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 June 30, 1996
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 Incorporation or Organization I.R.S. Employer Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn: 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
At June 30, At December 31,
1996 1995
Assets
Investments in real estate:
Land $7,526,126 $7,526,126
Buildings and improvements 26,290,257 26,226,602
33,816,383 33,752,728
Less accumulated depreciation (9,555,963) (8,958,549)
24,260,420 24,794,179
Cash and cash equivalents 2,543,793 2,436,356
Other assets 19,719 16,206
Total Assets $26,823,932 $27,246,741
Liabilities and Partners' Capital
Liabilities:
Distribution payable $ 533,792 $587,171
Accounts payable and accrued expenses 358,196 168,831
Due to affiliates 34,357 32,209
Security deposits 146,815 143,040
Total Liabilities 1,073,160 931,251
Partners' Capital:
General Partners ----- -----
Limited Partners 25,750,772 26,315,490
Total Partners' Capital 25,750,772 26,315,490
Total Liabilities and Partners' Capital $26,823,932 $27,246,741
Consolidated Statement of Partners' Capital
For the six months ended June 30, 1996
Limited General
Partners Partners Total
Balance at December 31, 1995 $26,315,490 $ ----- $26,315,490
Net Income 396,107 106,758 502,865
Distributions (960,825) (106,758) (1,067,583)
Balance at June 30, 1996 $25,750,772 $ ----- $25,750,772
Consolidated Statements of Operations
Three months ended June 30, Six months ended June 30,
1996 1995 1996 1995
Income
Rental $1,191,023 $1,919,473 $2,372,172 $3,846,998
Interest 26,041 55,279 53,372 98,472
Other 4,295 ----- 4,295 -----
Total Income 1,221,359 1,974,752 2,429,839 3,945,470
Expenses
Property operating $607,417 $1,097,657 $1,253,179 $2,184,401
Depreciation 298,922 490,093 597,414 987,422
Interest ----- 127,497 ----- 255,264
General and administrative 28,106 53,133 76,381 96,873
Total Expenses 934,445 1,768,380 1,926,974 3,523,960
Net Income $286,914 $206,372 $502,865 $421,510
Net Income Allocated:
To the General Partners $ 53,379 $ 53,379 $106,758 $ 53,379
To the Limited Partners 233,535 152,993 396,107 368,131
$286,914 $206,372 $502,865 $421,510
Per limited partnership unit
(128,110 outstanding) $ 1.82 $ 1.19 $ 3.09 $ 2.87
Consolidated Statements of Cash Flows
For the six months ended June 30,
1996 1995
Cash Flows From Operating Activities:
Net income $502,865 $421,510
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 597,414 987,422
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Other assets (3,513) (2,574)
Accounts payable and accrued expenses 189,365 402,433
Security deposits 3,775 (12,448)
Due to affiliates 2,148 1,422
Net cash provided by operating activities 1,292,054 1,797,765
Cash Flows From Investing Activities:
Additions to real estate (63,655) (149,630)
Net cash used for investing activities (63,655) (149,630)
Cash Flows From Financing Activities:
Mortgage principal payments ----- (21,425)
Distributions (1,120,962) -----
Net cash used for financing activities (1,120,962) (21,425)
Net increase in cash and cash equivalents 107,437 1,626,710
Cash and cash equivalents, beginning of period 2,436,356 3,234,383
Cash and cash equivalents, end of period $2,543,793 $4,861,093
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ ----- $255,264
Notes to the Consolidated Financial Statements
The unaudited interim consolidated financial statements should be
read in conjunction with the Partnership's annual 1995 audited
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 June 30,
1996 and the results of operations and cash flows for the six
months ended June 30, 1996 and 1995 and the statement of
partners' capital for the six months ended June 30, 1996.
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
1995, and no material contingencies exist which would require
disclosure in this interim report per regulations S-X, Rule 10-
01, Paragraph (a)(5).
Part I, Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
At June 30, 1996, the Partnership had cash and cash equivalents
of $2,543,793, which were invested in unaffiliated money market
funds, relatively unchanged from the balance at December 31,1995.
The Partnership expects sufficient cash to be generated from
operations to meet its current operating expenses and debt
service requirements.
Accounts payable and accrued expenses increased from $168,831 at
December 31, 1995 to $358,196 at June 30, 1996 primarily as a
result of accruals for real estate taxes for all four properties.
The General Partners continue to perform various property
improvements at Pelican Landing and Shadowood Village, and
routine repairs at Village at the Foothills II. The improvements
include exterior painting, asphalt repairs, and landscaping at
Pelican Landing, and interior improvements at both Pelican
Landing and Shadowood Village. The improvements are currently
underway and are expected to be completed by the end of the year.
The General Partners declared a cash distribution of $3.75 per
Unit for the quarter ended June 30, 1996 which will be paid to
investors on or about August 15, 1996. The level of future
distributions will be evaluated on a quarterly basis and will
depend on the Partnership's operating results and future cash
needs.
The General Partners have engaged a commercial real estate broker
to market River Hill Apartments for sale. There can be no
assurances that a sale will be completed or that any particular
price for the property can be obtained. The original
construction contained structural deficiencies which required
significant repair in the late 1980s. These deficiencies may
affect our negotiations with prospective buyers with respect to a
final sales price. In the event a sale is not consummated, the
Partnership will continue to hold the property as an investment.
Results of Operations
Partnership operations for the three and six months ended
June 30, 1996, resulted in net income of $286,914 and $502,865,
respectively, compared with $206,372 and $421,510, respectively,
for the same periods in 1995. The increases were primarily due
to reductions in all expenses, partially offset by a decline in
rental and interest income. Net cash provided by operating
activities was $1,292,054 for the six months ended June 30, 1996,
a decrease from $1,797,765 for the same period in 1995. The
decrease was primarily attributable to the sale of Trails at
Meadowlakes and Cypress Lakes in July 1995.
Rental income for the three and six months ended June 30, 1996
was $1,191,023 and $2,372,172, respectively, compared with
$1,919,473 and $3,846,998, respectively, for the corresponding
periods in 1995. The decreases reflect the sale of Trails at
Meadowlakes and Cypress Lakes, partially offset by increases in
rental income at three of the four remaining properties as a
result of increased rental rates. Interest income declined from
1995 to 1996 as a result of the Partnership maintaining a reduced
cash balance.
Property operating expenses for the three and six months ending
June 30, 1996 decreased to $607,417 and $1,253,179, respectively,
from $1,097,657 and $2,184,401, respectively, for the
corresponding periods in 1995 primarily due to the sale of Trails
at Meadowlakes and Cypress Lakes. Depreciation for the three and
six months ended June 30, 1996 was lower compared to the same
period in 1995 primarily due to the July 1995 sale of Trails at
Meadowlakes and Cypress Lakes. Interest expense also was
eliminated due to the repayment of the mortgage secured by Trails
at Meadowlakes at the time the property was sold. General and
Administrative expenses for the three and six months ended
June 30, 1996 declined to $28,106 and $76,381, respectively, from
$53,133 and $96,873, respectively, for the corresponding periods
in 1995 primarily due to decreases in legal and appraisal expenses,
partially offset by higher Partnership administrative
expenses. During the first six months of 1996 and 1995, average
occupancy levels at each of the properties were as follows:
Property 1996 1995
Pelican Landing 97% 97%
River Hill Apartments 95% 95%
Shadowood Village 96% 94%
Village at the Foothills II 94% 94%
Part II Other Information
Items 1-4 Not applicable.
Item 5 Other Information
An offer dated May 28, 1996, was sent by Equity
Resource Fund XVIII to limited partners of the
Partnership to purchase up to 4.7% of their
limited partnership interests for $80 per unit
prior to the expiration of the offer on June 28, 1996.
On June 3, 1996, the General Partners of the
Partnership sent a letter to limited partners
recommending against the offer because the price
was inadequate, especially in view of the Net Asset
Value per Unit, which was estimated to be $230.60 as
of March 31, 1996.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K
were filed during the quarter ended June 30, 1996.
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: August 13, 1996 BY: /s/ Paul L Abbott
Director, President,
Chief Executive Officer and
Chief Financial Officer