   |   | (9.94         | )      |   |   | 1,939,415 |   |
| Third Quarter                |   |     | 965,416   |   |       |   | (121,252 | )          |   |   | (15.64        | )      |   |   | (4,636,927 | ) |
| Fourth Quarter               |   |     | 979,140   |   |       |   | (391,521 | )          |   |   | (50.50        | )      |   |   | (9,685,903 | ) |
|                         |   |     |      |   |       |   |     |       |   |   |          |   |   |   |   |   |
|                         |   |     |      |   |       |   |     |       |   |   |          |   |   |   |   |   |
| Year ended December 31, 2008 |   |     |      |   |       |   |     |       |   |   |          |   |   |   |   |   |
|                         |   |     |      |   |       |   |     |       |   |   |          |   |   |   |   |   |
| First Quarter                |   | $        | 920,343   |   |       | $      | (403,746 | )          |   | $      | (52.08        | )      |   | $ | (1,586,091 | ) |
| Second Quarter               |   |     | 929,701   |   |       |   | (346,030 | )          |   |   | (44.63        | )      |   |   | 970,810 |   |
| Third Quarter                |   |     | 876,354   |   |       |   | (370,999 | )          |   |   | (47.85        | )      |   |   | 589,813 |   |
| Fourth Quarter               |   |     | 1,033,539 |   |       |   | (426,276 | )          |   |   | (78.39        | )      |   |   | (13,344,201 | ) |
|                         |   |     |      |   |       |   |     |       |   |   |          |   |   |   |   |   |

|   | A reconciliation of net income (loss) for financial reporting purposes to net income (loss) for Federal income tax reporting purposes is as follows: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                    |   | For the Years Ended December 31, |        |
|-----------------------------------------------------------------------------------------|--------|----------------------------------|-------------|
|                                                                                    |   | 2009                             |        |   | 2008 |   |   | 2007 |   |
|                                                                                    |   |                             |        |   |   |   |   |   |   |
| Net income (loss) for financial reporting purposes                                      |   | $                                | (23,604,533 | ) |   | $ | (14,916,720 | ) |   | $ | 1,110,366 |   |
|                                                                                    |   |                             |        |   |   |   |   |   |   |   |   |   |
| 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                                               |   |                             | (1,237,500  | ) |   |   | 1,130,134 |   |   |   | 654,693 |   |
|                                                                                    |   |                             |        |   |   |   |   |   |   |   |   |   |
| Difference between tax and financial statement equity in net                            |   |                             |        |   |   |   |   |   |   |   |   |   |
| loss of joint venture                                                                   |   |                             | 19,396,228  |   |   |   | 7,236,549 |   |   |   | 156,664 |   |
|                                                                                    |   |                             |        |   |   |   |   |   |   |   |   |   |
| Difference between tax and financial statement depreciation                             |   |                             | (288,857    | ) |   |   | (321,619 | ) |   |   | (395,676 | ) |
|                                                                                    |   |                             |        |   |   |   |   |   |   |   |   |   |
| Net income (loss) for Federal income tax reporting purposes                             |   | $                                | (5,734,662  | ) |   | $ | (6,871,656 | ) |   | $ | 1,526,047 |   |
|                                                                                    |   |                             |        |   |   |   |   |   |   |   |   |   |
| Net ordinary loss for Federal income tax reporting purposes:                            |   | $                                | (4,657,114  | ) |   | $ | (6,871,656 | ) |   | $ | (1,637,863 | ) |
| Net capital (Sec. 1231) gain (loss) for Federal income tax reporting purposes:          |   |                             | (1,077,548  | ) |   |   | - |   |   |   | 3,173,110 |   |
| Short-term capital gain                                                                 |   |                             | -           |   |   |   | - |   |   |   | (9,200 | ) |
|                                                                                    |   |                             |        |   |   |   |   |   |   |   |   |   |
|                                                                                    |   | $                                | (5,734,662  | ) |   | $ | (6,871,656 | ) |   | $ | 1,526,047 |   |
|                                                                                    |   |                             |        |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |                             |        |   |   |   |   |   |   |   |   |   |
| Weighted average number of units of limited partnership  interest outstanding |   |                             | 7,753       |   |   |   | 7,753 |   |   |   | 7,753 |   |
|                                                                                    |   |                             |        |   |   |   |   |   |   |   |   |   |

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

|   | As of December 31, 2009 and 2008, the tax bases of the Partnership's assets and liabilities were approximately $52,981,874 and $62,068,851 of assets, and $38,935,149 and $39,504,639 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, 2009, 2008 and 2007 billings to the Partnership amounting to $196,780, $186,594 and $329,174, respectively, and are included in real estate operating expenses. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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, 2010 are $3,077,206 for 2010; $3,106,946 for 2011; $3,137,322 for 2012; $3,176,485 for 2013; $3,243,733 for 2014; and $21,011,539 thereafter. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | Pursuant to the original investment agreement, the Registrant may be called upon 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. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  SB PARTNERS                                       |   |         |       |   |                           |   |         |          |   |   |       |           |       |        |       |
|---------------------------------------------------------|--------|--------------|------------|--------|--------------------------------|--------|--------------|---------------|--------|--------|------------|----------------|------------|-------------|------------|
| SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION |   |         |       |   |                           |   |         |          |   |   |
|  DECEMBER 31, 2009                                 |   |         |       |   |                           |   |         |          |   |   |       |           |       |        |       |
|                                                    |   |         |       |   |                           |   |         |          |   |   |       |           |       |        |       |
| 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  |   |   | $ | 556,743 |   |
|                                                    |   |         |       |   |                           |   |         |          |   |   |       |           |       |        |       |   |   |   |   |   |
| DISTRIBUTION CENTER                                     |   |         |       |   |                           |   |         |          |   |   |       |           |       |        |       |   |   |   |   |   |
| Minnesota -                                             |   |         |       |   |                           |   |         |          |   |   |       |           |       |        |       |   |   |   |   |   |
| Lino Lakes (435 Park Court)                             |   |         | 10,000,000 |   |                           |   | 1,515,000    |          |   |   | 13,760,390 |           |       |        | 15,275,390 |   |   |   | - |   |
| Illinois -                                              |   |         |       |   |                           |   |         |          |   |   |       |           |       |        |       |   |   |   |   |   |
| Naperville (175 Ambassador Drive)                       |   |         | 6,634,550  |   |                           |   | 2,080,000    |          |   |   | 18,851,262 |           |       |        | 20,931,262 |   |   |   | 112,455 |   |
|                                                    |   |         |       |   |                           |   |         |          |   |   |       |           |       |        |       |   |   |   |   |   |
|                                                    |   |         |       |   |                           |   |         |          |   |   |       |           |       |        |       |   |   |   |   |   |
|                                                    |   | $            | 16,634,550 |   |                           | $      | 4,065,000    |          |   | $      | 36,855,037 |           |       | $           | 40,920,037 |   |   | $ | 669,198 |   |
|                                                    |   |         |       |   |                           |   |         |          |   |   |       |           |       |        |       |   |   |   |   |   |

|                                        |   |                                         |      |   |          |   |       |   |   |   |              |   |
|---------------------------------------------|--------|----------------------------------------------|-----------|--------|---------------|--------|------------|--------|--------|--------|-------------------|--------|
|                                        |   |                                         |      |   |          |   |       |   |   |   |              |   |
| 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   |   |          | $      | 4,800,128  |   |   | $      | 5,270,128         |   |   | $ | 948,605 |   |
|                                        |   |                                         |      |   |          |   |       |   |   |   |              |   |   |   |   |   |
| DISTRIBUTION CENTER                         |   |                                         |      |   |          |   |       |   |   |   |              |   |   |   |   |   |
| Minnesota -                                 |   |                                         |      |   |          |   |       |   |   |   |              |   |   |   |   |   |
| Lino Lakes (435 Park Court)                 |   |                                         | 1,515,000 |   |          |   | 13,760,390 |   |   |   | 15,275,390        |   |   |   | 1,504,531 |   |
| Illinois -                                  |   |                                         |      |   |          |   |       |   |   |   |              |   |   |   |   |   |
| Naperville (175 Ambassador Drive)           |   |                                         | 2,080,000 |   |          |   | 18,963,717 |   |   |   | 21,043,717        |   |   |   | 1,502,051 |   |
|                                        |   |                                         |      |   |          |   |       |   |   |   |              |   |   |   |   |   |
|                                        |   | $                                            | 4,065,000 |   |          | $      | 37,524,235 |   |   | $      | 41,589,235        |   |   | $ | 3,955,187 |   |
|                                        |   |                                         |      |   |          |   |       |   |   |   |              |   |   |   |   |   |

----

|  SB PARTNERS                                                         |        |                                        |   |     |   |        |
|---------------------------------------------------------------------------|-------------|---------------------------------------------|--------|----------|--------|-------------|
|  SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED |
|  DECEMBER 31, 2009                                                   |        |                                        |   |     |   |        |
|                                                                      |        |                                        |   |     |   |        |   |   |
| 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: |                                         |   |   |       |   |   |   |       |   |
|------------------------|----------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|
|                   |                                         |   |   |       |   |   |   |       |   |   |
|                   |                                         |   | 2009   |       |   | 2008   |   |       | 2007   |   |
|                   |                                         |   |   |       |   |   |   |       |   |   |
| (a)                    | Reconciliation of amounts shown in Column E: |   |   |       |   |   |   |       |   |   |
|                   | Balance at beginning of year                 |   | $      | 41,553,318 |   |   | $      | 41,539,216 |   |   | $ | 55,986,587 |   |
|                   | Additions -                                  |   |   |       |   |   |   |       |   |   |   |   |   |
|                   | Acquisitions                                 |   |   | 0          |   |   |   | 0          |   |   |   | 0 |   |
|                   | Cost of improvements                         |   |   | 35,917     |   |   |   | 14,102     |   |   |   | 423,873 |   |
|                   |                                         |   |   |       |   |   |   |       |   |   |   |   |   |
|                   | Deductions -                                 |   |   |       |   |   |   |       |   |   |   |   |   |
|                   | Sales                                        |   |   | 0          |   |   |   | 0          |   |   |   | (14,871,244 | ) |
|                   |                                         |   |   |       |   |   |   |       |   |   |   |   |   |
|                   | Balance at end of year                       |   | $      | 41,589,235 |   |   | $      | 41,553,318 |   |   | $ | 41,539,216 |   |
|                   |                                         |   |   |       |   |   |   |       |   |   |   |   |   |
|                   |                                         |   |   |       |   |   |   |       |   |   |   |   |   |
| (b)                    | Reconciliation of amounts shown in Column F: |   |   |       |   |   |   |       |   |   |   |   |   |
|                   | Balance at beginning of year                 |   | $      | 2,973,803  |   |   | $      | 2,000,624  |   |   | $ | 3,317,024 |   |
|                   | Additions -                                  |   |   |       |   |   |   |       |   |   |   |   |   |
|                   | Depreciation expense for the year            |   |   | 981,384    |   |   |   | 973,179    |   |   |   | 987,816 |   |
|                   |                                         |   |   |       |   |   |   |       |   |   |   |   |   |
|                   | Deductions -                                 |   |   |       |   |   |   |       |   |   |   |   |   |
|                   | Sales                                        |   |   | 0          |   |   |   | 0          |   |   |   | (2,304,216 | ) |
|                   |                                         |   |   |       |   |   |   |       |   |   |   |   |   |
|                   |                                         |   | $      | 3,955,187  |   |   | $      | 2,973,803  |   |   | $ | 2,000,624 |   |
|                   |                                         |   |   |       |   |   |   |       |   |   |   |   |   |
| (c)                    | Aggregate cost basis for Federal             |   |   |       |   |   |   |       |   |   |   |   |   |
|                   | income tax reporting purposes                |   | $      | -          |   |   | $      | -          |   |   | $ | 41,408,208 |   |
|                   |                                         |   |   |       |   |   |   |       |   |   |   |   |   |
| (d)                    | Accumulated depreciation for Federal         |   |   |       |   |   |   |       |   |   |   |   |   |
|                   | income tax reporting purposes                |   | $      | -          |   |   | $      | -          |   |   | $ | 2,544,257 |   |
|                   |                                         |   |   |       |   |   |   |       |   |   |   |   |   |