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, 1995
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
Attention: Andre Anderson 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,
Assets 1995 1994
Investments in real estate:
Land $ 8,688,574 $ 12,088,984
Buildings and improvements 29,562,788 48,236,772
38,251,362 60,325,756
Less accumulated depreciation (12,689,494) (18,896,846)
25,561,868 41,428,910
Cash and cash equivalents 2,774,055 3,234,383
Other assets 18,606 22,527
Total Assets $ 28,354,529 $ 44,685,820
Liabilities and Partners' Capital
Liabilities:
Mortgage payable $ 0 $ 5,051,086
Distribution payable 587,171 0
Accounts payable and accrued expenses 494,852 137,009
Security deposits 141,352 288,335
Due to general partners and affiliates 48,628 54,369
Total Liabilities 1,272,003 5,530,799
Partners' Capital:
General Partners 0 0
Limited Partners 27,082,526 39,155,021
Total Partners' Capital 27,082,526 39,155,021
Total Liabilities and Partners' Capital $ 28,354,529 $ 44,685,820
Consolidated Statement of Partners' Capital
For the nine months ended September 30, 1995
General Limited
Partners Partners Total
Balance at January 1, 1995 $ 0 $ 39,155,021 $ 39,155,021
Net income 352,302 3,140,568 3,492,870
Cash distributions (352,302) (15,213,063) (15,565,365)
Balance at September 30, 1995 $ 0 $ 27,082,526 $ 27,082,526
Consolidated Statements of Operations
Three months ended Nine months ended
September 30, September 30,
Income 1995 1994 1995 1994
Rental $ 1,334,083 $ 1,887,765 $ 5,181,081 $ 5,655,581
Interest 112,852 22,152 211,324 46,831
Total Income 1,446,935 1,909,917 5,392,405 5,702,412
Expenses
Property operating 807,612 957,061 2,992,013 2,898,098
Interest 28,292 128,286 283,556 385,605
Depreciation 332,784 508,730 1,320,206 1,525,990
General and administrative 61,771 40,558 158,644 131,824
Total Expenses 1,230,459 1,634,635 4,754,419 4,941,517
Income from operations 216,476 275,282 637,986 760,895
Gain on sale of properties 2,854,884 0 2,854,884 0
Net Income $ 3,071,360 $ 275,282 $ 3,492,870 $ 760,895
Net Income Allocated:
To the General Partners 298,923 202,430 352,302 542,141
To the Limited Partners 2,772,437 72,852 3,140,568 218,754
$ 3,071,360 $ 275,282 $ 3,492,870 $ 760,895
Per limited partnership unit
(128,110 outstanding) $ 21.64 $ .57 $ 24.51 $ 1.71
Consolidated Statements of Cash Flows
For the nine months ended September 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income $ 3,492,870 $ 760,895
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 1,320,206 1,525,990
Gain on sale of properties (2,854,884) 0
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Other assets 3,921 (2,205)
Accounts payable and accrued expenses 357,843 610,077
Security deposits (146,983) 302
Due to general partners and affiliates (5,741) (9,758)
Net cash provided by operating activities 2,167,232 2,885,301
Cash Flows From Investing Activities:
Net proceeds from sale of properties 17,551,351 0
Additions to real estate (149,631) (23,481)
Net cash provided by (used for)
investing activities 17,401,720 (23,481)
Cash Flows from Financing Activities:
Mortgage principal payments (5,051,086) (29,428)
Distributions (14,978,194) (1,921,650)
Net cash used for financing activities (20,029,280) (1,951,078)
Net increase (decrease) in cash and
cash equivalents (460,328) 910,742
Cash and cash equivalents at beginning
of period 3,234,383 2,201,276
Cash and cash equivalents at end of period $ 2,774,055 $ 3,112,018
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 283,556 $ 385,605
Notes to the Consolidated Financial Statements
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1994 consolidated financial
statements within Form 10-K.
The unaudited consolidated financial statements include all adjustments which
are, in the opinion of management, necessary to present a fair statement of
financial position as of September 30, 1995 and the results of operations and
cash flows for the nine months ended September 30, 1995 and 1994 and the
statement of changes in partners' capital for the nine months ended September
30, 1995. Results of operations for the periods are not necessarily indicative
of the results to be expected for the full year.
The following significant events have occurred subsequent to fiscal year 1994
which require disclosure in this interim report per regulation S-X, rule 10-01,
paragraph (a)(5).
Sale of Properties
On July 20, 1995, the Partnership closed on the sale of Trails at Meadowlakes
and Cypress Lakes (the "Properties"). Trails at Meadowlakes and Cypress Lakes
sold for $8,940,000 and $8,825,000, respectively, to an institutional buyer
(the "Buyer"), which is unaffiliated with the Partnership. The selling price
was determined by arm's length negotiations between the Partnership and the
Buyer. The Partnership received net proceeds of $17,551,351 from the
transaction of which $5,057,952, representing outstanding principal and
interest, was used to fully satisfy the Partnership's mortgage obligation on
Trails at Meadowlakes. The transaction resulted in a gain on sale
of $2,854,884.
On August 22, 1995, the Partnership paid a special distribution of $14,252,238
to the limited partners. The special distribution was comprised of net proceeds
from the sale of the Properties and $1,758,839 from the Partnership's cash
reserves.
Part I, Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
At September 30, 1995, the Partnership had cash and cash equivalents of
$2,774,055, which were invested in unaffiliated money market funds, compared
with $3,234,383 at December 31, 1994. The decrease is primarily attributable
to cash flow used for mortgage principal payments and distributions exceeding
the cash provided by operating activities and net sale proceeds. The
Partnership expects sufficient cash flow to be generated from operations to
meet its current operating expenses.
The sales of Trails at Meadowlakes and Cypress Lakes (the "Properties") were
completed on July 20, 1995. The Properties were sold for $8,940,000 and
$8,825,000, respectively, to an institutional buyer, which is unaffiliated with
the Partnership. The Partnership received net proceeds of $17,551,351 from the
transaction of which $5,057,952, representing outstanding principal and
interest, was used to fully satisfy the Partnership's mortgage obligation on
Trails at Meadowlakes. The transaction resulted in the Partnership recognizing
gains of $1,960,811 and $894,073 on the sales of Trails at Meadowlakes and
Cypress Lakes, respectively.
On August 22, 1995, the Partnership paid a special cash distribution of
$14,252,238 or $111.25 per Unit to the limited partners. The special
distribution was comprised of net proceeds from the sale of the Properties and
$1,758,839 from the Partnership's cash reserves.
The General Partners reinstated quarterly cash distributions beginning with the
1995 second quarter distribution paid in August. The third quarter
distribution, in the amount of $3.75 per Unit, will be paid to limited partners
on or about November 15, 1995. Cash distributions will be determined on a
quarterly basis and will be based on cash flow generated by the Partnership.
Accounts payable and accrued expenses were $494,852 at September 30, 1995
compared to $137,009 at December 31, 1994. The increase reflects principally
the accrual and timing of payments due for real estate taxes for the two
remaining Florida properties and the one Texas property for the first nine
months of 1995.
Results of Operations
Net income for the three and nine months ended September 30, 1995 totalled
$3,071,360 and $3,492,870, respectively, compared with net income of $275,282
and $760,895 for the corresponding periods in 1994. The increase in net income
is primarily attributable to the $2,854,884 gain recognized on the sale of the
Properties, partially offset by a decrease in rental income. Excluding the
gain recognized on the sale of the properties, income from operations was down
for both the three- and nine-month periods in 1995 compared to 1994, primarily
as a result of lower rental income, partially offset by higher interest income
and lower depreciation and interest expense. After adding back depreciation, a
non-cash expense, and subtracting mortgage amortization and the gain on sales
of Trails at Meadowlakes and Cypress Lakes, operations generated cash flow of
$549,260 and $1,936,767, respectively, for the three and nine months ended
September 30, 1995, compared with cash flow of $773,955 and $2,2 57,457 for the
corresponding periods in 1994. The decrease in cash flow from operations is
primarily due to higher property operating expenses at all of the properties.
Rental income for the three and nine months ended September 30, 1995 totalled
$1,334,083 and $5,181,081, respectively, compared with $1,887,765 and
$5,655,581 for the corresponding periods in 1994. The decreases in 1995
reflect lower revenues primarily due to the sale of the properties. Interest
income for the three and nine months ended September 30, 1995 totalled $112,852
and $211,324, respectively, compared with interest income of $22,152 and
$46,831 for the corresponding periods in 1994. The increases in 1995 are due
primarily to increased available cash balances resulting from the suspension of
cash distributions beginning in the third quarter of 1994, and higher interest
rates in 1995. Total expenses for the three and nine months ended September
30, 1995 totalled $1,230,459 and $4,754,419, respectively, compared with total
expenses of $1,634,635 and $4,941,517 for the corresponding periods in 1994.
The decreases in 1995 reflect a decrease in interest expense, depreciation and,
in the three-month period, property operating expenses. All three expense
categories declined primarily as a result of the sale of the Properties.
Partially offsetting the reduction in property operating expenses due to the
sales was an increase in repairs and maintenance and insurance expense.
For the three- and nine-month periods ended September 30, 1995 and 1994,
average occupancy levels at each of the properties were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
Property 1995 1994 1995 1994
Pelican Landing 96% 97% 97% 97%
River Hill 97% 96% 96% 96%
Shadowood Village 95% 96% 95% 95%
Village at the Foothills II 95% 94% 95% 95%
PART II OTHER INFORMATION
Items 1-5 Not applicable.
Item 6 Exhibits and Reports on Form 8-K.
(a) Exhibits:
(27) Financial Data Schedule
(b) Reports on Form 8-K
On August 4, 1995, a Current Report on Form 8-K was filed
reporting the consummation of the sale of Trails of Meadowlakes
and Cypress Lakes Apartments for $8,940,000 and $8,825,000
respectively. Such information was provided in response to
Item 2 of Form 8-K.
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.
HUTTON/CONAM REALTY INVESTORS 4
BY: RI 3-4 REAL ESTATE SERVICES, INC.
General Partner
Date: November 14, 1995
BY: /s/ Paul L. Abbott
Name: Paul L. Abbott
Title: Director, President, Chief
Executive Officer and Chief
Financial Officer