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, 1994
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: 0-13329
HUTTON/CONAM REALTY INVESTORS 4
(Exact name of registrant as specified in its charter)
California 11-2685746
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 World Financial Center, 29th Floor, New York, NY 10285
(Address of principal executive offices) (Zip Code)
(212) 526-3237
(Registrant's telephone number, including area code)
Indicate by check mark 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 preceding 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
Consolidated Balance Sheets
September 30, December 31,
1994 1993
Assets
Investments in real estate:
Land $ 12,088,984 $ 12,088,984
Buildings and improvements 48,221,166 48,197,685
---------- ----------
60,310,150 60,286,669
Less- accumulated depreciation (18,388,066) (16,862,076)
---------- ----------
41,922,084 43,424,593
Cash and cash equivalents 3,112,018 2,201,276
Other assets 22,527 20,322
---------- ----------
Total Assets $ 45,056,629 $ 45,646,191
========== ==========
Liabilities and Partners' Capital
Liabilities:
Mortgage payable $ 5,061,400 $ 5,090,828
Distribution payable 0 640,550
Accounts payable and accrued expenses 748,686 138,609
Due to general partners and affiliates 41,762 51,520
Security deposits 273,493 273,191
--------- ---------
Total Liabilities 6,125,341 6,194,698
--------- ---------
Partners' Capital (Deficit):
General Partners (170,605) (584,636)
Limited Partners 39,101,893 40,036,129
---------- ---------
Total Partners' Capital 38,931,288 39,451,493
---------- ----------
Total Liabilities and Partners' Capital $ 45,056,629 $ 45,646,191
========== ==========
Consolidated Statements of Operations
Three months ended Nine months ended
September 30, September 30,
1994 1993 1994 1993
Income
Rental $ 1,887,765 $ 1,821,450 $ 5,655,581 $ 5,379,292
Interest 22,152 12,055 46,831 34,980
--------- --------- --------- ---------
Total Income 1,909,917 1,833,505 5,702,412 5,414,272
--------- --------- --------- ---------
Expenses
Property operating 957,061 1,028,265 2,898,098 2,904,680
Depreciation 508,730 507,769 1,525,990 1,523,035
Interest 128,286 129,252 385,605 388,428
General and administrative 40,558 33,584 131,824 130,099
--------- --------- --------- ---------
Total Expenses 1,634,635 1,698,870 4,941,517 4,946,242
--------- --------- --------- ---------
Net income $ 275,282 $ 134,635 $ 760,895 $ 468,030
========= ========= ========= =========
Net Income Allocated:
To the General Partners $ 202,430 $ 60,831 $ 542,141 $ 246,350
To the Limited Partners 72,852 73,804 218,754 221,680
------- -------- ------- -------
$ 275,282 $ 134,635 $ 760,895 $ 468,030
======= ======== ======= =======
Per limited partnership unit
(128,110 outstanding) $.57 $.58 $1.71 $1.73
Consolidated Statement of Partners' Capital
For the nine months ended September 30, 1994
General Limited Total
Partners' Partners' Partners'
Deficit Capital Capital
Balance at January 1, 1994 $ (584,636) $ 40,036,129 $ 39,451,493
Net income 542,141 218,754 760,895
Cash distributions (128,110) (1,152,990) (1,281,100)
------- ---------- ----------
Balance at September 30, 1994 $ (170,605) $ 39,101,893 $ 38,931,288
======= ========== ==========
Consolidated Statements of Cash Flows
For the nine months ended September 30, 1994 and 1993
1994 1993
Cash Flows from Operating Activities:
Net income $ 760,895 $ 468,030
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,525,990 1,523,035
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Other assets (2,205) 0
Accounts payable and accrued expenses 610,077 606,468
Due to general partners and affiliates (9,758) (8,482)
Security deposits 302 27,457
--------- ---------
Net cash provided by operating activities 2,885,301 2,616,508
--------- ---------
Cash Flows from Investing Activities:
Additions to real estate (23,481) (59,895)
------ ------
Net cash used for investing activities (23,481) (59,895)
------ ------
Cash Flows from Financing Activities:
Mortgage principal payments (29,428) (26,605)
Distributions (1,921,650) (1,886,064)
--------- ---------
Net cash used for financing activities (1,951,078) (1,912,669)
--------- ---------
Net increase in cash and cash equivalents 910,742 643,944
Cash and cash equivalents at beginning of period 2,201,276 2,049,371
--------- ---------
Cash and cash equivalents at end of period $ 3,112,018 $ 2,693,315
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 385,605 $ 388,428
Notes to the Consolidated Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1993 audited financial statements included in its
Annual Report on Form 10-K for the year ended December 31, 1993.
The unaudited financial statements include all adjustments consisting of only
normal recurring accruals which are, in the opinion of management, necessary to
present a fair statement of financial position as of September 30, 1994 and the
results of operations for the three and nine months then ended and the changes
in partners' capital and cash flows for the nine months then ended. Results of
operations for the period are not necessarily indicative of the results to be
expected for the full year.
No significant events have occurred subsequent to fiscal year 1993, and no
material contingencies exist, which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
Part 1, Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
- - -------------------------------
At September 30, 1994, the Partnership had cash and cash equivalents of
$3,112,018 compared with $2,201,276 at December 31, 1993. The increase is
primarily attributable to net cash from operations exceeding capital
improvement expenditures, mortgage principal payments and distributions to
limited partners. The Partnership expects sufficient cash flow to be generated
from operations to meet its current operating expenses and debt service
requirements.
The note secured by a mortgage on the Trails at Meadowlakes matures on July 19,
1995, at which time the Partnership will be required to pay $5,025,984 to the
mortgage lender. The Partnership is exploring opportunities to market some of
the properties for sale, however, it is uncertain if a sale will be completed
before the maturity of the note. Alternatively, refinancing the property's
mortgage loan is not an attractive option at this time, given rising interest
rates and the high expenses associated with a refinancing.
In order to build the Partnership's cash reserves in anticipation of this
maturing debt, the General Partners suspended the payment of cash distributions
commencing with the third quarter of 1994. It is likely that distributions
will remain suspended until the debt is repaid from sales proceeds or
Partnership cash reserves. Once the debt is resolved, the General Partners will
evaluate the Partnership's cash flow from operations, cash reserves and future
cash requirements to determine when and at what level cash distributions may be
reinstated.
Accounts payable and accrued expenses were $748,686 at September 30, 1994
compared with $138,609 at December 31, 1993. The increase reflects the accrual
of real estate taxes for the first nine months of 1994.
Results of Operations
- - ---------------------
Net income for the three and nine month periods ended September 30, 1994
totalled $275,282 and $760,895, respectively, compared with net income of
$134,635 and $468,030 for the corresponding periods in 1993. After adding back
depreciation, a non-cash expense, and subtracting mortgage amortization,
operations generated cash flow of $773,955 and $2,257,457 for the three and
nine months ended September 30, 1994, compared with cash flow of $633,312 and
$1,964,460 for the corresponding periods in 1993. The increase in net income
and cash flow is primarily attributable to an increase in rental income.
Rental income for the three and nine month periods ended September 30, 1994
totalled $1,887,765 and $5,655,581, respectively, compared with $1,821,450 and
$5,379,292 for the corresponding periods in 1993. The increase in 1994
reflects increased revenues at all six properties due to rental rate increases
instituted during the past year. Interest income increased for both the three
and nine months ended September 30, 1994 in comparison to a year earlier,
primarily due to the Partnership's higher cash balance.
Total expenses for the three and nine months ended September 30, 1994 totalled
$1,634,635 and $4,941,517, respectively, compared with $1,698,870 and
$4,946,242 for the corresponding periods in 1993. All components of total
expenses remained relatively in line with 1993 levels.
For the three and nine months ended September 30, 1994 and 1993, average
occupancy levels at each of the properties were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
Property 1994 1993 1994 1993
- - -------- ---- ---- ---- ----
Cypress Lakes 95% 94% 96% 97%
Pelican Landing 97% 96% 97% 95%
River Hill 96% 97% 96% 96%
Shadowood Village 96% 96% 95% 96%
Trails at MeadowLakes 94% 95% 96% 96%
Village at the Foothills II 94% 96% 95% 95%
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and Reports on Form 8-K.
(a) Exhibits: None
(b) Reports on Form 8-K - No reports on Form 8-K were filed
during the three-month period covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HUTTON/CONAM REALTY INVESTORS 4
BY: RI 3-4 REAL ESTATE SERVICES, INC.
General Partner
Date: November 11, 1994 BY: /S/ Paul L. Abbott
----------------------
Director, President, Chief
Executive Officer and Chief
Financial Officer