| (Mark                One)                                                                                                           |
|-------------------------------------------------------------------------------------------------------------------------------------|
| [x]                Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange                Act of 1934              |
| [Fee                Required]                                                                                                       |
| For                the fiscal year ended                                                                                            | December                31, 2006 |   |   |
|                                                                                                                                |   |   |   |   |   |
| or                                                                                                                                  |   |   |   |   |   |
|                                                                                                                                |   |   |   |   |   |
| [                ]Transition Report Pursuant to Section 13 or 15(d) of the Securities                Exchange Act of 1934** ** |
| [No                Fee Required]                                                                                                    |
| For                the transition period from ____________________ to                ______________________                         |
|                                                                                                                                |   |   |   |   |   |
|                                                                                                                                |   |   |   |   |   |
| Commission                file Number: 0-8952                                                                                       |
|                                                                                                                                |   |   |   |   |   |
| SB                Partners                                                                                                          |
| (Exact                name of registrant as specified in its charter)                                                               |
|                                                                                                                                |   |   |   |   |   |
| New                York                                                                                                             |   | 13-6294787 |
|                                                                                                                                |   |   |   |   |   |
| (State                of other Jurisdiction of                                                                                      |   | (I.R.S.                Employer |
| incorporation                or organization)                                                                                       |   | Identification                No.) |
|                                                                                                                                |   |   |   |   |   |
|                                                                                                                                |   |   |   |   |   |
| 1251                Avenue of the Americas, N.Y., N.Y.                                                                              |   | 10020 |
| (Address                of principal executive offices)                                                                             |   | (Zip                Code) |
|                                                                                                                                |   |   |   |   |   |
|                                                                                                                                |   |   |   |   |   |
| Registrant's                telephone number, including area code                                                                   |   | (212)                408-2900 |   |
|                                                                                                                                |   |   |   |   |   |
|                                                                                                                                |   |   |   |   |   |
| Securities                registered pursuant to Section 12(b) of the Act:                                                          |
|                                                                                                                                |   |   |   |   |   |
| Title                of each Class                                                                                                  |   | Name                of each exchange on which registered |
| NONE                                                                                                                                |   |   |   |
|                                                                                                                                |   |   |   |   |   |
|                                                                                                                                |   |   |   |   |   |
| Securities                registered pursuant to Section 12(g) of the Act:                                                          |
|                                                                                                                                |   |   |   |   |   |
| Units                of Limited Partnership Interests                                                                               |
| (Title                of Class)                                                                                                     |

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|                                            |                                 |     |   |                     |   |   |   |   |   |                              |                    |                               |                    |                                  |   |                              |   |
|-------------------------------------------------|--------------------------------------|----------|--------|--------------------------|--------|--------|--------|--------|--------|-----------------------------------|-------------------------|------------------------------------|-------------------------|---------------------------------------|--------|-----------------------------------|--------|
|                                            |                                 |     |   | Description              |   |   |   |   |   |                              |                    |                               |                    |
| Property                                        |                                 | Location |   | Sq.                  Ft. |   | Units  |   | Acres  |   | Acquisition                  Date |                    | Percent                  Ownership |                    | Occupancy                  12/31/2006 |   | Mortgage                  Payable |   |
|                                            |                                 |     |   |                     |   |   |   |   |   |                              |                    |                               |                    |                                  |   |                              |   |
| Apartments:                                     |                                 |     |   |                     |   |   |   |   |   |                              |                    |                               |                    |                                  |   |                              |   |
| Le                  Coeur du Monde Apts.(a)     |  St.                Louis, MO   |     |   | 177,000                  |   |   | 192    |   |   | 12.3                              |                    |                               | Sep-99                  |                                  |   | 100                               | %      |   | 93.50 | % | $ | 9,477,741 |   |
|                                            |                                 |     |   |                     |   |   |   |   |   |                              |                    |                               |                    |                                  |   |                              |   |   |   |   |   |   |   |   |   |
| Industrial                  Flex:               |                                 |     |   |                     |   |   |   |   |   |                              |                    |                               |                    |                                  |   |                              |   |   |   |   |   |   |   |   |   |
| Eagle                  Lake Business Center IV  |  Maple                Grove, MN | 60,000   |   |                     | n/a    |   |   | 5.15   |   |                              | Jun                  02 |                               |                    | 100                                   | %      |                              | 100    | % | $ | 0 |   |
|                                            |                                 |     |   |                     |   |   |   |   |   |                              |                    |                               |                    |                                  |   |                              |   |   |   |   |   |   |   |   |   |
| Warehouse                  Distribution Center: |                                 |     |   |                     |   |   |   |   |   |                              |                    |                               |                    |                                  |   |                              |   |   |   |   |   |   |   |   |   |
| 435                  Park Court (b)             |  Lino                Lakes, MN  | 266,000  |   |                     | n/a    |   |   | 13.47  |   |                              | Oct                  05 |                               |                    | 100                                   | %      |                              | 100    | % | $ | 10,000,000 |   |
| 175                  Ambassador Drive (c)       |  Naperville,                IL  |     |   | 331,089                  |   |   | n/a    |   |   | 17.55                             |                    |                               | Dec                  06 |                                  |   | 100                               | %      |   | 100 | % | $ | 7,084,552 |   |

|                                               |   | 2006   |   | 2005   |   | 2004   |   | 2003   |   | 2002   |   |
|----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                               |   |   |   |   |   |   |   |   |   |   |   |
| Average                  Occupancy (d)             |   |   |   |   |   |   |   |   |   |   |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |
| Holiday                  Park Apts.(e)             |   |   | 97.17  | %      |   | 93.50  | %      |   | 94.50  | %      |   | 94.50 | % |   | 90.90 | % |
| Cypress                  Key Apts. (f)             |   |   | n/a    |   |   | 98.20  | %      |   | 91.70  | %      |   | 89.70 | % |   | 90.40 | % |
| Halton                  Place Apts. (g)            |   |   | 96.59  | %      |   | 92.70  | %      |   | 90.30  | %      |   | 84.50 | % |   | 87.20 | % |
| Le                  Coeur du Monde Apts. (a)       |   |   | 95.97  | %      |   | 95.50  | %      |   | 93.90  | %      |   | 86.70 | % |   | 93.00 | % |
| Eagle                  Lake Business Center IV     |   |   | 100.00 | %      |   | 100.00 | %      |   | 100.00 | %      |   | 100.00 | % |   | 100.00 | % |
| 435                  Park Court (b)                |   |   | 100.00 | %      |   | 100.00 | %      |   | n/a    |   |   | n/a |   |   | n/a |   |
| 175                  Ambassador Drive (c)          |   |   | 100.00 | %      |   | n/a    |   |   | n/a    |   |   | n/a |   |   | n/a |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effective                  Annual Rent (d)         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Holiday                  Park Apts. (e)(h)         |   | $      | 6,583  |   | $      | 5,796  |   | $      | 5,522  |   | $      | 5,261 |   | $ | 5,056 |   |
| Cypress                  Key Apts. (f)(h)          |   |   | n/a    |   | $      | 8,214  |   | $      | 7,656  |   | $      | 7,469 |   | $ | 7,706 |   |
| Halton                  Place Apts. (g)(h)         |   | $      | 6,895  |   | $      | 6,288  |   | $      | 5,886  |   | $      | 5,685 |   | $ | 6,095 |   |
| Le                  Coeur du Monde Apts. (a)(h)    |   | $      | 9,577  |   | $      | 8,998  |   | $      | 8,799  |   | $      | 8,358 |   | $ | 9,164 |   |
| Eagle                  Lake Business Center IV (i) |   | $      | 15     |   | $      | 14     |   | $      | 14     |   | $      | 14 |   | $ | 12 |   |
| 435                  Park Court (b)(i)             |   | $      | 22     |   | $      | 4      |   |   | n/a    |   |   | n/a |   |   | n/a |   |
| 175                  Ambassador Drive (c)(i)       |   | $      | 7      |   |   | n/a    |   |   | n/a    |   |   | n/a |   |   | n/a |   |

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|                                                                 |   |                                              |   |   |   |   |   |   |   |   |   |
|----------------------------------------------------------------------|--------|---------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                 |   |                                              |   |   |   |   |   |   |   |   |   |
|                                                                 |   | For                  the Years Ended December 31, |   |
|                                                                 |   | 2006                                              |   | 2005   |   | 2004   |   | 2003   |   | 2002   |   |
|                                                                 |   | (In                  Thousands, Except Unit Data) |   |
|                                                                 |   |                                              |   |   |   |   |   |   |   |   |   |
| Income                  Statement Data:                              |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rental,                  Interest and Other Revenues            |   | $                                                 | 3,093  |   | $      | 1,236  |   | $      | 877    |   | $      | 875 |   | $ | 444 |   |
| Operating                  Expenses, Less Depreciation          |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and                  Amortization                              |   |                                              | (2,648 | )      |   | (1,676 | )      |   | (1,466 | )      |   | (1,484 | ) |   | (1,387 | ) |
| Depreciation                  and Amortization                  |   |                                              | (532   | )      |   | (200   | )      |   | (110   | )      |   | (110 | ) |   | (64 | ) |
|                                                                 |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss                  from Operations                                |   |                                              | (87    | )      |   | (640   | )      |   | (699   | )      |   | (719 | ) |   | (1,007 | ) |
| Equity                  in Net (Loss) Income of Joint Venture        |   |                                              | (26    | )      |   | 3,342  |   |   | (317   | )      |   | (239 | ) |   | (93 | ) |
|                                                                 |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)                  Income from Continuing Operations            |   |                                              | (113   | )      |   | 2,702  |   |   | (1,016 | )      |   | (958 | ) |   | (1,100 | ) |
|                                                                 |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (Loss) from Discontinued Operations          |   |                                              | 781    |   |   | (1,403 | )      |   | (314   | )      |   | (570 | ) |   | (1,063 | ) |
| Gain                  on Sale of Investments in Real Estate          |   |                                              | 12,376 |   |   | 6,351  |   |   | -      |   |   | - |   |   | 17,481 |   |
|                                                                 |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  Income (Loss)                                   |   | $                                                 | 13,044 |   | $      | 7,650  |   | $      | (1,330 | )      | $      | (1,528 | ) | $ | 15,318 |   |
|                                                                 |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (Loss) from Continuing Operations            |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| per                  Unit of Partnersip Interest:               |   | $                                                 | (15    | )      | $      | 349    |   | $      | (131   | )      | $      | (124 | ) | $ | (142 | ) |
|                                                                 |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Distributions                  paid per Unit of Partnership Interest |   | $                                                 | 350    |   | $      | 40     |   | $      | 40     |   | $      | 500 |   | $ | 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                                    |   | $                                                 | 40,143 |   | $      | 19,658 |   | $      | 4,480  |   | $      | 4,588 |   | $ | 4,690 |   |
| Real                  Estate Assets Held for Sale                    |   | $                                                 | 12,527 |   | $      | 27,387 |   | $      | 47,855 |   | $      | 48,649 |   | $ | 49,481 |   |
| Total                  Assets                                        |   | $                                                 | 67,013 |   | $      | 55,341 |   | $      | 56,310 |   | $      | 57,811 |   | $ | 60,508 |   |
| Mortgage                  Notes Payable                              |   | $                                                 | 17,085 |   | $      | 10,000 |   | $      | -      |   | $      | - |   | $ | - |   |
| Other                  Liabilities in Discontinued Operations        |   | $                                                 | 9,639  |   | $      | 15,404 |   | $      | 33,453 |   | $      | 33,769 |   | $ | 30,770 |   |

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| For                  the year ending December 31, |   |   |       |
|---------------------------------------------------|--------|--------|------------|
| 2007                                              |   | $      | 285,495    |   |
| 2008                                              |   |   | 318,044    |   |
| 2009                                              |   |   | 9,310,862  |   |
| 2010                                              |   |   | 6,647,892  |   |
| 2011                                              |   |   | 0          |   |
| Thereafter                                        |   |   | 10,000,000 |   |
|                                              |   |   |       |   |
| Total                                             |   | $      | 26,562,293 |   |

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**.**

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| (a)   | The                Chief Executive Officer and the Chief Financial Officer of the general                partner of SB Partners have evaluated the disclosure controls and                procedures relating to the Registrant’s Annual Report on Form 10-K for the                year ended December 31, 2006 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, 2006 that could significantly affect those controls                subsequent to the date of evaluation. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Name                             | Age    | Position                                             |
|----------------------------------|--------|------------------------------------------------------|
|                             |   |                                                 |
|                             |   |                                                 |
| John                H. Streicker | 64     | President                & Director              |
|                             |   |                                                 |
| Millie                C. Cassidy | 61     | Vice                President & Director         |
|                             |   |                                                 |
| David                Weiner      | 71     | Chief                Executive Officer               |
|                             |   |                                                 |
| Anita                Breslin     | 50     | First                Vice President                  |
|                             |   |                                                 |
| Robert                Leniart    | 50     | Vice                President                        |
|                             |   |                                                 |
| Martin                Cawley     | 50     | Vice                President                        |
|                             |   |                                                 |
| George                N. Tietjen | 46     | Chief                Financial Officer and Treasurer |

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| (a) | At                December 31, 2006, 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, 2006, 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 27.8% of the outstanding number                of                Units on December 31, 2006. In accordance with SEC regulations, SRE                Clearing Services filed Form 13-D/A on December 13, 2006, when the                total                number of Units held reached 27% of the outstanding number of                Units. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | During                the year ended December                31, 2006, there were no changes                in control of the Registrant or the General                Partner. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 1.   | Audit                Fees.                The aggregate fees billed for professional services rendered by the                principal accountant for the audit of the Partnership’s annual financial                statements and review of financial statements included in the                Partnership’s Form 10-Q or services that are normally provided by the                accountant in connection with statutory and regulatory filings or                engagements for those fiscal years were approximately $133,000 and                $180,000 for the years ended December 31, 2006 and 2005, respectively.                All                of the fees for 2005 and $28,000 of the fees for 2006 were paid to                Deloitte & Touche LLP, the former independent registered                accounting firm for the Partnership. The remaining 2006 fees of                $105,000 are in connection with Dworken, Hillman, LaMorte & Sterczala,                P.C., the current independent registered accounting firm for the                Partnership. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | Audit-Related                Fees.                No fees were billed by the principal accountant during the years                ended                December 31, 2006 and 2005 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** **$15,000 and                $20,000 for the years ended December 31, 2006 and 2005, 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 2006 Annual Audited Consolidated Financial                Statements are included in this Annual Report on Form                10-K. |
|-----|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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|                                 |   | SB                PARTNERS                                  |
|--------------------------------------|--------|-------------------------------------------------------------|
|                                 |   |                                                        |
|                                 | By:    | SB                PARTNERS REAL ESTATE CORPORATION          |
|                                 |   | General                Partner                              |
|                                 |   |                                                        |
|                                 |   | Chief                Executive Officer                      |
| Dated:                March 30, 2007 | By:    | /s/                David Weiner                             |
|                                 |   | David                Weiner                                 |
|                                 |   |                                                        |
|                                 |   | Principal                Financial & Accounting Officer |
| Dated:                March 30, 2007 | By:    | /s/                George N. Tietjen III                    |
|                                 |   | George                N. Tietjen III                        |
|                                 |   | Chief                Financial Officer & Treasurer      |
|                                 |   |                                                        |

|                                     |   |                                                          |                                                   |                          |   |                          |   |
|------------------------------------------|--------|---------------------------------------------------------------|--------------------------------------------------------|-------------------------------|--------|-------------------------------|--------|
| Signature                                |   | Position                                                      |                                                   |                          | Date   |
|                                     |   |                                                          |                                                   |                          |   |                          |   |
| /s/                David Weiner          |   |                                                          | Chief                Executive Officer                 |                          |   | March                30, 2007 |
| David                Weiner              |   |                                                          |                                                   |                          |   |                          |
|                                     |   |                                                          |                                                   |                          |   |
|                                     |   |                                                          | Chief                Financial Officer & Treasurer |                          |   |
| /s/                George N. Tietjen III |   | (Principal                Financial & Accounting Officer) |                                                   | March                30, 2007 |
| George                N. Tietjen III     |   |                                                          |                                                   |                          |   |                          |

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**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 |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

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

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

|                                 |   | Chief                Executive Officer |
|--------------------------------------|--------|----------------------------------------|
| Dated:                March 30, 2007 | By:    | /s/                David Weiner        |
|                                 |   | 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 |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|  Dated:                March 30, 2007 |  By: | Principal                Financing & Accounting Officer |
|--------------------------------------------|-----------|-------------------------------------------------------------|
| /s/                George N. Tietjen III   |
|                                       |      | George                N. Tietjen III                        |
|                                       |      | Chief                Financial Officer & Treasurer      |

----

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

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

|                                 |   | Chief                Executive Officer |
|--------------------------------------|--------|----------------------------------------|
| Dated:                March 30, 2007 | By:    | /s/                David Weiner        |
|                                 |   | 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, 2006, as filed with the Securities and Exchange Commission                (the “Report”), fully complies with the requirements of Section 13(a) or                15(d) of the Securities Exchange Act of                1934; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|  Dated:                March 30, 2007 |  By: | Principal                Financing & Accounting Officer |
|--------------------------------------------|-----------|-------------------------------------------------------------|
| /s/                George N. Tietjen III   |
|                                       |      | George                N. Tietjen III                        |
|                                       |      | Chief                Financial Officer & Treasurer      |

----

| SB                PARTNERS                                                                                                                 |
|--------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                       |   |
| ITEMS                8 and 14 (a) (1) and (2)                                                                                              |
|                                                                                                                                       |   |
|                                                                                                                                       |   |
| FINANCIAL                STATEMENTS AND SUPPLEMENTARY DATA                                                                                 |
|                                                                                                                                       |   |
| INDEX                TO CONSOLIDATED FINANCIAL STATEMENTS AND                                                                              |
| SUPPLEMENTAL                FINANCIAL STATEMENT SCHEDULE                                                                                   |
|                                                                                                                                       |   |
|                                                                                                                                       |   |
| Reports                of Independent Registered Public Accounting Firm                                                                    | 29                - 30 |
|                                                                                                                                       |   |
| Consolidated                Balance Sheets as of December 31, 2006 and 2005                                                                | 31 |
|                                                                                                                                       |   |
| Consolidated                Statements of Operations for the years ended December 31, 2006, 2005                and                2004    | 32 |
|                                                                                                                                       |   |
| Consolidated                Statements of Changes in Partners' Capital for the years ended December                31, 2006, 2005 and 2004 | 33 |
|                                                                                                                                       |   |
| Consolidated                Statements of Cash Flows for the years ended December 31, 2006, 2005                and                2004    | 34 |
|                                                                                                                                       |   |
| Notes                to Consolidated Financial Statements                                                                                  | 35                - 45 |
|                                                                                                                                       |   |
| Supplemental                Financial Statement schedule:                                                                                  |   |
|                                                                                                                                       |   |
| Schedule                III - Real Estate and Accumulated Depreciation as of December 31,                2006                              | 46-47 |
|                                                                                                                                       |   |

----

**,**

----

----

| SB                  PARTNERS                                      |   |                          |       |   |   |
|-------------------------------------------------------------------|--------|-------------------------------|------------|--------|--------|
| (A                  New York Limited Partnership)                 |   |                          |       |   |   |
|                                                              |   |                          |       |   |   |
| CONSOLIDATED                  BALANCE SHEETS                      |   |                          |       |   |   |
|                                                              |   |                          |       |   |   |
|                                                              |   | December                  31, |       |
|                                                              |   | 2006                          |       | 2005   |   |
|                                                              |   |                          |       |   |   |
| Assets:                                                           |   |                          |       |   |   |   |   |
| Investments                  -                                    |   |                          |       |   |   |   |   |
| Real                  estate, at cost                             |   |                          |       |   |   |   |   |
| Land                                                              |   | $                             | 4,065,000  |   | $      | 1,985,000 |   |
| Buildings,                  furnishings and improvements          |   |                          | 37,090,344 |   |   | 18,156,163 |   |
| Less                  - accumulated depreciation                  |   |                          | (1,012,808 | )      |   | (483,464 | ) |
|                                                              |   |                          | 40,142,536 |   |   | 19,657,699 |   |
|                                                              |   |                          |       |   |   |   |   |
| Real                  estate held for sale                        |   |                          | 12,527,027 |   |   | 27,387,386 |   |
| Investment                  in joint venture                      |   |                          | -          |   |   | 712,800 |   |
|                                                              |   |                          | 52,669,563 |   |   | 47,757,885 |   |
|                                                              |   |                          |       |   |   |   |   |
| Other                  Assets -                                   |   |                          |       |   |   |   |   |
| Cash                  and cash equivalents                        |   |                          | 999,342    |   |   | 7,081,976 |   |
| Marketable                  securities                            |   |                          | 12,999,198 |   |   | - |   |
| Other                                                             |   |                          | 210,430    |   |   | 32,972 |   |
| Other                  assets in discontinued operations          |   |                          | 134,728    |   |   | 468,470 |   |
|                                                              |   |                          |       |   |   |   |   |
| Total                  assets                                     |   | $                             | 67,013,261 |   | $      | 55,341,303 |   |
|                                                              |   |                          |       |   |   |   |   |
| Liabilities:                                                      |   |                          |       |   |   |   |   |
| Mortgage                  note payable                            |   | $                             | 17,084,552 |   | $      | 10,000,000 |   |
| Accounts                  payable and accrued expenses            |   |                          | 237,500    |   |   | 227,124 |   |
| Tenant                  security deposits                         |   |                          | 92,221     |   |   | 103,366 |   |
| Deferred                  revenue                                 |   |                          | 23,314     |   |   | - |   |
| Other                  liabilities in discontinued operations,    |   |                          |       |   |   |   |   |
| including                  $9,477,741 and $15,027,370 of          |   |                          |       |   |   |   |   |
| mortgage                  notes payable, respectively             |   |                          | 9,638,501  |   |   | 15,404,212 |   |
|                                                              |   |                          |       |   |   |   |   |
| Total                  liabilities                                |   |                          | 27,076,088 |   |   | 25,734,702 |   |
|                                                              |   |                          |       |   |   |   |   |
| Partners'                  Capital:                               |   |                          |       |   |   |   |   |
| Units                  of partnership interest without par value; |   |                          |       |   |   |   |   |
| Limited                  partner - 7,753 units                    |   |                          | 39,950,457 |   |   | 29,621,217 |   |
| General                  partner - 1 unit                         |   |                          | (13,284    | )      |   | (14,616 | ) |
|                                                              |   |                          |       |   |   |   |   |
| Total                  partners' capital                          |   |                          | 39,937,173 |   |   | 29,606,601 |   |
|                                                              |   |                          |       |   |   |   |   |
| Total                  liabilities and partners' capital          |   | $                             | 67,013,261 |   | $      | 55,341,303 |   |
|                                                              |   |                          |       |   |   |   |   |
| See                  notes to consolidated financial statements   |   |                          |       |   |   |   |   |

----

| SB                  PARTNERS                                              |
|---------------------------------------------------------------------------|
| (A                  New York Limited Partnership)                         |
|                                                                      |   |   |   |   |   |   |   |
| CONSOLIDATED                  STATEMENTS OF OPERATIONS                    |
|                                                                      |   |   |   |   |   |   |   |
|                                                                      |   | For                  the Years Ended December 31, |   |
|                                                                      |   |   |   |   |   |   |   |
|                                                                      |   | 2006 |   | 2005 |   | 2004 |   |
| Revenues:                                                                 |   |   |   |   |   |   |   |   |   |   |
| Base                  rental income                                       |   | $ | 1,938,947 |   | $ | 853,240 |   | $ | 581,673 |   |
| Other                  rental income                                      |   |   | 657,533 |   |   | 295,492 |   |   | 290,901 |   |
| Interest                  on short-term investments                       |   |   | 496,654 |   |   | 87,156 |   |   | 4,588 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| Total                  revenues                                           |   |   | 3,093,134 |   |   | 1,235,888 |   |   | 877,162 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                                 |   |   |   |   |   |   |   |   |   |   |
| Real                  estate operating expenses                           |   |   | 525,832 |   |   | 427,582 |   |   | 459,013 |   |
| Interest                  on mortgage notes payable                       |   |   | 696,768 |   |   | 96,667 |   |   | - |   |
| Depreciation                  and amortization                            |   |   | 531,708 |   |   | 199,866 |   |   | 110,043 |   |
| Real                  estate taxes                                        |   |   | 521,292 |   |   | 170,759 |   |   | 167,268 |   |
| Management                  fees                                          |   |   | 709,655 |   |   | 687,210 |   |   | 712,845 |   |
| Other                                                                     |   |   | 194,738 |   |   | 293,750 |   |   | 127,335 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| Total                  expenses                                           |   |   | 3,179,993 |   |   | 1,875,834 |   |   | 1,576,504 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| Loss                  from operations                                     |   |   | (86,859 | ) |   | (639,946 | ) |   | (699,342 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| Equity                  in net (loss) income of joint venture             |   |   | (26,133 | ) |   | 3,342,104 |   |   | (317,007 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| (Loss)                  income from continuing operations                 |   |   | (112,992 | ) |   | 2,702,158 |   |   | (1,016,349 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) from discontinued operations               |   |   | 781,439 |   |   | (1,403,033 | ) |   | (313,887 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| Net                  gain on sale of investment in real estate property   |   |   | 12,375,850 |   |   | 6,350,771 |   |   | - |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss)                                        |   |   | 13,044,297 |   |   | 7,649,896 |   |   | (1,330,236 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) allocated to general partner               |   |   | 1,682 |   |   | 987 |   |   | (171 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) allocated to limited partners              |   | $ | 13,042,615 |   | $ | 7,648,909 |   | $ | (1,330,065 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| Earnings                  (loss) per unit of limited partnership interest |   |   |   |   |   |   |   |   |   |   |
| (basic                  and diluted)                                      |   |   |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| Continuing                  operations                                    |   | $ | (14.57 | ) | $ | 348.53 |   | $ | (131.09 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| Discontinued                  operations (including gain on sale)         |   | $ | 1,697.06 |   | $ | 638.17 |   | $ | (40.49 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss)                                        |   | $ | 1,682.49 |   | $ | 986.70 |   | $ | (171.58 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| Weighted                  Average Number of Units of Limited              |   |   |   |   |   |   |   |   |   |   |
| Partnership                  Interest Outstanding                         |   |   | 7,753 |   |   | 7,753 |   |   | 7,753 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| See                  notes to consolidated financial statements           |   |   |   |   |   |   |   |   |   |   |

----

| SB                  PARTNERS                                             |
|--------------------------------------------------------------------------|
| (A                  New York Limited Partnership)                        |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |
| CONSOLIDATED                  STATEMENTS OF CHANGES IN PARTNERS' CAPITAL |
| For                  the years ended December 31, 2006, 2005, and 2004   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |
| Limited                  Partners:                                       |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   | Units                  of Partnership Interest |   |   |   |   |   |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   | Number |   | Amount |   | Cumulative                  Cash Distributions |   | Accumulated                  Earnings |   | Total |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  January 1, 2004                                |   |   | 7,753 |   | $ | 119,968,973 |   | $ | (104,821,861 | ) | $ | 8,775,461 |   | $ | 23,922,573 |   |
| Cash                  distributions                                      |   |   | - |   |   | - |   |   | (310,100 | ) |   | - |   |   | (310,100 | ) |
| Net                  loss for the year                                   |   |   | - |   |   | - |   |   | - |   |   | (1,330,065 | ) |   | (1,330,065 | ) |
| Balance,                  December 31, 2004                              |   |   | 7,753 |   |   | 119,968,973 |   |   | (105,131,961 | ) |   | 7,445,396 |   |   | 22,282,408 |   |
| Cash                  distributions                                      |   |   | - |   |   | - |   |   | (310,100 | ) |   | - |   |   | (310,100 | ) |
| Net                  income for the year                                 |   |   | - |   |   | - |   |   | - |   |   | 7,648,909 |   |   | 7,648,909 |   |
| Balance,                  December 31, 2005                              |   |   | 7,753 |   |   | 119,968,973 |   |   | (105,442,061 | ) |   | 15,094,305 |   |   | 29,621,217 |   |
| Cash                  distributions                                      |   |   | - |   |   | - |   |   | (2,713,375 | ) |   | - |   |   | (2,713,375 | ) |
| Net                  income for the year                                 |   |   | - |   |   | - |   |   | - |   |   | 13,042,615 |   |   | 13,042,615 |   |
| Balance,                  December 31, 2006                              |   |   | 7,753 |   | $ | 119,968,973 |   | $ | (108,155,436 | ) | $ | 28,136,920 |   | $ | 39,950,457 |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General                  Partner:                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |   | Units                  of Partnership Interest  |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |   | Number |   |   | Amount |   |   | Cumulative                  Cash Distributions |   |   | Accumulated                  Earnings |   |   | Total |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  January 1, 2004                                |   |   | 1 |   | $ | 10,000 |   | $ | (25,474 | ) | $ | 122 |   | $ | (15,352 | ) |
| Cash                  distributions                                      |   |   | - |   |   | - |   |   | (40 | ) |   | - |   |   | (40 | ) |
| Net                  loss for the year                                   |   |   | - |   |   | - |   |   | - |   |   | (171 | ) |   | (171 | ) |
| Balance,                  December 31, 2004                              |   |   | 1 |   |   | 10,000 |   |   | (25,514 | ) |   | (49 | ) |   | (15,563 | ) |
| Cash                  distributions                                      |   |   | - |   |   | - |   |   | (40 | ) |   | - |   |   | (40 | ) |
| Net                  income for the year                                 |   |   | - |   |   | - |   |   | - |   |   | 987 |   |   | 987 |   |
| Balance,                  December 31, 2005                              |   |   | 1 |   |   | 10,000 |   |   | (25,554 | ) |   | 938 |   |   | (14,616 | ) |
| Cash                  distributions                                      |   |   | - |   |   | - |   |   | (350 | ) |   | - |   |   | (350 | ) |
| Net                  income for the year                                 |   |   | - |   |   | - |   |   | - |   |   | 1,682 |   |   | 1,682 |   |
| Balance,                  December 31, 2006                              |   |   | 1 |   | $ | 10,000 |   | $ | (25,904 | ) | $ | 2,620 |   | $ | (13,284 | ) |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See                  notes to consolidated financial statements.         |   |

----

| SB                  PARTNERS                                                                         |
|------------------------------------------------------------------------------------------------------|
| (A                  New York Limited Partnership)                                                    |
|                                                                                                 |   |   |   |   |   |   |   |
| CONSOLIDATED                  STATEMENTS OF CASH FLOWS                                               |
|                                                                                                 |   |   |   |   |   |   |   |
|                                                                                                 |   | For                  the Years Ended December 31, |
|                                                                                                 |   | 2006 |   | 2005 |   | 2004 |   |
|                                                                                                 |   |   |   |   |   |   |   |
| Cash                  Flows From Operating Activities:                                               |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss)                                                                   |   | $ | 13,044,297 |   | $ | 7,649,896 |   | $ | (1,330,236 | ) |
| Adjustments                  to reconcile net income (loss) to net cash                         |   |   |   |   |   |   |   |   |   |   |
|  from                  operating activities:                                                    |   |   |   |   |   |   |   |   |   |   |
| Net                  gain on sale of investment in real estate property                         |   |   | (12,375,850 | ) |   | (6,350,771 | ) |   | - |   |
| Equity                  in net (income) loss of joint venture                                   |   |   | 26,133 |   |   | (3,342,104 | ) |   | 317,007 |   |
| Depreciation                  and amortization                                                  |   |   | 761,559 |   |   | 1,281,137 |   |   | 1,601,822 |   |
| Distributions                  received from joint venture                                      |   |   | 686,667 |   |   | 2,103,330 |   |   | - |   |
| Increase                  in deferred revenue                                                   |   |   | 23,314 |   |   | - |   |   | - |   |
| Net                  (increase) decrease in operating assets                                    |   |   | (117,956 | ) |   | 49,891 |   |   | 204,735 |   |
| Net                  decrease in operating liabilities                                          |   |   | (216,851 | ) |   | (307,416 | ) |   | (114,866 | ) |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |
|  Net                  cash provided by operating activites                                      |   |   | 1,831,313 |   |   | 1,083,963 |   |   | 678,462 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Cash                  Flows From Investing Activities:                                               |   |   |   |   |   |   |   |   |   |   |
| Net                  proceeds from sale of investment in real estate                  property  |   |   | 27,448,306 |   |   | 26,581,743 |   |   | - |   |
| Return                  of capital from investment in joint venture                             |   |   | - |   |   | 3,714,563 |   |   | - |   |
| Acquisition                  of real estate property                                            |   |   | (13,823,943 | ) |   | (15,312,160 | ) |   | - |   |
| Decrease                  in cash held in escrow                                                |   |   | 239,371 |   |   | 307,205 |   |   | - |   |
| Additional                  investment in joint venture                                         |   |   | - |   |   | (375,000 | ) |   | (30,000 | ) |
| Purchase                  of marketable securities                                              |   |   | (12,999,198 | ) |   |  - |   |   |  - |   |
| Capital                  additions to real estate owned                                         |   |   | (492,362 | ) |   | (733,297 | ) |   | (653,108 | ) |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |
|  Net                  cash provided by (used in) investing activites                            |   |   | 372,174 |   |   | 14,183,054 |   |   | (683,108 | ) |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Cash                  Flows From Financing Activities:                                               |   |   |   |   |   |   |   |   |   |   |
| Additional                  borrowings under revolving credit facility                          |   |   | - |   |   | 2,200,000 |   |   | 700,000 |   |
| Repayments                  of mortgage notes payable                                           |   |   | (3,383,118 | ) |   | (15,859,050 | ) |   | - |   |
| Principal                  payments on mortgage notes payable                                   |   |   | (189,278 | ) |   | (242,212 | ) |   | (445,243 | ) |
| Proceeds                  of mortgage note payable                                              |   |   | - |   |   | 10,000,000 |   |   | - |   |
| Repayments                  of borrowings under revolving credit facility                       |   |   | (2,000,000 | ) |   | (4,100,000 | ) |   |  - |   |
| Distributions                  paid to partners                                                 |   |   | (2,713,725 | ) |   | (310,140 | ) |   | (310,140 | ) |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |
|  Net                  cash used in financing activities                                         |   |   | (8,286,121 | ) |   | (8,311,402 | ) |   | (55,383 | ) |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Net                  change in cash and cash equivalents                                             |   |   | (6,082,634 | ) |   | 6,955,615 |   |   | (60,029 | ) |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents at beginning of year                                 |   |   | 7,081,976 |   |   | 126,361 |   |   | 186,390 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents at end of year                                       |   | $ | 999,342 |   | $ | 7,081,976 |   | $ | 126,361 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Supplemental                  disclosure of cash flow information:                                   |   |   |   |   |   |   |   |   |   |   |
| Cash                  paid during the year for interest                                         |   | $ | 1,616,635 |   | $ | 2,917,951 |   | $ | 2,190,765 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Mortgage                  assumed in connection with acquisition of real                        |   |   |   |   |   |   |   |   |   |   |
|  estate                  property                                                               |   | $ | 7,107,319 |   | $ | - |   | $ | - |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| See                  notes to consolidated financial statements                                      |   |

----

| (a)   | The                accompanying consolidated financial statements include the accounts                of SB                Partners and its subsidiaries. All significant intercompany accounts                and                transactions have been eliminated. The consolidated financial statements                are prepared using the accrual basis of accounting in accordance                with                accounting principles generally accepted in the United States of                America.                Revenues are recognized as earned and expenses are recognized as                incurred.                The preparation of financial statements in conformity with such principles                requires management to make estimates and assumptions that affect                the                reported amounts of assets and liabilities and disclosure of contingent                assets and liabilities at the date of the financial statements and                the                reported amounts of revenues and expenses during the reporting period.                Actual results could differ from 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: |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| (d)   | Real                estate properties are regularly evaluated on a property by property                basis                to determine if it is appropriate to write down carrying values to                recognize an impairment of value. Impairment is determined by calculating                the sum of the estimated undiscounted future cash flows including                the                projected undiscounted future net proceeds from the sale of the property.                In the event such sum is less than the net carrying value of the                property,                the property will be written down to estimated fair value. Based                on the                Partnership’s long-term hold strategy for its investments in real estate,                the carrying value of its properties at December 31, 2006 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)   | Marketable                securities consist of corporate paper, which are classified as held                to                maturity and purchased at a discount, which will be accreted over                the life                of the security. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h)   | The                Partnership accounts for its investment in joint venture under the                equity                method of accounting as the Partnership exercises significant influence,                but not control, over the joint                venture. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

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

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

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

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

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

----

|                                                                |   | **December                  31, 2005** |       |
|---------------------------------------------------------------------|--------|----------------------------------------|------------|
|                                                                |   |                                   |       |   |   |   |   |
|                                                                |   |                                   |       |   |   |   |   |
|                                                                |   | **As**                                 |       | **To                  reflect reclassification** |   | **As** |   |
|                                                                |   | **originally**                         |       | **to                  real estate held for sale** |   | **retrospectively** |   |
|                                                                |   | **reported**                           |       | **as                  of April 1, 2006** |   | **adjusted** |   |
| **ASSETS**                                                          |   |                                   |       |   |   |   |   |   |   |   |
| Investments                  -                                      |   |                                   |       |   |   |   |   |   |   |   |
| Real                  estate, at cost                          |   |                                   |       |   |   |   |   |   |   |   |
|  Land                                                          |   | $                                      | 4,577,500  |   | $ | (2,592,500 | ) | $ | 1,985,000 |   |
|  Buildings,                  furnishings and improvements      |   |                                   | 44,372,200 |   |   | (26,216,037 | ) |   | 18,156,163 |   |
|  Less                  - accumulated depreciation              |   |                                   | (5,079,885 | ) |   | 4,596,421 |   |   | (483,464 | ) |
|                                                                |   |                                   | 43,869,815 |   |   | (24,212,116 | ) |   | 19,657,699 |   |
|                                                                |   |                                   |       |   |   |  |   |   |   |   |
| Real                  estate held for sale                     |   |                                   | 3,175,270  |   |   | 24,212,116 |   |   | 27,387,386 |   |
| Investment                  in joint venture                   |   |                                   | 712,800    |   |   | - |   |   | 712,800 |   |
|                                                                |   |                                   | 47,757,885 |   |   | - |   |   | 47,757,885 |   |
| Other                  Assets -                                     |   |                                   |       |   |   |  |   |   |   |   |
| Cash                  and cash equivalents                     |   |                                   | 7,081,976  |   |   | - |   |   | 7,081,976 |   |
| Cash                  held by lenders in escrow                |   |                                   | 137,354    |   |   | (137,354 | ) |   | - |   |
| Other                                                          |   |                                   | 167,617    |   |   | (134,645 | ) |   | 32,972 |   |
| Other                  assets in discontinued operations       |   |                                   | 196,471    |   |   | 271,999 |   |   | 468,470 |   |
|                                                                |   |                                   |       |   |   |  |   |   |   |   |
|  Total                  assets                                 |   | $                                      | 55,341,303 |   | $ | - |   | $ | 55,341,303 |   |
|                                                                |   |                                   |       |   |   |  |   |   |   |   |
| **LIABILITIES**                                                     |   |                                   |       |   |   |  |   |   |   |   |
| Mortgage                  notes payable                        |   | $                                      | 21,622,268 |   | $ | (11,622,268 | ) | $ | 10,000,000 |   |
| Accounts                  payable and accrued expenses         |   |                                   | 425,732    |   |   | (198,608 | ) |   | 227,124 |   |
| Tenant                  security deposits                      |   |                                   | 157,751    |   |   | (54,385 | ) |   | 103,366 |   |
| Other                  liabilities in discontinued operations  |   |                                   | 3,528,951  |   |   | 11,875,261 |   |   | 15,404,212 |   |
|                                                                |   |                                   |       |   |   |  |   |   |   |   |
|  Total                  liabilities                            |   |                                   | 25,734,702 |   |   | - |   |   | 25,734,702 |   |
|                                                                |   |                                   |       |   |   |  |   |   |   |   |
| **PARTNERS'                  CAPITAL**                              |   |                                   |       |   |   |  |   |   |   |   |
| Limited                  partners - 7,753 units                |   |                                   | 29,621,217 |   |   | - |   |   | 29,621,217 |   |
| General                  partners - 1 unit                     |   |                                   | (14,616    | ) |   | - |   |   | (14,616 | ) |
|                                                                |   |                                   |       |   |   |  |   |   |   |   |
|  Total                  partners' capital                      |   |                                   | 29,606,601 |   |   | - |   |   | 29,606,601 |   |
|                                                                |   |                                   |       |   |   |  |   |   |   |   |
|  Total                  liabilities and partners' capital      |   | $                                      | 55,341,303 |   | $ | - |   | $ | 55,341,303 |   |

----

|                                                                                                           |   | **For                  the Year Ended December 31, 2005** |
|----------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|
|                                                                                                           |   |                                                      |   |   |   |   |   |
|                                                                                                           |   | **As**                                                    |   | **To                  reflect reclassification** |   | **As** |   |
|                                                                                                           |   | **originally**                                            |   | **to                  real estate held for sale** |   | **retrospectively** |   |
|                                                                                                           |   | **reported**                                              |   | **as                  of April 1, 2006** |   | **adjusted** |   |
| **REVENUES**                                                                                                   |   |                                                      |   |   |   |   |   |   |   |   |
| Rental                  income                                                                            |   | $                                                         | 4,128,833 |   | $ | (3,275,593 | ) | $ | 853,240 |   |
| Other                  rental income                                                                      |   |                                                      | 420,996 |   |   | (125,504 | ) |   | 295,492 |   |
| Interest                  on short-term investments                                                       |   |                                                      | 87,301 |   |   | (145 | ) |   | 87,156 |   |
|                                                                                                           |   |                                                      |   |   |   |  |   |   |   |   |
|  Total                  revenues                                                                          |   |                                                      | 4,637,130 |   |   | (3,401,242 | ) |   | 1,235,888 |   |
|                                                                                                           |   |                                                      |   |   |   |  |   |   |   |   |
| **EXPENSES**                                                                                                   |   |                                                      |   |   |   |  |   |   |   |   |
| Real                  estate operating expenses                                                           |   |                                                      | 1,929,328 |   |   | (1,501,746 | ) |   | 427,582 |   |
| Interest                  on mortgage notes payable                                                       |   |                                                      | 942,510 |   |   | (845,843 | ) |   | 96,667 |   |
| Depreciation                  and amortization                                                            |   |                                                      | 1,045,232 |   |   | (845,366 | ) |   | 199,866 |   |
| Real                  estate taxes                                                                        |   |                                                      | 452,284 |   |   | (281,525 | ) |   | 170,759 |   |
| Management                  fees                                                                          |   |                                                      | 687,210 |   |   | - |   |   | 687,210 |   |
| Other                                                                                                     |   |                                                      | 307,291 |   |   | (13,541 | ) |   | 293,750 |   |
|                                                                                                           |   |                                                      |   |   |   |  |   |   |   |   |
|  Total                  expenses                                                                          |   |                                                      | 5,363,855 |   |   | (3,488,021 | ) |   | 1,875,834 |   |
|                                                                                                           |   |                                                      |   |   |   |  |   |   |   |   |
| Loss                  from operations                                                                     |   |                                                      | (726,725 | ) |   | 86,779 |   |   | (639,946 | ) |
| Equity                  in net income of joint venture                                                    |   |                                                      | 3,342,104 |   |   | - |   |   | 3,342,104 |   |
|                                                                                                           |   |                                                      |   |   |   |  |   |   |   |   |
| Income                  from continuing operations                                                        |   |                                                      | 2,615,379 |   |   | 86,779 |   |   | 2,702,158 |   |
| Loss                  from discontinued operations                                                        |   |                                                      | (1,316,254 | ) |   | ($86,779 | ) |   | (1,403,033 | ) |
| Net                  gain on sale of investment in real estate                                            |   |                                                      | 6,350,771 |   |   | - |   |   | 6,350,771 |   |
|                                                                                                           |   |                                                      |   |   |   |  |   |   |   |   |
| **NET                  INCOME**                                                                                |   |                                                      | 7,649,896 |   |   | - |   |   | 7,649,896 |   |
|                                                                                                           |   |                                                      |   |   |   |   |   |   |   |   |
| Income                  allocated to general partner                                                      |   |                                                      | 987 |   |   | - |   |   | 987 |   |
| Income                  allocated to limited partners                                                     |   | $                                                         | 7,648,909 |   | $ | - |   | $ | 7,648,909 |   |
|                                                                                                           |   |                                                      |   |   |   |   |   |   |   |   |
| Earnings                  per unit of limited partnership interest (basic and                  diluted):  |   |                                                      |   |   |   |   |   |   |   |   |
| Continuing                  operations                                                                    |   | $                                                         | 337.34 |   | $ | 11.19 |   | $ | 348.53 |   |
| Discontinued                  operations (including gain on sale)                                         |   | $                                                         | 649.36 |   | $ | (11.19 | ) | $ | 638.17 |   |
| Net                  Income per unit of Limited Partnership Interest                                      |   | $                                                         | 986.70 |   | $ | - |   | $ | 986.70 |   |

----

|                                                                                                           |   | **For                  the Year Ended December 31, 2004** |
|----------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|
|                                                                                                           |   |                                                      |   |   |   |   |   |
|                                                                                                           |   | **As**                                                    |   | **To                  reflect reclassification** |   | **As** |   |
|                                                                                                           |   | **originally**                                            |   | **to                  real estate held for sale** |   | **retrospectively** |   |
|                                                                                                           |   | **reported**                                              |   | **as                  of April 1, 2006** |   | **adjusted** |   |
| **REVENUES**                                                                                                   |   |                                                      |   |   |   |   |   |   |   |   |
| Rental                  income                                                                            |   | $                                                         | 3,717,223 |   | $ | (3,135,550 | ) | $ | 581,673 |   |
| Other                  rental income                                                                      |   |                                                      | 408,410 |   |   | (117,509 | ) |   | 290,901 |   |
| Interest                  on short-term investments                                                       |   |                                                      | 4,588 |   |   | - |   |   | 4,588 |   |
|                                                                                                           |   |                                                      |   |   |   |  |   |   |   |   |
|  Total                  revenues                                                                          |   |                                                      | 4,130,221 |   |   | (3,253,059 | ) |   | 877,162 |   |
|                                                                                                           |   |                                                      |   |   |   |  |   |   |   |   |
| **EXPENSES**                                                                                                   |   |                                                      |   |   |   |  |   |   |   |   |
| Real                  estate operating expenses                                                           |   |                                                      | 1,921,574 |   |   | (1,462,561 | ) |   | 459,013 |   |
| Interest                  on mortgage notes payable                                                       |   |                                                      | 889,998 |   |   | (889,998 | ) |   | - |   |
| Depreciation                  and amortization                                                            |   |                                                      | 802,123 |   |   | (692,080 | ) |   | 110,043 |   |
| Real                  estate taxes                                                                        |   |                                                      | 406,467 |   |   | (239,199 | ) |   | 167,268 |   |
| Management                  fees                                                                          |   |                                                      | 712,845 |   |   | - |   |   | 712,845 |   |
| Other                                                                                                     |   |                                                      | 138,410 |   |   | (11,075 | ) |   | 127,335 |   |
|                                                                                                           |   |                                                      |   |   |   |  |   |   |   |   |
|  Total                  expenses                                                                          |   |                                                      | 4,871,417 |   |   | (3,294,913 | ) |   | 1,576,504 |   |
|                                                                                                           |   |                                                      |   |   |   |  |   |   |   |   |
| Loss                  from operations                                                                     |   |                                                      | (741,196 | ) |   | 41,854 |   |   | (699,342 | ) |
| Equity                  in net loss of joint venture                                                      |   |                                                      | (317,007 | ) |   | - |   |   | (317,007 | ) |
|                                                                                                           |   |                                                      |   |   |   |  |   |   |   |   |
| Loss                  from continuing operations                                                          |   |                                                      | (1,058,203 | ) |   | 41,854 |   |   | (1,016,349 | ) |
| Loss                  from discontinued operations                                                        |   |                                                      | (272,033 | ) |   | (41,854 | ) |   | (313,887 | ) |
|                                                                                                           |   |                                                      |   |   |   |  |   |   |   |   |
| **NET                  LOSS**                                                                                  |   |                                                      | (1,330,236 | ) |   | - |   |   | (1,330,236 | ) |
|                                                                                                           |   |                                                      |   |   |   |   |   |   |   |   |
| Loss                  allocated to general partner                                                        |   |                                                      | (171 | ) |   | - |   |   | (171 | ) |
| Loss                  allocated to limited partners                                                       |   |                                                      | ($1,330,065 | ) | $ | - |   |   | ($1,330,065 | ) |
|                                                                                                           |   |                                                      |   |   |   |   |   |   |   |   |
| Earnings                  per unit of limited partnership interest (basic and                  diluted):  |   |                                                      |   |   |   |   |   |   |   |   |
| Continuing                  operations                                                                    |   | $                                                         | (136.49 | ) | $ | 5.40 |   | $ | (131.09 | ) |
| Discontinued                  operations (including gain on sale)                                         |   | $                                                         | (35.09 | ) | $ | (5.40 | ) | $ | (40.49 | ) |
| Net                  loss per unit of Limited Partnership Interest                                        |   | $                                                         | (171.58 | ) |   |   |   | $ | (171.58 | ) |

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

----

|                                               |   |                    |   |                     |   |        |   |                                 |                        |     |   |
|----------------------------------------------------|--------|-------------------------|--------|--------------------------|--------|-------------|--------|--------------------------------------|-----------------------------|----------|--------|
|                                               |   |                    |   |                     |   |        |   | Real                  Estate at Cost |
|                                               |   | No.                  of |   | Year                  of |   |        |   |                                 |                        |     |   |
| Type                                               |   | Prop.                   |   | Acquisition              |   | Description |   | 12/31/06                             |                        | 12/31/05 |   |
|                                               |   |                    |   |                     |   |        |   |                                 |                        |     |   |
|                                               |   |                    |   |                     |   |        |   |                                 |                        |     |   |   |   |   |   |   |
| Industrial                  flex property          |   |                    | 1      |                     |   | 2002        |   |                                 | 60,345                  sf  |     | $      | 4,901,089 |   | $ | 4,829,003 |   |
|                                               |   |                    |   |                     |   |        |   |                                 |                        |     |   |   |   |   |   |   |
| Warehouse                  distribution properties |   |                    | 2      |                     |   | 2005-06     |   |                                 | 596,605                  sf |     |   | 36,254,255 |   |   | 15,312,160 |   |
|                                               |   |                    |   |                     |   |        |   |                                 |                        |     |   |   |   |   |   |   |
| Total                  cost                        |   |                    |   |                     |   |        |   |                                 |                        |     |   | 41,155,344 |   |   | 20,141,163 |   |
|                                               |   |                    |   |                     |   |        |   |                                 |                        |     |   |   |   |   |   |   |
| Less:                  Accumulated depreciation    |   |                    |   |                     |   |        |   |                                 |                        |     |   | (1,012,808 | ) |   | (483,464 | ) |
|                                               |   |                    |   |                     |   |        |   |                                 |                        |     |   |   |   |   |   |   |
|                                               |   |                    |   |                     |   |        |   |                                 |                        |     |   | 40,142,536 |   |   | 19,657,699 |   |
|                                               |   |                    |   |                     |   |        |   |                                 |                        |     |   |   |   |   |   |   |
| Real                  estate held for sale         |   |                    | (a     | )                        |   | 1998/91     |   |                                 | 682                  Apts   |     |   | 12,527,027 |   |   | 27,387,386 |   |
|                                               |   |                    |   |                     |   |        |   |                                 |                        |     |   |   |   |   |   |   |
| Net                  book value                    |   |                    |   |                     |   |        |   |                                 |                        |     | $      | 52,669,563 |   | $ | 47,045,085 |   |
|                                               |   |                    |   |                     |   |        |   |                                 |                        |     |   |   |   |   |   |   |

|                                                        |   |   |      |   |   |        |   |
|-------------------------------------------------------------|--------|--------|-----------|--------|--------|-------------|--------|
|                                                        |   |   |      |   |   |        |   |
|                                                        |   | 2006   |      | 2005   |   | 2004        |   |
|                                                        |   |   |      |   |   |        |   |
| Operating                  revenue                          |   | $      | 4,183,318 |   | $      | 5,707,424   |   | $ | 7,636,663 |   |
|                                                        |   |   |      |   |   |        |   |   |   |   |
| Operating                  expenses                         |   |   | 3,401,879 |   |   | 7,110,457   |   |   | 7,950,550 |   |
|                                                        |   |   |      |   |   |        |   |   |   |   |
| Income                  (loss) from discontinued operations |   | $      | 781,439   |   |   | ($1,403,033 | )      |   | ($313,887 | ) |
|                                                        |   |   |      |   |   |        |   |   |   |   |
|                                                        |   |   |      |   |   |        |   |   |   |   |

----

----

|                                                  |   | (Unaudited) |              | (Audited) |   |      |   |
|-------------------------------------------------------|--------|-------------|-------------------|-----------|--------|-----------|--------|
| Balance                  Sheet                        |   | 2006        |              | 2005      |   |      |   |
|                                                  |   |        |              |      |   |      |   |
| Investment                  in real estate, net       |   | $           | 0                 |      | $      | 0         |   |   |   |   |
| Other                  assets                         |   |        | 12                |      |   | 1,326     |   |   |   |   |
| Other                  liabilities                    |   |        | (12               | )         |   | (138      | )      |   |   |   |
| Venturer's                  capital                   |   | $           | 0                 |      | $      | 1,188     |   |   |   |   |
|                                                  |   |        |              |      |   |      |   |   |   |   |
|                                                  |   |        | (Unaudited)  |      |   | (Audited) |   |   | (Audited) |   |
| Statement                  of Operations              |   |        | 2006              |      |   | 2005      |   |   | 2004 |   |
|                                                  |   |        |              |      |   |      |   |   |   |   |
| Rent                  and other income                |   | $           | 36                |      | $      | 2,381     |   | $ | 2,930 |   |
| Real                  estate operating expenses,      |   |        |              |      |   |      |   |   |   |   |
| before                  depreciation and amortization |   |        | (78               | )         |   | (4,662    | )      |   | (2,864 | ) |
| Depreciation                  and amortization        |   |        | -                 |      |   | (147      | )      |   | (495 | ) |
| Gain                  on sale                         |   |        | -                 |      |   | 7,700     |   |   | - |   |
|                                                  |   |        |              |      |   |      |   |   |   |   |
| Net                  income (loss)                    |   |        | ($42              | )         | $      | 5,272     |   |   | ($429 | ) |
|                                                  |   |        |              |      |   |      |   |   |   |   |

----

|                                                                |   |                           |   |                           |   |                           |   |                         |    |                                 |   |       |   |
|---------------------------------------------------------------------|--------|--------------------------------|--------|--------------------------------|--------|--------------------------------|--------|------------------------------|---------|--------------------------------------|--------|------------|--------|
|                                                                |   |                           |   |                           |   |                           |   |                         |    |                                 |   |       |   |
|                                                                |   |                           |   |                           |   |                           |   |                         |    | Net                  Carrying Amount |
|                                                                |   |                           |   |                           |   | Annual                         |   |                         |    | December                  31,        |
|                                                                |   | Interest                  Rate |   |                           |   | Installment                    |   | Amount                  Due  |    |                                 |   |       |   |
| Property                                                            |   | Rate                           |   | Maturity                  Date |   | Payments                  (a)  |   | at                  Maturity |    | 2006                                 |   | 2005       |   |
|                                                                |   |                           |   |                           |   |                           |   |                         |    |                                 |   |       |   |
| Lino                  Lakes                                         |   |                           | 5.800  | %                              |   | October,                  2015 |   | $                            | 580,000 |                                 | $      | 10,000,000 |   | $ | 10,000,000 |   | $ | 10,000,000 |   |
|                                                                |   |                           |   |                           |   |                           |   |                         |    |                                 |   |       |   |   |   |   |   |   |   |
| Ambassador                  Drive                                   |   |                           | 5.880  | %                              |   | October,                  2010 |   |                         | 554,178 |                                 |   | 6,508,785  |   |   | 7,084,552 |   |   | - |   |
|                                                                |   |                           |   |                           |   |                           |   |                         |    |                                 |   |       |   |   | 17,084,552 |   |   | 10,000,000 |   |
|                                                                |   |                           |   |                           |   |                           |   |                         |    |                                 |   |       |   |   |   |   |   |   |   |
| Mortgage                  notes payable in discontinued operations: |   |                           |   |                           |   |                           |   |                         |    |                                 |   |       |   |   |   |   |   |   |   |
|                                                                |   |                           |   |                           |   |                           |   |                         |    |                                 |   |       |   |   |   |   |   |   |   |
| Le                  Coeur du Monde                                  |   |                           | 7.805  | %                              |   | October,                  2009 |   |                         | 890,447 |                                 |   | 9,075,763  |   |   | 9,477,741 |   |   | 9,622,268 |   |
|                                                                |   |                           |   |                           |   |                           |   |                         |    |                                 |   |       |   |   |   |   |   |   |   |
| Halton                  Place (b)                                   |   |                           | 6.520  | %                              |   | March,                  2007   |   |                         | -       |                                 |   | -          |   |   | - |   |   | 2,000,000 |   |
|                                                                |   |                           |   |                           |   |                           |   |                         |    |                                 |   |       |   |   |   |   |   |   |   |
| Holiday                  Park                                       |   |                           | 6.895  | %                              |   | October,                  2009 |   |                         | -       |                                 |   | -          |   |   | - |   |   | 3,405,102 |   |
|                                                                |   |                           |   |                           |   |                           |   |                         |    |                                 |   |       |   | $ | 26,562,293 |   | $ | 25,027,370 |   |
|                                                                |   |                           |   |                           |   |                           |   |                         |    |                                 |   |       |   |   |   |   |   |   |   |

|                                          |   |                          |    |                                |   | Income                  (Loss) from |   |
|-----------------------------------------------|--------|-------------------------------|---------|-------------------------------------|--------|-------------------------------------|--------|
|                                          |   |                          |    | Income                  (Loss) from |   | Operations                          |   |
| Year                  ended December 31, 2006 |   | Revenues                  (1) |    | Operations                          |   | Per                  Unit           |   |
|                                          |   |                          |    |                                |   |                                |   |
| First                  Quarter                |   | $                             | 682,826 |                                |   | ($90,923                            | )      |   | ($11.73 | ) |
| Second                  Quarter               |   |                          | 740,647 |                                |   | 28,345                              |   |   | 3.66 |   |
| Third                  Quarter                |   |                          | 830,600 |                                |   | 164,141                             |   |   | 21.17 |   |
| Fourth                  Quarter               |   |                          | 839,061 |                                |   | (188,422                            | )      |   | (24.30 | ) |
|                                          |   |                          |    |                                |   |                                |   |   |   |   |
|                                          |   |                          |    |                                |   |                                |   |   |   |   |
| Year                  ended December 31, 2005 |   |                          |    |                                |   |                                |   |   |   |   |
|                                          |   |                          |    |                                |   |                                |   |   |   |   |
| First                  Quarter                |   | $                             | 220,290 |                                |   | ($133,610                           | )      |   | ($17.23 | ) |
| Second                  Quarter               |   |                          | 251,804 |                                |   | (112,602                            | )      |   | (14.52 | ) |
| Third                  Quarter                |   |                          | 255,075 |                                |   | (91,052                             | )      |   | (11.74 | ) |
| Fourth                  Quarter               |   |                          | 508,719 |                                |   | (302,682                            | )      |   | (39.04 | ) |

----

|   |   | 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, |
|                                                                                                          |   | 2006                                              |       | 2005   |   | 2004       |   |
|                                                                                                          |   |                                              |       |   |   |       |   |
| Net                  income (loss) for financial reporting purposes                                           |   | $                                                 | 13,044,297 |   | $      | 7,649,896  |   |   | ($1,330,236 | ) |
|                                                                                                          |   |                                              |       |   |   |       |   |   |   |   |
| 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                                                    |   |                                              | 393,157    |   |   | 99,653     |   |   | - |   |
|                                                                                                          |   |                                              |       |   |   |       |   |   |   |   |
| Difference                  between tax and financial statement equity in net                                 |   |                                              |       |   |   |       |   |   |   |   |
| loss                  of joint venture                                                                        |   |                                              | (519       | )      |   | 983,634    |   |   | (296,701 | ) |
|                                                                                                          |   |                                              |       |   |   |       |   |   |   |   |
| Difference                  between tax and financial statement depreciation                                  |   |                                              | (892,510   | )      |   | (315,412   | )      |   | (288,631 | ) |
|                                                                                                          |   |                                              |       |   |   |       |   |   |   |   |
| Net                  income (loss) for Federal income tax reporting purposes                                  |   | $                                                 | 12,544,425 |   | $      | 8,417,771  |   | $ | (1,915,568 | ) |
|                                                                                                          |   |                                              |       |   |   |       |   |   |   |   |
| Net                  ordinary loss for Federal income tax reporting purposes:                                 |   | $                                                 | (224,582   | )      | $      | (4,467,687 | )      | $ | (1,915,568 | ) |
| Net                  capital (Sec. 1231) gain for Federal income tax reporting                  purposes:     |   |                                              | 12,769,007 |   |   | 12,885,458 |   |   | - |   |
|                                                                                                          |   |                                              |       |   |   |       |   |   |   |   |
|                                                                                                          |   |                                              | 12,544,425 |   | $      | 8,417,771  |   | $ | (1,915,568 | ) |
|                                                                                                          |   |                                              |       |   |   |       |   |   |   |   |
|                                                                                                          |   |                                              |       |   |   |       |   |   |   |   |
| Weighted                  average number of units of limted 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,                2006, 2005 and 2004 billings to the Partnership amounting to                $273,078**,**                $240,974, and $235,404, respectively, and are included in real estate                operating expenses. For the years ended December 31, 2006, 2005 and                2004                billings to the partnership which relate to Le Coeur Du Monde, Halton                Place Apartments, Cypress Key Apartments and Holiday Park, amount                to                $208,191,** **$285,086                and $381,875, 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, 2006 are                $3,318,647 for 2007; $3,318,647 for 2008; $3,318,647 for 2009; $3,318,647                for 2010; $3,318,647 for 2011 and $30,826,831                thereafter. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | On                March 1, 2007 the Registrant made a distribution of $350 per unit                totaling                $2,713,725, to unitholders as of December 31,                2006. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| SB                  PARTNERS                                             |   |                      |       |                                            |   |                           |   |   |       |                            |   |
|--------------------------------------------------------------------------|--------|---------------------------|------------|-------------------------------------------------|--------|--------------------------------|--------|--------|------------|---------------------------------|--------|
| SCHEDULE                  III - REAL ESTATE AND ACCUMULATED DEPRECIATION |   |                      |       |                                            |   |                           |   |   |       |                            |   |
| DECEMBER                  31, 2006                                       |   |                      |       |                                            |   |                           |   |   |       |                            |   |
|                                                                     |   |                      |       |                                            |   |                           |   |   |       |                            |   |
| Column                  A                                                |   | Column                  B |       |                                            |   | Column                  C      |   |   |       | Column                  D       |   |
|                                                                     |   |                      |       | Initial                  Cost to the Registrant | Costs  |                           |
|                                                                     |   |                      |       |                                            |   |                           |   |   |       | Capitalized                     |   |
|                                                                     |   |                      |       |                                            |   | Buildings                  and |   |   |       | Subsequent                      |   |
| Description                                                              |   | Encumbrances              |       | Land                                            |   | Improvements                   |   | Total  |       | to                  Acquisition |   |
|                                                                     |   |                      |       |                                            |   |                           |   |   |       |                            |   |
| INDUSTRIAL                  FLEX                                         |   |                      |       |                                            |   |                           |   |   |       |                            |   |   |   |   |   |   |
| Minnesota                  -                                        |   |                      |       |                                            |   |                           |   |   |       |                            |   |   |   |   |   |   |
|  Maple                  Grove (Eagle Lake Business Center IV)       |   | $                         | -          |                                            | $      | 470,000                        |   | $      | 4,243,385  |                            | $      | 4,713,385 |   | $ | 187,704 |   |
|                                                                     |   |                      |       |                                            |   |                           |   |   |       |                            |   |   |   |   |   |   |
| DISTRIBUTION                  CENTER                                     |   |                      |       |                                            |   |                           |   |   |       |                            |   |   |   |   |   |   |
| Minnesota                  -                                        |   |                      |       |                                            |   |                           |   |   |       |                            |   |   |   |   |   |   |
|  Lino                  Lakes (435 Park Court)                       |   |                      | 10,000,000 |                                            |   | 1,515,000                      |   |   | 13,797,160 |                            |   | 15,312,160 |   |   | 10,833 |   |
| Illinois                  -                                         |   |                      |       |                                            |   |                           |   |   |       |                            |   |   |   |   |   |   |
|  Naperville                  (175 Ambassador Drive)                 |   |                      | 7,084,552  |                                            |   | 2,080,000                      |   |   | 18,851,262 |                            |   | 20,931,262 |   |   | - |   |
|                                                                     |   |                      |       |                                            |   |                           |   |   |       |                            |   |   |   |   |   |   |
| REAL                  ESTATE HELD FOR SALE                               |   |                      |       |                                            |   |                           |   |   |       |                            |   |   |   |   |   |   |
| Missouri                  -                                         |   |                      |       |                                            |   |                           |   |   |       |                            |   |   |   |   |   |   |
|  St.                  Louis (Le Coeur du Monde)                     |   |                      | 9,477,741  |                                            |   | 1,332,500                      |   |   | 12,039,635 |                            |   | 13,372,135 |   |   | 1,459,108 |   |
|                                                                     |   |                      |       |                                            |   |                           |   |   |       |                            |   |   |   |   |   |   |
|                                                                     |   | $                         | 26,562,293 |                                            | $      | 5,397,500                      |   | $      | 48,931,442 |                            | $      | 54,328,942 |   | $ | 1,657,645 |   |

|                                                               |   |                                                          |                      |                           |   |       |   |                               |       |
|--------------------------------------------------------------------|--------|---------------------------------------------------------------|---------------------------|--------------------------------|--------|------------|--------|------------------------------------|------------|
|                                                               |   |                                                          |                      |                           |   |       |   |                               |       |
| Column                  A                                          |   |  Column                  E                               | Column                  F |                           |
|                                                               |   |                                                          |                      |                           |   |       |   |                               |       |
|                                                               |   | Gross                  amount at which Carried at End of Year |                      |                           |
|                                                               |   | (Notes                  a & c)                            |                      |                           |   |
|                                                               |   |                                                          |                      |                           |   |       |   | Accumulated                        |       |
|                                                               |   |                                                          |                      | Buildings                  and |   |       |   | Depreciation                       |       |
| Description                                                        |   | Land                                                          |                      | Improvements                   |   | Total      |   | (Notes                  b & d) |       |
|                                                               |   |                                                          |                      |                           |   |       |   |                               |       |
| INDUSTRIAL                  FLEX                                   |   |                                                          |                      |                           |   |       |   |                               |       |   |   |   |   |
| Minnesota                  -                                  |   |                                                          |                      |                           |   |       |   |                               |       |   |   |   |   |
|  Maple                  Grove (Eagle Lake Business Center IV) |   | $                                                             | 470,000                   |                           | $      | 4,431,089  |   | $                                  | 4,901,089  |   | $ | 526,121 |   |
|                                                               |   |                                                          |                      |                           |   |       |   |                               |       |   |   |   |   |
| DISTRIBUTION                  CENTER                               |   |                                                          |                      |                           |   |       |   |                               |       |   |   |   |   |
| Minnesota                  -                                  |   |                                                          |                      |                           |   |       |   |                               |       |   |   |   |   |
|  Lino                  Lakes (435 Park Court)                 |   |                                                          | 1,515,000                 |                           |   | 13,807,993 |   |                               | 15,322,993 |   |   | 442,378 |   |
| Illinois                  -                                   |   |                                                          |                      |                           |   |       |   |                               |       |   |   |   |   |
|  Naperville                  (175 Ambassador Drive)           |   |                                                          | 2,080,000                 |                           |   | 18,851,262 |   |                               | 20,931,262 |   |   | 44,309 |   |
|                                                               |   |                                                          |                      |                           |   |       |   |                               |       |   |   |   |   |
| REAL                  ESTATE HELD FOR SALE                         |   |                                                          |                      |                           |   |       |   |                               |       |   |   |   |   |
| Missouri                  -                                   |   |                                                          |                      |                           |   |       |   |                               |       |   |   |   |   |
|  St.                  Louis (Le Coeur du Monde)               |   |                                                          | 1,332,500                 |                           |   | 13,498,743 |   |                               | 14,831,243 |   |   | 2,304,216 |   |
|                                                               |   |                                                          |                      |                           |   |       |   |                               |       |   |   |   |   |
|                                                               |   | $                                                             | 5,397,500                 |                           | $      | 50,589,087 |   | $                                  | 55,986,587 |   | $ | 3,317,024 |   |
|                                                               |   |                                                          |                      |                           |   |       |   |                               |       |   |   |   |   |
|                                                               |   |                                                          |                      |                           |   |       |   |                               |       |   |   |   |   |
|                                                               |   |                                                          |                      |                           |   |       |   |                               |       |   |   |   |   |

----

| SB                  PARTNERS                                                         |   |                      |      |                      |   |                              |   |
|--------------------------------------------------------------------------------------|--------|---------------------------|-----------|---------------------------|--------|-----------------------------------|--------|
| SCHEDULE                  III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED |   |                      |      |                      |   |                              |   |
| DECEMBER                  31, 2006                                                   |   |                      |      |                      |   |                              |   |
|                                                                                 |   |                      |      |                      |   |                              |   |
| Column                  A                                                            |   | Column                  G |      | Column                  H |   | Column                  I         |   |
|                                                                                 |   |                      |      |                      |   |                              |   |
|                                                                                 |   |                      |      |                      |   | Life                  on which    |   |
|                                                                                 |   |                      |      |                      |   | Depreciation                  in  |   |
|                                                                                 |   |                      |      |                      |   | Latest                  Statement |   |
|                                                                                 |   | Date                  of  |      | Date                      |   | of                  Operations    |   |
| Description                                                                          |   | Construction              |      | Acquired                  |   | is                  Computed      |   |
|                                                                                 |   |                      |      |                      |   |                              |   |
| INDUSTRIAL                  FLEX                                                     |   |                      |      |                      |   |                              |   |   |   |   |
| Minnesota                  -                                                    |   |                      |      |                      |   |                              |   |   |   |   |
|  Maple                  Grove (Eagle Lake Business Center IV)                   |   |                      | 2000      |                      |   | Jun                  2002         |   |   | 7                  to 39 years |   |
|                                                                                 |   |                      |      |                      |   |                              |   |   |   |   |
| DISTRIBUTION                  CENTER                                                 |   |                      |      |                      |   |                              |   |   |   |   |
| Minnesota                  -                                                    |   |                      |      |                      |   |                              |   |   |   |   |
|  Lino                  Lakes (435 Park Court)                                   |   |                      | 2004      |                      |   | Oct                  2005         |   |   | 7                  to 39 years |   |
| Illinois                  -                                                     |   |                      |      |                      |   |                              |   |   |   |   |
|  Naperville                  (175 Ambassador Drive)                             |   |                      | 1995      |                      |   | Nov                  2006         |   |   | 7                  to 39 years |   |
|                                                                                 |   |                      |      |                      |   |                              |   |   |   |   |
| MULTI                  FAMILY RESIDENTIAL                                            |   |                      |      |                      |   |                              |   |   |   |   |
| Missouri                  -                                                     |   |                      |      |                      |   |                              |   |   |   |   |
|  St.                  Louis (Le Couer Du Monde)                                 |   |                      | 1988-1989 |                      |   | Sept                  1999        |   |   | 7                  to 40 years |   |

| NOTES                        TO SCHEDULE III:                                      |   |   |   |   |   |        |   |   |        |
|------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|-------------|--------|--------|-------------|
|                                                                               |   |   |   |   |   |        |   |   |        |
|                                                                               |   |   |   | 2006   |   | 2005        |   | 2004   |        |
|                                                                               |   |   |   |   |   |        |   |   |        |
| (a)                  Reconciliation                  of amounts shown in Column E: |   |   |   |   |   |        |   |   |        |   |   |   |   |
| Balance                  at beginning of year                                      |   |   |   |   | $      | 54,869,652  |   | $      | 62,667,799  |   | $ | 62,014,691 |   |
| Additions                  -                                                  |   |   |   |   |   |        |   |   |        |   |   |   |   |
|  Acquisitions                                                                 |   |   |   |   |   | 20,931,262  |   |   | 15,312,160  |   |   | - |   |
|  Cost                  of improvements                                        |   |   |   |   |   | 492,362     |   |   | 733,297     |   |   | 653,108 |   |
|                                                                               |   |   |   |   |   |        |   |   |        |   |   |   |   |
| Deductions                  -                                                 |   |   |   |   |   |        |   |   |        |   |   |   |   |
|  Sales                                                                        |   |   |   |   |   | (20,306,689 | )      |   | (23,843,604 | ) |   | - |   |
|                                                                               |   |   |   |   |   |        |   |   |        |   |   |   |   |
| Balance                  at end of year                                            |   |   |   |   | $      | 55,986,587  |   | $      | 54,869,652  |   | $ | 62,667,799 |   |
|                                                                               |   |   |   |   |   |        |   |   |        |   |   |   |   |
|                                                                               |   |   |   |   |   |        |   |   |        |   |   |   |   |
| (b)                  Reconciliation                  of amounts shown in Column F: |   |   |   |   |   |        |   |   |        |   |   |   |   |
| Balance                  at beginning of year                                      |   |   |   |   | $      | 7,824,567   |   | $      | 10,332,256  |   | $ | 8,777,534 |   |
| Additions                  -                                                  |   |   |   |   |   |        |   |   |        |   |   |   |   |
|  Depreciation                  expense for the year                           |   |   |   |   |   | 726,690     |   |   | 1,104,943   |   |   | 1,554,722 |   |
|                                                                               |   |   |   |   |   |        |   |   |        |   |   |   |   |
| Deductions                  -                                                 |   |   |   |   |   |        |   |   |        |   |   |   |   |
|  Sales                                                                        |   |   |   |   |   | (5,234,233  | )      |   | (3,612,632  | ) |   | - |   |
|                                                                               |   |   |   |   |   |        |   |   |        |   |   |   |   |
|                                                                               |   |   |   |   | $      | 3,317,024   |   | $      | 7,824,567   |   | $ | 10,332,256 |   |
|                                                                               |   |   |   |   |   |        |   |   |        |   |   |   |   |
| (c)Aggregate                  cost basis for Federal                               |   |   |   |   |   |        |   |   |        |   |   |   |   |
| income                  tax reporting purposes                                |   |   |   |   | $      | 55,914,162  |   | $      | 55,063,239  |   | $ | 62,861,672 |   |
|                                                                               |   |   |   |   |   |        |   |   |        |   |   |   |   |
| (d)                  Accumulated                  depreciation for Federal         |   |   |   |   |   |        |   |   |        |   |   |   |   |
| income                  tax reporting purposes                                |   |   |   |   | $      | 4,156,499   |   | $      | 8,328,961   |   | $ | 10,620,887 |   |