FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
March 31, 1997 0-14386
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
(Exact Name of Registrant as specified in its charter)
Delaware 16-1245153
- -------------------- ------------------------------------
(State of Formation) (IRS Employer Identification Number)
2350 North Forest Road
Suite 12 A
Getzville, New York 14068
(Address of Principal Executive Office)
Registrant's Telephone Number: (716) 636-0280
Indicate by a 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
--- ---
Indicate by a check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-Q or any
amendment to this Form 10-Q. (X)
As of March 31, 1997 the issuer had 23,365.9 units of limited partnership
interest outstanding.
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
--------------------------------------------------
INDEX
-----
PAGE NO.
--------
PART I: FINANCIAL INFORMATION
- ------- ---------------------
Balance Sheets -
March 31, 1997 and December 31, 1996 3
Statements of Operations -
Three Months Ended March 31, 1997 and 1996 4
Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996 5
Statements of Partners' (Deficit) -
Three Months Ended March 31, 1997 and 1996 6
Notes to Financial Statements 7 - 16
PART II: MANAGEMENT'S DISCUSSION & ANALYSIS OF
- -------- -------------------------------------
FINANCIAL CONDITION & RESULTS OF
--------------------------------
OPERATIONS 17 - 18
----------
-2-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
BALANCE SHEETS
March 31, 1997 and December 31, 1996
(Unaudited)
March 31, December 31,
1997 1996
---- ----
ASSETS
- ------
Property, at cost:
Land $ 1,773,922 $ 1,773,922
Buildings and improvements 27,967,656 27,898,057
Furniture, fixtures and equipment 2,711,794 2,711,794
------------ ------------
32,453,372 32,383,773
Less accumulated depreciation 13,826,795 13,753,437
------------ ------------
Property, net 18,626,577 18,630,336
Escrow deposits 787,901 764,566
Interest and other receivables 578,064 591,255
Note receivable 0 0
Prepaid expenses 142,239 216,629
Prepaid commissions, net of accumulated amortization
of $131,651 and $122,454 39,564 14,932
Mortgage costs, net of accumulated amortization
of $510,888 and $493,159 251,112 265,953
Other assets 4,455 4,455
------------ ------------
Total Assets $ 20,429,912 $ 20,488,126
============ ============
LIABILITIES AND PARTNERS' (DEFICIT)
- -----------------------------------
Liabilities:
Cash overdraft $ 473,341 $ 138,032
Mortgages and notes payable 18,861,727 18,939,324
Accounts payable and accrued expenses 701,139 864,429
Accounts payable - affiliates 3,162,694 3,167,754
Accrued interest 193,896 172,452
Security deposits and prepaid rents 404,216 395,123
------------ ------------
Total Liabilities 23,797,013 23,677,114
------------ ------------
Minority interest in joint venture 16,084 18,477
------------ ------------
Partners' (Deficit):
General partners (674,475) (669,203)
Limited partners (2,708,710) (2,538,262)
------------ ------------
Total Partners' (Deficit) (3,383,185) (3,207,465)
------------ ------------
Total Liabilities and Partners' (Deficit) $ 20,429,912 $ 20,488,126
============ ============
See notes to financial statements
-3-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
STATEMENTS OF OPERATIONS
Three Months Ended March 31, 1997 and 1996
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
---- ----
Income:
Rental $ 1,320,386 $ 1,384,488
Interest and other income 88,007 108,552
----------- -----------
Total income 1,408,393 1,493,040
----------- -----------
Expenses:
Property operations 676,102 661,362
Interest:
Paid to affiliates 90,809 63,223
Other 389,837 418,133
Depreciation and amortization 96,218 238,733
Administrative:
Paid to affiliates 130,463 87,196
Other 203,077 167,496
----------- -----------
Total expenses 1,586,506 1,636,143
----------- -----------
Loss before allocated loss from joint venture (178,113) (143,103)
Loss allocated to minority interest 2,393 3,159
----------- -----------
Net loss ($ 175,720) ($ 139,944)
=========== ===========
Loss per limited partnership unit ($ 7.29) ($ 5.81)
=========== ===========
Distributions per limited partnership unit $ 0.00 $ 0.00
=========== ===========
Weighted average number of
limited partnership units
outstanding 23,366 23,366
=========== ===========
See notes to financial statements
-4-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1997 and 1996
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
---- ----
Cash flow from operating activities:
Net loss ($175,720) ($139,944)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation and amortization 96,218 238,733
Loss allocated to minority interest (2,393) (3,159)
Changes in operating assets and liabilities:
Escrow deposits (23,335) 0
Interest and other receivables 13,191 28,955
Prepaid expenses 74,390 0
Prepaid commisions (29,763) 0
Other assets 0 (672,835)
Accounts payable and accrued expenses (163,290) 44,258
Accrued interest 21,444 (46,820)
Security deposits and prepaid rent 9,093 (81,954)
--------- ---------
Net cash (used in) operating activities (180,165) (632,766)
--------- ---------
Cash flow from investing activities:
Capital expenditures (69,599) 0
Increase in note(s) receivable 0 (6,178)
--------- ---------
Net cash (used in) investing activities (69,599) (6,178)
--------- ---------
Cash flows from financing activities:
Mortgage costs (2,888) (90,555)
Cash overdraft 335,309 (125,619)
Accounts payable - affiliates (5,060) 219,558
Principal payments on mortgages and notes (77,597) (145,777)
Proceeds from mortgage 0 781,337
--------- ---------
Net cash provided by financing activities 249,764 638,944
--------- ---------
Increase (decrease) in cash 0 0
Cash - beginning of period 0 0
--------- ---------
Cash - end of period $ 0 $ 0
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 459,202 $ 464,953
========= =========
See notes to financial statements
-5-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
STATEMENTS OF PARTNERS' (DEFICIT)
Three Months Ended March 31, 1997 and 1996
(Unaudited)
General Limited Partners
Partners
Amount Units Amount
------ ----- ------
Balance, January 1, 1996 ($ 678,636) 23,366 ($2,843,271)
Net loss (4,198) 0 (135,746)
----------- ----------- -----------
Balance, March 31, 1996 ($ 682,834) 23,366 ($2,979,017)
=========== =========== ===========
Balance, January 1, 1997 ($ 669,203) 23,366 ($2,538,262)
Net loss (5,272) 0 (170,448)
----------- ----------- -----------
Balance, March 31, 1997 ($ 674,475) 23,366 ($2,708,710)
=========== =========== ===========
See notes to financial statements
-6-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
NOTES TO FINANCIAL STATEMENTS
Three Months Ended March 31, 1997 and 1996
(Unaudited)
1. GENERAL PARTNERS' DISCLOSURE
----------------------------
In the opinion of the General Partners of Realmark Property Investors
Limited Partnership IV, all adjustments necessary for a fair presentation of
the Partnership's financial position, results of operations and changes in
cash flows for the three month periods ended March 31, 1997 and 1996, have
been made in the financial statements. Such financial statements are
unaudited and subject to any year-end adjustments which may be necessary.
2. FORMATION AND OPERATION OF PARTNERSHIP
--------------------------------------
Realmark Property Investors Limited Partnership IV (the "Partnership"), a
Delaware Limited Partnership, was formed on February 12, 1985, to invest in
a diversified portfolio of income-producing real estate investments.
In April 1985, the Partnership commenced the public offering of units of
limited partnership interest. Other than matters relating to organization,
it had no business activities and, accordingly, had not incurred any
expenses or earned any income until the first interim closing (minimum
closing) of the offering, which occurred on September 20, 1985. On June 22,
1986 the offering was concluded, at which time 23,362.9 units of limited
partnership interest were outstanding, excluding 3 units held by an
affiliate of the General Partners. The General Partners are Realmark
Properties, Inc., a wholly-owned subsidiary of J.M. Jayson & Company, Inc.
and Joseph M. Jayson, the Individual General Partner. Joseph M. Jayson is
the sole shareholder of J.M. Jayson & Company, Inc.
Under the partnership agreement, the general partners and their affiliates
can receive compensation for services rendered and reimbursement for
expenses incurred on behalf of the Partnership.
Net income or loss and proceeds arising from a sale or refinancing shall be
distributed first to the limited partners in amounts equivalent to a 7%
return on the average of their adjusted capital contributions, then an
amount equal to their capital contributions, then an amount equal to an
additional 5% of the average of their adjusted capital contributions after
the general partners receive a disposition fee, then to all partners in an
amount equal to their respective positive capital balances and, finally, in
the ratio of 87% to the limited partners and 13% to the general partners.
-7-
FORMATION AND OPERATION OF PARTNERSHIP (CONTINUED)
The partnership agreement also provides that distribution of funds,
revenues, costs and expenses arising from partnership activities, exclusive
of any sale or refinancing activities, are to be allocated 97% to the
limited partners and 3% to the general partners.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Cash
----
For purposes of reporting cash flows, cash includes the following items:
cash on hand; cash in checking; and money market savings.
Property and Depreciation
-------------------------
Depreciation is provided using the straight-line method over the estimated
useful lives of the respective assets. Expenditures for maintenance and
repairs are expensed as incurred, and major renewals and betterments are
capitalized. The Accelerated Cost Recovery System and Modified Accelerated
Cost Recovery System are used to determine depreciation expense for tax
purposes.
Rental Income
-------------
Leases for residential properties have terms of one year or less. Commercial
leases have terms of from one to five years. Rental income is recognized on
the straight line method over the term of the lease.
Minority Interest in Consolidated Joint Venture
-----------------------------------------------
The minority interest in a consolidated joint venture is stated at the
amount of capital contributed by the minority investors adjusted for their
share of joint venture losses.
4. ACQUISITION AND DISPOSITION OF RENTAL PROPERTY
----------------------------------------------
In November 1985, the Partnership acquired a 168 unit apartment complex
(Lakeview Village) located in Milwaukee, Wisconsin, for a purchase price of
$4,411,659, which included $320,779 in acquisition fees.
In December 1985, the Partnership acquired a 288 unit apartment complex
(Sutton Park, formerly Bristol Square) located in Lansing, Michigan for a
purchase price of $7,252,858, which included $588,716 in acquisition fees.
-8-
ACQUISITION AND DISPOSITION OF RENTAL PROPERTY (CONTINUED)
-----------------------------------------------------------
In August 1986, the Partnership acquired two office/warehouse buildings
consisting of 62,598 square feet (Airlane I) and 68,300 square feet (Airlane
III), consisting of approximately 25% office space and 75% warehouse space
located in Nashville, Tennessee, for a purchase price of $6,180,920, which
included $383,169 in acquisition fees.
In October 1986, the Partnership acquired an 86 unit apartment complex (Gold
Key Village II) located in Englewood, Ohio for a purchase price of
$2,354,615, which included $152,744 in acquisition fees.
In December 1986, the Partnership acquired two apartment complexes
consisting of 96 and 144 units (Creekside Apartments, formerly Bretton Park
I and II) located in Flat Rock, Michigan, for a purchase price of
$5,462,176, which included $445,964 in acquisition fees.
In December 1986, the Partnership acquired a 215 unit apartment complex
(Willow Creek) located in Greenville, South Carolina, for a purchase price
of $5,040,560, which included $477,987 in acquisition fees.
In December 1986, the Partnership acquired a 72 unit apartment complex
(Evergreen Terrace) located in Lansing, Michigan for a purchase price of
$1,1711,093, which included $314,379 in acquisition fees.
In May 1987, the Partnership acquired a 56 unit apartment complex (Cedar
Court) located in Monroeville, Pennsylvania, for a purchase price of
$1,439,832, which included $370,728 in acquisition fees.
In 1988, the Partnership acquired, upon its dissolution, the net assets and
liabilities of the Willow Lake Joint Venture, which amounted to $1,635,474.
Since the date of the acquisition, the Partnership had capitalized
additional construction costs of $5,059,296 which included capitalized
interest of $151,993. Construction on this project was substantially
complete in early 1991. During September 1992, Willow Lake's lender
foreclosed and took possession of the property because the Partnership had
difficulty in obtaining tenant leases and financing to complete tenant
build-out costs. The disposal generated a $1,328,352 loss for financial
statement purposes.
In October, 1989 the Partnership sold the Gold Key II apartment complex for
$2,881,136 which generated a gain of $911,177 for financial statement
purposes.
-9-
ACQUISITION AND DISPOSITION OF RENTAL PROPERTY (CONTINUED)
-----------------------------------------------------------
In July 1996, the Partnership entered into a plan to dispose of the
property, plant and equipment of the following properties: Lakeview Village
(anticipated sales price of $4,090,000), Sutton Park (anticipated sales
price of $5,800,000), Creekside (anticipated sales price of $5,900,000),
Willow Creek (anticipated sales price of $5,425,000), and Evergreen Terrace
(anticipated sales price of $1,200,000). Management has determined that the
sale of the properties is in the best interests of the limited partners. All
contracts are cancelable by the buyer(s); the actual date of closing on the
sale of any property will depend on financing availability, tax credit
availability and other factors.
Financial Accounting Standards Statement No. 121, Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of
(the "Statement") requires that assets to be disposed of be recorded at the
lower of carrying value or fair value, less costs to sell. The Statement
also requires that such assets not be depreciated during the disposal
period, as the assets will be recovered through sale rather than through
operations. In accordance with this Statement, the long-lived assets of the
Partnership, classified as held for sale on the balance sheet, are recorded
at the carrying amount which is the lower of carrying value or fair value
less costs to sell, and have not been depreciated during the disposal
period. Depreciation expense, not recorded during the disposal period, for
the three months ended March 31, 1997 totaled approximately $46,500.
5. NOTE RECEIVABLE
---------------
In connection with the sale of the Gold Key II apartment complex, the
Partnership took back a second mortgage as security for two notes
receivable. The first note for $155,000 carried an interest rate of 10% with
interest payable monthly and the remaining balance payable at maturity on
October 11, 1995. The second note for $75,000 carried an interest rate of
10% with principal payments payable in five annual installments of $15,000
and any remaining interest payable at maturity on October 11, 1995. Neither
of the notes were paid in full by the maturity date, and according to the
provisions of the notes, interest continued to accrue at 15% annually on the
unpaid balances. The Partnership received a settlement in the amount of
$175,000 during 1996. The remainder of the balances were written off.
-10-
6. MORTGAGES AND NOTES PAYABLE
---------------------------
The Partnership has the following mortgages and notes payable:
Lakeview
--------
In January 1996, the Partnership refinanced the mortgage. The refinanced
mortgage, with a balance of $2,501,582 and $2,524,939 at March 31, 1997 and
1996, respectively, provides for annual principal and interest payments at
8.25% payable in equal monthly installments of $232,924. The term of the
mortgage is ten years with the remaining balance due and payable on February
1, 2006.
Sutton Park (formerly Bristol Square)
-------------------------------------
The property was refinanced January 11, 1996 with an 8% mortgage for
$3,400,000, and an unsecured $50,000 promissory note. The new mortgage
provides for annual principal and interest payments of $306,168 in equal
monthly installments. The balance outstanding at March 31, 1997 and 1996 was
$3,361,461 and $3,394,285, respectively. The term of the mortgage is 10
years with the remaining balance due and payable on February 1, 2006. The
promissory note provides for monthly principal payments of $2,083 plus
interest accruing at the lenders reference rate plus 2% (total of 10.25% at
March 31, 1997). At March 31, 1997 and 1996 the outstanding balance was
$22,921 and $49,587, respectively. The note is due and payable February 1,
1998.
Airlanes I & III
----------------
A 7.625% mortgage with a balance of $3,500,539 and $3,599,280 at March 31,
1997 and 1996, respectively, which provides for annual principal and
interest payments of $369,783 payable in equal monthly installments, with
the remaining balance due January 1, 1999.
Creekside
---------
An adjustable rate mortgage with an outstanding principal balance of
$3,651,727 and $3,745,882 at March 31, 1997 and 1996, respectively. The
interest rate is adjustable quarterly to a maximum rate of 13.5% and a
minimum rate of 7% (7.09% at March 31, 1997). The mortgage is payable
monthly in amounts which vary with the interest rate. Monthly payments at
March 31, 1997 based on 7.09% interest rate were $27,850. The balance of the
mortgage is due and payable March 31, 1998.
-11-
MORTGAGES AND NOTES PAYABLE (CONTINUED)
----------------------------------------
Willow Creek
------------
A 9.25% mortgage with an original balance of $4,080,000 which provides for
annual principal and interest payments of $393,023 payable in equal monthly
installments with the remaining balance of $3,929, 432 due on September 1,
1996; the maturity was extended to March 1, 1997. The balance as of March
31, 1997 and 1996 was $3,911,790 and $3,948,467, respectively.
Evergreen Terrace
-----------------
An adjustable rate mortgage with a balance at March 31, 1997 and 1996 of
$1,017,156 and $1,036,006, respectively. The interest rate is adjustable
annually to a maximum rate of 15% during the first five years of the loan
term and 17% for the remaining life of the loan; the interest rate shall
never be less than 9% over the life of the loan (9.00% at March 31, 1997).
The mortgage is payable monthly in amounts which vary with the interest
rate. Monthly payments at March 31, 1997 based on a 9.00% interest rate were
$8,962. The balance of the mortgage is due and payable May 24, 1998.
Chapelwood Estates (formerly Cedar Court)
-----------------------------------------
A 9.25% mortgage with a balance of $894,551 and $898,421 at March 31, 1997
and 1996, respectively, which provides for annual principal and interest
payments of $89,586 payable in equal monthly installments with remaining
balance of $895,117 due September 1, 1996. The mortgage is now in default
and therefore payable on demand.
The mortgages described above are secured by the Partnership properties to
which they relate.
-12-
MORTGAGES AND NOTES PAYABLE (CONTINUED)
---------------------------------------
The aggregate maturities of mortgages and notes payable for each of the next
five years and thereafter are as follows:
Year Amount
---- ------
1997 $ 5,104,085
1998 4,783,112
1999 3,384,889
2000 82,696
2001 89,653
Thereafter 5,494,889
-------------
TOTAL $ 18,939,324
=============
7. INVESTMENT IN JOINT VENTURE
---------------------------
On September 1, 1992, the Partnership entered into an agreement to form a
joint venture with Realmark Property Investors Limited Partnership VI-B
(RPILP VI-B). The joint venture was formed for the purpose of operating the
Lakeview Apartment complex owned by the Partnership. Under the terms of the
agreement, RPILP VI-B contributed $175,413, with the Partnership
contributing the property net of the first mortgage.
The joint venture agreement provides that any income, loss, gain, cash flow,
or sale proceeds be allocated 83.78% to the Partnership and 16.22% to RPILP
VI-B. The net loss from the date of inception has been allocated to the
minority interest in accordance with the agreement and has been recorded as
a reduction of the capital contribution.
A reconciliation of the minority interest share in the Lakeview Joint
Venture is as follows:
1997
----
Balance, January 1 $ 18,477
Allocated Loss ( 2,393)
----------
Balance, March 31 $ 16,084
==========
-13-
8. RELATED PARTY TRANSACTIONS
--------------------------
Management fees for the management of certain of the Partnership's
properties are paid to an affiliate of the General Partners. The management
agreement provides for 5% of gross monthly receipts of the complexes to be
paid as fees for administering the operations of the properties. These fees
totaled $83,192 and $87,196 for the three months ended March 31, 1997 and
1996, respectively.
The Partnership entered into a management agreement with an unrelated third
party for the management of Airlane I and III on August 15, 1986. The
agreement provides for the payment of a management fee equal to 4% of
monthly gross rental income. An affiliate of the General Partners also
receives a management fee of 2% of monthly gross rental income.
According to the terms of the Partnership Agreement, the Corporate General
Partner is also entitled to receive a partnership management fee equal to 7%
of net cash flow (as defined in the Partnership Agreement), 2% of which is
subordinated to the limited partners having received an annual cash return
equal to 7% of their average adjusted capital contributions. No such fee was
paid or accrued by the partnership for the three months ended March 31, 1997
and 1996.
Accounts payable to affiliates amounted to $3,115,423 and $2,212,802 at
March 31, 1997 and 1996, respectively. The payables represent fees due and
advances from the Corporate General Partner or an affiliate of the General
Partners. Interest charged on accounts payable to affiliates totaled $90,809
and $63,223 for the three months ended March 31, 1997 and 1996.
The General Partners are also allowed to collect a property disposition fee
upon sale of acquired properties. This fee is not to exceed the lesser of
50% of amounts customarily charged in arm's-length transactions by others
rendering similar services for comparable properties, or 3% of the sales
price. The property disposition fee is subordinate to payments to the
limited partners of a cumulative annual return (not compounded) equal to 7%
of their average adjusted capital balances and to repayment to the limited
partners of an amount equal to their original capital contributions. Since
these conditions have not been met, no fees have been recorded or paid on
the sale of the Gold Key II apartment complex.
Computer service charges for the partnerships are paid or accrued to an
affiliate of the General Partner. The fee is based upon the number of
apartment units and totaled $20,394 for both the three months ended March
31, 1997 and 1996.
-14-
RELATED PARTY TRANSACTIONS (CONTINUED)
---------------------------------------
Pursuant to the terms of the Partnership Agreement, the Corporate General
partner charged the Partnership for reimbursement of certain costs and
expenses incurred by the Corporate General Partner and its affiliates in
connection with the administration of the Partnership. These charges were
for the Partnership's allocated share of such costs and expenses which
include payroll, legal, rent, depreciation, printing, mailing, travel and
communication costs related to Partnership accounting, partner communication
and relations and property marketing. Accounting, communication and
marketing expenses are allocated based on total assets, number of partners,
and the market value of properties respectively. These charges totaled
$59,173 and $23,692 for the three months ended March 31, 1997 and 1996,
respectively.
9. INCOME TAXES
------------
No provision has been made for income taxes since the income or loss of the
partnership is to be included in the tax returns of the Individual Partners.
The tax returns of the Partnership are subject to examination by the Federal
and state taxing authorities. Under federal and state income tax laws,
regulations and rulings, certain types of transactions may be accorded
varying interpretations and, accordingly, reported partnership amounts could
be changed as a result of any such examination.
The reconciliation of net loss for the three months ended March 31, 1997 and
1996 as reported in the statements of operations, and as would be reported
for tax purposes, is as follows:
March 31, March 31,
1997 1996
---- ----
Net loss - statement of operations $ (175,720) $ (139,944)
Add to (deduct from):
Difference in depreciation ( 80,140) ( 14,800)
Gain on sale of property 1,101 1,101
Allowance for doubtful accounts 46,443 82,000
----------- ----------
Net loss - tax return purposes $ ( 208,316) $ ( 71,643)
=========== ==========
-15-
INCOME TAXES (CONTINUED)
-------------------------
The reconciliation of Partners' (Deficit) as of March 31, 1997 and December
31, 1996 as reported in the balance sheet, and as reported for tax purposes,
is as follows:
March 31, December 31,
1997 1996
---- ----
Partners' (Deficit) - balance sheet $ (3,383,185) $ (3,661,851)
$ (3,207,465)
Add to (deduct from):
Accumulated difference in
depreciation (5,628,275) (5,548,135)
Accumulated amortization 382,695 382,695
Syndication fees 2,734,297 2,734,297
Difference in book and tax
basis in partnership investments ( 635,737) ( 635,737)
Gain from fire loss - ( 706,158)
Other 1,380,353 1,332,809
------------ ------------
Partners' (Deficit) - tax return purposes $ (5,149,852) $ (5,647,694)
============ ============
-16-
PARTII MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS.
--------------
The Partnership continues to encounter cash flow difficulties, primarily
stemming from poor cash collections, low occupancies at Lakeview Apartments,
Creekside Apartments, Evergreen Terrace Apartments and Chapelwood Estates.
Airlane Office Warehouse located in Nashville, Tennessee continues to have high
occupancy and generate positive cash flow for the Partnership. The General
Partner and its affiliates continue to loan the Partnership funds to cover cash
flow shortages, although under no obligation to do so. There continues to be no
assurance that the General Partner will continue to advance funds to the
Partnership. All advances are payable on demand. The Partnership did not make
any distributions for the three month periods ended March 31, 1997 and 1996, and
it does not envision making any future distributions until all partnership
obligations are satisfied, which will most likely not occur until the sale of
one or more properties in the Partnership.
Attractive incentive plans have been put in place to bring in new tenants; plans
for capital improvements, such as exterior painting and repairs to woodwork, are
also in place. There are extensive capital improvements underway at Creekside
Apartments, where all decks are being replaced, and at Willow Creek Apartments,
where concrete patios are being reconstructed. The units destroyed by fire at
Sutton Park during the fourth quarter of 1996 are almost fully re-built. These
units were upgraded in hopes of commanding higher rents. The on-site personnel
at this property has been successful in leasing almost all of the upgraded (i.e.
re-built) units to date.
Management is also hopeful that the pending sale(s) of various of the properties
in this partnership will continue to move closer to finality. Since the
contracts signed are all cancelable by the buyer, management continues to market
the properties to other interested parties in search of a more firm closing
commitment.
Results of Operations:
- ----------------------
Net loss for the three month period ended March 31, 1997 amounted to $175,720 or
$7.29 per limited partnership unit versus a net loss of $139,944 or $5.81 per
limited partnership unit for the quarter ended March 31, 1996.
On a tax basis, the partnership generated a loss of $208,316 or $8.65 per
limited partnership unit for the three month period ended March 31, 1997
compared to a tax loss of $71,643 or $2.97 per unit for the three month period
ended March 31, 1996.
-17-
Results of Operations (continued):
- -----------------------------------
Partnership revenue for the quarter ended March 31, 1997 totaled $1,408,393,
decreasing just over $84,500 from the corresponding 1996 period. Rental income
decreased over $64,000, while interest and other income decreased approximately
$20,500. The decrease in both rental and other income was due to lower occupancy
and therefore lower laundry revenue, forfeited security deposits, etc. in most
properties in the Partnership.
For the three month period ended March 31, 1997, partnership expenses totaled
$1,586,506, a decrease of $49,637 from the quarter ended March 31, 1996.
Property operations expenses increased by slightly less than $15,000 between the
two quarters, primarily due to increased repairs and maintenance costs in the
form of paint and carpet at the residential properties. This increase is the
result of efforts to upgrade the units in an effort to attract new tenants.
Interest expense paid to affiliates increased by approximately $27,500 due to a
higher carrying value on the General Partner advances through the first quarter.
Other interest expense decreased approximately $28,000, primarily the result of
new debt structure agreements reached between the Partnership and the mortgage
holders. Administrative charges meanwhile, increased roughly $79,000. This
increase can be attributed to increases in legal fees resulting from collection
work and finance and service charges which were incurred as a result of cash
flow shortages.
For the three month period ended March 31, 1997, the Lakeview Joint Venture
generated a net loss of $14,755 with 16.22% of the loss, or $2,393, allocated to
the minority venturer. For the three months ended March 31, 1996, the joint
venture had a net loss of $19,474. The primary reason for the decrease in the
loss between the two quarters is the decrease in depreciation expense due to the
requirements of Financial Accounting Standards Statement No. 121 described in
Note 4 to the financial statements.
Management is putting forth every effort to decrease expenses and increase
income in the Partnership. Additional advertising and marketing is planned as a
means of attracting new tenants. Capital improvements are underway at virtually
all of the residential properties in the Partnership, thus cash flow is expected
to remain tight for the next several months. It is management's hope that one of
the properties with a signed sales contract will close shortly, but in the event
that this does not occur, there is a possibility that the Partnership will go
into default on one of its mortgages.
-18-
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
--------------------------------------------------
PART II
-------
OTHER INFORMATION
-----------------
Item 1 - Legal Proceedings
- --------------------------
The Partnership is not party to, nor is it the subject of, any material pending
legal proceedings other than ordinary routine litigation incidental to the
Partnership's business.
Item 2, 3, 4 and 5
- ------------------
Not applicable.
Item 6 - Exhibits and reports on Form 8-K
- -----------------------------------------
None.
-19-
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.
REALMARK PROPERTY INVESTORS
LIMITED PARTNERSHIP IV
By: /s/Joseph M. Jayson June 9, 1997
------------------------------ ------------------------
Joseph M. Jayson, Date
Individual General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: REALMARK PROPERTIES, INC.
Corporate General Partner
/s/Joseph M. Jayson June 9, 1997
------------------------------ ------------------------
Joseph M. Jayson, Date
President and Director
/s/Michael J. Colmerauer June 9, 1997
------------------------------ ------------------------
Michael J. Colmerauer Date
Secretary
20