EDGAR 10-K Filing

Company CIK: 87047
Filing Year: 2022
Filename: 87047_10-K_2022_0001437749-22-007833.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS
Description of SB Partners (the “Registrant”)
The Registrant is a New York limited partnership formed to engage in acquiring, operating and holding for investment a varying portfolio of real estate interests. The Registrant's initial public offering was in 1971, the year it began operations. As of December 31, 2021, the Registrant owns an industrial flex property in Maple Grove, Minnesota. In addition, the Registrant has a thirty percent interest in Sentinel Omaha, LLC (“Omaha”). Omaha is a real estate investment company which as of December 31, 2021 owns one multifamily property in Nashville, Tennessee. Omaha is an affiliate of the Registrant’s general partner.
The principal objectives of the Registrant are, first, to obtain capital appreciation through equity investments in real estate; second, to generate cash available for distribution, a portion of which may not be currently taxable; and third, to the extent still permitted under the Internal Revenue Code of 1986, as amended, to generate tax losses which may offset the limited partners' income from the Registrant and certain other sources.
The Registrant’s filings with the Securities and Exchange Commission (the “SEC”) are available on the SEC’s Website at www.sec.gov and type in 0000087047 for the Registrant’s CIK.
COVID -19
The continuation of the COVID-19 pandemic may affect market conditions in which the Registrant and Omaha operates creating a challenging and uncertain economic environment. Financial and real estate companies may be affected by liquidity, disparity of real estate values and financing issues. There is no assurance that such conditions will not result in decreased cash flows which could result in the sale of investments at amounts less than the reported values at December 31, 2021.
Recent Developments and Real Estate Investment Factors
Omaha’s portfolio consists exclusively of older multi-family properties located in secondary and tertiary markets. During 2021 and 2020, physical and economic occupancy remained stable at most of Omaha’s properties. Rent collections were steady during 2021 while lower during the second half of 2020 due to delinquencies from residents negatively impacted by the Covid 19 pandemic economic downturn. Average net rental income increased at Omaha’s remaining property at a rate of 4.5% for 2021 vs. a slight decrease of 0.01% for 2020 (see Item 2 Properties). Apartment rental rates increased significantly nationally during 2021.
During December 2020, Omaha sold one of its garden apartment properties located in Nashville, Tennessee for a sale price of $58,760,000. Net sales proceeds were used to first pay selling expenses and retire each property’s related secured mortgage loan. A portion of the remaining net sales proceeds were used to retire Omaha’s secured mortgage loan encumbering another garden apartment property located in Nashville, Tennessee in February 2021 to further pay down Omaha’s overall debt. The remaining portion of the sales proceeds were used to pay a distribution of $36,000,000 to its investors. Registrants 30% allocation of the distribution was $10,800,000.
During April 2021, Omaha sold its garden apartment property located in Charleston, South Carolina for a sale price of $47,250,000. Net sales proceeds were used to first pay selling expenses. The remaining net sales proceeds were reserved to retire Omaha’s secured mortgage loan encumbering a garden apartment property located in Nashville, Tennessee and to retire Omaha’s secured mortgage loan encumbering a garden apartment property located in Aurora, Illinois to payoff Omaha’s long term debt.
During August 2021, Omaha sold one of its garden apartment properties located in Nashville (Antioch), Tennessee for a sales price of $77,234,663. Net sales proceeds were used to first pay selling expenses. The remaining portion of the sales proceeds were used to pay a distribution of $73,000,000 to its investors. The Registrant’s 30% allocation of the distribution was $21,900,000.
During November 2021, Omaha sold its garden apartment property located in Aurora, Illinois for a sale price of $34,500,000. Net sales proceeds were used to first pay selling expenses. The remaining portion of the sales proceeds were used to pay a distribution of $52,600,000 to its investors. The Registrant’s 30% allocation
of the distribution was $15,780,000.
During December 2021, Omaha sold one of its garden apartment properties located in Nashville (Gallatin), Tennessee for a sale price of $33,300,000. Net sales proceeds were used to pay selling expenses. The remaining portion of the sales proceeds were used to pay a distribution to its investors during March 2022.
During November 2021, Omaha executed a contract to sell its remaining property for a sale price of $57,350,000. The sale was completed on January 13, 2022. Net sales proceeds were used to pay selling expenses. The remaining portion of the sales proceeds were used, along with sales proceeds from the sale of the Omaha property located in Nashville (Gallatin), Tennessee, to pay a distribution to its investors during March 2022 less a cash reserve. Omaha paid a distribution in March 2022 of $90,000,000 to its investors. The Registrant’s 30% allocation of the distribution was $27,000,000. In March 2022, Registrant declared a distribution of $3,300 for a full unit for all partners holding units or participations on March 21, 2022. The distribution will be paid in late May 2022.
Omaha reports its investment in its remaining real estate property on a fair value basis based on the sale price of a sale contract Omaha executed in November 2021 less an estimate for selling expenses. For the year ended December 31, 2021 Omaha reported an increase of $19,776,500 (53.4%) in the value of its remaining property vs. December 31, 2020. During November 2021, Omaha executed a contract to sell its remaining property for a sale price of $57,350,000. The sale was completed on January 13, 2022. The total real estate portfolio value of $56,777,000 as of December 31, 2021 consists of the same property which made up Omaha’s portfolio as of December 31, 2020 with the exception of the properties sold during 2021 as referred to above. During 2021 Omaha paid off all of its long term debt. Registrant as of the year ended December 31, 2021 recognized a value in the Omaha investment equal to Registrant’s 30% portion of the equity reported on Omaha’s balance sheet as of December 31, 2021 without any reserve. As of December 31, 2021 Omaha owns only one real estate asset which is unencumbered plus Omaha has sufficient cash reserves. Registrant as of the year ended December 31, 2020 recognized a value in the Omaha investment equal to Registrant’s 30% portion of the equity reported on Omaha’s balance sheet as of December 31, 2020 less a 20% reserve for possible unforeseen disruptions in the property and capital markets. The investment in a 30% non-controlling interest was valued at a discount due to the lack of control and liquidity.
Registrant has only one wholly owned property which is located in Maple Grove, Minnesota. It is 100% leased to a single tenant whose lease expires October 31, 2024. The tenant pays fixed base rent which increases approximately 3% each year. The tenant pays directly or reimburses Registrant for all utilities, real estate taxes, insurance and most of the property operating expenses and property management fees. If the tenant defaulted the Registrant would have no internal source of new funds until the space is released to a new tenant or Registrant receives additional distributions from Omaha. On February 28, 2022, the tenant and Registrant executed the Sixth Amendment (“Amendment”) to the lease. The Amendment extends the term of the lease from October 31, 2024 to October 31, 2031. The Amendment reduces the fixed monthly base rent stipulated in the fifth amendment from November 1, 2021 to October 31, 2024 as follows:
From November 1, 2021 to October 31, 2022, $71,222 per month to $62,859 per month.
From November 1, 2022 to October 31, 2023, $73,359 per month to $64,745 per month.
From November 1, 2023 to October 31, 2024, $75,560 per month to $66,688 per month.
Monthly base rent for the extended term increases approximately 3% per annum. Registrant has agreed to provide a tenant improvement allowance of $175,000 for HVAC replacements. Tenant has a one time right to extend the lease an additional five years. Registrant has agreed to pay for a leasing commission to the tenant’s broker. In addition, an affiliate of the Registrant will earn a landlord leasing commission in accordance with the property management agreement. All the other relevant terms of the lease remain the same.
The Registrant has no other debt except normal trade accounts payable and a security deposit held for the tenant leasing the space at the Maple Grove property.
(Please refer to Item 7. - Management’s Discussion and Analysis of Financial Condition and Results of Operations.)

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ITEM 1A. RISK FACTORS
ITEM 1A. Risks Factors
This report on Form 10-K includes statements that constitute "forward looking statements" within the meaning of Section 27(A) of the Securities Act of 1933 and Section 21(E) of the Securities Exchange Act of 1934 and that are intended to come within the safe harbor protection provided by those sections. By their nature, all forward looking statements involve risks and uncertainties. Actual results may differ materially from those contemplated by the forward looking statements for a number of reasons, including, but not limited to, those risks described below:
Covid-19
The continuation of the COVID-19 pandemic may affect market conditions in which the Registrant and Omaha operates creating a challenging and uncertain economic environment. Financial and real estate companies may be affected by liquidity, disparity of real estate values and financing issues. There is no assurance that such conditions will not result in decreased cash flows which could result in the sale of investments at amounts less than the reported values at December 31, 2021.
General
The Registrant's investments consist of direct or indirect investments in real property and as such will be subject to varying degrees of risk generally incident to the ownership of real estate assets. The underlying value of the Registrant's direct real property and the Registrant's financial condition will be dependent upon its ability to operate the property in a manner sufficient to maintain or increase revenues and to generate sufficient income in excess of ownership and operating expenses. The underlying value of the Registrant's real estate investment will be dependent upon the investment’s managing partner’s ability to operate its remaining property in a manner sufficient to maintain or increase revenues and to generate sufficient income in excess of ownership and operating expenses. Income from the wholly owned property and the properties of the investments may be adversely affected by changes in national and local economic conditions such as oversupply of industrial flex space or apartments in the Registrant's markets, the attractiveness of the properties to tenants, changes in interest rates and in the availability, cost and terms of mortgage financing, the ongoing need for capital improvements, particularly in older structures, changes in real estate tax rates, adverse changes in governmental rules and fiscal policies, adverse changes in zoning laws, civil unrest, acts of God, including natural disasters (which may result in uninsured losses), and other factors which are beyond the control of the Registrant. If the Registrant were unable to promptly renew the leases of a significant number of tenants, re-lease vacant spaces or, if the rental rates upon such renewal or re-letting were significantly lower than expected rates, the Registrant's results of operations, financial condition and ability to make distributions to Unit holders may be adversely affected.
Risks of Liability and Loss
The development and ownership of real estate may result in liability to third parties due to conditions existing on a property which may result in injury. In addition, real estate may suffer a loss in value due to casualties such as fire or natural disaster. Such liability or loss may be uninsurable in some circumstances, such as a loss caused by the presence of mold or may exceed the limits of insurance maintained at typical amounts for the type and condition of the property. Real estate may also be taken, in whole or in part, by public authorities for public purposes in eminent domain proceedings. Awards resulting from such proceedings may not adequately compensate the Registrant for the value lost.
Value and Non-liquidity of Real Estate
Real estate investments are relatively non-liquid. The Registrant's ability to vary its portfolio in response to changes in economic and other conditions will therefore be limited. If the Registrant must sell an investment, there can be no assurance that it will be able to dispose of the investment in the time period it desires or that the sales price of the investment will recoup or exceed the amount of the Registrant's cost of the investment.
Potential Adverse Effect on Results of Operations Due to Operating Risks
The Registrant's real estate investments are subject to operating risks common to real estate in general, any and all of which may adversely affect occupancy or rental rates.
Environmental Issues
Under various federal, state and local environmental laws, ordinances and regulations, an owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances on such property. These laws often impose environmental liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. The presence of such substances, or the failure to properly remediate their presence, may adversely affect the owner's or operator's ability to sell or rent the property or to borrow using the property as collateral. Persons who arrange for the disposal or treatment of hazardous or toxic substances may also be liable for the costs of removal or remediation of such substances at a disposal or treatment facility, whether or not such facility is owned or operated by such person. Certain third parties may seek recovery from owners or operators of such properties or persons who arranged for the disposal or treatment of hazardous or toxic substances and, therefore, are potentially liable for removal or remediation costs, as well as certain other related costs, including governmental fines and injuries to persons and property.
Competition
The Registrant competes for tenants with many other real estate owners. The success of the Registrant in attracting tenants for its property will depend upon its ability to maintain its property and its attractiveness to tenants, new property developments, local conditions, and changing demographic trends. The Registrant's property is located in a developed area that includes other, similar properties. The number of competitive properties in a particular area could have a material effect on the Registrant's ability to lease industrial flex space and on the rents charged at such property.
General
Efforts required in complying with federal, state and local environmental regulations may have and may continue to have an adverse effect on the Registrant's operations in the future, although such costs have not historically been significant in amount.
The Registrant considers itself to be engaged in only one industry segment, real estate investment, and therefore information regarding industry segments is not applicable and has not been provided.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
The property owned by the Registrant as of December 31, 2021 is as follows:
Occupancy
Description
Acquisition
Percent
at
Mortgage
Property
Location
Sq. Ft.
Units
Acres
Date
Ownership
12/31/2021
Payable
Industrial Flex:
Maple Grove
Eagle Lake Business Center IV
MN
60,000
n/a
5.15
Jun 02
%
%
$
Eagle Lake Business Center IV is 100% leased to a single tenant whose lease expires October 31, 2024. On February 28, 2022
Registrant and tenant executed a lease amendment which, among other issues, extends the lease term to October 31, 2031. See
Recent Developments and Real Estate Factors.
Investment in Sentinel Omaha LLC:
Nashville
1 garden apartment property
TN
n/a
n/a
Sept. 07
%
%
n/a
Additional information regarding properties owned by the Registrant:
Average Occupancy (a)
Eagle Lake Business Center IV (b)
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
Investment in Sentinel Omaha, LLC (c)
98.00 %
95.00 %
95.00 %
92.00 %
92.00 %
Effective Annual Rent (a)
Eagle Lake Business Center IV (b) (d)
$
$
$
$
$
Investment in Sentinel Omaha, LLC (c) (e)
$ 12,026
$ 11,162
$ 10,968
$ 10,126
$ 10,012
(a) For period of ownership.
(b) Property was purchased June 12, 2002.
(c) Investment was purchased September 2007.
(d) Average per square foot per annum. Base rent plus operating expense reimbursements from tenant, divided by the total number of square feet at the property. Expense reimbursements include only expenses paid by Registrant in accordance with the terms of each lease. Reimbursements by the tenant include real estate taxes, insurance and certain operating expenses. Amounts are annualized for periods of ownership of less than one year.
(e) Average per apartment unit per annum. Gross potential rent, less concessions and vacancies, divided by the total number of apartment units at the property. Amounts are annualized for periods of ownership of less than one year.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
None

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT'S UNITS OF PARTNERSHIP INTEREST AND RELATED UNITHOLDER MATTERS
The transfer of Units or Participations (equivalent to one-half Unit) is subject to certain limitations, including the consent of the General Partner. There is no public market for the Units and it is not anticipated that any such public market will develop. The number of Unit holders as of December 31, 2021 was 2,033.
At various times, the Registrant has generated and distributed cash to the Unit holders. Registrant paid a distribution during 2019 to Unit holders of record as of June 1, 2019 in the amount of $400 for each Unit owned. Registrant did not declare a distribution for 2020. Registrant paid a distribution during 2021 to Unit holders of record as of February 1, 2021 in the amount of $1,300 for each Unit owned. Registrant also paid a distribution during 2021 to Unit holders of record as of November 8, 2021 in the amount of $4,700 for each Unit owned. Cumulative distributions since inception have totaled $161,370,350. However, there is no requirement to make such distributions nor can there be any assurance that future operations will generate cash available for distribution. In March 2022, Registrant declared a distribution of $3,300 for a full unit for all partners holding units or participations on March 21, 2022. The distribution will be paid in late May 2022.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data regarding the Registrant's financial condition and results of operations determined in accordance with accounting principles generally accepted in the United States of America. This data should be read in conjunction with the Audited Consolidated Financial Statements and Notes thereto, and Management's Discussion and Analysis of Financial Condition and Results of Operations, included elsewhere in this annual report on Form 10-K.
For the Years Ended December 31,
(In Thousands, Except Unit Data)
Income Statement Data:
Rental, Interest and Other Revenues
$ 1,221
$ 1,180
$ 1,131
$ 1,110
$ 1,081
Operating Expenses, Less Depreciation and Amortization
(1,618 )
(1,595 )
(1,559 )
(1,468 )
(1,418 )
Depreciation and Amortization
(164 )
(165 )
(146 )
(171 )
(179 )
Loss from Operations
(561 )
(580 )
(574 )
(529 )
(516 )
Equity in Net Income of Investment
19,251
7,637
6,829
5,842
11,320
Reserve for Value of Investment
11,923
(1,527 )
1,817
1,048
Income from Continuing Operations
30,613
5,530
6,569
7,130
11,852
Gain on Extinguishment of Debt
-
-
-
1,694
-
Net Income
$ 30,613
$ 5,530
$ 6,569
$ 8,824
$ 11,852
Income from Continuing Operations per Unit of Partnership Interest:
$ 3,948
$
$
$
$ 1,529
Gain on Extinguishment of Debt per Unit of Partnership Interest:
$ -
$ -
$ -
$
$ -
Distributions paid per Unit of Partnership Interest
$ 6,000
$ -
$
$ -
$ -
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
$ 3,417
$ 3,581
$ 3,746
$ 3,461
$ 3,467
Investment in Sentinel Omaha, LLC, net
$ 30,387
$ 47,692
$ 41,582
$ 42,839
$ 37,580
Total Assets
$ 35,925
$ 51,834
$ 46,324
$ 46,646
$ 43,008
Loan Payable
$ -
$ -
$ -
$ -
$ 5,719
Partners' Equity
$ 35,662
$ 51,569
$ 46,040
$ 42,571
$ 33,748

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMPANY OVERVIEW
The Registrant is a New York limited partnership formed to engage in acquiring, operating and holding for investment a varying portfolio of real estate interests. The Registrant's initial public offering was in 1971, the year it began operations. As of December 31, 2021, the Registrant owned an industrial flex property in Maple Grove, Minnesota and the Registrant has a thirty percent interest in Sentinel Omaha, LLC. Omaha is a real estate investment company which as of December 31, 2021 owns one multifamily property located in Nashville, Tennessee. Omaha is an affiliate of the Registrant’s general partner.
The principal objectives of the Registrant are, first, to obtain capital appreciation through equity investments in real estate; second, to generate cash available for distribution, a portion of which may not be currently taxable; and third, to the extent still permitted under the Internal Revenue Code of 1986, as amended, to generate tax losses which may offset the limited partners' income from the Registrant and certain other sources.
The consolidated financial statements for the years ended December 31, 2021, 2020 and 2019 reflect the operations of one industrial flex property located in Maple Grove, Minnesota as well as a 30% interest in Omaha.
CRITICAL ACCOUNTING ESTIMATES
In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Set forth below is a summary of the accounting policies that management believes are critical to the preparation of the consolidated financial statements. The summary should be read in conjunction with the more complete discussion of significant accounting policies included in Note 1 to the consolidated financial statements for the year ended December 31, 2021.
Real Estate
Real estate is carried at cost, net of accumulated depreciation and amortization. Maintenance and repairs are charged to operations as incurred. Depreciation requires an estimate by management of the useful life of each property as well as an allocation of the costs associated with a property to its various components. If Registrant does not allocate these costs appropriately or incorrectly estimates the useful lives of its real estate, depreciation expense may be misstated.
Registrant’s wholly owned property located in Maple Grove, Minnesota is leased 100% to a single tenant whose lease expires October 31, 2024. The tenant pays fixed base rent which increases approximately 3% each year. The tenant pays directly or reimburses Registrant for all utilities, real estate taxes, insurance and most of the property operating expenses and property management fees. On February 28, 2022, the tenant and Registrant executed the Sixth Amendment (“Amendment”) to the lease. The Amendment extends the term of the lease from October 31, 2024 to October 31, 2031. The Amendment reduces the fixed monthly base rent stipulated in the fifth amendment from November 1, 2021 to October 31, 2024 as follows:
From November 1, 2021 to October 31, 2022, $71,222 per month to $62,859 per month.
From November 1, 2022 to October 31, 2023, $73,359 per month to $64,745 per month.
From November 1, 2023 to October 31, 2024, $75,560 per month to $66,688 per month.
Monthly base rent for the extended term increases approximately 3% per annum. Registrant has agreed to provide a tenant improvement allowance of $175,000 for HVAC replacements. Tenant has a one time right to extend the lease an additional five years. Registrant has agreed to pay for a leasing commission to the tenant’s broker. In addition, an affiliate of the Registrant will earn a landlord leasing commission in accordance with the property management agreement. All the other relevant terms of the lease remain the same.
Sentinel Omaha LLC’s portfolio as of December 31, 2021 consists of one garden apartment property located in Nashville, Tennessee. Leases are generally one year or less. Tenants generally pay fixed rent plus utilities used by tenant.
Registrant's property is regularly evaluated for impairment. 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. If Registrant incorrectly estimates the value of the asset or the undiscounted cash flows, the impairment charges may be different from those, if any, in the consolidated financial statements.
Investment in Sentinel Omaha, LLC
The Registrant has a 30% non-controlling interest in Omaha that is accounted for on a fair value basis. During December 2020, Omaha sold one of its garden apartment properties located in Nashville, Tennessee for a sale price of $58,760,000. Net sales proceeds were used to first pay selling expenses and retire each property’s related secured mortgage loan. A portion of the remaining net sales proceeds were used to retire Omaha’s secured mortgage loan encumbering another garden apartment property located in Nashville, Tennessee in February 2021 to further pay down Omaha’s overall debt. The remaining portion of the sales proceeds were used to pay a distribution of $36,000,000 to its investors. Registrants 30% allocation of the distribution was $10,800,000.
During April 2021, Omaha sold its garden apartment property located in Charleston, South Carolina for a sale prices of $47,250,000. Net sales proceeds were used to first pay selling expenses. The remaining net sales proceeds have been reserved to retire Omaha’s secured mortgage loan encumbering a garden apartment property located in Nashville, Tennessee and to retire Omaha’s secured mortgage loan encumbering a garden apartment property located in Aurora, Illinois to payoff Omaha’s long term debt.
During August 2021, Omaha sold one of its garden apartment properties located in Nashville (Antioch), Tennessee for a sales price of $77,234,663. Net sales proceeds were used to first pay selling expenses. The remaining portion of the sales proceeds were used to pay a distribution of $73,000,000 to its investors. The Registrant’s 30% allocation of the distribution was $21,900,000.
During November 2021, Omaha sold its garden apartment property located in Aurora, Illinois for a sale price of $34,500,000. Net sales proceeds were used to first pay selling expenses. The remaining portion of the sales proceeds were used to pay a distribution of $52,600,000 to its investors. The Registrant’s 30% allocation
of the distribution was $15,780,000.
During December 2021, Omaha sold one of its garden apartment properties located in Nashville (Gallatin), Tennessee for a sale price of $33,300,000. Net sales proceeds were used to pay selling expenses. The remaining portion of the sales proceeds were used to pay a distribution to its investors during March 2022.
During November 2021, Omaha executed a contract to sell its remaining property for a sale price of $57,350,000. The sale was completed on January 13, 2022. Net sales proceeds were used to pay selling expenses. The remaining portion of the sales proceeds were used, along with sales proceeds from the sale of the Omaha property located in Nashville (Gallatin), Tennessee, to pay a distribution to its investors during March 2022 less a cash reserve. Omaha paid a distribution in March 2022 of $90,000,000 to its investors. The Registrant’s 30% allocation of the distribution was $27,000,000. In March 2022, Registrant declared a distribution of $3,300 for a full unit for all partners holding units or participations on March 21, 2022. The distribution will be paid in late May 2022.
Omaha reports its investment in its remaining real estate property on a fair value basis based on the sale price of a sale contract Omaha executed in November 2021 less an estimate for selling expenses. For the year ended December 31, 2021 Omaha reported an increase of $19,776,500 (53.4%) in the value of its remaining property vs. December 31, 2020. During November 2021, Omaha executed a contract to sell its remaining property for a sale price of $57,350,000. The sale was completed on January 13, 2022. The total real estate portfolio value of $56,777,000 as of December 31, 2021 consists of the same property which made up Omaha’s portfolio as of December 31, 2020 with the exception of the properties sold during 2021 as referred to above. During 2021 Omaha paid off all of its long term debt. Registrant as of the year ended December 31, 2021 recognized a value in the Omaha investment equal to Registrant’s 30% portion of the equity reported on Omaha’s balance sheet as of December 31, 2021 without any reserve. As of December 31, 2021 Omaha owns only one real estate asset which is unencumbered plus Omaha has sufficient cash reserves. Registrant as of the year ended December 31, 2020 recognized a value in the Omaha investment equal to Registrant’s 30% portion of the equity reported on Omaha’s balance sheet as of December 31, 2020 less a 20% reserve for possible unforeseen disruptions in the property and capital markets. The investment in a 30% non-controlling interest was valued at a discount due to the lack of control and liquidity.
For the year ended December 31, 2021, Omaha reported net investment income of $5,706,768 of which the Registrant’s interest was $1,712,030. In addition, Omaha reported net unrealized depreciation of real estate properties and interest rate protection agreements of $15,712,933 of which Registrant’s interest was $4,713,880 for 2021. Also Omaha reported net realized gain on the sale of a real estate property of $74,181,286 of which the Registrant’s interest was 22,254,386.
For the year ended December 31, 2020, Omaha reported net investment income of $10,586,967 of which the Registrant’s interest was $3,176,007. In addition, Omaha reported net unrealized depreciation of real estate properties and interest rate protection agreements of $8,286,294 of which Registrant’s interest was $2,485,888 for 2020. Also Omaha reported net realized gain on the sale of a real estate property of $23,157,727 of which the Registrant’s interest was $6,947,318.
For the year ended December 31, 2019, Omaha reported net investment income of $10,495,319 of which the Registrant’s interest was $3,148,596. In addition, Omaha reported net unrealized depreciation of real estate properties and interest rate protection agreements of $1,366,240 of which Registrant’s interest was $409,872 for 2019. Also Omaha reported net realized gain on the sale of two real estate properties of $13,634,547 of which the Registrant’s interest was $4,090,364.
Determination of the fair value of Omaha involves numerous estimates and subjective judgments that are subject to change in response to current and future economic and market conditions, including, among other things, demand for residential apartments, competition, and operating cost levels such as labor, energy costs, real estate taxes and market interest rates. Judgments regarding these factors are not subject to precise quantification or verification and may change from time to time as economic and market factors change.
The accounting guidance for fair value measurements establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in determining fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level of input that is significant to the fair value measurement.
Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value is calculated based on the assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.
The three levels of fair value hierarchy are described below:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical unrestricted assets or liabilities;
Level 2 - Quoted prices in active markets for similar assets and liabilities or quoted prices in less active dealer or broker markets;
Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and are unobservable.
Estimated fair value of the remaining real estate investment of Omaha was determined utilizing Level 2 inputs based upon an executed sale contract.
Further, the investment in Omaha is not consolidated because other investors have substantive ownership and participative rights regarding Omaha’s operations and therefore control does not vest in the Registrant. Were the Registrant deemed to control Omaha, it would have to be consolidated and therefore would impact the financial statements and related ratios.
Revenue Recognition
Rental income is recognized when earned pursuant to the terms of the leases. Base rents and reimbursement of the tenants' share of certain operating expenses are generally recognized when due from tenants. Before Registrant can recognize revenue, it is required to assess, among other things, its collectability. Registrant continually analyzes the collectability of its revenue and will reserve against its revenue if conditions warrant such action.
Off-Balance Sheet Arrangements
None.
Recently Issued Accounting Pronouncements
None.
CONTRACTUAL OBLIGATIONS
Pursuant to the original investment agreement, Registrant may be called upon to contribute, in cash, an additional $3,720,000 to the capital of Omaha, as and when required, as determined by the Manager.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2021, Registrant had cash and cash equivalents of approximately $2,110,000 as compared to approximately $549,000 as of December 31, 2020. Cash and cash equivalents increased during the year ended December 31, 2021 primarily due to distributions received from Omaha combined with cash flow generated from operating activities at Registrant’s wholly owned property. This increase was partially offset by partnership expenses paid and distributions paid to the partners.
As of December 31, 2021, Registrant’s only consistent source of cash is rental income received from the tenant who leases 100% of the leasable space at Registrant’s wholly owned property in Maple Grove. The tenant reimburses Registrant for real estate taxes, insurance and most of the property’s operating expenses leaving a significant portion of the base rent received available to pay capital improvements and partnership administrative expenses.
Inflation and changing prices during the current period did not significantly affect the markets in which the Registrant conducts its business, or the Registrant’s business overall.
Omaha reports its investment in its remaining real estate property on a fair value basis based on the sale price of a sale contract Omaha executed in November 2021 less an estimate for selling expenses. For the year ended December 31, 2021 Omaha reported an increase of $19,776,500 (53.4%) in the value of its remaining property vs. December 31, 2020. During November 2021, Omaha executed a contract to sell its remaining property for a sale price of $57,350,000. The sale was completed on January 13, 2022. The total real estate portfolio value of $56,777,000 as of December 31, 2021 consists of the same property which made up Omaha’s portfolio as of December 31, 2020 with the exception of the properties sold during 2021 as referred to above. During 2021 Omaha paid off all of its long term debt. Although the remaining commercial property owned by the Registrant is 100% occupied, it is occupied by a single tenant. According to a report by CBRE, the Minneapolis industrial market reported positive absorption, market rates remained steady and vacancy rates remained a low 4.4% in 2021. Registrant may still require a longer time period to replace the tenant at its property should a default occur and the space become vacant.
Registrant anticipates cash flow generated from the property located in Maple Grove and current cash reserves will be sufficient to pay ongoing operating and capital improvement costs, other working capital requirements of the Registrant and current fees due to the General Partner and its affiliate. The Registrant has no debt except normal trade accounts payable and a security deposit held for the tenant at Registrant’s wholly owned property.
During 2020, Omaha sold one of its garden apartment properties located in Nashville, Tennessee for a sale price of $58,760,000. Net sales proceeds were used to first pay selling expenses and retire the property’s related secured mortgage loan. A portion of the remaining net sales proceeds were used in 2021 to retire Omaha’s secured mortgage loan encumbering one of its other garden apartment properties located in Nashville, Tennessee to further pay down Omaha’s debt. The rest of the remaining proceeds were used to pay a distribution to Omaha’s investors in 2021, including $10,800,000 to Registrant. In January 2021, Registrant declared a distribution of $1,300 for a full unit for all partners holding units or participations on February 1, 2021. The distribution was paid on February 28, 2021.
During April 2021, Omaha sold its garden apartment property located in Charleston, South Carolina for a sale prices of $47,250,000. Net sales proceeds were used to first pay selling expenses. The remaining net sales proceeds have been reserved to retire Omaha’s secured mortgage loan encumbering a garden apartment property located in Nashville, Tennessee and to retire Omaha’s secured mortgage loan encumbering a garden apartment property located in Aurora, Illinois to payoff Omaha’s long term debt.
During August 2021, Omaha sold one of its garden apartment properties located in Nashville (Antioch), Tennessee for a sales price of $77,234,663. Net sales proceeds were used to first pay selling expenses. The remaining portion of the sales proceeds were used to pay a distribution of $73,000,000 to its investors. The Registrant’s 30% allocation of the distribution was $21,900,000.
During November 2021, Omaha sold its garden apartment property located in Aurora, Illinois for a sale price of $34,500,000. Net sales proceeds were used to first pay selling expenses. The remaining portion of the sales proceeds were used to pay a distribution of $52,600,000 to its investors. The Registrant’s 30% allocation of the distribution was $15,780,000.
During December 2021, Omaha sold one of its garden apartment properties located in Nashville (Gallatin), Tennessee for a sale price of $33,300,000. Net sales proceeds were used to pay selling expenses. The remaining portion of the sales proceeds were used to pay a distribution to its investors during March 2022.
During November 2021, Omaha executed a contract to sell its remaining property for a sale price of $57,350,000. The sale was completed on January 13, 2022. Net sales proceeds were used to pay selling expenses. The remaining portion of the sales proceeds were used, along with sales proceeds from the sale of the Omaha property located in Nashville (Gallatin), Tennessee, to pay a distribution to its investors during March 2022 lwess a cash reserve. Omaha paid a distribution in March 2022 of $90,000,000 to its investors. The Registrant’s 30% allocation of the distribution was $27,000,000. In March 2022, Registrant declared a distribution of $3,300 for a full unit for all partners holding units or participations on March 21, 2022. The distribution will be paid in late May 2022.
MANAGEMENT’S DISCUSSION OF RESULTS OF OPERATIONS
2021 VS. 2020
Total revenues from operations increased $42,000 to approximately $1,222,000 in 2021 from approximately $1,180,000 in 2020 primarily due to higher rental income. Rental income increased due to a scheduled increase in base rent for the tenant at the Maple Grove property. Other income increased due to an increase in real estate tax reimbursement while interest income decreased due to a decrease in cash reserves available for investment.
The Registrant reported a net loss from operations of approximately $561,000 in 2021, a decrease of the loss of $19,000 as compared to a net loss from operations of approximately $580,000 in 2020. Net loss from operations consists of net income from the Maple Grove property combined with partnership income and expenses. The decrease of loss from operations was due to higher total revenues partially offset by higher operating expenses. Total expenses from operations for 2021 increased $22,000 to approximately $1,782,000 from approximately $1,760,000 in 2020, due to increases in professional fees, real estate taxes, utilities and repairs and maintenance expense. This was partially offset by a decrease in management fees.
Omaha reports its investments in real estate properties on a fair value basis. During 2021, Omaha sold four of its garden apartment properties as previously described. Net sales proceeds were used to first pay selling expenses and retire Omaha’s long term debt and make a distribution to Omaha’s investors. For the year ended December 31, 2021 Omaha reported an increase of $19,776,500 (53.4%) in the value of its remaining property vs. December 31, 2020. During November 2021, Omaha executed a contract to sell its remaining property for a sale price of $57,350,000. The sale was completed on January 13, 2022. The total real estate portfolio value of $56,777,000 as of December 31, 2021 consists of the same property which made up Omaha’s portfolio as of December 31, 2020 with the exception of the properties sold during 2021 as referred to above.
Equity in net income of investment increased $11,614,000 to an income of approximately $19,251,000 for 2021 compared to income of approximately $7,637,000 for 2020. During November 2021, Omaha executed a contract to sell its remaining property for a sale price of $57,350,000. The sale was completed on January 13, 2022.
For additional analysis, please refer to the discussions of the individual properties below.
Eagle Lake Business Center IV (Maple Grove, Minnesota)
Total revenues increased $32,000, to approximately $1,209,000 in 2021 compared with approximately $1,177,000 in 2020. Net income, which includes deductions for depreciation, increased $13,000 to approximately $725,000 in 2021 from approximately $712,000 in 2020. The property has been 100% leased and occupied by the same single tenant for both years. The increase in total revenue was due to higher rental income combined with higher other income. Rental income increased due to a scheduled increase in base rent for the tenant. Other income increased from 2020 to 2021 due to an increase in real estate tax reimbursement. The increase in net income was due to the increase in revenues partially offset by an increase in operating expenses. The increase in operating expenses was primarily due to increases in real estate taxes of $5,000 and utilities of $8,000.
According to a report by CBRE, the Minneapolis industrial market reported positive absorption, market rates remained steady and vacancy rates remained a low 4.4% in 2021.
Investments
During 2007, the Registrant made a total investment in the amount of $37,200,000 in Omaha representing a thirty percent ownership interest. The Registrant’s investment in Omaha is accounted for at fair value.
On September 18, 2007, Omaha acquired all the outstanding common shares of America First Apartment Investors, Inc., a publicly held real estate investment trust, in a transaction valued at approximately $532 million, including the assumption of outstanding debt and excluding transactions costs. Omaha consisted of 31 wholly owned multifamily residential properties, a wholly owned commercial property and a wholly owned multifamily property that was under development. During 2021, Omaha sold four of its garden apartment properties as previously described. Net sales proceeds were used to first pay selling expenses and retire Omaha’s long term debt and make a distribution to Omaha’s investors. The total real estate portfolio value of $56,777,000 as of December 31, 2021 consists of the same property which made up Omaha’s portfolio as of December 31, 2020 with the exception of the properties sold during 2021 as referred to above.
Omaha reported total revenues for 2021 of approximately $13,663,000. Net investment income before net unrealized appreciation and realized gain was $5,707,000. Major expenses included $216,000 of interest expense, $1,365,000 for repairs and maintenance, $2,120,000 for payroll and $1,618,000 for real estate taxes. In addition, Omaha reported a net unrealized depreciation based on the valuation of the remaining real estate asset and interest rate protection agreements of $15,713,000. Also Omaha reported a realized gain on the sale of four real estate properties of $74,181,000. For the year ended December 31, 2021, the Registrant’s equity interest in the income of Omaha was approximately $19,251,000.
2020 VS. 2019
Total revenues from operations increased $49,000 to approximately $1,180,000 in 2020 from approximately $1,131,000 in 2019 primarily due to higher rental income. Rental income increased due to a scheduled increase in base rent for the tenant at the Maple Grove property. Other income increased due to an increase in real estate tax reimbursement while interest income decreased due to a decrease in cash reserves available for investment.
The Registrant reported a net loss from operations of approximately $580,000 in 2020, an increase of the loss of $6,000 as compared to a net loss from operations of approximately $574,000 in 2019. Net loss from operations consists of net income from the Maple Grove property combined with partnership income and expenses. The increase of loss from operations was due to higher operating expenses partially offset by higher total revenues. Total expenses from operations for 2020 increased $55,000 to approximately $1,760,000 from approximately $1,705,000 in 2019, due to increases in investment fees, real estate taxes, depreciation and administrative expenses partially offset by decreases in repairs and maintenance expense.
Omaha reports its investments in real estate properties on a fair value basis. During 2020, Omaha sold one of its garden apartment properties located in Nashville, Tennessee. Net sales proceeds were used to first pay selling expenses and retire the property’s related secured mortgage loan. Remaining net sales proceeds were used in 2021 to retire Omaha’s secured mortgage loan encumbering another of its garden apartment properties located in Nashville, Tennessee to further pay down Omaha’s debt and make a distribution to Omaha’s investors. For the year ended December 31, 2020 Omaha reported an increase of $6,900,000 in the value of its portfolio over the same properties as of the year ended December 31, 2020. The total real estate portfolio value of $190,600,000 as of December 31, 2020 consists of the same properties which made up Omaha’s portfolio as of December 31, 2019 less the property sold during 2020.
Equity in net income of investment increased $808,000 to an income of approximately $7,637,000 for 2020 compared to income of approximately $6,829,000 for 2019. Omaha anticipates the net operating income from its remaining portfolio to be flat during 2020 as compared to 2019. All of Omaha’s property mortgage loans and banks loans use floating rates based on the SIFMA Bond Index rate plus the credit spread. During March 2020 the floating rates on Omaha loans increased significantly for approximately three weeks as the SIFMA bond index rate spiked upward in initial response to the extreme uncertainty in the Covid 19 pandemic. However by mid-April the SIFMA bond index rate had declined to .21% and has remained in a range of .08% to .21% during the rest of 2020
For additional analysis, please refer to the discussions of the individual properties below.
Eagle Lake Business Center IV (Maple Grove, Minnesota)
Total revenues increased $50,000, to approximately $1,177,000 in 2020 compared with approximately $1,127,000 in 2019. Net income, which includes deductions for depreciation, increased $22,000 to approximately $712,000 in 2020 from approximately $690,000 in 2019. The property has been 100% leased and occupied by the same single tenant for both years. The increase in total revenue was due to higher rental income combined with higher other income. Rental income increased due to a scheduled increase in base rent for the tenant. Other income increased from 2019 to 2020 due to an increase in real estate tax reimbursement. The increase in net income was due to the increase in revenues partially offset by an increase in operating expenses. The increase in operating expenses was primarily due to increases in real estate taxes of $12,000 and depreciation of $18,000.
According to a report by CBRE, the Minneapolis industrial market reported positive absorption, market rates remained steady and vacancy rates remained a low 4.7% in 2020.
Investments
During 2007, the Registrant made a total investment in the amount of $37,200,000 in Omaha representing a thirty percent ownership interest. The Registrant’s investment in Omaha is accounted for at fair value.
On September 18, 2007, Omaha acquired all the outstanding common shares of America First Apartment Investors, Inc., a publicly held real estate investment trust, in a transaction valued at approximately $532 million, including the assumption of outstanding debt and excluding transactions costs. Omaha consisted of 31 wholly owned multifamily residential properties, a wholly owned commercial property and a wholly owned multifamily property that was under development. During 2020, Omaha sold one of its garden apartment properties located in Nashville, Tennessee. Net sales proceeds were used to first pay selling expenses and retire the property’s related secured mortgage loan. Remaining net sales proceeds were used in 2021 to retire Omaha’s secured mortgage loan encumbering another of its garden apartment properties located in Nashville, Tennessee to further pay down Omaha’s debt and make a distribution to Omaha’s investors. For the year ended December 31, 2020 Omaha reported an increase of $6,900,000 in the value of its portfolio over the same properties as of the year ended December 31, 2020. The total real estate portfolio value of $190,600,000 as of December 31, 2020 consists of the same properties which made up Omaha’s portfolio as of December 31, 2019 less the property sold during 2020.
Omaha reported total revenues for 2020 of approximately $24,239,000. Net investment income before net unrealized appreciation and realized gain was $10,587,000. Major expenses included $1,280,000 of interest expense, $1,999,000 for repairs and maintenance, $3,186,000 for payroll and $3,154,000 for real estate taxes. In addition, Omaha reported a net unrealized depreciation based on the valuation of the remaining real estate assets and interest rate protection agreements of $8,286,000. Also Omaha reported a realized gain on the sale of one real estate property of $23,158,000. For the year ended December 31, 2020, the Registrant’s equity interest in the income of Omaha was approximately $7,637,000.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
NONE

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements required by this item, together with the Report of Independent Registered Public Accounting Firm thereon, are contained herein on pages 23 through 36 of this Annual Report on Form 10-K.
Supplementary financial information required by this item is contained herein on pages 37 through 38 of this report.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
(a)
The Chief Executive Officer and the Chief Financial Officer of the general partner of Registrant have evaluated the disclosure controls and procedures relating to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2021 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, 2021 that could significantly affect those controls subsequent to the date of evaluation.
(c)
Management’s Report on Internal Control Over Financial Reporting
Registrant’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and Chief Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Our evaluation of internal control over financial reporting includes using the COSO 2013 framework, an integrated framework for the evaluation of internal controls issued by the Committee of Sponsoring Organizations of the Treadway Commission, to identify the risks and control objectives related to the evaluation of our control environment.
Based on our evaluation under the frameworks described above, our management has concluded that our internal control over financial reporting was effective as of December 31, 2021.
This Annual Report does not include an attestation report of the Registrant’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Registrant’s independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit Registrant to provide only management’s report in this Annual Report.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
NONE
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Registrant has no executive officers or directors. All of its business affairs are handled by its General Partner, SB Partners Real Estate Corporation (the "General Partner").
The directors and executive officers of the General Partner are elected by Sentinel Holdings Corporation ("SHC") as its sole shareholder to serve until their successors are duly elected and qualified. The limited partners of the Registrant are not entitled to vote in their election.
The directors and executive officers of the General Partner who are active in the Registrant's operations are:
Name
Age
Position
Michael F. Streicker
Director
Leland J. Roth
President & Director
George N. Tietjen III
Chief Executive Officer
John H. Zoeller
Chief Financial Officer and Director
Joseph Stein
Treasurer
Martin Cawley Vice President
Mr. Streicker joined the General Partner in 2003 and serves as a Director. He is President of the parent company, The Sentinel Corporation.
Mr. Roth joined the General Partner in 1994 and serves as its President and Director. He is a certified public accountant with over 35 years of real estate related financial, accounting and reporting experience.
Mr. Tietjen joined the General Partner in 1990 and served as its Chief Accounting Officer until 2006 and Chief Financial Officer and Treasurer from 2004 to 2007. He is a certified public accountant with over 36 years of real estate related financial, management, accounting and reporting experience.
Mr. Zoeller joined the General Partner in 1994 and serves as its principal financial and accounting officer. He is a certified public accountant with over 39 years of real estate related financial, accounting and reporting experience.
Mr. Cawley joined the General Partner in 1994. He is the regional manager responsible for commercial property transactions and management.
Mr. Stein joined the General Partner in 2002 and had served as its assistant controller from 2002 to 2007.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
The Registrant has no executive officers or directors.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a)
At December 31, 2021, an institutional investor of record owned 7.13% of the outstanding Units of Limited Partnership Interests. On January 13, 1993, a group of Unit holders of record, including the institutional investor referred to above, entered into a collective agreement with respect to their ownership interest in the Registrant. The aggregate number of Units beneficially owned by the group is 606 Units, representing 7.8% of the total number of outstanding Units of Limited Partnership Interest on that date. Each Unit holder has disclaimed beneficial ownership of all Units owned by the other Unit holders in this group. The foregoing information is based upon a 13-D filing made by the respective Unit holders.
(b)
As of December 31, 2021, none of the Directors of the General Partner owned any outstanding 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 4,053.5 Units of Limited Partnership Interest, representing 52.3% of the outstanding number of Units on December 31, 2021. In accordance with SEC regulations, SRE Clearing Services, Inc. filed Form 13-D/A on June 4, 2021, when the total number of Units held reached 52% of the outstanding number of Units.
(c)
During the year ended December 31, 2021, there were no changes in control of the Registrant or the General Partner.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner, among other things, furnishes services and advice to the Registrant and is paid a variable annual fee for such services based on calculations prescribed in the Registrant's Partnership Agreement. For these services, the General Partner receives a management fee equal to 2% of the average amount of capital invested in real estate plus cumulative mortgage amortization payments, and 0.5% of capital not invested in real estate, as defined in the Partnership Agreement. The management fee amounted to $996,741, $1,018,617 and $1,007,137 for the years ended December 31, 2021, 2020, and 2019, respectively. In addition, the General Partner is entitled to 25% of cash distributions in excess of the annual distribution preference, as defined in the Partnership Agreement. No such amounts were due for the years ended December 31, 2021, 2020 or 2019.
Certain affiliates of the General Partner oversee the management and operations of various real estate properties, including those owned by the Registrant. Services performed by these affiliates applicable to the Registrant's properties are billed at actual or allocated cost, or percentage of revenues. The costs of such services are believed to be competitive with charges for similar services provided by unrelated management companies. Fees charged by these affiliates totaled $59,800, $58,587 and $56,734 in 2021, 2020, and 2019, respectively.
In 2012 an affiliate of the General Partner commenced maintaining and updating the investor database and preparing the tax K-1 forms and related schedules which previously had been prepared by an unaffiliated company. The fee charged by the affiliate for the similar service is lower than the fee previously charged by the unaffiliated company. Fees charged for 2021, 2020 and 2019 were $54,000 each year.
During 2019 the Registrant had the roof of its wholly owned property located in Maple Grove, Minnesota replaced. In accordance with the management agreement, an affiliate of the General Partner was paid a construction supervision fee for the supervision of the capital project in the amount of $16,547.
In 2007 the Registrant made an investment of $37,200,000, representing a thirty percent ownership interest in Omaha. For the years 2021, 2020 and 2019, the Registrant’s equity interest in the net income of Omaha was approximately $19,251,000, $7,637,000 and $6,829,000, respectively.
Reference is made to Items 10 and 11, and Notes 3, 5, 6 and 9 in the consolidated financial statements.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
1.
Audit Fees. The aggregate fees billed for professional services rendered by the principal accountant for the audit of the Registrant’s annual financial statements and review of financial statements included in Registrant’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 $107,500 and $104,000 for each of the years ended December 31, 2021 and 2020, respectively.
2.
Audit-Related Fees. No fees were billed by the principal accountant during the years ended December 31, 2021 and 2020 for assurance and related services that are reasonably related to the performance of the audit or review of Registrant's financial statements that are not reported under subparagraph (1) of this section.
3.
Tax Fees. The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were approximately $16,100 and $15,000 for the years ended December 31, 2021 and 2020, respectively. This work included reviewing year-end tax projections as well as the Registrant’s tax returns prepared by the Registrant for the respective years.
4.
All Other Fees. No other fees were billed in either of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in subparagraphs (1) through (3) of this section.
5.
(i)The selection of the independent auditors to audit the annual financial statements and perform review procedures on the quarterly reports filed with the SEC by the Registrant is made by the general partner of Registrant. Fees quoted by the independent auditors are approved by the general partner prior to their acceptance by the Registrant.
(ii) Not Applicable.
6.
Not Applicable.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) (1)
Financial statements - The Registrant's 2021 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 22. All other financial statement schedules are inapplicable or the required subject matter is contained in the consolidated financial statements or notes thereto.
(b)
Exhibits -
Exhibit
No.
Description
3.1 Agreement of Limited Partnership
31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1 Audited Financial Statements of Sentinel Omaha, LLC December 31, 2021
101.INS ** Inline XBRL Instance
101.SCH ** Inline XBRL Taxonomy Extension Schema
101.CAL ** Inline XBRL Taxonomy Extension Calculation
101.DEF ** Inline XBRL Taxonomy Extension Definition
101.LAB ** Inline XBRL Taxonomy Extension Labels
101.PRE ** Inline XBRL Taxonomy Extension Presentation
Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)
**XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.