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, 1997
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
State or Other Jurisdiction of 11-2685746
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,
1997 1996
Assets
Property:
Land $ 5,627,763 $ 5,627,763
Buildings and improvements 20,452,272 20,448,021
26,080,035 26,075,784
Less accumulated depreciation (10,147,588) (9,754,730)
15,932,447 16,321,054
Property held for disposition 7,358,300 7,358,300
Cash and cash equivalents 2,540,992 2,314,876
Other assets 13,235 15,370
Total Assets $25,844,974 $26,009,600
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 340,865 $ 108,269
Due to affiliates 20,176 20,443
Distribution payable 533,792 533,792
Security deposits payable 146,018 144,220
Total Liabilities 1,040,851 806,724
Partners' Capital:
General Partners $ -- $ --
Limited Partners 24,804,123 25,202,876
Total Partners' Capital 24,804,123 25,202,876
Total Liabilities and
Partners' Capital $25,844,974 $26,009,600
Consolidated Statement of Partners' Capital
For the six months ended June 30, 1997
General Limited
Partners Partners Total
Balance at December 31, 1996 $ -- $25,202,876 $25,202,876
Net Income 106,759 562,072 668,831
Cash Distributions (106,759) (960,825) (1,067,584)
Balance at June 30, 1997 $ -- $24,804,123 $24,804,123
Consolidated Statements of Operations
Three months Six months
ended June 30, ended June 30,
1997 1996 1997 1996
Income
Rental $1,219,739 $1,191,023 $2,427,500 $2,372,172
Interest 28,057 26,041 55,147 53,372
Other -- 4,295 5,305 4,295
Total Income 1,247,796 1,221,359 2,487,952 2,429,839
Expenses
Property operating 682,385 607,417 1,318,591 1,253,179
Depreciation 196,465 298,922 392,858 597,414
General and administrative 49,523 28,106 107,672 76,381
Total Expenses 928,373 934,445 1,819,121 1,926,974
Net Income $ 319,423 $ 286,914 $ 668,831 $ 502,865
Net Income Allocated:
To the General Partners $ 53,380 $ 53,379 $ 106,759 $ 106,758
To the Limited Partners 266,043 233,535 562,072 396,107
$ 319,423 $ 286,914 $ 668,831 $ 502,865
Per limited partnership unit
(128,110 outstanding) $ 2.08 $ 1.82 $ 4.39 $ 3.09
Consolidated Statements of Cash Flows
For the six months ended June 30, 1997 1996
Cash Flows From Operating Activities:
Net income $ 668,831 $ 502,865
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 392,858 597,414
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Other assets 2,135 (3,513)
Accounts payable and accrued expenses 232,596 191,190
Security deposits payable 1,798 3,775
Due to affiliates (267) 323
Net cash provided by operating activities 1,297,951 1,292,054
Cash Flows From Investing Activities:
Additions to real estate (4,251) (63,655)
Net cash used for investing activities (4,251) (63,655)
Cash Flows From Financing Activities:
Distributions (1,067,584) (1,120,962)
Net cash used for financing activities (1,067,584) (1,120,962)
Net increase in cash and cash equivalents 226,116 107,437
Cash and cash equivalents, beginning of period 2,314,876 2,436,356
Cash and cash equivalents, end of period $2,540,992 $2,543,793
Notes to the Consolidated Financial Statements
The unaudited interim consolidated financial statements should be
read in conjunction with the Partnership's annual 1996 audited
consolidated financial statements within Form 10-K.
The unaudited interim consolidated 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 June 30, 1997 and the
results of operations for the three and six months ended June 30,
1997 and 1996, cash flows for the six months ended June 30, 1997
and 1996 and the statement of partners' capital for the six
months ended June 30, 1997. Results of operations for the period
are not necessarily indicative of the results to be expected for
the full year.
Certain prior year amounts have been reclassified to conform to
the current year's presentation.
The following significant event has occurred subsequent to fiscal
year 1996 and material contingencies exist, which require
disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
On August 6, 1997, the Partnership sold River Hill Apartments to
an unaffiliated institutional buyer for a sales price of
$7,275,000. As a result, a cash distribution, representing the
proceeds from this sale will be distributed in the near future to
the partners.
Part I, Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At June 30, 1997, the Partnership had cash and cash equivalents
of $2,540,992, which were invested in unaffiliated money market
funds, compared with $2,314,876 at December 31, 1996. The
increase is attributable to cash provided by operating activities
exceeding cash used for distributions and additions to real
estate. The Partnership expects sufficient cash to be generated
from operations to meet its current operating expenses.
Given the performance of the Partnership's properties, and the
improvement in the real estate capital markets which has
increased demand by potential buyers, the General Partners have
determined that it is in the best interest of the Partnership to
attempt to sell the remaining properties in an orderly manner
over the next few years. Assuming these efforts are successful,
the General Partners expect to distribute the sales proceeds and
subsequently dissolve the Partnership in 1998 or 1999. However,
meeting this objective will be dependent upon a variety of
factors, many of which are not within the Partnership's control.
Consequently, there can be no assurance that any specific
property or all the properties can be sold, that particular
prices will be achieved, or that all the properties can be sold
within this time frame.
In keeping with this objective, on August 6, 1997 the Partnership
sold River Hill Apartments to an unaffiliated institutional buyer
for a sales price of $7,275,000. As a result, a cash
distribution, representing the proceeds from this sale will be
distributed in the near future to the partners. In addition, the
Partnership recently engaged a real estate broker to commence
marketing Pelican Landing Apartments for sale.
The General Partners declared a cash distribution of $3.75 per
Unit for the quarter ended June 30, 1997 which will be paid to
investors on or about August 19, 1997. 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. As a result of the River Hill sale on August 6, quarterly
cash distributions will be reduced to reflect the corresponding
reduction in the Partnership's cash flow.
Accounts payable and accrued expenses increased from $108,269 at
December 31, 1996 to $340,865 at July 30, 1997 primarily as a
result of accruals for real estate taxes for all four properties.
Results of Operations
Partnership operations for the three and six months ended June
30, 1997 resulted in net income of $319,423 and $668,831,
respectively, compared with net income of $286,914 and $502,865
for the corresponding periods in 1996. The increase is primarily
attributable to higher rental income at three of the four
properties and lower depreciation expense due to the
reclassification of the River Hill property as property held for
disposition. Net cash provided by operating activities was
$1,297,951 for the six months ended June 30, 1997, largely
unchanged from $1,292,054 for the corresponding period in 1996.
Rental income for the three and six months ended June 30, 1997
was $1,219,739 and $2,427,500, respectively, compared with
$1,191,023 and $2,372,172 for the corresponding periods in 1996.
The increases reflect higher rental revenues at Pelican Landing
and River Hill Apartments. At Village of the Foothills II and
Shadowood Village, rental income remained relatively unchanged.
Property operating expenses for the three and six months ended
June 30, 1997 totaled $682,385 and $1,318,591, respectively,
compared to $607,417 and $1,253,179 for the corresponding periods
in 1996. The increases for both periods are primarily
attributable to an increase in repair and maintenance expense at
Pelican Landing and Shadowood Village during the 1997 periods.
As a result of the reclassification of the River Hill property as
held for disposition, depreciation expense decreased from
$298,922 and $597,414 for the three and six months ended June 30,
1996, respectively, to $196,465 and $392,858 for the
corresponding periods in 1997.
General and administrative expenses for the three and six months
ended June 30, 1997 were $49,523 and $107,672, respectively,
compared to $28,106 and $76,381 for the same periods in 1996.
During the 1997 periods, certain expenses incurred by an
unaffiliated third party service provider in servicing the
Partnership, which were voluntarily absorbed by affiliates of RI
3-4 Real Estate Services, Inc. in prior periods, were
reimbursable to RI 3-4 Real Estate Services, Inc. and its
affiliates.
During the first six months of 1997 and 1996, average occupancy
levels at each of the properties were as follows:
Property 1997 1996
Pelican Landing 97% 97%
River Hill Apartments 95% 95%
Shadowood Village 93% 96%
Village at the Foothills II 93% 94%
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 June 30, 1997.
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, 1997 BY: /s/ Paul L. Abbott
Director, President, Chief Executive Officer
and Chief Financial Officer