UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2004 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________to _________ Commission file number 0-11002 CONSOLIDATED CAPITAL PROPERTIES IV (Exact Name of Registrant as Specified in Its Charter) California 94-2768742 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, PO Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Registrant's telephone number) Check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the proceeding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED CAPITAL PROPERTIES IV CONSOLIDATED BALANCE SHEETS (in thousands, except unit data) September 30, December 31, 2004 2003 (Unaudited) (Note) (Restated) Assets Cash and cash equivalents $ 841 $ 1,537 Receivables and deposits 1,142 1,163 Restricted escrows 960 748 Other assets 1,825 1,388 Assets held for sale (Note A) 3,745 4,479 Investment properties: Land 11,216 11,216 Buildings and related personal property 98,945 84,614 110,161 95,830 Less accumulated depreciation (75,587) (74,370) 34,574 21,460 $ 43,087 $ 30,775 Liabilities and Partners' Deficit Liabilities Accounts payable $ 2,696 $ 731 Tenant security deposit liabilities 323 352 Accrued property taxes 965 1,014 Other liabilities 898 1,107 Due to affiliates (Note B) 10,129 -- Distributions payable 715 715 Mortgage notes payable 53,653 55,703 Liabilities related to assets held for sale (Note A) 10,259 12,588 79,638 72,210 Partners' Deficit General partners (6,855) (7,044) Limited partners (342,773 units issued and outstanding) (29,696) (34,391) (36,551) (41,435) $ 43,087 $ 30,775 Note: The balance sheet at December 31, 2003, has been derived from the audited financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. See Accompanying Notes to Consolidated Financial Statements CONSOLIDATED CAPITAL PROPERTIES IV CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per unit data) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 (Restated) (Restated) Revenues: Rental income $ 4,033 $ 4,148 $11,727 $11,936 Other income 494 533 1,499 1,466 Casualty gain (Note C) 129 23 528 23 Total revenues 4,656 4,704 13,754 13,425 Expenses: Operating 2,254 2,016 6,052 5,608 General and administrative 240 383 750 1,005 Depreciation 520 637 1,600 2,081 Interest 971 945 2,872 2,841 Property taxes 264 329 886 893 Loss on early extinguishment of debt (Note E) 278 -- 278 -- Total expenses 4,527 4,310 12,438 12,428 Income from continuing operations 129 394 1,316 997 Income from discontinued operations (Note A) 205 172 434 345 Gain on sale of discontinued operations (Note D) -- 83 3,141 6,232 Net income $ 334 $ 649 $ 4,891 $ 7,574 Net income allocated to general partners (4%) $ 13 $ 26 $ 196 $ 303 Net income allocated to limited partners (96%) 321 623 4,695 7,271 $ 334 $ 649 $ 4,891 $ 7,574 Per limited partnership unit: Income from continuing operations $ 0.37 $ 1.10 $ 3.69 $ 2.79 Income from discontinued operations 0.57 0.49 1.21 0.97 Gain on sale of discontinued operations -- 0.23 8.80 17.45 Net income $ 0.94 $ 1.82 $ 13.70 $ 21.21 Distributions per limited partnership unit $ -- $ 2.90 $ -- $ 15.62 See Accompanying Notes to Consolidated Financial Statements CONSOLIDATED CAPITAL PROPERTIES IV CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (in thousands, except unit data) Limited Total Partnership General Limited Partners' Units Partners Partners Deficit Original capital contributions 343,106 $ 1 $171,553 $171,554 Partners' deficit at December 31, 2003 342,773 $ (7,044) $(34,391) $(41,435) Distributions to partners -- (7) -- (7) Net income for the nine months ended September 30, 2004 -- 196 4,695 4,891 Partners' deficit at September 30, 2004 342,773 $ (6,855) $(29,696) $(36,551) See Accompanying Notes to Consolidated Financial Statements CONSOLIDATED CAPITAL PROPERTIES IV CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended September 30, 2004 2003 Cash flows from operating activities: Net income $ 4,891 $ 7,574 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,992 2,572 Amortization of loan costs 107 156 Casualty gain (528) (23) Loss on early extinguishment of debt 326 13 Gain on sale of discontinued operations (3,141) (6,232) Change in accounts: Receivables and deposits 21 (103) Other assets (473) (445) Accounts payable 2 (276) Tenant security deposit liabilities (67) (2) Accrued property taxes 13 50 Other liabilities (209) 191 Due to affiliates 75 149 Net cash provided by operating activities 3,009 3,624 Cash flows from investing activities: Property improvements and replacements (13,141) (2,431) Net (deposits to) withdrawals from restricted escrows (212) 309 Insurance proceeds received 528 23 Net proceeds from sale of discontinued operations 3,794 8,137 Net cash (used in) provided by investing activities (9,031) 6,038 Cash flows from financing activities: Payments on mortgage notes payable (609) (654) Proceeds from mortgage notes payable 3,810 -- Repayment of mortgage notes payable (7,604) (4,229) Loan costs and prepayment penalties paid (318) -- Advances from affiliate 12,073 -- Payments on advances from affiliate (2,019) -- Distributions to partners (7) (5,432) Net cash provided by (used in) financing activities 5,326 (10,315) Net decrease in cash and cash equivalents (696) (653) Cash and cash equivalents at beginning of period 1,537 2,127 Cash and cash equivalents at end of period $ 841 $ 1,474 Supplemental Disclosures of Cash Flow Information and Non-Cash Activities: Cash paid for interest was approximately $3,922,000 and $4,084,000 for the nine months ended September 30, 2004 and 2003, respectively. At September 30, 2004 and December 31, 2003, property improvements and replacements of approximately $2,106,000 and $243,000, respectively, were included in accounts payable. Distributions payable and distributions to partners were adjusted by approximately $144,000 for non-cash activity for the nine months ended September 30, 2003. See Accompanying Notes to Consolidated Financial Statements CONSOLIDATED CAPITAL PROPERTIES IV NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements of Consolidated Capital Properties IV (the "Partnership" or "Registrant") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of ConCap Equities, Inc. ("CEI" or the "General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2004, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2004. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 2003. The General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, the accompanying consolidated balance sheet as of December 31, 2003 and the consolidated statements of operations as of January 1, 2003 have been restated to reflect the operations of Point West Apartments as income from discontinued operations due to its sale in March 2004 and the operations of Briar Bay and Nob Hill Villa Apartments as income from discontinued operations due to their sales subsequent to September 30, 2004 (see Note H). In addition, the operations of South Port Apartments are shown as income from discontinued operations due to its sale in March 2003. Note B - Transactions with Affiliated Parties The Partnership has no employees and depends on the General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for (i) certain payments to affiliates for services and (ii) reimbursements of certain expenses incurred by affiliates on behalf of the Partnership. Affiliates of the General Partner are entitled to receive 5% of gross receipts from all the Partnership's properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $819,000 and $881,000 for the nine months ended September 30, 2004 and 2003, respectively, which is included in operating expenses and income from discontinued operations. An affiliate of the General Partner charged reimbursement of accountable administrative expenses amounting to approximately $715,000 and $624,000 for the nine months ended September 30, 2004 and 2003, respectively, which is included in general and administrative expenses and investment properties. Included in these amounts are fees related to construction management services provided by an affiliate of the General Partner of approximately $156,000 and $50,000 for the nine months ended September 30, 2004 and 2003, respectively. The construction management service fees are calculated based on a percentage of current year additions to investment properties. At September 30, 2004, the Partnership owed approximately $57,000 for such reimbursements, which is included in due to affiliates. The Partnership Agreement provides for a special management fee equal to 9% of the total distributions made to the limited partners from cash flow provided by operations to be paid to the General Partner for executive and administrative management services. The Partnership paid approximately $158,000 under this provision of the Partnership Agreement to the General Partner during the nine months ended September 30, 2003, which is included in general and administrative expenses. There were no such special management fees paid or earned during the nine months ended September 30, 2004. For acting as real estate broker in connection with the sale of South Port Apartments, the General Partner was paid a real estate commission of approximately $295,000 during the nine months ended September 30, 2003. When the Partnership terminates, the General Partner will have to return this commission if the limited partners do not receive their original invested capital plus a 6% per annum cumulative return. In accordance with the Partnership Agreement, an affiliate of the General Partner advanced the Partnership approximately $12,073,000 during the nine months ended September 30, 2004 to assist with the construction of Belmont Place Apartments and to repay the mortgage encumbering the property (see Note E). During the same period, the Partnership repaid approximately $2,033,000, which included approximately $14,000 of interest. There were no such advances or repayments during the nine months ended September 30, 2003. Interest on advances is charged at prime plus 2% or 6.75% at September 30, 2004. Interest expense was approximately $32,000 for the nine months ended September 30, 2004. There was no interest expense for the nine months ended September 30, 2003. At September 30, 2004, the Partnership owed approximately $10,072,000 for advances and accrued interest, which is included in due to affiliates. Subsequent to September 30, 2004, the Partnership received additional advances of approximately $1,915,000 to pay construction invoices for Belmont Place Apartments. The Partnership insures its properties up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty and vehicle liability. The Partnership insures its properties above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the General Partner. During the nine months ended September 30, 2004 and 2003, the Partnership was charged by AIMCO and its affiliates approximately $388,000 and $350,000, respectively, for insurance coverage and fees associated with policy claims administration. Note C - Casualty Gains In October 2003, Citadel Village Apartments suffered fire damage to five apartment units. Insurance proceeds of approximately $92,000 were received during the nine months ended September 30, 2004. The Partnership recognized a casualty gain of approximately $92,000 during the nine months ended September 30, 2004 as the damaged assets were fully depreciated at the time of the casualty. In November 2003, Lake Forest Apartments suffered water damage to some of its rental units. Insurance proceeds of approximately $44,000 were received during the nine months ended September 30, 2004. The Partnership recognized a casualty gain of approximately $44,000 during the nine months ended September 30, 2004 as the damaged assets were fully depreciated at the time of the casualty. In February 2004, The Apartments suffered damage to 180 apartment units due to an ice storm. During the nine months ended September 30, 2004, the Partnership received insurance proceeds of approximately $319,000, which included approximately $29,000 for emergency expenses. The Partnership recognized a casualty gain of approximately $290,000 during the nine months ended September 30, 2004 as the damaged assets were fully depreciated at the time of the casualty. In February 2004, Knollwood Apartments suffered fire damage to some of its rental units. Insurance proceeds of approximately $47,000 were received during the nine months ended September 30, 2004. The Partnership recognized a casualty gain of approximately $47,000 during the nine months ended September 30, 2004 as the damaged assets were fully depreciated at the time of the casualty. In March 2004, Village East Apartments suffered an electrical fire that damaged six apartment units. Insurance proceeds of approximately $55,000 were received during the nine months ended September 30, 2004. The Partnership recognized a casualty gain of approximately $55,000 during the nine months ended September 30, 2004 as the damaged assets were fully depreciated at the time of the casualty. In January 2003, The Apartments had a fire, which damaged five apartment units and a hallway. Insurance proceeds of approximately $23,000 were received during the nine months ended September 30, 2003. The Partnership recognized a casualty gain of approximately $23,000 during the nine months ended September 30, 2003 as the damaged assets were fully depreciated at the time of the casualty. Note D - Disposition of Investment Properties On March 31, 2004, the Partnership sold Point West Apartments to a third party, for a gross sales price of $3,900,000. The net proceeds realized by the Partnership were approximately $3,794,000 after payment of closing costs of approximately $106,000. The Partnership used approximately $2,204,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $3,141,000 for the nine months ended September 30, 2004, as a result of this sale. The property's operations, a loss of approximately $87,000 and $65,000 for the nine months ended September 30, 2004 and 2003, respectively, including revenues of approximately $189,000 and $607,000, respectively, are included in income from discontinued operations. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $48,000 for the nine months ended September 30, 2004 due to the write off of unamortized loan costs, which is also included in income from discontinued operations in the accompanying consolidated statements of operations. On March 28, 2003, the Partnership sold South Port Apartments to a third party, for a gross sale price of $8,625,000. The net proceeds realized by the Partnership were approximately $8,137,000 after payment of closing costs of approximately $488,000. The Partnership used approximately $4,229,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $6,232,000 for the nine months ended September 30, 2003, as a result of this sale. The property's operations, income of approximately $8,000 for the nine months ended September 30, 2003, including revenues of approximately $327,000, are included in income from discontinued operations. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $13,000 for the nine months ended September 30, 2003 due to the write-off of unamortized loan costs, which is also included in income from discontinued operations in the accompanying consolidated statements of operations. Note E - Redevelopment of Belmont Place Apartments During 2003, the General Partner determined that Belmont Place Apartments suffered from severe structural defects in the buildings' foundation and as such, demolished the property. The General Partner has designed and approved a redevelopment plan for the property. Site work on the redevelopment began during the fourth quarter of 2003. The Partnership has entered into a construction contract with Casden Builders, Inc. (a related party) to develop the new Belmont Place Apartments at an estimated cost of approximately $26.4 million. The construction contract provides for the payment of the cost of the work plus a fee without a maximum guaranteed price. Construction is expected to be completed in 2005. The Partnership plans to fund these construction expenditures from operating cash flow, proceeds from a cross collateralized loan, Partnership reserves and loans from the General Partner. During the nine months ended September 30, 2004, approximately $12,332,000 of construction costs were incurred. These expenditures included capitalized construction period interest of approximately $299,000 and capitalized property tax expense of approximately $186,000. The Partnership anticipates additional construction costs of approximately $6.9 million during the remainder of 2004. As part of the redevelopment, during the nine months ended September 30, 2004, an affiliate of the General Partner advanced the Partnership approximately $5,600,000 to repay the mortgage and associated accrued interest encumbering Belmont Place Apartments. The loan was scheduled to mature in December 2005. In addition to repaying the mortgage of approximately $5,400,000, the Partnership paid prepayment penalties of approximately $169,000 and wrote off unamortized loan costs of approximately $109,000, which is shown as loss on early extinguishment of debt on the accompanying consolidated statements of operations. Note F - Second Mortgage Financing On June 8, 2004, the Partnership obtained a second mortgage loan on Lake Forest Apartments in the amount of $2,500,000. The second mortgage requires monthly payments of interest beginning August 1, 2004 until the loan matures July 1, 2007. Interest is variable and is equal to the one month LIBOR rate plus 300 basis points (4.84% at September 30, 2004). Capitalized loan costs incurred on the financing were approximately $83,000. In connection with the new financing, the Partnership agreed to certain modifications on the existing mortgage loan encumbering Lake Forest Apartments. The modification of terms consisted of an interest rate of 7.43%, a payment of approximately $44,000 due on July 1, 2004 and monthly payments of approximately $42,000, commencing August 1, 2004 through the maturity of July 1, 2014, at which time a balloon payment of approximately $5,255,000 is due. The previous terms consisted of monthly payments of approximately $51,000 with a stated interest rate of 7.13% through the maturity date of October 1, 2021, at which time the loan was scheduled to be fully amortized. On June 18, 2004, the Partnership obtained a second mortgage loan on Citadel Apartments in the amount of $1,310,000. The second mortgage requires monthly payments of interest beginning August 1, 2004 until the loan matures July 1, 2007. Interest is variable and is equal to the one month LIBOR rate plus 300 basis points (4.84% at September 30, 2004). Capitalized loan costs incurred on the financing were approximately $66,000. In connection with the new financing, the Partnership agreed to certain modifications on the existing mortgage loan encumbering Citadel Apartments. The modification of terms consisted of an interest rate of 8.55%, a payment of approximately $38,000 due on July 1, 2004 and monthly payments of approximately $33,000, commencing August 1, 2004 through the maturity of July 1, 2014, at which time a balloon payment of approximately $3,748,000 is due. The previous terms consisted of monthly payments of approximately $40,000 with a stated interest rate of 8.25% through the maturity date of March 1, 2020, at which time the loan was scheduled to be fully amortized. Note G - Contingencies In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captioned Heller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. In general terms, the proposed settlement provides for certification for settlement purposes of a settlement class consisting of all limited partners in this Partnership and others (the "Partnerships") as of December 20, 2002, the dismissal with prejudice and release of claims in the Nuanes and Heller litigation, payment by AIMCO of $9.9 million (which shall be distributed to settlement class members after deduction of attorney fees and costs of class counsel and certain costs of settlement) and up to $1 million toward the cost of independent appraisals of the Partnerships' properties by a court appointed appraiser. An affiliate of the General Partner has also agreed to make at least one round of tender offers to purchase all of the partnership interests in the Partnerships within one year of final approval, if it is granted, and to provide partners with the independent appraisals at the time of these tenders. The proposed settlement also provided for the limitation of the allowable costs which the General Partner or its affiliates will charge the Partnerships in connection with this litigation and imposes limits on the class counsel fees and costs in this litigation. On April 11, 2003, notice was distributed to limited partners providing the details of the proposed settlement. On June 13, 2003, the court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an appeal (the "Appeal") seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On November 24, 2003, the Objector filed an application requesting the court order AIMCO to withdraw settlement tender offers it had commenced, refrain from making further offers pending the appeal and auction any units tendered to third parties, contending that the offers did not conform with the terms of the settlement. Counsel for the Objector (on behalf of another investor) had alternatively requested the court take certain action purportedly to enforce the terms of the settlement agreement. On December 18, 2003, the court heard oral argument on the motions and denied them both in their entirety. The Objector filed a second appeal challenging the court's use of a referee and its order requiring Objector to pay those fees. On January 28, 2004, the Objector filed his opening brief in the Appeal. On April 23, 2004, the General Partner and its affiliates filed a response brief in support of the settlement and the judgment thereto. The plaintiffs have also filed a brief in support of the settlement. On June 4, 2004, Objector filed a reply to the briefs submitted by the General Partner and Plaintiffs. In addition both the Objector and plaintiffs filed briefs in connection with the second appeal. The Court of Appeals heard oral argument on both appeals on September 22, 2004 and took the matters under submission. The General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnership's overall operations. On August 8, 2003 AIMCO Properties L.P., an affiliate of the General Partner, was served with a complaint in the United States District Court, District of Columbia alleging that AIMCO Properties L.P. willfully violated the Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. On March 5, 2004 the plaintiffs filed an amended complaint also naming NHP Management Company, which is also an affiliate of the General Partner. The complaint is styled as a Collective Action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. failed to compensate maintenance workers for time that they were required to be "on-call". Additionally, the complaint alleges AIMCO Properties L.P. failed to comply with the FLSA in compensating maintenance workers for time that they worked in responding to a call while "on-call". The defendants have filed an answer to the amended complaint denying the substantive allegations. Some discovery has taken place and settlement negotiations continue. Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its financial condition or results of operations. Similarly, the General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership's consolidated financial condition or results of operations. The Partnership is unaware of any other pending or outstanding litigation matters involving it or its investment properties that are not of a routine nature arising in the ordinary course of business. As previously disclosed, the Central Regional Office of the United States Securities and Exchange Commission (the "SEC") is conducting a formal investigation relating to certain matters. Although the staff of the SEC is not limited in the areas that it may investigate, AIMCO believes the areas of investigation include AIMCO's miscalculated monthly net rental income figures in third quarter 2003, forecasted guidance, accounts payable, rent concessions, vendor rebates, capitalization of payroll and certain other costs, and tax credit transactions. AIMCO is cooperating fully. AIMCO is not able to predict when the matter will be resolved. AIMCO does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership's consolidated financial condition or results of operations. Note H - Subsequent Event On October 29, 2004, the Partnership sold Nob Hill Villa Apartments to a third party, for net proceeds of approximately $10,518,000 after payment of closing costs. The Partnership used approximately $6,374,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership anticipates that it will recognize a gain on the sale of approximately $8,189,000. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $20,000 as a result of unamortized loan costs being written off. The property's operations, income of approximately $9,000 and loss of approximately $81,000 for the nine months ended September 30, 2004 and 2003, respectively, include revenues of approximately $1,935,000 and $1,968,000, respectively, and are included in income from discontinued operations. On October 29, 2004, the Partnership sold Briar Bay Racquet Club Apartments to a third party, for net proceeds of approximately $19,547,000 after payment of closing costs. The Partnership used approximately $3,520,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership anticipates that it will recognize a gain on the sale of approximately $17,961,000. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $114,000 as a result of unamortized loan costs being written off and prepayment penalties paid. The property's operations, income of approximately $512,000 and $483,000 for the nine months ended September 30, 2004 and 2003, respectively, include revenues of approximately $1,425,000 and $1,344,000, respectively, and are included in income from discontinued operations. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The matters discussed in this report contain certain forward-looking statements, including, without limitation, statements regarding future financial performance and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including, without limitation: national and local economic conditions; the terms of governmental regulations that affect the Registrant and interpretations of those regulations; the competitive environment in which the Registrant operates; financing risks, including the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for tenants in such markets; litigation, including costs associated with prosecuting and defending claims and any adverse outcomes, and possible environmental liabilities. Readers should carefully review the Registrant's financial statements and the notes thereto, as well as the risk factors described in the documents the Registrant files from time to time with the Securities and Exchange Commission. The Partnership's investment properties consist of eleven apartment complexes. The following table sets forth the average occupancy of the properties for the nine months ended September 30, 2004 and 2003: Average Occupancy Property 2004 2003 The Apartments (1) 91% 94% Omaha, NE Arbours of Hermitage Apartments 94% 95% Nashville, TN Belmont Place -- 2% Marietta, GA Citadel Apartments (2) 92% 95% El Paso, TX Citadel Village Apartments (3) 87% 78% Colorado Springs, CO Foothill Place Apartments (4) 86% 90% Salt Lake City, UT Knollwood Apartments (4) 90% 95% Nashville, TN Lake Forest Apartments 95% 95% Omaha, NE Post Ridge Apartments (4) 91% 95% Nashville, TN Rivers Edge Apartments (5) 96% 92% Auburn, WA Village East Apartments (3) 77% 70% Cimarron Hills, CO (1) The General Partner attributes the decrease in occupancy at The Apartments to damage sustained in an ice storm in February 2004 which caused many tenants to vacate the property. (2) The General Partner attributes the decrease in occupancy at Citadel Apartments to military deployments in the local area. (3) The General Partner attributes the increase in occupancy at Citadel Village and Village East Apartments to a more aggressive marketing campaign and the use of competitive pricing strategies in the local market coupled with the return of military personnel from overseas deployment. (4) The General Partner attributes the decrease in occupancy at Knollwood, Foothill Place and Post Ridge Apartments to a more stringent tenant acceptance policy in order to create a more stable customer base coupled with units being uninhabitable due to fire damage at Knollwood and roofing issues at Post Ridge. (5) The General Partner attributes the increase in occupancy at Rivers Edge Apartments to a more aggressive marketing campaign and the use of competitive pricing strategies in the local market. During 2003, the General Partner determined that Belmont Place Apartments suffered from severe structural defects in the buildings' foundation and as such, demolished the property. The General Partner has designed and approved a redevelopment plan for the property. Site work on the redevelopment began during the fourth quarter of 2003. The Partnership has entered into a construction contract with Casden Builders, Inc. (a related party) to develop the new Belmont Place Apartments at an estimated cost of approximately $26.4 million. The construction contract provides for the payment of the cost of the work plus a fee without a maximum guaranteed price. Construction is expected to be completed in 2005. The Partnership plans to fund these construction expenditures from operating cash flow, proceeds from a cross collateralized loan, partnership reserves and loans from the General Partner. The Partnership's financial results depend upon a number of factors including the ability to attract and maintain tenants at the investment properties, interest rates on mortgage loans, costs incurred to operate the investment properties, general economic conditions and weather. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, the General Partner may use rental concessions and rental rate reductions to offset softening market conditions, accordingly, there is no guarantee that the General Partner will be able to sustain such a plan. Further, a number of factors that are outside the control of the Partnership such as the local economic climate and weather can adversely or positively affect the Partnership's financial results. Results of Operations The Partnership's net income for the three and nine months ended September 30, 2004 was approximately $334,000 and $4,891,000, compared to net income of approximately $649,000 and $7,574,000 for the three and nine months ended September 30, 2003, respectively. The decrease in net income for the three months ended September 30, 2004 is due to a decrease in gain on sale of discontinued operations, a decrease in total revenues and an increase in total expenses. The decrease in net income for the nine months ended September 30, 2004 is primarily due to the decrease in gain on sale of discontinued operations. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, the accompanying consolidated balance sheet as of December 31, 2003 and the consolidated statements of operations as of January 1, 2003 have been restated to reflect the operations of Point West Apartments as income from discontinued operations due to its sale in March 2004 and the operations of Briar Bay and Nob Hill Villa Apartments as income from discontinued operations due to their sales subsequent to September 30, 2004. In addition, the operations of South Port Apartments are shown as income from discontinued operations due to its sale in March 2003. The operations of Briar Bay Apartments were income of approximately $512,000 and $483,000 for the nine months ended September 30, 2004 and 2003, respectively, and include revenues of approximately $1,425,000 and 1,344,000, respectively. The operations of Nob Hill Villa Apartments were income of approximately $9,000 and loss of approximately $81,000 for the nine months ended September 30, 2004 and 2003, respectively, and include revenues of approximately $1,935,000 and $1,968,000, respectively. These amounts are included in income from discontinued operations in the accompanying consolidated statements of operations. On March 31, 2004, the Partnership sold Point West Apartments to a third party, for a gross sales price of $3,900,000. The net proceeds realized by the Partnership were approximately $3,794,000 after payment of closing costs of approximately $106,000. The Partnership used approximately $2,204,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $3,141,000 for the nine months ended September 30, 2004, as a result of this sale. The property's operations, a loss of approximately $87,000 and $65,000 for the nine months ended September 30, 2004 and 2003, respectively, including revenues of approximately $189,000 and $607,000, respectively, are included in income from discontinued operations. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $48,000 for the nine months ended September 30, 2004 due to the write off of unamortized loan costs, which is also included in income from discontinued operations in the accompanying consolidated statements of operations. On March 28, 2003, the Partnership sold South Port Apartments to a third party, for a gross sale price of $8,625,000. The net proceeds realized by the Partnership were approximately $8,137,000 after payment of closing costs of approximately $488,000. The Partnership used approximately $4,229,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $6,232,000 for the nine months ended September 30, 2003, as a result of this sale. The property's operations, income of approximately $8,000 for the nine months ended September 30, 2003, including revenue of approximately $327,000, is included in income from discontinued operations. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $13,000 for the nine months ended September 30, 2003 due to the write-off of unamortized loan costs, which is also included in income from discontinued operations in the accompanying consolidated statements of operations. Excluding the discontinued operations and gain on sales, the Partnership's income from continuing operations for the three and nine months ended September 30, 2004 was approximately $129,000 and $1,316,000, respectively, compared to income from continuing operations of approximately $394,000 and $997,000 for the corresponding periods in 2003. Income from continuing operations decreased for the three month period due to a decrease in total revenues and an increase in total expenses. Income from continuing operations increased for the nine month period due to an increase in total revenues. Total revenues for the three month period decreased due to decreases in rental and other income partially offset by an increase in casualty gains recognized in 2004. Total revenues for the nine month period increased due to casualty gains recognized in 2004 and an increase in other income partially offset by a decrease in rental income. Rental income for both periods decreased due to decreases in occupancy at six of the investment properties and decreases in the average rental rate at four of the investment properties partially offset by increases in occupancy at three of the investment properties and a decrease in bad debt expense at most of the investment properties. Other income for the three month period decreased due to a decrease in late charges and non-refundable fees at most of the investment properties and a decrease in lease cancellation fees at four of the investment properties. Other income for the nine month period increased due to an increase in cleaning and damage charges and lease cancellation fees, primarily at Foothill Place Apartments. In October 2003, Citadel Village Apartments suffered fire damage to five apartment units. Insurance proceeds of approximately $92,000 were received during the nine months ended September 30, 2004. The Partnership recognized a casualty gain of approximately $92,000 during the nine months ended September 30, 2004 as the damaged assets were fully depreciated at the time of the casualty. In November 2003, Lake Forest Apartments suffered water damage to some of its rental units. Insurance proceeds of approximately $44,000 were received during the nine months ended September 30, 2004. The Partnership recognized a casualty gain of approximately $44,000 during the nine months ended September 30, 2004 as the damaged assets were fully depreciated at the time of the casualty. In February 2004, The Apartments suffered damage to 180 apartment units due to an ice storm. During the nine months ended September 30, 2004, the Partnership received insurance proceeds of approximately $319,000, which included approximately $29,000 for emergency expenses. The Partnership recognized a casualty gain of approximately $290,000 during the nine months ended September 30, 2004 as the damaged assets were fully depreciated at the time of the casualty. In February 2004, Knollwood Apartments suffered fire damage to some of its rental units. Insurance proceeds of approximately $47,000 were received during the nine months ended September 30, 2004. The Partnership recognized a casualty gain of approximately $47,000 during the nine months ended September 30, 2004 as the damaged assets were fully depreciated at the time of the casualty. In March 2004, Village East Apartments suffered an electrical fire that damaged six apartment units. Insurance proceeds of approximately $55,000 were received during the nine months ended September 30, 2004. The Partnership recognized a casualty gain of approximately $55,000 during the nine months ended September 30, 2004 as the damaged assets were fully depreciated at the time of the casualty. In January 2003, The Apartments had a fire, which damaged five apartment units and a hallway. Insurance proceeds of approximately $23,000 were received during the nine months ended September 30, 2003. The Partnership recognized a casualty gain of approximately $23,000 during the nine months ended September 30, 2003 as the damaged assets were fully depreciated at the time of the casualty. Total expenses for the three month period increased due to an increase in operating expense and the loss on early extinguishment of debt recognized in 2004 partially offset by decreases in general and administrative, depreciation and property tax expenses. Although total expenses for the nine month period remained relatively constant, an increase in operating expense and the loss on early extinguishment of debt recognized in 2004 were offset by decreases in general and administrative and depreciation expenses. Operating expense for both periods increased due to increases in property and maintenance expenses. Property expense increased due to an increase in payroll and related benefits and utilities at most of the investment properties partially offset by the ongoing construction project at Belmont Place Apartments which resulted in the property not incurring significant property expenses in 2004. Maintenance expense increased due to an increase in contract labor at most of the investment properties and due to fewer capitalized costs associated with the reconstruction of Belmont Place Apartments. Depreciation expense for both periods decreased due to the building at Foothill Place Apartments becoming fully depreciated in 2003 and due to no depreciation being charged at Belmont Place Apartments during 2004 while the property is being constructed. Property tax expense for the three month period decreased due to decreases in the assessed values at nine of the investment properties and due to an increase in the amount of capitalized construction period taxes at Belmont Place Apartments. General and administrative expense decreased for both periods due to a decrease in management reimbursements to the General Partner, as allowed under the Partnership Agreement, and a decrease in management fees paid to the General Partner in connection with distributions made from operations. Also included in general and administrative expenses are costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement. Liquidity and Capital Resources At September 30, 2004, the Partnership had cash and cash equivalents of approximately $841,000 compared to approximately $1,474,000 at September 30, 2003. The decrease in cash and cash equivalents of approximately $696,000 from the Partnership's year ended December 31, 2003 is due to approximately $9,031,000 of cash used in investing activities partially offset by approximately $3,009,000 and $5,326,000 of cash provided by operating and financing activities, respectively. Cash used in investing activities consisted of property improvements and replacements and net deposits to restricted escrows maintained by the mortgage lenders partially offset by insurance proceeds received and net proceeds from the sale of Point West Apartments. Cash provided by financing activities consisted of proceeds from mortgage notes payable and advances received from an affiliate of the General Partner partially offset by payments of principal on the mortgages encumbering the investment properties, repayment of the mortgages encumbering Point West and Belmont Place Apartments, repayment of advances from an affiliate of the General Partner, loan costs and prepayment penalties paid and distributions to partners. The Partnership invests its working capital reserves in interest bearing accounts. On June 8, 2004, the Partnership obtained a second mortgage loan on Lake Forest Apartments in the amount of $2,500,000. The second mortgage requires monthly payments of interest beginning August 1, 2004 until the loan matures July 1, 2007. Interest is variable and is equal to the one month LIBOR rate plus 300 basis points (4.84% at September 30, 2004). Capitalized loan costs incurred on the financing were approximately $83,000. In connection with the new financing, the Partnership agreed to certain modifications on the existing mortgage loan encumbering Lake Forest Apartments. The modification of terms consisted of an interest rate of 7.43%, a payment of approximately $44,000 due on July 1, 2004 and monthly payments of approximately $42,000, commencing August 1, 2004 through the maturity of July 1, 2014, at which time a balloon payment of approximately $5,255,000 is due. The previous terms consisted of monthly payments of approximately $51,000 with a stated interest rate of 7.13% through the maturity date of October 1, 2021, at which time the loan was scheduled to be fully amortized. On June 18, 2004, the Partnership obtained a second mortgage loan on Citadel Apartments in the amount of $1,310,000. The second mortgage requires monthly payments of interest beginning August 1, 2004 until the loan matures July 1, 2007. Interest is variable and is equal to the one month LIBOR rate plus 300 basis points (4.84% at September 30, 2004). Capitalized loan costs incurred on the financing were approximately $66,000. In connection with the new financing, the Partnership agreed to certain modifications on the existing mortgage loan encumbering Citadel Apartments. The modification of terms consisted of an interest rate of 8.55%, a payment of approximately $38,000 due on July 1, 2004 and monthly payments of approximately $33,000, commencing August 1, 2004 through the maturity of July 1, 2014, at which time a balloon payment of approximately $3,748,000 is due. The previous terms consisted of monthly payments of approximately $40,000 with a stated interest rate of 8.25% through the maturity date of March 1, 2020, at which time the loan was scheduled to be fully amortized. As part of the redevelopment of Belmont Place Apartments, during the nine months ended September 30, 2004, an affiliate of the General Partner advanced the Partnership approximately $5,600,000 to repay the mortgage and associated accrued interest encumbering Belmont Place Apartments. The loan was scheduled to mature in December 2005. In addition to repaying the mortgage of approximately $5,400,000, the Partnership paid prepayment penalties of approximately $169,000 and wrote off unamortized loan costs of approximately $109,000, which is shown as loss on early extinguishment of debt on the accompanying consolidated statements of operations. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state, and local legal and regulatory requirements. The General Partner monitors developments in the area of legal and regulatory compliance. For example, the Sarbanes-Oxley Act of 2002 mandates or suggests additional compliance measures with regard to governance, disclosure, audit and other areas. In light of these changes, the Partnership expects that it will incur higher expenses related to compliance. Capital improvements planned for each of the Partnership's properties are detailed below. The Apartments During the nine months ended September 30, 2004, the Partnership completed approximately $405,000 of capital improvements at The Apartments, consisting primarily of casualty repairs, floor covering replacements, water heaters, and heating system upgrades. These improvements were funded from operating cash flow and insurance proceeds. The Partnership evaluates the capital improvement needs of the property during the year and currently expects to complete an additional $146,000 in capital improvements during the remainder of 2004. Additional capital improvements may be considered and will depend on the physical condition of the property as well as the anticipated cash flow generated by the property. Arbours of Hermitage Apartments During the nine months ended September 30, 2004, the Partnership completed approximately $189,000 of capital improvements at Arbours of Hermitage Apartments, consisting primarily of structural improvements and floor covering and appliance replacements. These improvements were funded from operating cash flow. The Partnership evaluates the capital improvement needs of the property during the year and currently expects to complete an additional $12,000 in capital improvements during the remainder of 2004. Additional capital improvements may be considered and will depend on the physical condition of the property as well as the anticipated cash flow generated by the property. Briar Bay Racquet Club Apartments During the nine months ended September 30, 2004, the Partnership completed approximately $61,000 of capital improvements at Briar Bay Racquet Club Apartments, consisting primarily of structural and floor covering replacements. These improvements were funded from operating cash flow. The property was sold subsequent to September 30, 2004. Belmont Place Apartments During 2003, the General Partner determined that Belmont Place Apartments suffered from severe structural defects in the buildings' foundation and as such, demolished the property. The General Partner has designed and approved a redevelopment plan for the property. Site work on the redevelopment began during the fourth quarter of 2003. The Partnership has entered into a construction contract with Casden Builders, Inc. (a related party) to develop the new Belmont Place Apartments at an estimated cost of approximately $26.4 million. The construction contract provides for the payment of the cost of the work plus a fee without a maximum guaranteed price. Construction is expected to be completed in 2005. The Partnership plans to fund these construction expenditures from operating cash flow, proceeds from a cross collateralized loan, partnership reserves and loans from the General Partner. During the nine months ended September 30, 2004, approximately $12,332,000 of construction costs were incurred. These expenditures included capitalized construction period interest of approximately $299,000 and capitalized property tax expense of approximately $186,000. The Partnership anticipates additional construction costs of approximately $6.9 million during the remainder of 2004. Citadel Apartments During the nine months ended September 30, 2004, the Partnership completed approximately $29,000 of capital improvements at Citadel Apartments, consisting primarily of air conditioning unit, appliance and floor covering replacements. These improvements were funded from operating cash flow. The Partnership evaluates the capital improvement needs of the property during the year and currently expects to complete an additional $116,000 in capital improvements during the remainder of 2004. Additional capital improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and the anticipated cash flow generated by the property. Citadel Village Apartments During the nine months ended September 30, 2004, the Partnership completed approximately $509,000 of capital improvements at Citadel Village Apartments, consisting primarily of casualty repairs from a fire and appliance and floor covering replacements. These improvements were funded from operating cash flow and insurance proceeds. The Partnership evaluates the capital improvement needs of the property during the year and currently expects to complete an additional $12,000 in capital improvements during the remainder of 2004. Additional capital improvements may be considered and will depend on the physical condition of the property as well as the anticipated cash flow generated by the property. Foothill Place Apartments During the nine months ended September 30, 2004, the Partnership completed approximately $534,000 of capital improvements at Foothill Place Apartments, consisting primarily of water heater and plumbing fixture installations, appliance and floor covering replacements and structural upgrades. These improvements were funded from operating cash flow. The Partnership evaluates the capital improvement needs of the property during the year and currently expects to complete an additional $45,000 in capital improvements during the remainder of 2004. Additional capital improvements may be considered and will depend on the physical condition of the property as well as the anticipated cash flow generated by the property. Knollwood Apartments During the nine months ended September 30, 2004, the Partnership completed approximately $200,000 of capital improvements at Knollwood Apartments, consisting primarily of roof replacement and water heater, appliance and floor covering replacements. These improvements were funded from operating cash flow and insurance proceeds. The Partnership evaluates the capital improvement needs of the property during the year and currently expects to complete an additional $5,000 in capital improvements during the remainder of 2004. Additional capital improvements may be considered and will depend on the physical condition of the property as well as the anticipated cash flow generated by the property. Lake Forest Apartments During the nine months ended September 30, 2004, the Partnership completed approximately $170,000 of capital improvements at Lake Forest Apartments, consisting primarily of structural upgrades and floor covering and appliance replacements. These improvements were funded from operating cash flow and insurance proceeds. The Partnership evaluates the capital improvement needs of the property during the year and currently expects to complete an additional $5,000 in capital improvements during the remainder of 2004. Additional capital improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and the anticipated cash flow generated by the property. Nob Hill Villa Apartments During the nine months ended September 30, 2004, the Partnership completed approximately $203,000 of capital improvements at Nob Hill Villa Apartments, consisting primarily of appliance and floor covering replacements, water heater replacements and plumbing fixtures. These improvements were funded from operating cash flow. This property was sold subsequent to September 30, 2004. Point West Apartments During the nine months ended September 30, 2004, the Partnership completed approximately $3,000 of capital improvements at Point West Apartments, consisting primarily of floor covering replacements. These improvements were funded from operating cash flow. The property was sold on March 31, 2004. Post Ridge Apartments During the nine months ended September 30, 2004, the Partnership completed approximately $120,000 of capital improvements at Post Ridge Apartments, consisting primarily of parking area improvements, roof replacements, and floor covering and water heater replacements. These improvements were funded from operating cash flow. The Partnership evaluates the capital improvement needs of the property during the year and currently expects to complete an additional $30,000 in capital improvements during the remainder of 2004. Additional capital improvements may be considered and will depend on the physical condition of the property as well as the anticipated cash flow generated by the property. Rivers Edge Apartments During the nine months ended September 30, 2004, the Partnership completed approximately $52,000 of capital improvements at Rivers Edge Apartments, consisting primarily of floor covering replacements and structural improvements. These improvements were funded from operating cash flow. The Partnership evaluates the capital improvement needs of the property during the year and currently expects to complete an additional $57,000 in capital improvements during the remainder of 2004. Additional capital improvements may be considered and will depend on the physical condition of the property as well as the anticipated cash flow generated by the property. Village East Apartments During the nine months ended September 30, 2004, the Partnership completed approximately $197,000 of capital improvements at Village East Apartments, consisting primarily of floor covering replacements and plumbing fixtures. These improvements were funded from operating cash flow and insurance proceeds. The Partnership evaluates the capital improvement needs of the property during the year and currently expects to complete an additional $14,000 in capital improvements during the remainder of 2004. Additional capital improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and the anticipated cash flow generated by the property. Additional capital expenditures will be incurred only if cash is available from operations or from Partnership reserves. To the extent that such budgeted capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected at least in the short term. The Partnership's assets are thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness encumbering the Partnership's investment properties of approximately $53,653,000 matures at various dates between 2005 and 2022 with balloon payments of approximately $27,130,000 due in 2005, $3,810,000 due in 2007, $9,003,000 due in 2014 and $173,000 due in 2022. The General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity dates. If a property cannot be refinanced or sold for a sufficient amount, the Partnership will risk losing such property through foreclosure. The Partnership distributed the following amounts during the nine months ended September 30, 2004 and 2003 (in thousands except per unit data): Nine Months Per Nine Months Per Ended Limited Ended Limited September 30, Partnership September 30, Partnership 2004 Unit 2003 Unit Operations $ -- $ -- $1,827 $ 5.12 Sale (1) -- -- 3,743 10.50 Total $ -- $ -- $5,570 $15.62 (1) Proceeds from the sale of Southport Apartments in March 2003. In conjunction with the transfer of funds from certain majority-owned sub-tier limited partnerships to the Partnership, approximately $7,000 and $6,000 was distributed to the general partner of the majority owned sub-tier limited partnerships during the nine months ended September 30, 2004 and 2003, respectively. The Partnership's cash available for distribution is reviewed on a monthly basis. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves, and the timing of debt maturities, refinancings and/or property sales. There can be no assurance, however, that the Partnership will generate sufficient funds from operations, after planned capital improvement expenditures, to permit distributions to its partners during the remainder of 2004 or subsequent periods. Other In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 203,674.50 limited partnership units (the "Units") in the Partnership representing 59.42% of the outstanding Units at September 30, 2004. A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. In this regard, on November 8, 2004 AIMCO Properties, L.P. made a tender offer to purchase any and all of the Units not owned by affiliates of AIMCO for a purchase price of $181.82 per Unit. The tender off expires on December 8, 2004, unless extended. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 59.42% of the outstanding units, AIMCO is in a position to control all such voting decisions with respect to the Partnership. Although the General Partner owes fiduciary duties to the limited partners of the Partnership, the General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the General Partner, as general partner, to the Partnership and its limited partners may come into conflict with the duties of the General Partner to AIMCO as its sole stockholder. Critical Accounting Policies and Estimates The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require the Partnership to make estimates and assumptions. The Partnership believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity. Impairment of Long-Lived Assets Investment properties are recorded at cost, less accumulated depreciation, unless considered impaired. If events or circumstances indicate that the carrying amount of a property may be impaired, the Partnership will make an assessment of its recoverability by estimating the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the aggregate future cash flows, the Partnership would recognize an impairment loss to the extent the carrying amount exceeds the fair value of the property. Real property investments are subject to varying degrees of risk. Several factors may adversely affect the economic performance and value of the Partnership's investment properties. These factors include, but are not limited to, changes in the national, regional and local economic climate; local conditions, such as an oversupply of multifamily properties; competition from other available multifamily property owners and changes in market rental rates. Any adverse changes in these factors could cause impairment of the Partnership's assets. Revenue Recognition The Partnership generally leases apartment units for twelve-month terms or less. Rental income attributable to leases is recognized monthly as it is earned. The Partnership evaluates all accounts receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants. The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Any concessions given at the inception of the lease are amortized over the life of the lease. ITEM 3. Quantitative and Qualitative Disclosures about Market Risk The Partnership is exposed to market risks from adverse changes in interest rates. In this regard, changes in U.S. interest rates affect the interest earned on the Partnership's cash and cash equivalents as well as interest paid on its indebtedness. As a policy, the Partnership does not engage in speculative or leveraged transactions, nor does it hold or issue financial instruments for trading purposes. The Partnership is exposed to changes in interest rates primarily as a result of its borrowing activities used to maintain liquidity and fund business operations. To mitigate the impact of fluctuations in U.S. interest rates, the Partnership maintains its debt as fixed rate in nature by borrowing on a long-term basis. Based on interest rates at September 30, 2004, a 100 basis point increase or decrease in market interest rates would not have a material impact on the Partnership. The following table summarizes the Partnership's debt obligations at September 30, 2004. The interest rates represent the weighted-average rates. The fair value of the debt obligations approximated the recorded value as of September 30, 2004. Principal amount by expected maturity: Long Term Debt Fixed Rate Debt Average Interest Rate (in thousands) 2004 $ 225 7.54% 2005 27,869 6.67% 2006 797 7.54% 2007 4,670 7.19% 2008 928 7.54% Thereafter 19,164 7.54% Total $53,653 ITEM 4. CONTROLS AND PROCEDURES (a) Disclosure Controls and Procedures. The Partnership's management, with the participation of the principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnership's principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnership's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnership's principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnership's disclosure controls and procedures are effective. (b) Internal Control Over Financial Reporting. There have not been any changes in the Partnership's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captioned Heller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. In general terms, the proposed settlement provides for certification for settlement purposes of a settlement class consisting of all limited partners in this Partnership and others (the "Partnerships") as of December 20, 2002, the dismissal with prejudice and release of claims in the Nuanes and Heller litigation, payment by AIMCO of $9.9 million (which shall be distributed to settlement class members after deduction of attorney fees and costs of class counsel and certain costs of settlement) and up to $1 million toward the cost of independent appraisals of the Partnerships' properties by a court appointed appraiser. An affiliate of the General Partner has also agreed to make at least one round of tender offers to purchase all of the partnership interests in the Partnerships within one year of final approval, if it is granted, and to provide partners with the independent appraisals at the time of these tenders. The proposed settlement also provided for the limitation of the allowable costs which the General Partner or its affiliates will charge the Partnerships in connection with this litigation and imposes limits on the class counsel fees and costs in this litigation. On April 11, 2003, notice was distributed to limited partners providing the details of the proposed settlement. On June 13, 2003, the court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an appeal (the "Appeal") seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On November 24, 2003, the Objector filed an application requesting the court order AIMCO to withdraw settlement tender offers it had commenced, refrain from making further offers pending the appeal and auction any units tendered to third parties, contending that the offers did not conform with the terms of the settlement. Counsel for the Objector (on behalf of another investor) had alternatively requested the court take certain action purportedly to enforce the terms of the settlement agreement. On December 18, 2003, the court heard oral argument on the motions and denied them both in their entirety. The Objector filed a second appeal challenging the court's use of a referee and its order requiring Objector to pay those fees. On January 28, 2004, the Objector filed his opening brief in the Appeal. On April 23, 2004, the General Partner and its affiliates filed a response brief in support of the settlement and the judgment thereto. The plaintiffs have also filed a brief in support of the settlement. On June 4, 2004, Objector filed a reply to the briefs submitted by the General Partner and Plaintiffs. In addition both the Objector and plaintiffs filed briefs in connection with the second appeal. The Court of Appeals heard oral argument on both appeals on September 22, 2004 and took the matters under submission. The General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnership's overall operations. On August 8, 2003 AIMCO Properties L.P., an affiliate of the General Partner, was served with a complaint in the United States District Court, District of Columbia alleging that AIMCO Properties L.P. willfully violated the Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. On March 5, 2004 the plaintiffs filed an amended complaint also naming NHP Management Company, which is also an affiliate of the General Partner. The complaint is styled as a Collective Action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. failed to compensate maintenance workers for time that they were required to be "on-call". Additionally, the complaint alleges AIMCO Properties L.P. failed to comply with the FLSA in compensating maintenance workers for time that they worked in responding to a call while "on-call". The defendants have filed an answer to the amended complaint denying the substantive allegations. Some discovery has taken place and settlement negotiations continue. Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its financial condition or results of operations. Similarly, the General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership's consolidated financial condition or results of operations. ITEM 6. EXHIBITS See Exhibit Index Attached. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CONSOLIDATED CAPITAL PROPERTIES IV By: CONCAP EQUITIES, INC. General Partner By: /s/Martha L. Long Martha L. Long Senior Vice President By: /s/Stephen B. Waters Stephen B. Waters Vice President Date: November 12, 2004 S-K Reference Number Document Description 3 Certificate of Limited Partnership, as amended to date. 10.62 Contracts related to refinancing of debt: (a) Deed of Trust and Security Agreement dated March 27, 1995 between Nob Hill Villa Apartment Associates, L.P., a Tennessee limited partnership, and First Union National Bank of North Carolina, a North Carolina Corporation. (b) Promissory Note dated March 27, 1995 between Nob Hill Villa Apartment Associates, L.P., a Tennessee limited partnership, and First Union National Bank of North Carolina, a North Carolina Corporation. (c) Assignment of leases and Rents dated March 27, 1995 between Nob Hill Villa Apartment Associates, L.P., a Tennessee limited partnership, and First Union National Bank of North Carolina, a North Carolina Corporation. 10.63 Multifamily Note dated November 30, 1995 between Briar Bay Apartments, LTD., a Texas limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1995). 10.64 Multifamily Note dated November 30, 1995 between CCP IV Associates, LTD., a Texas limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1995). 10.65 Multifamily Note dated November 30, 1995 between CCP IV Associates, LTD., a Texas limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1995). 10.66 Multifamily Note dated November 30, 1995 between CCP IV Associates, LTD., a Texas limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1995). 10.67 Multifamily Note dated November 30, 1995 between CCP IV Associates, LTD., a Texas limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1995). 10.68 Multifamily Note dated November 30, 1995 between Foothill Chimney Associates Limited Partnership, a Georgia limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1995). 10.69 Multifamily Note dated November 30, 1995 between Foothill Chimney Associates Limited Partnership, a Georgia limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1995). 10.78 Multifamily Note dated February 2, 2000 between Apartment Associates, Ltd., a Texas limited partnership and ARCS Commercial Mortgage Co., L.P., a California limited partnership. (Incorporated by reference to Annual Report on Form 10-K ended December 31, 1999). 10.79 Multifamily Note dated February 28, 2000 between ConCap Citadel Associated, Ltd., a Texas limited partnership and ARCs Commercial Mortgage Cl., L.P., a California corporation. (Incorporated by reference to Annual Report on Form 10-K ended December 31, 1999). 10.81 Multifamily Note dated August 29, 2000 between ConCap Rivers Edge Associates, Ltd., a Texas Limited Partnership, and GMAC Commercial Mortgage Corporation, a California Corporation. (Incorporated by reference to Quarterly Report on Form 10-Q for quarter ended September 30, 2000.) 10.85 Multifamily Note dated September 27, 2001 between Consolidated Capital Properties IV, a California limited partnership, doing business in Nebraska as Consolidated Capital Properties IV Limited Partnership and AIMCO Properties, L.P., a Delaware limited partnership, in favor of GMAC Commercial Mortgage Corporation, a California corporation (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2001). 10.86 Multifamily Note dated December 20, 2001 between Post Ridge Associates, Ltd., a Tennessee limited partnership, and GMAC Commercial Mortgage Corporation, a California corporation. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2001). 10.87 Purchase and Sale Contract dated January 14, 2003 between South Port CCP IV, L.L.C., a South Carolina limited liability company, and Warren Lortie Associates, Inc., a California corporation. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2003). 10.88 Reinstatement and First Amendment of Purchase and Sale Contract between South Port IV, L.L.C., a South Carolina limited liability company, and Warren Lortie Associates, Inc., a California corporation. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2003). 10.89 Form of Multifamily Note dated October 22, 2003 between Post Ridge Associates, Ltd., Limited Partnership, a Tennessee limited partnership, and GMAC Commercial Mortgage Corporation, a California corporation. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2000). 10.90 Form of Replacement Reserve Agreement dated October 22, 2003 between Post Ridge Associates, Ltd., Limited Partnership, a Tennessee limited partnership, and GMAC Commercial Mortgage Corporation, a California corporation. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2003). 10.91 Form of Repair Agreement dated October 22, 2003 between Post Ridge Associates, Ltd., Limited Partnership, a Tennessee limited partnership, and GMAC Commercial Mortgage Corporation, a California corporation. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2003). 10.92 Form of Cross-Collateralization Agreement dated October 22, 2003 between Post Ridge Associates, Ltd., Limited Partnership, a Tennessee limited partnership, and Federal Home Loan Mortgage Corporation, a corporation organized and existing under the laws of the United States of America. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2003). 10.93 Form of Cross-Collateralization Agreement dated October 22, 2003 between Foothill Chimney Associates Limited Partnership, a Georgia limited partnership, and Federal Home Loan Mortgage Corporation, a corporation organized and existing under the laws of the United States of America. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2003.) 10.94 Form of Debt Service Escrow Agreement dated October 22, 2003 between Foothill Chimney Associates Limited Partnership, a Georgia limited partnership, and Federal Homes Loan Mortgage Corporation, a corporate instrumentality of the United States of America. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2003.) 10.95 Form of Second Modification to Replacement Reserve Agreement dated October 22, 2003 between Foothill Chimney Associates Limited Partnership, a Georgia limited partnership, and Federal Homes Loan Mortgage Corporation, a corporate instrumentality of the United States of America. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2003.) 10.96 Purchase and Sale Contract between Point West Associates Limited Partnership, a Georgia limited partnership, as Seller and Focus Development, Inc., a Georgia corporation, as Purchaser, effective November 17, 2003. (Incorporated by reference to Form 8-K dated March 31, 2004). 10.97 First Amendment to Purchase and Sale Contract dated January 23, 2004 between Point West Associates Limited Partnership, a Georgia limited partnership, as Seller and Focus Development, Inc., a Georgia corporation, as Purchaser. (Incorporated by reference to Form 8-K dated March 31, 2004). 10.98 Multifamily Note dated June 21, 2004 between Concap Citadel Associates, Ltd., a Texas limited partnership, and GMAC Commercial Mortgage Bank. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2004). 10.99 Replacement Reserve Agreement dated June 21, 2004 between Concap Citadel Associates, Ltd. a Texas limited partnership, and GMAC Commercial Mortgage Bank. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2004). 10.100 Allonge and Amendment to Multifamily Note dated June 21, 2004 between Concap Citadel Associates, Ltd., a Texas limited partnership, and Federal Home Loan Mortgage Corporation. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2004). 10.101 Multifamily Note dated June 8, 2004 between Consolidated Capital Properties IV, a California limited partnership, doing business in Nebraska as Consolidated Capital Properties IV Limited Partnership and GMAC Commercial Mortgage Bank. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2004). 10.102 Replacement Reserve Agreement dated June 8, 2004 between Consolidated Capital Properties IV, a California limited partnership, doing business in Nebraska as Consolidated Capital Properties IV Limited Partnership and GMAC Commercial Mortgage Bank. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2004). 10.103 Allonge and Amendment to Multifamily Note dated June 8, 2004 between Consolidated Capital Properties IV, a California limited partnership, doing business in Nebraska as Consolidated Capital Properties IV Limited Partnership and Federal Home Loan Mortgage Corporation. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2004). 10.104 Purchase and Sale Contract between Briar Bay Associates, Ltd., a Texas limited partnership, as Seller, and Victoria Real Estate Management, Inc., a Florida corporation, as Purchaser, effective September 13, 2004. (Incorporated by reference to Form 8-K dated September 13, 2004). 31.1 Certification of equivalent of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of equivalent of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Exhibit 31.1 CERTIFICATION I, Martha L. Long, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital Properties IV; 2. Based on my knowledge, this report does not contain any untrue statement of a 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 period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) 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 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 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 financial reporting; and 5. The registrant's other certifying officer(s) 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. Date: November 12, 2004 /s/Martha L. Long Martha L. Long Senior Vice President of ConCap Equities, Inc., equivalent of the chief executive officer of the Partnership Exhibit 31.2 CERTIFICATION I, Stephen B. Waters, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital Properties IV; 2. Based on my knowledge, this report does not contain any untrue statement of a 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 period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) 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 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 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 financial reporting; and 5. The registrant's other certifying officer(s) 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. Date: November 12, 2004 /s/Stephen B. Waters Stephen B. Waters Vice President of ConCap Equities, Inc., equivalent of the chief financial officer of the Partnership Exhibit 32.1 Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report on Form 10-Q of Consolidated Capital Properties IV (the "Partnership"), for the quarterly period ended September 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Martha L. Long, as the equivalent of the chief executive officer of the Partnership, and Stephen B. Waters, as the equivalent of the chief financial officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. /s/Martha L. Long Name: Martha L. Long Date: November 12, 2004 /s/Stephen B. Waters Name: Stephen B. Waters Date: November 12, 2004 This certification is furnished with this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.