| SB                  Partners                                                             |
|------------------------------------------------------------------------------------------|
| (Exact                  name of registrant as specified in its                  charter) |

| New                  York                                                                                   |        | 13-6294787                                                                  |
|-------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|
| (State                  of other Jurisdiction of incorporation                  or organization)  |   | (I.R.S.                  Employer Identification                  No.) |
|                                                                                                        |   |                                                                        |
| 1251                  Avenue of the Americas, N.Y., N.Y.                                                    |   | 10020                                                                       |
| (Address                  of principal executive offices)                                                   |   | (Zip                  Code)                                                 |

| Title                  of each Class |   | Name                  of each exchange on which registered |
|--------------------------------------|--------|------------------------------------------------------------|
| NONE                                 |   |                                                       |

| Units                  of Limited Partnership Interests |
|---------------------------------------------------------|
| (Title                  of Class)                       |

----

----

----

----

----

----

| SB                PARTNERS                    |   |
|-----------------------------------------------|--------|
| Summary                of Properties          |   |
| As                of December 31, 2005        |   |
|                                          |   |   |   |   |   |   |   |   |   | Occupancy |   |   |   |   |
|                                          |   |   |   | Description |   | Acquisition |   | Percent |   | at |   |   | Mortgage |   |
| Property                                      |   | Location |   | Sq.                Ft. |   | Units |   | Acres |   | Date |   | Ownership |   | 12/31/05 |   |   | Payable |   |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Apartments:                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Holiday                Park Apts. (a)         |   |   | Holiday,                FL |   |   | 220,000 |   |   | 244 |   |   | 21.5 |   |   | Jan                1991 |   |   | 100 | % |   | 93.9 | % |   | $ | 3,405,102 |   |
| Halton                Place Apts.             |   |   | Greenville,                SC |   |   | 233,000 |   |   | 246 |   |   | 20.6 |   |   | Dec                1998 |   |   | 100 | % |   | 94.3 | % |   | $ | 2,000,000 |   |
| Le                Coeur du Monde Apts.        |   |   | St.                Louis, MO |   |   | 177,000 |   |   | 192 |   |   | 12.3 |   |   | Sep                1999 |   |   | 100 | % |   | 97.4 | % |   | $ | 9,622,268 |   |
|                                          |   |   |   |   |   | 630,000 |   |   | 682 |   |   | 54.4 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Industrial                Flex:               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Eagle                Lake Business Center IV  |   |   | Maple                Grove, MN |   |   | 60,000 |   |   | n/a |   |   | 5.15 |   |   | Jun                2002 |   |   | 100 | % |   | 100 | % |   | $ | 0 |   |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Warehouse                Distribution Center: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |   |  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 435                Park Court (b)             |   |   | Lino                Lakes, MN |   |   | 266,000 |   |   | n/a |   |   | 13.47 |   |   | Oct                2005 |   |   | 100 | % |   | 100 | % |   | $ | 10,000,000 |   |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Land:                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unimproved                land (c)(a)         |   |   | Holiday,                FL |   |   | n/a |   |   | n/a |   |   | 13.9 |   |   | Jul                1978 |   |   | 100 | % |   | n/a |   |   | $ | 0 |   |

|                                                   |   |  2005 |   |  2004 |   |  2003 |   |  2002 |   |  2001 |   |
|--------------------------------------------------------|--------|------------|--------|------------|--------|------------|--------|------------|--------|------------|--------|
|  Average              Occupancy (d)               |   |       |   |       |   |       |   |       |   |       |   |
|  Meadowwood              Apts.                    |   |       | n/a    |       |   | n/a        |   |       | n/a    |       |   | n/a |   |   | 96.3 | % |
|  Holiday              Park Apts.(a)          |   |       | 93.5   | %          |   | 94.5       | %      |       | 94.5   | %          |   | 90.9 | % |   | 91.6 | % |
|  Cypress              Key Apts. (e)               |   |       | 98.2   | %          |   | 91.7       | %      |       | 89.7   | %          |   | 90.4 | % |   | 92.1 | % |
|  Halton              Place Apts.                  |   |       | 92.7   | %          |   | 90.3       | %      |       | 84.5   | %          |   | 87.2 | % |   | 88.5 | % |
|  Le              Coeur du Monde Apts.             |   |       | 95.5   | %          |   | 93.9       | %      |       | 86.7   | %          |   | 93.0 | % |   | 93.0 | % |
|  Eagle              Lake Business Center IV  |   |       | 100.0  | %          |   | 100.0      | %      |       | 100.0  | %          |   | 100.0 | % |   | n/a |   |
|  435              Park Court (b)             |   |       | 100.0  | %          |   | n/a        |   |       | n/a    |       |   | n/a |   |   | n/a |   |
|                                                   |   |       |        |       |   |            |   |       |        |       |   |  |   |   |  |   |
|  Effective              Annual Rent (d)           |   |       |   |       |   |            |   |       |        |       |   |  |   |   |  |   |
|  Meadowwood              Apts. (f)           |   |       | n/a    |       |   | n/a        |   |       | n/a    |       | $      | 7,013 |   | $ | 6,962 |   |
|  Holiday              Park Apts. (a)(f)           |   | $          | 5,796  |       | $      | 5,522      |   | $          | 5,261  |       | $      | 5,056 |   | $ | 5,038 |   |
|  Cypress              Key Apts. (e)(f)            |   | $          | 8,214  |       | $      | 7,656      |   | $          | 7,469  |       | $      | 7,706 |   | $ | 8,016 |   |
|  Halton              Place Apts. (f)         |   | $          | 6,288  |       | $      | 5,886      |   | $          | 5,685  |       | $      | 6,095 |   | $ | 6,477 |   |
|  Le              Coeur du Monde Apts. (f)    |   | $          | 8,998  |       | $      | 8,799      |   | $          | 8,358  |       | $      | 9,164 |   | $ | 8,963 |   |
|  Eagle              Lake Business Center IV (g)   |   | $          | 14     |       | $      | 14         |   | $          | 14     |       | $      | 12 |   |   | n/a |   |
|  435              Park court (b)(g)               |   | $          | 4      |       |   | n/a        |   |       | n/a    |       |   | n/a |   |   | n/a |   |

----

----

|                                                                                            |   | For                the Years Ended December 31,  |   |
|-------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|--------|
|                                                                                            |   | 2005                                             |   | 2004  |   | 2003 |   | 2002 |   | 2001 |   |
|                                                                                            |   | (In                Thousands, Except Unit Data)  |   |
| Income              Statement Data:                                                             |   |                                                  |   |   |   |   |   |   |   |   |   |
| Rental,                Interest and Other Revenues                                              |   | $                                                     | 4,637  |   | $ | 4,130 |   | $ | 3,987 |   | $ | 3,818 |   | $ | 3,460 |   |
| Operating                  Expenses, less Depreciation and Amortization                         |   |                                                  | (4,319 | ) |   | (4,069 | ) |   | (4,056 | ) |   | (4,422 | ) |   | (3,805 | ) |
| Depreciation                and Amortization                                                    |   |                                                  | (1,045 | ) |   | (802 | ) |   | (842 | ) |   | (784 | ) |   | (684 | ) |
| Loss                from Operations                                                             |   |                                                  | (727   | ) |   | (741 | ) |   | (911 | ) |   | (1,388 | ) |   | (1,029 | ) |
| Equity                in Net Income (Loss) of Joint Venture                                     |   |                                                  | 3,342  |   |   | (317 | ) |   | (239 | ) |   | (93 | ) |   | 0 |   |
| Income              (loss) from continuing operations                                           |   |                                                  | 2,615  |   |   | (1,058 | ) |   | (1,150 | )  |   | (1,481 | )  |   | (1,029 | )  |
|                                                                                            |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)                Income from Discontinued Operations                                       |   |                                                  | (1,316 | ) |   | (272 | ) |   | (378 | ) |   | (682 | ) |   | 720 |   |
| Gain                on Sale of Investments in Real Estate                                       |   |                                                  | 6,351  |   |   | 0 |   |   | 0 |   |   | 17,481 |   |   | 0 |   |
| Net                Income (Loss)                                                                |   | $                                                     | 7,650  |   | $ | (1,330 | ) | $ | (1,528 | ) | $ | 15,318 |   | $ | (309 | ) |
|                                                                                            |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net              Loss from Continuing Operations per Unit of Partnership              Interest: |   | $                                                     | 337    |   | $ | (136 | ) | $ | (148 | ) | $ | (191 | ) | $ | (133 | ) |
|                                                                                            |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Distributions                paid per Unit of Partnership Interest                              |   | $                                                     | 40     |   | $ | 40 |   | $ | 500 |   | $ | 100 |   | $ | 100 |   |
| 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                                                                 |   | $                                                     | 43,870 |   | $ | 28,930 |   | $ | 29,305 |   | $ | 29,689 |   | $ | 25,389 |   |
| Real                Estate Assets Held for Sale                                                 |   | $                                                     | 3,175  |   | $ | 23,405 |   | $ | 23,932 |   | $ | 24,482 |   | $ | 38,779 |   |
| Total                Assets                                                                     |   | $                                                     | 55,341 |   | $ | 56,310 |   | $ | 57,811 |   | $ | 60,508 |   | $ | 67,005 |   |
| Mortgage                Notes Payable                                                           |   | $                                                     | 21,622 |   | $ | 13,656 |   | $ | 13,080 |   | $ | 10,244 |   | $ | 11,100 |   |
| Other                liabilities in discontinued operations                                     |   | $                                                     | 3,529  |   | $ | 19,548 |   | $ | 20,275 |   | $ | 20,251 |   | $ | 40,604 |   |

----

----

*Accounting for Conditional Asset Retirement      Obligations*
*Asset      Retirement Obligations*

|  2006       |   | $      | 2,212,021  |   |
|------------------|--------|--------|------------|--------|
|  2007       |   |   | 228,517    |   |
|  2008       |   |   | 3,434,168  |   |
|  2009       |   |   | 9,152,664  |   |
|  2010       |   |   | 0          |   |
|  Thereafter |   |   | 10,000,000 |   |
|  Total      |   | $      | 25,027,370 |   |

----

**.      **

----

----

----

**.**

----

----

----

----

**.**

| (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, 2005 as filed with the Securities and Exchange                Commission and have judged such controls and procedures to be                effective. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| (b)  |  There              have been no changes in the Registrant’s internal controls during the year              ended December 31, 2005 that could significantly affect those controls              subsequent to the date of evaluation. |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  Name                    |  Age |  Position                                                                 |
|-------------------------------|-----------|--------------------------------------------------------------------------------|
|                          |      |                                                                           |
|  John H. Streicker       |  63  |  President & Director                                                 |
|  Millie C. Cassidy  |  60  |  Vice President &              Director                               |
|  David Weiner            |  70  |  Chief Executive Officer                                                  |
|  Anita Breslin           |  49  |  First Vice President                                                     |
|  Robert Leniart          |  49  |  Vice President                                                           |
|  Martin Cawley           |  49  |  Vice President                                                           |
|  George N. Tietjen       |  45  |  Principal                Financial and Accounting                Officer |

----

| (a) | At                December 31, 2005, an institutional investor of record owned 7.13%                of the                outstanding Units of Limited Partnership Interests. On January 13,                1993, a                group of Unitholders 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 676 Units, representing 8.7% of                the                total number of outstanding Units of Limited Partnership Interest                on that                date. Each Unitholder has disclaimed beneficial ownership of all                Units                owned by the other Unitholders in this group. The foregoing information                is                based upon a 13-D filing made by the respective                Unitholders. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | As                of December 31, 2005, 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 1,840.50 Units of                Limited                Partnership Interest, representing 23.7% of the outstanding number                of                Units on December 31, 2005. In accordance with SEC regulations, SRE                Clearing Services filed Form 13-D/A on September 27, 2005, when the                total                number of Units held reached 23% of the outstanding number of                Units. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | During                the year ended December                31, 2005, there were no changes                in control of the Registrant or the General                Partner. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 1.   | Audit                Fees.                The aggregate fees billed for professional services rendered by Deloitte                & Touche LLP and its affiliated entities the Registrant's 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 $180,000 and $165,000 for the years ended                December 31, 2005 and 2004,                respectively. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                   2. | Audit-Related                Fees.                No fees were billed by the principal accountant during the years                ended                December 31, 2005 and 2004 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                $20,000 and $20,000 for the years ended December 31, 2005 and 2004,                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.                Except for $33,000 billed in connection to the review of the Waterview                financial statements for the form 10-K/A filed on February 24, 2006,                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 2005 Annual Audited Consolidated Financial                Statements are included in this Annual Report on Form                10-K. |
|-----|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| (b) |   | Exhibits                Incorporated by Reference - |
|-----|--------|-----------------------------------------------------|

| (c) |   | Financial                statements - Waterview Associates, L.P., 2005 Annual Audited Financial                Statements are included in this Annual Report on Form 10K.  Waterview                Associates, L.P., is a joint venture, of which the Registrant is                a                partner. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

|                                          |   |            | SB PARTNERS                                      |
|-----------------------------------------------|--------|-----------------|--------------------------------------------------|
|                                          |   |            |                                             |
|                                          |   |  By:  | SB              PARTNERS REAL ESTATE CORPORATION |
|                                          |   |            | GENERAL PARTNER                                  |
|                                          |   |            |                                             |
|                                          |   |            | Chief Executive Officer                          |
|                                          |   |            |                                             |
|  March              31, 2006   |   |            | /s/              David Weiner                    |
|                                          |   |  By:  | David Weiner                                     |

|  Signature                               |  Position                                             |  Date                        |
|----------------------------------------------------|-----------------------------------------------------------------|-----------------------------------|
|                                               |                                                            |                              |
|  /s/              David Weiner      |  Chief              Executive Officer            |  March              31, 2006 |
|  David Weiner                                 |                                                            |                              |
|                                               |                                                            |                              |
|  /s/              George N. Tietjen III  |  Principal              Financial & Accounting Officer |  March              31, 2006 |
|  George N. Tietjen III                        |  (Chief Financial Officer &              Treasurer)    |                              |
|                                               |                                                            |                              |

----

**Certification      Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**

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

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

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

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

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

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

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

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

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

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

|                                      |                  | Chief Executive Officer         |
|-------------------------------------------|-----------------------|---------------------------------|
|  Date:                March 31, 2006 |                  | /s/                David Weiner |
|                                      |   by:  | David                Weiner     |

----

**Certification      Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**

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

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

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

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

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

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

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

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

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

|                                         |                  | Principal Financial & Accounting              Officer                                 |
|-----------------------------------------|-----------------------|-------------------------------------------------------------------------------------------|
|  Date:              March 31, 2006 |                  | /s/              George N. Tietjen III                                                    |
|                                    |   by:  | George                N. Tietjen IIIChief                Financial Officer &Treasurer |

----

**Certification      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

|   | (1) | the Annual Report on Form 10-K of the registrant              for the              annual period ended December 31, 2005, 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       |
|-----------------------------------------|-----------------------|-------------------------------|
|  Date:              March 31, 2006 |                  | /s/              David Weiner |
|                                    |   by:  | David              Weiner     |

**Certification      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

|   | (1) | the Annual Report on Form 10-K of the registrant              for the              annual period ended December 31, 2005, 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. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                         |                  | Principal Financial & Accounting              Officer                                 |
|-----------------------------------------|-----------------------|-------------------------------------------------------------------------------------------|
|  Date:              March 31, 2006 |                  | /s/              George N. Tietjen III                                                    |
|                                    |   by:  | George                N. Tietjen IIIChief                Financial Officer &Treasurer |

----

|  Report of Independent Registered Public              Accounting Firm                                                |  28                   |
|---------------------------------------------------------------------------------------------------------------------------|----------------------------|
|                                                                                                                      |                       |
|  Balance Sheets as of December 31, 2005              and 2004                                                        |  29                   |
|                                                                                                                      |                       |
|  Statements              of Operations for              the years ended December 31, 2005, 2004 and 2003             |  30                   |
|                                                                                                                      |                       |
| Statements              of Changes in Partners' Capital for              the years ended December 31, 2005, 2004 and 2003 |  31                   |
|                                                                                                                      |                       |
|  Statements              of Cash Flows for              the years ended December 31, 2005, 2004 and 2003             |  32                   |
|                                                                                                                      |                       |
|  Notes to Financial Statements                                                                                       |  33 - 38              |
|                                                                                                                      |                       |
|  Supplemental Financial Statement              Schedule:                                                             |                       |
|                                                                                                                      |                       |
|  Schedule              III -- Real Estate and Accumulated Depreciation December              31, 2005                |  39 -              41 |

----

----

|                                                                                                                                                           |   |  December                31, |       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|------------|
|                                                                                                                                                           |   |  2005                        |       |  2004 |   |
|                                                                                                                                                           |   |                              |       |   |   |
|  ASSETS:                                                                                                                                                  |   |                              |       |   |   |
|  Investments                -                                                                                                                             |   |                              |       |   |   |
|  Real                estate, at cost                                                                                                                      |   |                              |       |   |   |
|  Land                                                                                                                                                     |   | $                                 | 4,577,500  |   | $ | 3,062,500 |   |
|  Buildings,                furnishings and                improvements                                                                                    |   |                              | 44,372,200 |   |   | 29,934,324 |   |
|  Less                - accumulated                depreciation                                                                                            |   |                              | (5,079,885 | ) |   | (4,066,544 | ) |
|                                                                                                                                                           |   |                              | 43,869,815 |   |   | 28,930,280 |   |
|                                                                                                                                                           |   |                              |       |   |   |   |   |
|  Real                estate held for sale                                                                                                                 |   |                              | 3,175,270  |   |   | 23,405,263 |   |
|  Investment                in joint venture                                                                                                               |   |                              | 712,800    |   |   | 2,813,589 |   |
|                                                                                                                                                           |   |                              | 47,757,885 |   |   | 55,149,132 |   |
|  Other              assets -                                                                                                                              |   |                              |       |   |   |   |   |
|  Cash                and cash equivalents                                                                                                                 |   |                              | 7,081,976  |   |   | 126,361 |   |
|  Cash                held by lenders in                escrow                                                                                             |   |                              | 137,354    |   |   | 137,717 |   |
|  Other                                                                                                                                                    |   |                              | 167,617    |   |   | 190,365 |   |
|  Other                assets in discontinued operations                                                                                                   |   |                              | 196,471    |   |   | 706,650 |   |
|  Total                assets                                                                                                                              |   | $                                 | 55,341,303 |   | $ | 56,310,225 |   |
|                                                                                                                                                           |   |                              |       |   |   |   |   |
|  LIABILITIES:                                                                                                                                             |   |                              |       |   |   |   |   |
|  Mortgage                notes payable                                                                                                                    |   | $                                 | 21,622,268 |   | $ | 13,655,977 |   |
|  Accounts                payable and accrued                expenses                                                                                      |   |                              | 425,732    |   |   | 719,995 |   |
|  Tenant                security deposits                                                                                                                  |   |                              | 157,751    |   |   | 118,974 |   |
|  Other                liabilities in discontinued operations, including $3,405,102                and $19,372,655 of mortgage notes payable, respectively |   |                              | 3,528,951  |   |   | 19,548,434 |   |
|  Total                liabilities                                                                                                                         |   |                              | 25,734,702 |   |   | 34,043,380 |   |
|                                                                                                                                                           |   |                              |       |   |   |   |   |
|  PARTNERS’CAPITAL:                                                                                                                                  |   |                              |       |   |   |   |   |
|  Units                of partnership interest without par                value;                                                                           |   |                              |       |   |   |  |   |
|  Limited                partners - 7,753                units                                                                                             |   |                              | 29,621,217 |   |   | 22,282,408 |   |
|  General                partner - 1 unit                                                                                                             |   |                              | (14,616    | ) |   | (15,563 | ) |
|  Total                partners' capital                                                                                                                   |   |                              | 29,606,601 |   |   | 22,266,845 |   |
|  Total                liabilities and partners' capital                                                                                                   |   | $                                 | 55,341,303 |   | $ | 56,310,225 |   |

----

|                                                                                                         |   |  For                The Years Ended December                31, |            |
|--------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|-----------------|
|                                                                                                         |   |  2005                                                           |            |  2004 |   |  2003 |   |
|                                                                                                         |   |                                                                 |            |   |   |   |   |
|  Revenues:                                                                                              |   |                                                                 |            |   |   |   |   |
|  Rental                income                                                                           |   | $                                                                    | 4,128,833       |   | $ | 3,717,223 |   | $ | 3,552,788 |   |
|  Other                rental income                                                                     |   |                                                                 | 420,996         |   |   | 408,410 |   |   | 425,538 |   |
|  Interest                on short-term                investments                                  |   |                                                                 | 87,301          |   |   | 4,588 |   |   | 8,313 |   |
|  Total                revenues                                                                          |   |                                                                 | 4,637,130       |   |   | 4,130,221 |   |   | 3,986,639 |   |
|                                                                                                         |   |                                                                 |            |   |   |   |   |   |   |   |
|  Expenses:                                                                                              |   |                                                                 |            |   |   |   |   |   |   |   |
|  Real                estate operating                expenses                                           |   |                                                                 | 1,929,328       |   |   | 1,921,574 |   |   | 1,833,191 |   |
|  Interest                on mortgage notes                payable                                       |   |                                                                 | 942,510         |   |   | 889,998 |   |   | 853,448 |   |
|  Depreciation                and amortization                                                      |   |                                                                 | 1,045,232       |   |   | 802,123 |   |   | 842,160 |   |
|  Real                estate taxes                                                                       |   |                                                                 | 452,284         |   |   | 406,467 |   |   | 502,063 |   |
|  Management                fees                                                                         |   |                                                                 | 687,210         |   |   | 712,845 |   |   | 711,984 |   |
|  Other                                                                                             |   |                                                                 | 307,291         |   |   | 138,410 |   |   | 155,029 |   |
|  Total                expenses                                                                     |   |                                                                 | 5,363,855       |   |   | 4,871,417 |   |   | 4,897,875 |   |
|                                                                                                         |   |                                                                 |            |   |   |   |   |   |   |   |
|  Loss              from operations                                                                      |   |                                                                 | (726,725        | ) |   | (741,196 | ) |   | (911,236 | ) |
|                                                                                                         |   |                                                                 |            |   |   |   |   |   |  |   |
|  Equity              in net income (loss) of joint              venture                                 |   |                                                                 | 3,342,104       |   |   | (317,007 | ) |   | (238,992 | ) |
|  Income              (loss) from continuing operations                                                  |   |                                                                 | 2,615,379  |   |   | (1,058,203  | )  |   | (1,150,228 | )  |
|  Loss              from discontinued operations                                                         |   |                                                                 | (1,316,254      | ) |   | (272,033 | ) |   | (377,677 | ) |
|                                                                                                         |   |                                                                 |            |   |   |   |   |   |   |   |
|  Net              gain on sale of investment in real              estate                                |   |                                                                 | 6,350,771       |   |   | 0 |   |   | 0 |   |
|  Net              income (loss)                                                                         |   |                                                                 | 7,649,896       |   |   | (1,330,236 | ) |   | (1,527,905 | ) |
|                                                                                                         |   |                                                                 |            |   |   |   |   |   |   |   |
|  Income              (loss) allocated to general              partner                              |   |                                                                 | 987             |   |   | (171 | ) |   | (197 | ) |
|  Income              (loss) allocated to limited partners                                               |   | $                                                                    | 7,648,909       |   | $ | (1,330,065 | ) | $ | 1,527,708 |   |
|                                                                                                         |   |                                                                 |            |   |   |   |   |   |   |   |
|  Earnings              per unit of limited partnership interest (basic and diluted):                    |   |                                                                 |            |   |   |   |   |   |   |   |
|  Continuing              operations                                                                     |   | $                                                                    | 337        |   | $ | (136 | )  | $ | (148 | )  |
|  Discontinuing              Operations (including gain on sale)                                         |   | $                                                                    | 650        |   | $ | (35 | )  | $ | (49 | )  |
|  Net              Income (Loss)                                                                         |   | $                                                                    | 987             |   | $ | (171 | ) | $ | (197 | ) |
|                                                                                                         |   |                                                                 |            |   |   |   |   |   |   |   |
|  Weighted              Average Number of Units of Limited Partnership              Interest Outstanding |   |                                                                 | 7,753           |   |   | 7,753 |   |   | 7,753 |   |

----

|                                          |   |  Units                of Partnership Interest |   |         |   |                                    |   |                                               |         |
|-----------------------------------------------|--------|----------------------------------------------------|--------|--------------|--------|-----------------------------------------|--------|----------------------------------------------------|--------------|
|                                          |   |  Number                                       |   |  Amount |   |  Cash                Distributions |   |  Accumulated                Earnings (Losses) |         |  Total |   |
|                                          |   |                                               |   |         |   |                                    |   |                                               |         |   |   |
|  Balance,              January 1, 2003   |   |                                               | 7,533  |         | $      | 119,968,973                             |   | $                                                  | (100,945,611 | ) | $ | 10,303,169 |   | $ | 29,326,531 |   |
|  Cash              distributions         |   |                                               | 0      |         |   | 0                                       |   |                                               | (3,876,250   | ) |   | 0 |   |   | (3,876,250 | ) |
|  Net              loss for the year      |   |                                               | 0      |         |   | 0                                       |   |                                               | 0            |   |   | (1,527,708 | ) |   | (1,527,708 | ) |
|  Balance,              December 31, 2003 |   |                                               | 7,533  |         | $      | 119,968,973                             |   |                                               | (104,821,861 | ) |   | 8,775,461 |   |   | 23,922,573 |   |
|  Cash              distributions         |   |                                               | 0      |         |   | 0                                       |   |                                               | (310,100     | ) |   | 0 |   |   | (310,100 | ) |
|  Net              loss for the year      |   |                                               | 0      |         |   | 0                                       |   |                                               | 0            |   |   | (1,330,065 | ) |   | (1,330,065 | ) |
|  Balance,              December 31, 2004 |   |                                               | 7,533  |         | $      | 119,968,973                             |   | $                                                  | (105,131,961 | ) | $ | 7,445,396 |   | $ | 22,282,408 |   |
|  Cash              distributions         |   |                                               | 0      |         |   | 0                                       |   |                                               | (310,100     | ) |   | 0 |   |   | (310,100 | ) |
|  Net              incomefor the year     |   |                                               | 0      |         |   | 0                                       |   |                                               | 0            |   |   | 7,648,909 |   |   | 7,648,909 |   |
|  Balance,              December 31, 2005 |   |                                               | 7,533  |         | $      | 119,968,973                             |   | $                                                  | (105,442,061 | ) | $ | 15,094,305 |   | $ | 29,621,217 |   |

|                                            |   |  Units                of Partnership Interest |   |         |   |                                    |   |                                               |    |
|-------------------------------------------------|--------|----------------------------------------------------|--------|--------------|--------|-----------------------------------------|--------|----------------------------------------------------|---------|
|                                            |   |  Number                                       |   |  Amount |   |  Cash                Distributions |   |  Accumulated                Earnings (Losses) |    |  Total |   |
|                                            |   |                                               |   |         |   |                                    |   |                                               |    |   |   |   |   |   |   |   |
|  Balance,              January 1, 2003     |   |                                               | 1      |         | $      | 10,000                                  |   | $                                                  | (24,974 | ) | $ | 319 |   | $ | (14,655 | ) |
|  Cash              distributions           |   |                                               | 0      |         |   | 0                                       |   |                                               | (500    | ) |   | 0 |   |   | (500 | ) |
|  Net              loss for the year        |   |                                               | 0      |         |   | 0                                       |   |                                               | 0       |   |   | (197 | ) |   | (197 | ) |
|  Balance,              December 31, 2003   |   |                                               | 1      |         | $      | 10,000                                  |   |                                               | (25,474 | ) |   | 122 |   |   | (15,352 | ) |
|  Cash              distributions           |   |                                               | 0      |         |   | 0                                       |   |                                               | (40     | ) |   | 0 |   |   | (40 | ) |
|  Net              loss for the year        |   |                                               | 0      |         |   | 0                                       |   |                                               | 0       |   |   | (171 | ) |   | (171 | ) |
|  Balance,              December 31, 2004   |   |                                               | 1      |         | $      | 10,000                                  |   | $                                                  | (25,514 | ) | $ | (49 | ) | $ | (15,563 | ) |
|  Cash              distributions           |   |                                               | 0      |         |   | 0                                       |   |                                               | (40     | ) |   | 0 |   |   | (40 | ) |
|  Net income              for the year |   |                                               | 0      |         |   | 0                                       |   |                                               | 0       |   |   | 987 |   |   | 987 |   |
|  Balance,              December 31, 2005   |   |                                               | 1      |         | $      | 10,000                                  |   | $                                                  | (25,554 | ) | $ | 938 |   | $ | (14,616 | ) |

----

|                                                                                                                         |   |  For                The Years Ended December                31, |        |
|------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|-------------|
|                                                                                                                         |   |  2005                                                           |        |  2004 |   |  2003 |   |
|                                                                                                                         |   |                                                                 |        |   |   |   |   |
|  Cash              Flows From Operating Activities:                                                                     |   |                                                                 |        |   |   |   |   |
|  Net                income (loss)                                                                                       |   | $                                                                    | 7,649,896   |   | $ | (1,330,236 | ) | $ | (1,527,905 | ) |
|  Adjustments                to reconcile net income (loss) to net cash provided by operating                activities: |   |                                                                 |        |   |   |   |   |   |   |   |
|  Net                gain on sale of investment in real estate                                                           |   |                                                                 | (6,350,771  | ) |   | 0 |   |   | 0 |   |
|  Equity                in net (income) loss of joint venture                                                            |   |                                                                 | (3,242,104  | ) |   | 317,007 |   |   | 238,992 |   |
|  Distributions                received from joint venture                                                               |   |                                                                 | 2,103,330   |   |   | 0 |   |   | 50,000 |   |
|  Depreciation                and amortization                                                                           |   |                                                                 | 1,281,137   |   |   | 1,601,822 |   |   | 1,677,294 |   |
|  Net                decrease (increase) in operating assets                                                             |   |                                                                 | 49,891      |   |   | 204,735 |   |   | (94,315 | ) |
|  Net                (decrease) increase in operating liabilities                                                        |   |                                                                 | (307,416    | ) |   | (114,866 | ) |   | 172,337 |   |
|  Net                cash provided by operating activities                                                               |   |                                                                 | 1,083,963   |   |   | 678,462 |   |   | 516,403 |   |
|                                                                                                                         |   |                                                                 |        |   |   |   |   |   |   |   |
|  Cash              Flows From Investing Activities:                                                                     |   |                                                                 |        |   |   |   |   |   |   |   |
|  Proceeds                from sale of investment in real                estate property                                 |   |                                                                 | 26,581,743  |   |   | 0 |   |   | 0 |   |
|  Return                of capital from investment in joint venture                                                      |   |                                                                 | 3,714,563   |   |   | 0 |   |   | 0 |   |
|  Acquisition                of real estate property                                                                     |   |                                                                 | (15,312,160 | ) |   | 0 |   |   | 0 |   |
|  Decrease                in cash held by lenders in escrow                                                              |   |                                                                 | 307,205     |   |   | 0 |   |   | 0 |   |
|  Additional                investment in joint venture                                                                  |   |                                                                 | (375,000    | ) |   | (30,000 | ) |   | (4,406 | ) |
|  Capital                additions to real estate owned                                                                  |   |                                                                 | (733,297    | ) |   | (653,108 | ) |   | (676,598 | ) |
|  Net                cash provided by (used in) investing activities                                                     |   |                                                                 | 14,183,054  |   |   | (683,108 | ) |   | (681,004 | ) |
|                                                                                                                         |   |                                                                 |        |   |   |   |   |   |   |   |
|  Cash              Flows From Financing Activities:                                                                     |   |                                                                 |        |   |   |   |   |   |   |   |
|  Retirement                of mortgage note payable                                                                     |   |                                                                 | (15,859,050 | ) |   | 0 |   |   | 0 |   |
|  Repayments                of borrowings under revolving credit                facility                                 |   |                                                                 | (4,100,000  | ) |   | 0 |   |   | 0 |   |
|  Proceeds                of mortgage note payable                                                                       |   |                                                                 | 10,000,000  |   |   | 0 |   |   | 0 |   |
|  Borrowings                under revolving credit facility                                                              |   |                                                                 | 2,200,000   |   |   | 700,000 |   |   | 2,950,000 |   |
|  Principal                payments on mortgage notes payable                                                            |   |                                                                 | (242,212    | ) |   | (445,243 | ) |   | (415,328 | ) |
|  Distributions                paid to partners                                                                          |   |                                                                 | (310,140    | ) |   | (310,140 | ) |   | (3,876,750 | ) |
|  Net                cash used in financing                activities                                                    |   |                                                                 | (8,311,402  | ) |   | (55,383 | ) |   | (1,342,078 | ) |
|  Net              increase (decrease) in cash and cash              equivalents                                         |   |                                                                 | 6,955,615   |   |   | (60,029 | ) |   | (1,506,679 | ) |
|                                                                                                                         |   |                                                                 |        |   |   |   |   |   |   |   |
|  Cash                and cash equivalents at beginning of                year                                           |   |                                                                 | 126,361     |   |   | 186,390 |   |   | 1,693,069 |   |
|  Cash                and cash equivalents at end of                year                                                 |   | $                                                                    | 7,081,976   |   | $ | 126,361 |   | $ | 186,390 |   |
|                                                                                                                         |   |                                                                 |        |   |   |   |   |   |   |   |
|  Supplemental              disclosure of cash flow information:Cash                paid during the year for interest    |   | $                                                                    | 2,917,951   |   | $ | 2,190,765 |   | $ | 2,175,439 |   |

----

| (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, 2005 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 joint venture under the                equity                method of accounting as the Partnership exercises significant influence,                but not control, over the joint                venture. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

| (j)   | 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. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

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

| (m)   | 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. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (n)   | Certain                prior year amounts have been reclassified to conform with the current                year                presentation. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| (o)                |  Upon                acquisitions of real estate, the Partnership assesses the fair value                of                acquired assets (including land, buildings and improvements, and                identified intangibles such as above and below market leases and                acquired                in-place leases and customer relationships) and acquired liabilities                in                accordance with Statement of Financial Accounting Standards ("SFAS")                No.                141: *Business Combinations* and SFAS No. 142: *Goodwill and                Other Intangible Assets*, and allocates purchase price based on these                assessments.  The Partnership assesses fair value based on estimated                cash flow projections that utilize appropriate discount and capitalization                rates and available market information.  Estimates of future cash                flow are based on a                number of factors including the historical operating results, known                trends, and market/economic conditions that may affect the property.                 The Partnership's properties, including any related intangible assets,                are                reviewed for impairment if events or circumstances change indicating                that                the carrying amount of the assets may not be                recoverable. |
|-------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (p)   | In                March 2005, the FASB issued FIN 47, *Accounting for Conditional Asset                Retirement Obligations*, an interpretation of FASB Statment No. 143,                *Asset Retirement Obligations*.  FIN 47 provides clarification                of the term "conditional asset retirement obligation" as used in                SFAS 143,                defined as a legal obligation to perform an asset retirement activity                in                which the timing and/or method of settlement are conditional on a                future                event that may or may not be within the control of the company.                 Under this standard, a company must record a liability for a conditional                asset retirement obligation if the fair value of the obligation can                be                reasonably estimated.  FIN 47 became effective in the Partnership's                fiscal quarter December 31, 2005.  Upon review of its assets, the                Partnership has concluded that no asset retirement obligation exists                as of                December 31, 2005.  |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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 |                      |
|---------------------------------------------------|--------|----------------------------------|--------|------------------------------------------|--------|-------------------|--------|------------------------------------------|---------------------------|
|  Type                                        |   |  No.of                Prop. |   |  Year                of Acquisition |   |  Description |   |  12/31/05                           |                      |  12/31/04 |   |
|                                              |   |                             |   |                                     |   |              |   |                                     |                      |   |   |
|  Residential              properties         |   |                             | 2      |                                     |   | 1991-99           |   |                                     | 438                Apts.  |   | $ | 28,808,537 |   | $ | 28,232,372 |   |
|  Industrial              flex property       |   |                             | 1      |                                     |   | 2002              |   |                                     | 60,345                sf  |   |   | 4,829,003 |   |   | 4,764,452 |   |
|  Warehouse              distrib. prop.       |   |                             | 1      |                                     |   | 2005              |   |                                     | 265,516                sf |   |   | 15,312,160 |   |   |   |   |
|  Total              cost                     |   |                             |   |                                     |   |              |   |                                     |                      |   |   | 48,949,700 |   |   | 32,996,824 |   |
|  Less:              accumulated depreciation |   |                             |   |                                     |   |              |   |                                     |                      |   |   | (5,079,885 | ) |   | (4,066,544 | ) |
|                                              |   |                             |   |                                     |   |              |   |                                     |                      |   |   | 43,869,815 |   |   | 28,930,280 |   |
|  Real              estate held for sale      |   |                             | (a)    |                                     |   | 1998/91           |   |                                     | 244                Apts   |   |   | 3,175,270 |   |   | 23,405,263 |   |
|  Net              book value                 |   |                             |   |                                     |   |              |   |                                     |                      |   | $ | 47,045,085 |   | $ | 52,335,543 |   |

----

|                                                              |   |  2005 |        |  2004 |   |  2003 |   |
|-------------------------------------------------------------------|--------|------------|-------------|------------|--------|------------|--------|
|                                                              |   |       |        |       |   |       |   |
|  Operating              revenue                              |   | $          | 2,306,182   |       | $      | 4,383,604  |   | $ | 4,201,270 |   |
|  Operating              expenses                             |   |       | 3,622,436   |       |   | 4,655,637  |   |   | 4,578,947 |   |
|  Loss              from discontinued              operations |   |       | ($1,316,254 | )          |   | ($272,033  | )      |   | ($377,677 | ) |

|                                                                                                 |   |  2005 |   |  2004 |   |    |   |
|------------------------------------------------------------------------------------------------------|--------|------------|--------|------------|--------|---------|--------|
|                                                                                                 |   |       |   |       |   |    |   |
|  Investment              in real estate, net                                                    |   | $          | 0      |       | $      | 17,436  |   |   |   |   |
|  Other              assets                                                                      |   |       | 1,326  |       |   | 365     |   |   |   |   |
|  Mortgage              note payable                                                             |   |       | 0      |       |   | (13,871 | )      |   |   |   |
|  Other              liabilities                                                                 |   |       | (138   | )          |   | (402    | )      |   |   |   |
|  Venturers’              capital                                                          |   | $          | 1,188  |       | $      | 3,528   |   |   |   |   |
|                                                                                                 |   |       |   |       |   |    |   |   |   |   |
|  STATEMENTS              OF OPERATIONS                                                          |   |       | 2005   |       |   | 2004    |   |   | 2003 |   |
|                                                                                                 |   |       |   |       |   |    |   |   |   |   |
|  Rent              and other income                                                             |   | $          | 2,381  |       | $      | 2,930   |   | $ | 2,825 |   |
|  Real              estate operating expenses, before              depreciation and amortization |   |       | (4,662 | )          |   | (2,864  | )      |   | (2,658 | ) |
|  Depreciation              and amortization                                                     |   |       | (147   | )          |   | (495    | )      |   | (485 | ) |
|  Gain              on sale                                                                      |   |       | 7,700  |       |   | 0       |   |   | 0 |   |
|  Net              income (loss)                                                                 |   | $          | 5,272  |       | $      | (429    | )      | $ | (318 | ) |

----

|                                                            |   |                               |   |                               |   |                                                 |   |                                        |                         |  Net                Carrying Amount December 31, |   |
|-----------------------------------------------------------------|--------|------------------------------------|--------|------------------------------------|--------|------------------------------------------------------|--------|---------------------------------------------|------------------------------|-------------------------------------------------------|--------|
|  Property                                                  |   |  Interest                Rate |   |  Maturity                Date |   |  Annual                Installment Payments (a) |   |  Amount                Due at Maturity |                         |  2005                                            |   |  2004 |   |
|                                                            |   |                               |   |                               |   |                                                 |   |                                        |                         |                                                  |   |   |   |
|  Halton              Place(b)                              |   |                               | 6.241  | %                                  |   | 3/06                                                 |   |                                        | Interest                Only |                                                  | $      | 2,000,000 |   | $ | 2,000,000 |   | $ | 3,900,000 |   |
|                                                            |   |                               |   |                               |   |                                                 |   |                                        |                         |                                                  |   |   |   |   |   |   |   |   |   |
|  Lino              Lakes                                   |   |                               | 5.800  | %                                  |   | 10/15                                                |   | $                                           | 580,000                      |                                                  |   | 10,000,000 |   |   | 10,000,000 |   |   | 0 |   |
|                                                            |   |                               |   |                               |   |                                                      |   |                                        |                         |                                                  |   |   |   |   |   |   |   |   |   |
|  Le              Coeur du Monde                            |   |                               | 7.805  | %                                  |   | 10/09                                                |   |                                        | 890,447                      |                                                  |   | 9,075,763 |   |   | 9,622,268 |   |   | 9,755,977 |   |
|                                                            |   |                               |   |                               |   |                                                 |   |                                        |                         |                                                  |   |   |   |   | 21,622,268 |   |   | 13,655,977 |   |
| Mortgage              notes payable in discontinued operations: |   |                               |   |                               |   |                                                 |   |                                        |                         |                                                  |   |   |
|                                                            |   |                               |   |                               |   |                                                 |   |                                        |                         |                                                  |   |   |   |   |   |   |   |   |   |
|  Cypress              Key                                  |   |                               | 6.605  | %                                  |   | 01/09                                                |   |                                        | 1,322,707                    |                                                  |   | 14,772,418 |   |   | 0 |   |   | 15,904,543 |   |
|                                                            |   |                               |   |                               |   |                                                 |   |                                        |                         |                                                  |   |   |   |   |   |   |   |   |   |
|  Holiday              Park                                 |   |                               | 6.895  | %                                  |   | 02/08                                                |   |                                        | 300,169                      |                                                  |   | 3,277,785 |   |   | 3,405,102 |   |   | 3,468,112 |   |
|                                                            |   |                               |   |                               |   |                                                 |   |                                        |                         |                                                  |   |   |   | $ | 25,027,370 |   | $ | 33,028,632 |   |

| (8)   | QUARTERLY                FINANCIAL INFORMATION - UNAUDITED |
|-----------------|------------------------------------------------------------|

|                                            |   |  Revenues                (1) |      | Loss                from Continuing                Operation |   |  Earnings                Per Unit |   |
|-------------------------------------------------|--------|-----------------------------------|-----------|--------------------------------------------------------------|--------|----------------------------------------|--------|
|                                            |   |                              |      |                                                         |   |                                   |   |
|  Year              Ended December 31, 2005 |   |                              |      |                                                         |   |                                   |   |
|  First              Quarter                |   | $                                 | 1,061,515 |                                                         | $      | (126,387                               | )      | $ | (16.30 | ) |
|  Second              Quarter               |   |                              | 1,094,334 |                                                         |   | (131,846                               | )      |   | (17.01 | ) |
|  Third              Quarter                |   |                              | 1,109,901 |                                                         |   | (83,006                                | )      |   | (10.71 | ) |
|  Fourth              Quarter               |   |                              | 1,371,380 |                                                         |   | (385,486                               | )      |   | (49.72 | ) |
|                                            |   |                              |      |                                                         |   |                                   |   |   |   |   |
|  Year              Ended December 31, 2004 |   |                              |      |                                                         |   |                                   |   |   |   |   |
|  First              Quarter                |   | $                                 | 1,020,383 |                                                         | $      | (196,995                               | )      | $ | (25.41 | ) |
|  Second              Quarter               |   |                              | 1,008,382 |                                                         |   | (171,276                               | )      |   | (22.09 | ) |
|  Third              Quarter                |   |                              | 1,048,185 |                                                         |   | (155,893                               | )      |   | (20.11 | ) |
|  Fourth              Quarter               |   |                              | 1,053,271 |                                                         |   | (217,032                               | )      |   | (27.99 | ) |

----

|   |   | 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, |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|------------|
|                                                                                                                                                                                                              |   |  2005                                            |       |  2004 |   |  2003 |   |
|                                                                                                                                                                                                              |   |                                                  |       |   |   |   |   |
|  Net              income (loss) for financial reporting purposes                                                                                                                                             |   | $                                                     | 7,649,896  |   | $ | (1,330,236 | ) | $ | (1,527,905 | ) |
|  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 sold |   |                                                  | 99,653     |   |   | 0 |   |   | 0 |   |
|  Difference              between tax and financial statement equity in net loss              of joint venture                                                                                                |   |                                                  | 983,634    |   |   | (296,701 | ) |   | (175,056 | ) |
|  Difference              between tax and financial statement depreciation                                                                                                                                    |   |                                                  | (315,412   | ) |   | (288,631 | ) |   | (70,510 | ) |
|  Net              income (loss) for Federal income tax reporting purposes                                                                                                                                    |   | $                                                     | 8,417,771  |   | $ | (1,915,568 | ) | $ | (1,773,471 | ) |
|                                                                                                                                                                                                              |   |                                                  |       |   |   |   |   |   |   |   |
|  Net              ordinary loss for Federal income tax reporting purposes:                                                                                                                                   |   | $                                                     | (4,467,687 | ) | $ | (1,915,568 | ) | $ | (1,773,471 | ) |
|  Net              capital (Sec. 1231) gain for              Federal income tax reporting purposes:                                                                                                           |   |                                                  | 12,885,458 |   |   | 0 |   |   | 0 |   |
|                                                                                                                                                                                                              |   | $                                                     | 8,417,771  |   | $ | (1,915,568 | ) | $ | (1,773,471 | ) |
|                                                                                                                                                                                                              |   |                                                  |       |   |   |   |   |   |   |   |
|  Weighted              average number of units of limited partnership interest              outstanding                                                                                                      |   |                                                  | 7,753      |   |   | 7,753 |   |   | 7,753 |   |

|   |   | 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,                2005, 2004 and 2003 billings to the Partnership amounting to $411,027,                $398,058, and $390,612, respectively, and are included in real estate                operating expenses. For the years ended December 31, 2005, 2004 and                2003                billings to the partnership which relate to Cypress Key Apartments                and                Holiday Park, amount to $115,033, $219,221 and $210,065, respectively,                and                are included in loss from discontinued operations. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |   | The                Partnership is a party to certain actions directly arising from its                normal                business operations. While the ultimate outcome is not presently                determinable with certainty, the Partnership believes that the resolution                of these matters will not have a material adverse effect on its financial                statements. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The                Partnership leases its properties to tenants under operating lease                agreements, certain of which require tenants at the industrial flex                and                warehouse distribution properties to pay all or part of certain operating                and other expenses of the property. The minimum future rentals to                be                received in respect of non-cancelable commercial operating leases                with                unexpired terms in excess of one year as of December 31, 2005 are                $1,759,484 for 2006; $1,759,484 for 2007; $1,278,233 for 2008; $1,181,983                for 2009; $1,181,983 for 2010 and $7,978,385                thereafter. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | On                February 22, 2006, the Partnership entered into a contract to sell                Holiday                Park Apartments for $15,500,000. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | On                March 1, 2006, the Partnership made a distribution of $350 per unit,                totaling $2,713,725, to Unitholders of record as of December 31,                2005. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | On                March 14, 2006, the Partnership paid down the revolving credit facility,                which is secured by Halton Place, by $2,000,000, bringing the outstanding                balance to $0. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| SB                PARTNERS                                             |   |                    |       |                                          |   |                         |   |   |       |                         |   |
|------------------------------------------------------------------------|--------|-------------------------|------------|-----------------------------------------------|--------|------------------------------|--------|--------|------------|------------------------------|--------|
| SCHEDULE                III - REAL ESTATE AND ACCUMULATED DEPRECIATION |   |                    |       |                                          |   |
| DECEMBER                31, 2005                                       |   |                    |       |                                          |   |                         |   |   |       |                         |   |
|                                                                   |   |                    |       |                                          |   |                         |   |   |       |                         |   |
| Column                A                                                |   | Column                B |       |                                          |   | Column                C      |   |   |       | Column                D      |   |
|                                                                   |   |                    |       | Initial                Cost to the Registrant |   | Costs                        |   |
|                                                                   |   |                    |       |                                          |   | Capitalized                  |   |
|                                                                   |   |                    |       |                                          |   | Buildings                and |   |   |       | Subsequent                to |   |
| Description                                                            |   | Encumbrances            |       | Land                                          |   | Improvements                 |   | Total  |       | Acquisition                  |   |
|                                                                   |   |                    |       |                                          |   |                         |   |   |       |                         |   |
| MULTI                FAMILY RESIDENTIAL                                |   |                    |       |                                          |   |                         |   |   |       |                         |   |
| South                Carolina -                                        |   |                    |       |                                          |   |                         |   |   |       |                         |   |
| Greenville                (Halton Place)                               |   | $                       | 2,000,000  |                                          | $      | 1,260,000                    |   | $      | 11,364,343 |                         | $      | 12,624,343 |   | $ | 1,554,779 |   |
| Missouri                -                                              |   |                    |       |                                          |   |                         |   |   |       |                         |   |   |   |   |   |   |
| St.                Louis (Le Coeur du Monde)                           |   |                    | 9,622,268  |                                          |   | 1,332,500                    |   |   | 12,039,635 |                         |   | 13,372,135 |   |   | 1,257,280 |   |
|                                                                   |   |                    | 11,622,268 |                                          |   | 2,592,500                    |   |   | 23,403,978 |                         |   | 25,996,478 |   |   | 2,812,059 |   |
|                                                                   |   |                    |       |                                          |   |                         |   |   |       |                         |   |   |   |   |   |   |
| INDUSTRIAL                FLEX                                         |   |                    |       |                                          |   |                         |   |   |       |                         |   |   |   |   |   |   |
| Minnesota                -                                             |   |                    |       |                                          |   |                         |   |   |       |                         |   |   |   |   |   |   |
| Maple                Grove (Eagle Lake Business Center IV)             |   |                    | N/a        |                                          |   | 470,000                      |   |   | 4,243,385  |                         |   | 4,713,385 |   |   | 115,618 |   |
|                                                                   |   |                    |       |                                          |   |                         |   |   |       |                         |   |   |   |   |   |   |
| DISTRIBUTION                CENTER                                     |   |                    |       |                                          |   |                         |   |   |       |                         |   |   |   |   |   |   |
| Minnesota                -                                             |   |                    |       |                                          |   |                         |   |   |       |                         |   |   |   |   |   |   |
| Lino                Lakes (435 Park Court)                             |   |                    | 10,000,000 |                                          |   | 1,515,000                    |   |   | 13,797,160 |                         |   | 15,312,160 |   |   | 0 |   |
|                                                                   |   |                    |       |                                          |   |                         |   |   |       |                         |   |   |   |   |   |   |
| REAL                ESTATE HELD FOR SALE                               |   |                    |       |                                          |   |                         |   |   |       |                         |   |   |   |   |   |   |
| Florida                -                                               |   |                    |       |                                          |   |                         |   |   |       |                         |   |   |   |   |   |   |
| Holiday                (Holiday Park -                                 |   |                    |       |                                          |   |                         |   |   |       |                         |   |   |   |   |   |   |
| Including                undeveloped land)                             |   |                    | 3,405,102  |                                          |   | 458,342                      |   |   | 4,043,354  |                         |   | 4,501,696 |   |   | 1,418,256 |   |
|                                                                   |   | $                       | 25,027,370 |                                          | $      | 5,035,842                    |   | $      | 45,487,877 |                         | $      | 50,523,719 |   | $ | 4,345,933 |   |

----

| SB                PARTNERS                                                         |   |                                                        |      |                         |   |       |   |                             |       |
|------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|-----------|------------------------------|--------|------------|--------|----------------------------------|------------|
| SCHEDULE                III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED |   |                                                        |      |
| DECEMBER                31, 2005                                                   |   |                                                        |      |                         |   |       |   |                             |       |
|                                                                               |   |                                                        |      |                         |   |       |   |                             |       |
|                                                                               |   |                                                        |      |                         |   |       |   |                             |       |
| 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) |       |
|                                                                               |   |                                                        |      |                         |   |       |   |                             |       |
| MULTI                FAMILY RESIDENTIAL                                            |   |                                                        |      |                         |   |       |   |                             |       |
| South                Carolina -                                                    |   |                                                        |      |                         |   |       |   |                             |       |
| Greenville                (Halton Place)                                           |   | $                                                           | 1,260,000 |                         | $      | 12,919,122 |   | $                                | 14,179,122 |   | $ | 2,390,542 |   |
| Missouri                -                                                          |   |                                                        |      |                         |   |       |   |                             |       |   |   |   |   |
| St.                Louis (Le Coeur du Monde)                                       |   |                                                        | 1,332,500 |                         |   | 13,296,915 |   |                             | 14,629,415 |   |   | 2,205,879 |   |
|                                                                               |   |                                                        | 2,592,500 |                         |   | 26,216,037 |   |                             | 28,808,537 |   |   | 4,596,421 |   |
|                                                                               |   |                                                        |      |                         |   |       |   |                             |       |   |   |   |   |
| INDUSTRIAL                FLEX                                                     |   |                                                        |      |                         |   |       |   |                             |       |   |   |   |   |
| Minnesota                -                                                         |   |                                                        |      |                         |   |       |   |                             |       |   |   |   |   |
| Maple                Grove (Eagle Lake Business Center IV)                         |   |                                                        | 470,000   |                         |   | 4,359,003  |   |                             | 4,829,003  |   |   | 395,021 |   |
|                                                                               |   |                                                        |      |                         |   |       |   |                             |       |   |   |   |   |
| DISTRIBUTION                CENTER                                                 |   |                                                        |      |                         |   |       |   |                             |       |   |   |   |   |
| Minnesota                -                                                         |   |                                                        |      |                         |   |       |   |                             |       |   |   |   |   |
| Lino                Lake (435 Park Court)                                          |   |                                                        | 1,515,000 |                         |   | 13,797,160 |   |                             | 15,312,160 |   |   | 88,443 |   |
|                                                                               |   |                                                        |      |                         |   |       |   |                             |       |   |   |   |   |
| REAL                ESTATE HELD FOR SALE                                           |   |                                                        |      |                         |   |       |   |                             |       |   |   |   |   |
| Florida                -                                                           |   |                                                        |      |                         |   |       |   |                             |       |   |   |   |   |
| Holiday                (Holiday Park -                                             |   |                                                        |      |                         |   |       |   |                             |       |   |   |   |   |
| including                undeveloped land)                                         |   |                                                        | 458,342   |                         |   | 5,461,610  |   |                             | 5,919,952  |   |   | 2,744,682 |   |
|                                                                               |   | $                                                           | 5,035,842 |                         | $      | 49,833,810 |   | $                                | 54,869,652 |   | $ | 7,824,567 |   |

----

| SB                PARTNERS                                                                        |                       |   |                     |   |                            |
|---------------------------------------------------------------------------------------------------|----------------------------|--------|--------------------------|--------|---------------------------------|
| SCHEDULE                III - REAL ESTATE AND ACCUMULATED DEPRECIATION -                CONTINUED |
| DECEMBER                31, 2005                                                                  |                       |   |                     |   |                            |
|                                                                                              |                       |   |                     |   |                            |
|                                                                                              |                       |   |                     |   |                            |
| Column                A                                                                           | Column                G    |   | Column                H  |   | Column                I         |
|                                                                                              |                       |   |                     |   |                            |
|                                                                                              |                       |   |                     |   | Life                on which    |
|                                                                                              |                       |   |                     |   | Depreciation                in  |
|                                                                                              |                       |   |                     |   | Latest                Statement |
|                                                                                              | Date                of     |   | Date                     |   | of                Operations    |
| Description                                                                                       | Construction               |   | Acquired                 |   | is                Computed      |
|                                                                                              |                       |   |                     |   |                            |
| MULTI                FAMILY RESIDENTIAL                                                           |                       |   |                     |   |                            |
| Florida                -                                                                          |                       |   |                     |   |                            |
| Holiday                (Holiday Park -                                                            |                       |   |                     |   |                            |
| including                undeveloped land)                                                        | 1972                - 1975 |   | Jan                1991  |   | 7                to 30 years    |
| Orlando                (Cypress Key)                                                              | 1988                       |   | Aug                1998  |   | 7                to 40 years    |
| South                Carolina -                                                                   |                       |   |                     |   |                            |
| Greenville                (Halton Place)                                                          | 1986                       |   | Dec                1998  |   | 7                to 40 years    |
| Missouri                -                                                                         |                       |   |                     |   |                            |
| St.                Louis (Le Coeur du Monde)                                                      | 1988-1989                  |   | Sept                1999 |   | 7                to 40 years    |
|                                                                                              |                       |   |                     |   |                            |
| 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    |

| NOTES                TO SCHEDULE III:                                             |   |   |        |   |   |       |   |
|-----------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|------------|--------|
|                                                                              |   |   |        |   |   |
|                                                                              |   | 2005   |        | 2004   |   | 2003       |   |
|                                                                              |   |   |        |   |   |       |   |
| Reconciliation                of amounts shown in Column E:                       |   |   |        |   |   |       |   |
| Balance                at beginning of year                                       |   | $      | 62,667,799  |   | $      | 62,014,691 |   | $ | 61,338,093 |   |
| Additions                -                                                        |   |   |        |   |   |       |   |   |   |   |
| Acquisitions                                                                      |   |   | 15,312,160  |   |   | 0          |   |   | 0 |   |
| Cost                of improvements                                               |   |   | 733,297     |   |   | 653,108    |   |   | 676,598 |   |
| Deductions                -                                                       |   |   |             |   |   |            |   |   |  |   |
| Sales                                                                        |   |   | (23,843,604 | )      |   | 0          |   |   | 0 |   |
| Balance                at end of year                                             |   | $      | 54,869,652  |   | $      | 62,667,799 |   | $ | 62,014,691 |   |
|                                                                              |   |   |        |   |   |       |   |   |   |   |
| Reconciliation                of amounts shown in Column F:                       |   |   |        |   |   |       |   |   |   |   |
| Balance                at beginning of year                                       |   | $      | 10,332,256  |   | $      | 8,777,534  |   | $ | 7,166,894 |   |
| Additions                -                                                        |   |   |        |   |   |       |   |   |   |   |
| Depreciation                expense for year                                      |   |   | 1,104,943   |   |   | 1,554,722  |   |   | 1,610,640 |   |
|                                                                              |   |   |        |   |   |       |   |   |   |   |
| Deductions                -                                                       |   |   | (3,612,632  | )      |   |       |   |   |   |   |
| Balance                at end of year                                             |   | $      | 7,824,567   |   | $      | 10,332,256 |   | $ | 8,777,534 |   |
|                                                                              |   |   |        |   |   |       |   |   |   |   |
| Aggregate                cost basis for Federal income tax reporting purposes     |   | $      | 55,063,239  |   | $      | 62,861,672 |   | $ | 62,208,559 |   |
| Accumulated                depreciation for Federal income tax reporting purposes |   | $      | 8,328,961   |   | $      | 10,620,887 |   | $ | 8,870,403 |   |

----

**Waterview        Associates L.P. **

**(a        limited        partnership) **

**Financial        Statements **

**December        31, 2005, 2004 and 2003**

----

**Waterview        Associates, L.P.**

**(a        limited        partnership) **

**Index        **

**December        31, 2005, 2004 and 2003**

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  **Page(s)**         |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                      |
|  **Report of Independent                Auditors**                                                                                                                                                                                                                                                                                                                                                                                                    |  1                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                      |
|  **Financial Statements**                                                                                                                                                                                                                                                                                                                                                                                                                             |                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                      |
| Statement                of net assets as of December 31, 2005 (Liquidation Basis) Balance                  Sheet as of December 31, 2004 (Going Concern Basis)                                                                                                                                                                                                                                                                                            |  2                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                      |
| Statement                of Operations for the period January 1, 2005 to December 22, 2005(Going                  Concern Basis) Changes                  in net assets for the period December 23, 2005 to December 31,                  2005                  (Liquidation                  Basis) and Statements of Operations for the years ended December                  31, 2004                  and 2003 (Going                  Concern Basis). |     3 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                      |
| Statement                of Changes in Partners' Capital for the period January 1, 2005 to                December                22, 2005 and                  the years ended December 31, 2004 and 2003 (Going Concern                  Basis)                                                                                                                                                                                                          |  4                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                      |
| Statement                of Cash Flows for the Period January 1, 2005 to December 22, 2005(Going                  Concern Basis) and December 22, 2005 to December 31, 2005 (Liquidation                  Basis) and                  for the years ended December 31, 2004 and 2003 (Going Concern                  Basis)                                                                                                                                |   5             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                      |
|  Notes to Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                        |  6−10          |

----

----

**PricewaterhouseCoopers        LLP **

**Report        of Independent Auditors**

----

****Waterview        Associates, L.P.****

**(a          limited          partnership) **

**Statement        of net assets as of December 31, 2005 (Liquidation Basis) **

**Balance        Sheet as of December 31, 2004 (Going Concern Basis**

----

*(in        thousands of dollars) *

|                                                                                                                      |   |  **2005**                                 |    |  **2004**                                   |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|--------------------------------------------------|--------|
|                                                                                                                      |   |  **Liquidation                    Basis** |    |  **Going                    Concern Basis** |   |
|                                                                                                                      |   |                                           |    |                                             |   |
|  **Assets**                                                                                                          |   |                                           |    |                                             |   |
|  Rental                  properties, at cost - Note 3                                                                |   |                                           |    |                                             |   |
|  Land                                                                                                                |   | $                                              | -       |                                             | $      | 2,657 |   |
|  Land                    Improvements                                                                                |   |                                           | -       |                                             |   | 499 |   |
|  Buildings                    and improvements                                                                       |   |                                           | -       |                                             |   | 15,095 |   |
|  Furnishings                    and equipment                                                                        |   |                                           | -       |                                             |   | 480 |   |
|                                                                                                                      |   |                                           | -  |                                             |   | 18,731 |   |
|  Less:                     Accumulated depreciation                                                             |   |                                           | -       |                                             |   | (1,295 | ) |
|                                                                                                                      |   |                                           | -  |                                             |   | 17,436 |   |
|  Cash                  and cash equivalents                                                                          |   |                                           | 1,266   |                                             |   | 73 |   |
|  Accounts                  receivable, net of allowance of $0 in 2005 and $40 in 2004,                  respectively |   |                                           | 42      |                                             |   | 29 |   |
|                                                                                                                      |   |                                           | 1,308   |                                             |   | 17,538 |   |
|  Prepaid                  and other assets                                                                           |   |                                           | 18      |                                             |   | 263 |   |
|                                                                                                                      |   | $                                              | 1,326   |                                             | $      | 17,801 |   |
|  **Liabilities                  and Partners' Capital**                                                              |   |                                           |    |                                             |   |  |   |
|  Liabilities                                                                                                         |   |                                           |    |                                             |   |  |   |
|  Accounts                    payable                                                                                 |   | $                                              | 89      |                                             | $      | 93 |   |
|  Accrued                    expenses and other liabilities                                                           |   |                                           | 49      |                                             |   | 209 |   |
|  Security                    deposits payable                                                                        |   |                                           | -       |                                             |   | 72 |   |
|  Prepaid                    rents                                                                                    |   |                                           | -       |                                             |   | 28 |   |
|  Debt                    obligation - Note 4                                                                         |   |                                           | -       |                                             |   | 13,871 |   |
|                                                                                                                      |   |                                           | 138     |                                             |   | 14,273 |   |
|  Partners'                  capital/ net assets - see statement                                                      |   |                                           | 1,188   |                                             |   | 3,528 |   |
|                                                                                                                      |   | $                                              | 1,326   |                                             | $      | 17,801 |   |

----

****Waterview        Associates, L.P.****

**(a          limited          partnership) **

**Statement        of Operations for the period January 1, 2005 to December 22, 2005 (Going        Concern        Basis) Changes in net assets for the period December 23, 2005 to December        31,        2005 (Liquidation Basis) and Statements of Operations for the years ended        December 31, 2004 and 2003 (Going Concern Basis)**

----

*(in        thousands of dollars) *

|                                                            |   | **01/01/05                  to 12/22/05 Going Concern Basis** |   | ** 12/23/05                  to 12/31/05 Liquidation Basis** |   | ** Total                  2005** |   | ** 2004                  Going Concern Basis** |   | ** 2003                  Going Concern Basis** |   |
|-----------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|---------------------------------------|--------|-----------------------------------------------------|--------|-----------------------------------------------------|--------|
|                                                            |   |                                                               |   |                                                              |   |                                  |   |                                                |   |                                                |   |
|  **Revenues**                                              |   |                                                               |   |                                                              |   |                                  |   |                                                |   |                                                |   |
|  Rental                revenue                             |   | $                                                                  | 2,254  |                                                              | $      | 0                                     |   | $                                                   | 2,254  |                                                | $      | 2,834 |   | $ | 2,742 |   |
|  Other                revenue                              |   |                                                               | 109    |                                                              |   | 18                                    |   |                                                | 127    |                                                |   | 96 |   |   | 83 |   |
|                                                            |   |                                                               | 2,363  |                                                              |   | 18                                    |   |                                                | 2,381  |                                                |   | 2,930 |   |   | 2,825 |   |
|  **Costs                and expenses**                     |   |                                                               |   |                                                              |   |                                  |   |                                                |   |                                                |   |   |   |   |   |   |
|  Rental                operations                          |   |                                                               | 1,526  |                                                              |   | -                                     |   |                                                | 1,526  |                                                |   | 1,762 |   |   | 1,572 |   |
|  General                and administrative                 |   |                                                               | 36     |                                                              |   | 14                                    |   |                                                | 50     |                                                |   | 66 |   |   | 43 |   |
|  Interest                                                  |   |                                                               | 997    |                                                              |   | -                                     |   |                                                | 997    |                                                |   | 1,036 |   |   | 1,043 |   |
|  Loss                on debt defeasance - Note 5           |   |                                                               | 2,089  |                                                              |   | -                                     |   |                                                | 2,089  |                                                |   | - |   |   | - |   |
|  Depreciation                                              |   |                                                               | 147    |                                                              |   | -                                     |   |                                                | 147    |                                                |   | 495 |   |   | 485 |   |
|                                                            |   |                                                               | 4,795  |                                                              |   | 14                                    |   |                                                | 4,809  |                                                |   | 3,359 |   |   | 3,143 |   |
|  Gain                on sale of rental property - Note 4   |   |                                                               | 7,700  |                                                              |   | -                                     |   |                                                | 7,700  |                                                |   | - |   |   | - |   |
|  Net                  income (loss)/ changes in net assets |   | $                                                                  | 5,268  |                                                              | $      | 4                                     |   | $                                                   | 5,272  |                                                | $      | (429 | ) |   | (318 | ) |

----

****Waterview        Associates, L.P.****

**(a          limited          partnership) **

**Statement        of Changes in Partners' Capital for the period January 1, 2005 to December        22,        2005 and the years ended December 31, 2004 and 2003 (Going Concern Basis)        **

----

*(in        thousands of dollars) *

|  **Partners'                capital, December 31, 2002**                            |   | $      | 4,254  |   |
|------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|  Partner                contributions                                               |   |   | 31     |   |
|  Partner                distributions                                               |   |   | (50    | )      |
|  Net                loss                                                            |   |   | (318   | )      |
|  **Partners'                capital, December 31, 2003**                            |   |   | 3,917  |   |
|  Partner                contributions                                               |   |   | 40     |   |
|  Net                loss                                                            |   |   | (429   | )      |
|  **Partners'                capital, December 31, 2004**                            |   |   | 3,528  |   |
|  Partner                contributions                                               |   |   | 500    |   |
|  Partner                distributions                                               |   |   | (8,112 | )      |
|  Net                income for the period January 1, 2005 through December 22, 2005 |   |   | 5,268  |   |
|  **Partners'                capital, December 22, 2005**                            |   |   | 1,184  |   |
|  Changes                in net assets                                               |   |   | 4      |   |
|  Net                assets                                                          |   | $      | 1,188  |   |

----

****Waterview        Associates, L.P.****

**(a          limited          partnership) **

**Statement        of Cash Flows for the Period January 1, 2005 to December 22, 2005 (Going        Concern        Basis) and December 22, 2005 to December 31, 2005 (Liquidation Basis) and        for        the years ended December 31, 2004 and 2003 (Going Concern Basis)**

----

*(in        thousands of dollars) *

|                                                                                                                            |   | **01/01/05                  to 12/22/05 Going Concern Basis** |    | ** 12/23/05                  to 12/31/05 Liquidation Basis** |   | ** Total                  2005** |   | ** 2004                  Going Concern Basis** |    | ** 2003                  Going Concern Basis** |   |
|---------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|---------|-------------------------------------------------------------------|--------|---------------------------------------|--------|-----------------------------------------------------|---------|-----------------------------------------------------|--------|
|                                                                                                                            |   |                                                               |    |                                                              |   |                                  |   |                                                |    |                                                |   |
|  **Cash                flows from operating activities**                                                                   |   |                                                               |    |                                                              |   |                                  |   |                                                |    |                                                |   |
|  Net                income (loss)                                                                                          |   | $                                                                  | 5,268   |                                                              | $      | 4                                     |   | $                                                   | 5,272   |                                                | $      | (429 | ) | $ | (318 | ) |
|  Adjustments                  to reconcile net income (loss) to net cash provided by operating                  activities |   |                                                               |    |                                                              |   |                                  |   |                                                |    |                                                |   |   |   |   |   |   |
|  Depreciation                                                                                                              |   |                                                               | 147     |                                                              |   | -                                     |   |                                                | 147     |                                                |   | 496 |   |   | 485 |   |
|  Bad                  debt expense                                                                                         |   |                                                               | 14      |                                                              |   | -                                     |   |                                                | 14      |                                                |   | - |   |   | - |   |
|  Loss                  on debt defeasance                                                                                  |   |                                                               | 2,064   |                                                              |   | -                                     |   |                                                | 2,064   |                                                |   | - |   |   | - |   |
|  Gain                  on sale of rental property                                                                          |   |                                                               | (7,700  | )                                                                 |   | -                                     |   |                                                | (7,700  | )                                                   |   | - |   |   | - |   |
|  Interest                  paid at settlement                                                                              |   |                                                               | 61      |                                                              |   | -                                     |   |                                                | 61      |                                                |   | - |   |   | - |   |
|  Changes                  in assets and liabilities                                                                        |   |                                                               |    |                                                              |   |                                  |   |                                                |    |                                                |   |   |   |   |   |   |
|  (Increase)                  decrease in accounts receivable                                                               |   |                                                               | (29     | )                                                                 |   |                                  |   |                                                | (29     | )                                                   |   | 45 |   |   | (23 | ) |
|  Decrease                  in prepaid and other assets                                                                     |   |                                                               | 263     |                                                              |   | (18                                   | )      |                                                | 245     |                                                |   | 70 |   |   | (82 | ) |
|  (Decrease)                  increase in accounts payable                                                                  |   |                                                               | (4      | )                                                                 |   | -                                     |   |                                                | (4      | )                                                   |   | 65 |   |   | (20 | ) |
|  (Decrease)                  increase in accrued expenses and other liabilities                                            |   |                                                               | (174    | )                                                                 |   | 14                                    |   |                                                | (160    | )                                                   |   | 37 |   |   | 13 |   |
|  Decrease                  in security deposit payable                                                                     |   |                                                               | (22     | )                                                                 |   | -                                     |   |                                                | (22     | )                                                   |   | (59 | ) |   | 131 |   |
|  Decrease                  in prepaid rents                                                                                |   |                                                               | (28     | )                                                                 |   | -                                     |   |                                                | (28     | )                                                   |   | (59 | ) |   | 13 |   |
|  Net                  cash and cash equivalents (used in) provided by operating                  activities                |   |                                                               | (140    | )                                                                 |   | -                                     |   |                                                | (140    | )                                                   |   | 166 |   |   | 199 |   |
|                                                                                                                            |   |                                                               |    |                                                              |   |                                  |   |                                                |    |                                                |   |   |   |   |   |   |
|  **Cash                flows used in investing activities**                                                                |   |                                                               |    |                                                              |   |                                  |   |                                                |    |                                                |   |   |   |   |   |   |
|  Capital                expenditures                                                                                       |   |                                                               | (113    | )                                                                 |   | -                                     |   |                                                | (113    | )                                                   |   | (106 | ) |   | (76 | ) |
|  Proceeds                from sale of rental property                                                                      |   |                                                               | 24,993  |                                                              |   | -                                     |   |                                                | 24,993  |                                                |   | - |   |   | - |   |
|  Net                  cash and cash equivalents provided by (used in) investing                  activities                |   |                                                               | 24,880  |                                                              |   | -                                     |   |                                                | 24,880  |                                                |   | (106 | ) |   | (76 | ) |
|                                                                                                                            |   |                                                               |    |                                                              |   |                                  |   |                                                |    |                                                |   |   |   |   |   |   |
|  **Cash                flows used in financing activities**                                                                |   |                                                               |    |                                                              |   |                                  |   |                                                |    |                                                |   |   |   |   |   |   |
|  Scheduled                principal repayments on debt obligations                                                         |   |                                                               | (155    | )                                                                 |   | -                                     |   |                                                | (155    | )                                                   |   | (141 | ) |   | (133 | ) |
|  Defeasement                of debt                                                                                        |   |                                                               | (15,780 | )                                                                 |   | -                                     |   |                                                | (15,780 | )                                                   |   | - |   |   | - |   |
|  Contributions                from Partners                                                                                |   |                                                               | 500     |                                                              |   | -                                     |   |                                                | 500     |                                                |   | 40 |   |   | 31 |   |
|  Distributions                to Partners                                                                                  |   |                                                               | (8,112  | )                                                                 |   | -                                     |   |                                                | (8,112  | )                                                   |   | - |   |   | (50 | ) |
|  Net                  cash and cash equivalents used in financing activities                                               |   |                                                               | (23,547 | )                                                                 |   | -                                     |   |                                                | (23,547 | )                                                   |   | (101 | ) |   | (152 | ) |
|  Net                  increase (decrease) in cash and cash equivalents                                                     |   |                                                               | 1,193   |                                                              |   |                                  |   |                                                | 1,193   |                                                |   | (41 | ) |   | (29 | ) |
|                                                                                                                            |   |                                                               |    |                                                              |   |                                  |   |                                                |    |                                                |   |   |   |   |   |   |
|  **Cash                and cash equivalents**                                                                              |   |                                                               |    |                                                              |   |                                  |   |                                                |    |                                                |   |   |   |   |   |   |
|  Beginning                of year                                                                                          |   |                                                               | 73      |                                                              |   | -                                     |   |                                                | 73      |                                                |   | 114 |   |   | 143 |   |
|  End                of year                                                                                                |   | $                                                                  | 1,266   |                                                              | $      | -                                     |   | $                                                   | 1,266   |                                                | $      | 73 |   | $ | 114 |   |
|                                                                                                                            |   |                                                               |    |                                                              |   |                                  |   |                                                |    |                                                |   |   |   |   |   |   |
|  **Supplemental                disclosure of cash flow information**                                                       |   |                                                               |    |                                                              |   |                                  |   |                                                |    |                                                |   |   |   |   |   |   |
|  Cash                  paid during the period for interest                                                                 |   | $                                                                  | 1,085   |                                                              | $      | -                                     |   | $                                                   | 1,085   |                                                | $      | 1,037 |   | $ | 1,044 |   |

----

****Waterview        Associates, L.P.****

**(a          limited          partnership) **

**Notes        to        Financial Statements **

**December        31, 2005, 2004 and 2003 **

----

**1.          Business Operations and Organization **

**2.        Significant Accounting Policies **

**Basis        of Accounting **

**Rental        Property/Held for Sale **

*Accounting        for the Impairment or Disposal of Long Lived Assets*

----

****Waterview        Associates, L.P.****

**(a          limited          partnership) **

**Notes        to        Financial Statements **

**December        31, 2005, 2004 and 2003 **

----

**Cash        and Cash Equivalents **

**Tenant        Security Deposits **

**Use        of Estimates **

**Reclassifications        **

**3.        Rental Property **

----

**Waterview          Associates, L.P.**

**(a          limited          partnership) **

**Notes        to        Financial Statements **

**December        31, 2005, 2004 and 2003 **

----

**4.        Debt Obligations **

**5.        Other Assets **

**6.        Related Party Transactions **

----

**Waterview              Associates, L.P.**

**(a              limited              partnership) **

**Notes            to            Financial Statements **

**December            31, 2005, 2004 and 2003 **

----

**7.        Liquidation Accounting Adjustments **

|  Liquidation                                                             |   |   |   |
|-------------------------------------------------------------------------------|--------|--------|--------|
|  Adjustments                                                             |   |   |   |
|  Accounting                  fees                                        |   | $      | 3,500  |   |
|  Other                                                                   |   | $      | 10,500 |   |
|  Total                  liquidation expense                  adjustments |   | $      | 14,000 |   |

**8.        Long-Term Retail Leases **

**9.        Other Commercial Leases **

**10.        Commitments and Contingencies **

----

**Waterview            Associates, L.P.**

**(a            limited            partnership) **

**Notes          to          Financial Statements **

**December          31, 2005, 2004 and 2003 **

----

**11.        Subsequent Event **

----