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, 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 I.R.S. Employer Identification No.
Incorporation or Organization
3 World Financial Center, 29th Floor, 10285
New York, NY Attn: Andre Anderson Zip Code
Address of Principal Executive Offices
(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 September 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 (9,848,964) (8,958,549)
23,967,419 24,794,179
Cash and cash equivalents 2,697,209 2,436,356
Other assets 19,719 16,206
Total Assets $26,684,347 $27,246,741
Liabilities and Partners' Capital
Liabilities:
Distribution payable $ 533,791 $587,171
Accounts payable and accrued expenses 500,997 168,831
Due to affiliates 52,508 32,209
Security deposits 144,161 143,040
Total Liabilities 1,231,457 931,251
Partners' Capital:
General Partners _ _
Limited Partners 25,452,890 26,315,490
Total Partners' Capital 25,452,890 26,315,490
Total Liabilities and Partners' Capital $26,684,347 $27,246,741
Consolidated Statement of Partners' Capital
For the nine months ended September 30, 1996
Limited General
Partners Partners Total
Balance at December 31, 1995 $26,315,490 $ _ $26,315,490
Net Income 578,637 160,137 738,774
Distributions (1,441,237) (160,137) (1,601,374)
Balance at September 30, 1996 $25,452,890 $ _ $25,452,890
Consolidated Statements of Operations
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
Income
Rental $ 1,185,400 $1,334,083 $3,557,572 $5,181,081
Interest 26,750 112,852 80,122 211,324
Other _ _ 4,295 _
Total Income 1,212,150 1,446,935 3,641,989 5,392,405
Expenses
Property operating 624,697 807,612 1,877,876 2,992,013
Depreciation 293,002 332,784 890,415 1,320,206
Interest _ 28,292 _ 283,556
General and administrative 58,543 61,771 134,924 158,644
Total Expenses 976,242 1,230,459 2,903,215 4,754,419
Income from operations 235,908 216,476 738,774 637,986
Gain on sale of properties _ 2,854,884 _ 2,854,884
Net Income $235,908 $3,071,360 $738,774 $3,492,870
Net Income Allocated:
To the General Partners $ 53,379 $298,923 $160,137 $352,302
To the Limited Partners 182,529 2,772,437 578,637 3,140,568
$235,908 $3,071,360 $738,774 $3,492,870
Per limited partnership unit
(128,110 outstanding)
Income from operations $ 1.42 $ 1.36 $ 4.51 $ 4.23
Gain on sale of property _ 20.28 _ 20.28
Net Income $ 1.42 $ 21.64 $4.51 $24.51
Consolidated Statements of Cash Flows
For the nine months ended September 30, 1996 1995
Cash Flows From Operating Activities:
Net income $738,774 $3,492,870
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 890,415 1,320,206
Gain on sale of properties _ (2,854,884)
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Other assets (3,513) 3,921
Accounts payable and accrued expenses 332,166 357,843
Security deposits 1,121 (146,983)
Due to affiliates 20,299 (5,741)
Net cash provided by operating activities 1,979,262 2,167,232
Cash Flows From Investing Activities:
Net proceeds from sale of properties _ 17,551,351
Additions to real estate (63,655) (149,631)
Net cash provided by (used for) investing activities (63,655) 17,401,720
Cash Flows From Financing Activities:
Mortgage principal payments _ (5,051,086)
Distributions (1,654,754) (14,978,194)
Net cash used for financing activities (1,654,754) (20,029,280)
Net increase (decrease) in cash and cash equivalents 260,853 (460,328)
Cash and cash equivalents, beginning of period 2,436,356 3,234,383
Cash and cash equivalents, end of period $2,697,209 $2,774,055
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ _ $283,556
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 September 30, 1996
and the results of operations and cash flows for the nine months
ended September 30, 1996 and 1995 and the statement of partners'
capital for the nine months ended September 30, 1996. Results of
operations for the period are not necessarily indicative of the
results to be expected for the full year.
The following events have occurred subsequent to fiscal year
1995, which require disclosure in this interim report per
regulations S-X, Rule 10-01, Paragraph (a)(5).
The Partnership had signed a contract, dated September 26, 1996,
to sell River Hill Apartments. On November 8, 1996, the
prospective buyer executed its right to terminate the purchase
agreement during the due diligence period. The General Partners
are currently evaluating the Partnership's alternatives with
respect to selling the property.
Part I, Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
At September 30, 1996, the Partnership had cash and cash
equivalents of $2,697,209, which were invested in unaffiliated
money market funds, an increase of $260,853 from the balance at
December 31, 1995. The increase is attributable to cash provided
by operating activities exceeding cash used for distributions,
mortgage principal payments, and additions to real estate. The
Partnership expects sufficient cash to be generated from
operations to meet its current operating expenses and debt
service requirements.
The Partnership had signed a contract, dated September 26, 1996,
to sell River Hill Apartments. On November 8, 1996, the
prospective buyer executed its right to terminate the purchase
agreement during the due diligence period. The General Partners
are currently evaluating the Partnership's alternatives with
respect to selling the property.
Accounts payable and accrued expenses increased from $168,831 at
December 31, 1995 to $500,997 at September 30, 1996 primarily as
a result of accruals for real estate taxes for all four
properties.
During the third quarter, asphalt work at Pelican Landing was
completed, and exterior painting work at the property was
postponed until early 1997. Interior repairs at Village at the
Foothills II, Pelican Landing and Shadowood Village were
performed as needed in response to occupancy changes and normal
tenant turnover.
The General Partners declared a cash distribution of $3.75 per
Unit for the quarter ended September 30, 1996 which will be paid
to investors on or about November 15, 1996. The General Partners
will monitor the level of cash distributions on a quarterly
basis.
Results of Operations
Partnership operations for the three and nine months ended
September 30, 1996, resulted in net income of $235,908 and
$738,774, respectively, compared with $3,071,360 and $3,492,870,
respectively, for the same periods in 1995. Net income decreased
from the 1995 period to the 1996 period primarily as a result of
a $2,854,884 gain recognized on the sale of Cypress Lakes and
Trails at Meadowlakes in July 1995. Excluding the gain, the
Partnership generated income from operations of $216,476 and
$637,986, respectively, for the three and nine months ended
September 30, 1995. The decrease is also due to a decline in
rental income, partially offset by reductions in property
operating expense, depreciation expense, interest expense, and
general and administrative expenses resulting from the sale of
the properties. Net cash provided by operating activities was
$1,979,263 for the nine months ended September 30, 1996, a
decrease from $2,167,232 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 nine months ended September 30, 1996
was $1,185,400 and $3,557,572, respectively, compared with
$1,334,083 and $5,181,081, respectively, for the corresponding
periods in 1995. The decrease reflects the sale of Trails at
Meadowlakes and Cypress Lakes, and was partially offset by
increases in rental income at three of the four remaining
properties primarily as a result of increased rental rates.
Property operating expenses for the three and nine months ending
September 30, 1996 decreased to $624,697 and $1,877,876,
respectively, from $807,612 and $2,992,013, respectively, for the
corresponding periods in 1995 primarily due to the sale of Trails
at Meadowlakes and Cypress Lakes. Depreciation for the three and
nine months ended September 30, 1996 was lower compared to the
same period in 1995 also due to the July 1995 sale of Trails at
Meadowlakes and Cypress Lakes. Interest expense 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 nine months ended
September 30, 1996 declined to $58,543 and $134,923,
respectively, from $61,771 and $158,644, respectively, for the
corresponding periods in 1995 primarily due to decreases in legal
fees and appraisal fees, partially offset by higher Partnership
administrative expenses. During the first nine 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 96% 96%
Shadowood Village 95% 95%
Village at the Foothills II 94% 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 - No reports on Form 8-K were
filed during the quarter ended September 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: November 14, 1996 BY: /s/ Paul L Abbott
Director, President,
Chief Executive Officer and
Chief Financial Officer