Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2016shares | |
Details | |
Registrant Name | REAL ESTATE ASSOCIATES LTD IV |
Registrant CIK | 355,573 |
SEC Form | 10-Q |
Period End date | Sep. 30, 2016 |
Fiscal Year End | --12-31 |
Trading Symbol | real4 |
Number of common stock shares outstanding | 12,998.22 |
Filer Category | Smaller Reporting Company |
Current with reporting | Yes |
Voluntary filer | No |
Well-known Seasoned Issuer | No |
Amendment Flag | false |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q3 |
Balance Sheets (September 30, 2
Balance Sheets (September 30, 2016 Unaudited) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Assets | ||
Cash and cash equivalents | $ 450 | $ 559 |
Prepaid expenses | 35 | 0 |
Accounts Receivable - limited partners | 25 | 25 |
Total assets | 510 | 584 |
Liabilities: | ||
Accounts payable and accrued expenses | 19 | 21 |
Partners' equity | ||
General partners | 46 | 47 |
Limited partners | 445 | 516 |
Total partners' equity | 491 | 563 |
Total liabilities and partners' equity | $ 510 | $ 584 |
Statement of Operations (Unaudi
Statement of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Details | ||||
Revenues | $ 0 | $ 0 | $ 0 | $ 0 |
Operating expenses: | ||||
Legal and accounting | 8 | 7 | 24 | 23 |
Management fees - General Partner | 2 | 2 | 5 | 5 |
General and administrative | 8 | 7 | 33 | 26 |
Total operating expenses | 18 | 16 | 62 | 54 |
Loss from partnership operations | (18) | (16) | (62) | (54) |
Advances in excess of investment in local Limited partnership | (10) | 0 | (10) | 0 |
Net loss | (28) | (16) | (72) | (54) |
Net loss allocated to general partners (1%) | 0 | 0 | (1) | (1) |
Net loss allocated to limited partners (99%) | $ (28) | $ (16) | $ (71) | $ (53) |
Net loss per limited partnership interest | $ (2.15) | $ (1.23) | $ (5.46) | $ (4.08) |
Statement of Changes in Partner
Statement of Changes in Partners' Equity (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands | General Partner | Limited Partner | Total |
Partners' Equity at Dec. 31, 2015 | $ 47 | $ 516 | $ 563 |
Net loss | (1) | (71) | (72) |
Partners' Equity at Sep. 30, 2016 | $ 46 | $ 445 | $ 491 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (72) | $ (54) |
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities | ||
Change in advances in excess of investment in local Limited partnership | 10 | 0 |
Change in accounts: | ||
Change in prepaid expenses | (35) | 0 |
Change in accounts payable and accrued expenses | (2) | (1) |
Net cash provided by (used in) operating activities | (99) | (55) |
Cash flows used in investing activities: | ||
Advances to Local Limited Partnership | (10) | 0 |
Net decrease in cash and cash equivalents | (109) | (55) |
Cash and cash equivalents | 559 | 662 |
Cash and cash equivalents | $ 450 | $ 607 |
Note 1 - Organization and Summa
Note 1 - Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Note 1 - Organization and Summary of Significant Accounting Policies | Note 1 Organization and Summary of Significant Accounting Policies General The information contained in the following notes to the unaudited financial statements is condensed from that which would appear in the annual audited financial statements; accordingly, the financial statements included herein should be reviewed in conjunction with the financial statements and related notes thereto contained in the annual report for the fiscal year ended December 31, 2015 filed by Real Estate Associates Limited IV (the "Partnership"). Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results of operations for the interim periods presented are not necessarily indicative of the results expected for the entire year. In the opinion of the Partnership's management, the accompanying unaudited financial statements contain all adjustments (consisting primarily of normal recurring items) considered necessary for a fair presentation. The balance sheet at December 31, 2015 has been derived from the audited financial statements at that date but does not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. The general partners collectively have a one percent interest in operating profits and losses of the Partnership. The limited partners share the remaining 99 percent interest in proportion to their respective individual investments. The general partners of the Partnership are National Partnership Investments, LLC, a California limited liability company ("NAPICO" or the General Partner), and National Partnership Investments Associates, a California limited partnership. The General Partner is a subsidiary of Bethesda Holdings II, LLC, a privately held real estate asset management company (Bethesda). At September 30, 2016 and December 31, 2015, there were 12,998.22 and 13,002.22, respectively, limited partnership interests outstanding. Basis of Presentation The accompanying unaudited financial statements have been prepared in conformity with accounting principles generally accepted in the United States. Net Loss Per Limited Partnership Interest Net loss per limited partnership interest is computed by dividing the limited partners share of net loss by the number of limited partnership interests outstanding at the beginning of the year. The number of limited partnership interests used was 13,002.22 and 13,000.20 for the nine months ended September 30, 2016 and 2015, respectively. Method of Accounting for Investment in the Local Limited Partnership The investment in local limited partnership (the Local Limited Partnership) is accounted for using the equity method. Variable Interest Entities The Partnership consolidates any variable interest entities in which the Partnership holds a variable interest and is the primary beneficiary. Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about an entitys activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entitys activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The primary beneficiary of a VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIEs economic performance, and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In determining whether it is the primary beneficiary of a VIE, the Partnership considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIEs economic performance and which party controls such activities; the amount and characteristics of the Partnerships investment; the obligation or likelihood for the Partnership or other investors to provide financial support; and the similarity with and significance to the business activities of the Partnership and the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by this VIE and general market conditions. At September 30, 2016 and December 31, 2015, the Partnership held variable interests in one VIE for which the Partnership was not the primary beneficiary. The Partnership has concluded, based on its qualitative consideration of the partnership agreement, the partnership structure and the role of the general partner in the Local Limited Partnership, that the general partner of the Local Limited Partnership is the primary beneficiary of the respective Local Limited Partnership. In making this determination, the Partnership considered the following factors: · · · · · · The one VIE at September 30, 2016 consists of a Local Limited Partnership that is directly engaged in the ownership and management of one apartment property with a total of 31 units. The Partnership is involved with the VIE as a non-controlling limited partner equity holder. The Partnerships maximum exposure to loss as a result of its involvement with the unconsolidated VIE is limited to the Partnerships recorded investments in and receivables from that VIE, which were zero at both September 30, 2016 and December 31, 2015. The Partnership may be subject to additional losses to the extent of any financial support that the Partnership voluntarily provides in the future . |
Note 2 - Investments in and Adv
Note 2 - Investments in and Advances To Local Limited Partnerships | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Note 2 - Investments in and Advances To Local Limited Partnerships | Note 2 Investments in and Advances to the Local Limited Partnership As of September 30, 2016 and December 31, 2015, the Partnership h eld limited partnership interests in one Local Limited Partnership . As of September 30, 2016 and December 31, 2015, the Local Limited Partnership own ed a residential low income rental project consisting of 31 apartment units (the Project). The mortgage loans of th is Project are payable to or insured by various governmental agencies. The Partnership, as a limited partner, does not have a contractual relationship with the Local Limited Partnership or exercise control over the activities and operations, including refinancing or selling decisions, of the Local Limited Partnership that would require or allow for consolidation. Accordingly, the Partnership accounts for its investment in the Local Limited Partnership using the equity method. The Partnership is allocated profits and losses of the Local Limited Partnership based upon its respective ownership percentage ( 99 %). Distributions of surplus cash from operations from the Local Limited Partnership are restricted by the Local Limited Partnership ' s Regulatory Agreement with the Connecticut Housing Finance Agency ("CHFA") and the United States Department of Housing and Urban Development (HUD) . These restrictions limit the distribution to a portion, generally less than 10 %, of the initial invested capital. The excess surplus cash is deposited into a residual receipts reserve, of which the ultimate realization by the Partnership is uncertain as CHFA frequently retains such reserve upon sale or dissolution of the Local Limited Partnership. The Partnership is allocated profits and losses and receives distributions from refinancings and sales in accordance with the Local Limited Partnership ' s partnership agreement. Th is agreement limit s the Partnerships distributions to an amount substantially less than its ownership percentage in the Local Limited Partnership. Additionally, CHFA takes the position that any residual receipts from a sale would be retained by them. The investment is carried at cost plus the Partnerships share of the Local Limited Partnerships profits less the Partnerships share of the Local Limited Partnerships losses, distributions and impairment charges. The Partnership is not legally liable for the obligations of the Local Limited Partnership and is not otherwise committed to provide additional support to it . Therefore, it does not recognize losses once its investment in the Local Limited Partnership reaches zero. Distributions from the Local Limited Partnership are accounted for as a reduction of the investment balance until the investment balance is reduced to zero. When the investment balance has been reduced to zero, subsequent distributions received are recognized as income in the accompanying statements of operations. The Partnership received no distributions from the Local Limited Partnership during the nine months ended September 30, 2016 or 2015. For those investments where the Partnership has determined that the carrying value of its investments approximates the estimated fair value of those investments, the Partnerships policy is to recognize equity in income of the Local Limited Partnership only to the extent of distributions received and amortization of acquisition costs from the Local Limited Partnership. Therefore, the Partnership limits its recognition of equity earnings to the amount it expects to ultimately realize. At September 30, 2016 and December 31, 2015, the investment balance in the Local Limited Partnership had been reduced to zero. At times, advances are made to the Local Limited Partnership. Advances made by the Partnership to the Local Limited Partnership are considered part of the Partnerships investment in the limited partnership. Advances made to the Local Limited Partnership for which the investment has been reduced to zero are generally charged to expense. Advances of $10,000 were made to the Local Limited Partnership during the nine months ended September 30, 2016. There were no advances made to the Local Limited Partnership during the nine months ended September 30, 2015. The following are unaudited condensed combined estimated statements of operations for the three and nine months ended September 30, 2016 and 2015 for the Local Limited Partnership in which the Partnership ha d investments (in thousands): Three Months Ended September 30, Nine months Ended September 30, 2016 2015 2016 2015 Revenues Rental and other income $ 88 $ 97 $ 279 $ 266 Expenses Operating expense 68 73 265 221 Financial expenses 11 8 25 23 Depreciation and amortization expenses 46 36 112 108 Total expenses 125 117 402 352 Income (Loss) from continuing operations $ (37) $ (20) $ (123) $ (86) In addition to being the General Partner of the Partnership, NAPICO or one of its affiliates is the local operating general partner of the Local Limited Partnership included above. |
Note 3 - Transactions With Affi
Note 3 - Transactions With Affiliated Parties | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Note 3 - Transactions With Affiliated Parties | Note 3 Transactions with Affiliated Parties Under the terms of the Partnerships Restated Certificate and Agreement of Limited Partnership, as amended (the Partnership Agreement),the Partnership is obligated to NAPICO for an annual management fee equal to 0.4 percent of the Partnerships original remaining invested assets of the Local Limited Partnerships at the beginning of the year. Invested assets are defined as the costs of acquiring project interests, including the proportionate amount of the mortgage loans related to the Partnership's interests in the capital accounts of the Local Limited Partnership. The management fee was approximately $5,000 for the nine months ended September 30, 2016 and 2015. Additionally, the Partnership reimburses NAPICO for administrative expenses incurred by NAPICO on behalf of the Partnership but paid by NAPICO for convenience. These reimbursed expenses were approximately $18,000 and $14,000 for the nine months ended September 30, 2016 and 2015, respectively. |
Note 4 - Fair Value of Financia
Note 4 - Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Note 4 - Fair Value of Financial Instruments | Note 4 Fair Value of Financial Instruments Financial Accounting Standards Board Accounting Standards Codification Topic 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Fair value is defined as the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Partnership believes that the carrying amounts of its assets and liabilities at September 30, 2016 approximated their fair value due to the short term maturity of these instruments. |
Note 5 - Contingencies
Note 5 - Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Note 5 - Contingencies | Note 5 - Contingencies The General Partner is involved in various lawsuits arising from transactions in the ordinary course of business. In the opinion of management and the General Partner, such claims will not result in any material liability to the Partnership. |
Note 6 - Subsequent Event
Note 6 - Subsequent Event | 9 Months Ended |
Sep. 30, 2016 | |
Notes | |
Note 6 - Subsequent Event | Note 6 - Subsequent Events The Partnerships management evaluated subsequent events through the time this Quarterly Report on Form 10-Q was filed. |
Note 1 - Organization and Sum12
Note 1 - Organization and Summary of Significant Accounting Policies: Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited financial statements have been prepared in conformity with accounting principles generally accepted in the United States. |
Note 1 - Organization and Sum13
Note 1 - Organization and Summary of Significant Accounting Policies: Net Loss Per Limited Partnership Interest (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Policies | |
Net Loss Per Limited Partnership Interest | Net Loss Per Limited Partnership Interest Net loss per limited partnership interest is computed by dividing the limited partners share of net loss by the number of limited partnership interests outstanding at the beginning of the year. The number of limited partnership interests used was 13,002.22 and 13,000.20 for the nine months ended September 30, 2016 and 2015, respectively. |
Note 1 - Organization and Sum14
Note 1 - Organization and Summary of Significant Accounting Policies: Method of Accounting For Investment in Local Limited Partnerships (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Policies | |
Method of Accounting For Investment in Local Limited Partnerships | Method of Accounting for Investment in the Local Limited Partnership The investment in local limited partnership (the Local Limited Partnership) is accounted for using the equity method. |
Note 1 - Organization and Sum15
Note 1 - Organization and Summary of Significant Accounting Policies: Variable Interest Entities (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Policies | |
Variable Interest Entities | Variable Interest Entities The Partnership consolidates any variable interest entities in which the Partnership holds a variable interest and is the primary beneficiary. Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about an entitys activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entitys activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The primary beneficiary of a VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIEs economic performance, and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In determining whether it is the primary beneficiary of a VIE, the Partnership considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIEs economic performance and which party controls such activities; the amount and characteristics of the Partnerships investment; the obligation or likelihood for the Partnership or other investors to provide financial support; and the similarity with and significance to the business activities of the Partnership and the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by this VIE and general market conditions. At September 30, 2016 and December 31, 2015, the Partnership held variable interests in one VIE for which the Partnership was not the primary beneficiary. The Partnership has concluded, based on its qualitative consideration of the partnership agreement, the partnership structure and the role of the general partner in the Local Limited Partnership, that the general partner of the Local Limited Partnership is the primary beneficiary of the respective Local Limited Partnership. In making this determination, the Partnership considered the following factors: · · · · · · The one VIE at September 30, 2016 consists of a Local Limited Partnership that is directly engaged in the ownership and management of one apartment property with a total of 31 units. The Partnership is involved with the VIE as a non-controlling limited partner equity holder. The Partnerships maximum exposure to loss as a result of its involvement with the unconsolidated VIE is limited to the Partnerships recorded investments in and receivables from that VIE, which were zero at both September 30, 2016 and December 31, 2015. The Partnership may be subject to additional losses to the extent of any financial support that the Partnership voluntarily provides in the future . |
Note 2 - Investments in and A16
Note 2 - Investments in and Advances To Local Limited Partnerships: Estimated condensed combined statements of operations for Local Partnerships (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Tables/Schedules | |
Estimated condensed combined statements of operations for Local Partnerships | Three Months Ended September 30, Nine months Ended September 30, 2016 2015 2016 2015 Revenues Rental and other income $ 88 $ 97 $ 279 $ 266 Expenses Operating expense 68 73 265 221 Financial expenses 11 8 25 23 Depreciation and amortization expenses 46 36 112 108 Total expenses 125 117 402 352 Income (Loss) from continuing operations $ (37) $ (20) $ (123) $ (86) |
Note 1 - Organization and Sum17
Note 1 - Organization and Summary of Significant Accounting Policies (Details) - shares | Sep. 30, 2016 | Dec. 31, 2015 |
Details | ||
Limited partnership interests outstanding | 12,998.22 | 13,002.22 |
Note 1 - Organization and Sum18
Note 1 - Organization and Summary of Significant Accounting Policies: Net Loss Per Limited Partnership Interest (Details) - shares | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Details | ||
Number of limited partnership interests in EPS calculation | 13,002.22 | 13,000.20 |
Note 2 - Investments in and A19
Note 2 - Investments in and Advances To Local Limited Partnerships: Estimated condensed combined statements of operations for Local Partnerships (Details) - Partnership Interest - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues | ||||
Rental Income, Nonoperating | $ 88 | $ 97 | $ 279 | $ 266 |
Expenses | ||||
Operating Costs and Expenses | 68 | 73 | 265 | 221 |
Financial expenses | 11 | 8 | 25 | 23 |
Depreciation, Depletion and Amortization, Nonproduction | 46 | 36 | 112 | 108 |
Total expenses | 125 | 117 | 402 | 352 |
Income (Loss) from Continuing Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest | $ (37) | $ (20) | $ (123) | $ (86) |