<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): November 26, 1997
REAL ESTATE ASSOCIATES LIMITED IV
(Exact name of Registrant as specified in charter)
CALIFORNIA 2-74063 95-3718731
- --------------- ------------ --------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
9090 Wilshire Boulevard
Suite 201
Beverly Hills, California 90211
Address of Principal Executive Offices
Registrant's telephone number, including area code: 310/278-2191
Page 1 of 3
<PAGE> 2
ITEM 5. OTHER EVENTS.
The Registrant recently became aware through several of its
limited partners that an entity identified as Everest Management, LLC was
apparently conducting a tender offer for units in the Registrant pursuant to an
offer dated November 26, 1997. Registrant has no further information about this
offer or Everest Management, LLC. The Registrant's general partners, on behalf
of the Registrant, advised the limited partners by letter dated July 15, 1998 to
consult with their tax advisors about the tax consequences that could result
from a sale of their units. Copies of the offer and the Registrant's letter are
attached here to as exhibits.
In addition, the Registrant recently became aware through
several of its limited partners that an entity identified as Bond Purchase,
L.L.C., is apparently conducting a tender offer for Units in the Registrant
pursuant to an "Offer to Purchase Limited Partnership Interests For $307.00"
dated June 26, 1998. Registrant has no further information about this offer or
Bond Purchase, L.L.C. The Registrant's general partners, on behalf of the
Registrant, advised the limited partners by letter dated July 15, 1998 to
consult with their tax advisors about the tax consequences that could result
from a sale of their units. Copies of the offer and the Registrant's letter are
attached hereto as exhibits.
EXHIBITS
The following exhibits are attached to this Current Report and thereby
made a part thereof:
1. Copy of the offer documents dated November 26, 1997 as received from
Registrant's limited partners.
2. Copy of Registrant's letter to its limited partners.
3. Copy of the "Offer to Purchase" documents dated June 26, 1998 as
received from Registrant's limited partners.
4. Copy of Registrant's letter dated July 15, 1998 to its limited
partners.
Page 2 of 3
<PAGE> 3
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 hereunto duly authorized.
DATED: August 9, 1998
REAL ESTATE ASSOCIATES LIMITED IV,
A CALIFORNIA LIMITED PARTNERSHIP
By: NATIONAL PARTNERSHIP INVESTMENTS CORP.,
A CALIFORNIA CORPORATION,
ITS GENERAL PARTNER
By: /s/ Bruce E. Nelson
---------------------------
Its: President
----------------------
Page 3 of 3
<PAGE> 1
[EVEREST MANAGEMENT, LLC LETTERHEAD]
November 26, 1997
To the Holders of Units in
REAL ESTATE ASSOCIATES LTD. IV
RE: 1997 YEAR END OFFER TO PURCHASE UNITS
We are offering you an opportunity to sell your limited partnership
interests (the "Units") in Real Estate Associates Ltd. IV (the "Partnership")
for cash in the amount of $100 per Unit, and insure a 1997 liquidation of your
investment.
What benefits does a seller receive? Most individual sellers
will receive the following:
a. Termination of K-1 taxable income without cash distributions after
1997.
b. Possible current tax loss from sale in 1997.
c. $100 per Unit in cash now.
Why does our company want to purchase these Units? We are a tax exempt
investor which will not suffer from the phantom income generated by this
Partnership. We do not need a current cash return on our investment and can wait
for the Partnership to be liquidated.
Investors should also consider the following facts:
- SELLING INDIVIDUAL INVESTORS PAID APPROXIMATELY $29 PER UNIT IN
TAXES IN 1996 TO HOLD THIS INVESTMENT. SUCH TAX LIABILITY IS
LIKELY TO BE THE SAME OR GREATER IN 1997. *
- Liquidity now. The Partnership was formed over 16 years ago, and
we are aware of plans to liquidate the Partnership.
- THE PARTNERSHIP HAS MADE NO DISTRIBUTIONS OVER THE PEST FOUR
YEARS. DURING THAT PERIOD YOU HAVE INCURRED TAXABLE INCOME OF
$251 PER UNIT.
- Selling will allow you to end the high cost (perhaps over $1 00
per year) of holding Units.
- SALE OF YOUR UNITS WILL ELIMINATE TROUBLESOME K-1'S AFTER 1997.
*Assumes a combined 40% federal and state tax rate.
<PAGE> 2
Our offer is limited to only 646 (4.9%) of the 13,200 outstanding
Units. WE WILL ACCEPT FOR PURCHASE PROPERLY DOCUMENTED UNITS ON A
"FIRST-RECEIVED, FIRST-BUY" BASIS. You will be paid promptly following
confirmation by the Partnership of a valid transfer. The purchase price will be
reduced by any cash distributions made to you by the Partnership after October
31, 1997, and any transfer fees charged by the Partnership. ALL TENDERS OF UNITS
WILL BE IRREVOCABLE AND MAY NOT BE RESCINDED OR WITHDRAWN.
We are a specialized investment company which is not affiliated with the
Partnership or the general partner. We are seeking to acquire Units for
investment purposes only. We urge you to contact your tax advisor regarding your
particular tax consequences from a sale.
AN AGREEMENT OF TRANSFER IS ENCLOSED WHICH YOU CAN USE TO ACCEPT OUR
OFFER. Please execute this document and return it (together with the original
Partnership certificate, if available) in the enclosed envelope.
We encourage you to act immediately if you are interested in accepting
our offer, as only a limited number of Units will be purchased.
OUR OFFER WILL EXPIRE ON DECEMBER 24, 1997.
Please call us at (800) 611-4613 if you have any questions.
EVEREST MANAGEMENT, LLC
<PAGE> 3
AGREEMENT OF TRANSFER
REAL ESTATE ASSOCIATES LTD. IV
The undersigned (the "Seller") sells, and directs any custodian or
trustee to sell, to Everest Management, LLC, a California limited liability
company, or its nominee (the "Purchaser"), all of the Seller's interest in
limited partnership units (the "Units") in Real Estate Associates Ltd. IV, a
California limited partnership (the "Partnerships), for $100 per Unit (which
amount will be reduced by any distributions made to Seller by the Partnership
after October 31, 1997, and all transfer fees charged by the Partnership).
The Seller appoints the Purchaser (without posting of a bond) as the
attorney-in-fact of the Seller with respect to such Units, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to transfer ownership of such Units on the
Partnership's books to the Purchaser, to change the address of record of such
Units prior to or after completion of such transfer, to execute and deliver lost
certificate indemnities and all other transfer documents, to direct any
custodian or trustee holding record title to the Units to do any of the
foregoing, including the execution and delivery of a copy of this Agreement of
Transfer, and upon payment by the Purchaser of the purchase price, to receive
all benefits and cash distributions, endorse Partnership checks payable to
Seller and otherwise exercise all rights (including voting rights) of beneficial
ownership of such Units.
The Seller represents to the Purchaser that the Seller owns such Units
and has full authority to validly sell such Units to the Purchaser, and that
when any such Units are accepted for payment by the Purchaser, the Purchaser
will acquire unrestricted and unencumbered title thereto.
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity or liquidation of the Seller and any obligations of the
Seller shall be binding upon the heirs, personal representatives, successors and
assigns of the Seller. THIS AGREEMENT IS IRREVOCABLE AND MAY NOT BE WITHDRAWN OR
RESCINDED. Payment by the Purchaser is conditioned upon confirmation of the
transfer of the Units to the Purchaser by the Partnership.
The Seller also agrees to execute and deliver any additional documents
requested by the Purchaser to complete the purchase of such Units and to deliver
to the Purchaser all checks or distributions from the Partnership received by
the Seller after October 31, 1997, to the extent not treated as a purchase price
reduction. This Agreement of Transfer shall be interpreted under and governed by
the laws of the State of California.
The Seller certifies, under penalties of perjury, that (1) the number
shown below on this form as the Seller's Taxpayer Identification Number is
correct and (2) Seller is not subject to backup withholding either because
Seller has not been notified by the Internal Revenue Service (the "IRS") that
Seller is subject to backup withholding as a result of a failure to report all
interest or dividends, or the IRS has notified Seller that Seller is no longer
subject to backup withholding.
<PAGE> 4
The Seller also certifies, under penalties of perjury, that the Seller,
if an individual, is not a nonresident alien for purposes of U.S. income
taxation, and if not an individual, is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations). The Seller understands that
this certification may be disclosed to the IRS by the Purchaser and that any
false statements contained herein could be punished by fine, imprisonment, or
both.
Upon completion and recording of the transfer of the Units to the
Purchaser, the Purchaser accepts all of the terms and conditions of the
Partnership Agreement. The Seller requests that the Purchaser become a
substitute limited partner of the Partnership.
Date: _______________ , 1997
ALL
- ----------------------------------------- -----------------------------------
[Specify Number of Units Offered for [Signature of Owner
Sale if Less Than All]
- ----------------------------------------- -----------------------------------
[Your Telephone Number] [Signature of Co-Owner]
- -----------------------------------------
[Your Social Security or Taxpayer ID Everest Management, LLC
Number] 199 S. Los Robles Ave., Suite 440
Pasadena, CA 91101
(800) 611-4613
FAX (626) 585-5929
- ----------------------------------------- Real Estate Associates Ltd. IV
[Name of IRA Custodian, if applicable]
Accepted:
EVEREST MANAGEMENT, LLC
EVEREST PROPERTIES II, LLC, MANAGER
By:
-----------------------------------
Its Authorized Representative
DAVID AND PATRICIA TOY, TTEES
TOY FAMILY TRUST DATED 11/30/94
2445 FEDERAL AVE
LOS ANGELES CR 90064-2914
<PAGE> 5
INSTRUCTIONS
BENEFICIAL OWNER of Record Should:
1. Sign the Agreement.
2. Indicate the Number of Units Owned, if not correctly indicated in the
bottom comer.
3. Fill in Telephone Number, Social Security, or Tax ID Number.
4. Return the Agreement in the envelope provided.
If Owned JOINTLY:
1. Joint owner should sign, as well.
2. If joint owner is deceased and units have not been reregistered, owner
should send:
- A copy of the Death Certificate
If Units have been INHERITED or are owned by an ESTATE:
- Executor should submit:
- A copy of the Death Certificate
- Letter of Testamentary or Will showing your beneficial ownership or
executor capacity.
If Units are held in an IRA ACCOUNT:
Beneficial Owner should sign; we will then work with the IRA Custodian
to complete the transfer. The funds will also be forwarded directly into
your IRA Account.
Include the Name of the IRA Custodian on the Agreement of Transfer.
If Units are held in a TRUST, PROFIT SHARING OR PENSION PLAN:
Please provide first, last, and other applicable pages of the Trust
Agreement showing authorized signatory.
If Units are held by a CORPORATION:
Corporate resolutions required showing authorized signatory.
IF AVAILABLE SEND IN THE ORIGINAL LIMITED PARTNER CERTIFICATE.
SIGNATURES DO NOT NEED TO BE NOTARIZED.
<PAGE> 1
[Real Estate Associates Limited IV LETTERHEAD]
RE: Real Estate Associates Limited IV
Dear Investor:
Several limited partners have called or written us to tell us that
they have received an unsolicited tender offer to buy their interests in Real
Estate Associates Limited IV. The buyers state that they are purchasing the
Units with a view towards holding them until REAL IV is liquidated.
While the General Partners are unable to value the interests because
of a lack of market for them, limited partners should be aware of the tax
consequences of a sale of their interests.
In addition, the General Partners of REAL IV expect to solicit the
consent of the Limited Partners to a proposed transaction pursuant to which
several of the properties in which REAL IV has invested will be sold to a real
estate investment trust (the "REIT") to be organized by affiliates of the
General Partners. Proxy materials have not yet been filed with the Securities
and Exchange Commission and solicitation of consents is not expected to
commence until the first quarter of 1998. If this transaction is consummated,
Limited Partners would receive distributions of net sales proceeds according
to their proportionate interests. It should be noted that the sales will be
subject to a number of conditions in addition to approval by Limited Partners
of REAL IV; including completion of a proposed private placement of shares of
the REIT. Accordingly, there can be no assurance that the proposed purchases
will be consummated or that, if consummated, will be on the currently proposed
terms.
Most of the Limited Partners have negative capital account balances
with respect to their interests in REAL IV. Our accountants tell us that on
average, the negative capital account balance for a $5,000 investor at the end
of December 1997 will be approximately $8,100. This means that an investor
would recognize gain from the sale of his REAL IV interest in an amount equal
to approximately $8,200 (the $8,100 negative capital account balance plus the
$100 cash sales price). This gain would be "passive" and would be offset by
passive losses which such investor may have from REAL IV (suspended from prior
years) or other sources. Unless a limited partner has suspended or current
losses from other sources, a substantial portion of the gain would still be
subject to tax liability.
<PAGE> 2
PLEASE CONSULT WITH YOUR TAX ADVISOR ABOUT THE IMPACT OF SUCH A SALE ON
YOUR OWN PARTICULAR SITUATION.
The Corporate General Partner urges each investor to carefully consider
the foregoing information before tendering his or her Units to the tendering
buyer. Although the offer letter states that investors cannot withdraw Units
which may already have been tendered, you should consult with your attorney to
determine if this requirement is enforceable should you wish to reconsider your
decision to tender.
Sincerely,
National Partnership Investments Corp.
Charles H. Boxenbaum Bruce E. Nelson
Chairman of the Board President
<PAGE> 1
EXHIBIT 3
BOND PURCHASE, L.L.C.
P.O. Box 26730
Kansas City, MO 64196
June 26, 1998
To the Holders of Limited Partnership Interests in Real Estate Associates
Limited IV.
RE: OFFER TO PURCHASE LIMITED PARTNERSHIP INTERESTS FOR $307.00
Dear Investor:
We are offering you an opportunity to sell your limited partnership
interests (the "Units") in Real Estate Associates Limited IV (the "Partnership")
for cash in the amount of $307.00 per Unit (which amount will be reduced by any
cash distributions declared by the Partnership after the date of this letter).
Our offer provides you with an opportunity to sell your Units now without the
costly transfer fees and commission costs (typically up to 10%) usually paid by
the seller in secondary market sales. ALL TRANSFER COSTS AND FEES WILL BE PAID
BY BOND PURCHASE, L.L.C.
We believe that it is appropriate for investors to have financial
choices. Our offer gives you, the investor, the ability to make a decision about
your continued involvement with the Partnership. You may no longer wish to
continue with your investment in the Partnership for a number of reasons,
including:
- NO FURTHER IRS FILING
- HIGHEST OFFER - This offer is higher than the last reported
trade of $300 (October 1, 1997 to December 31, 1997) in the
secondary market,
- If you sell your units, 1998 will be the final year for which
you receive a K-1 tax form from the partnership.
- You may be able to realize a tax loss that would reduce your
taxes for 1998.
- The Partnership was closed seventeen years ago in 1981.
Your money has been tied up for this long period with minimal
return.
- More immediate use for the cash tied up in your investment in
the Units.
- The absence of a formal trading market for the Units and their
resulting relative illiquidity.
<PAGE> 2
- The lack of any current cash distributions.
- General disenchantment with real estate investments,
particularly long-term investments in limited partnerships;
Our offer is limited to 655 of the 13,202 outstanding Units. If we were
to acquire more than this amount, the administrative costs of our offer would
become burdensome.
We will accept for purchase properly documented Units on a
"first-received, first-buy" basis, You will be paid promptly following
confirmation of a valid, properly executed Agreement of Transfer and other
required transfer documents, We will pay for all Partnership transfer fees and
costs. All tenders of Units will be irrevocable and may not be rescinded or
withdrawn.
We are real estate investors who are not affiliated with the Partnership
or the General Partners. The General Partners of the Partnership have not
analyzed, approved, endorsed or made any recommendation as to acceptance of the
offer. The purchase offer has been determined solely at the discretion of Bond
Purchase, L.L.C. and does not necessarily represent the true market value of
each unit. We are seeking to acquire Units for investment purposes only and not
with a view to their resale.
An Agreement of Transfer is enclosed which you can use to accept our
offer. Please execute page 3 of this document, as well as the Power of Attorney.
Obtain all other required signatures and return the documentation in the
enclosed envelope. Please note that all signatures must be medallion guaranteed.
The transfer cannot be processed without signatures that are medallion
guaranteed and failure to obtain them will result in needless delays. In
addition, place your Unit Certificate in the enclosed envelope. We encourage you
to act immediately if you are interested in accepting or offer as only 655 Units
will be purchased.
OUR OFFER WILL EXPIRE AT 5:00 PM ON JULY 31, 1998, UNLESS EXTENDED.
Please call John Katzer at (816) 421-4670 if you have any questions.
Sincerely,
Bond Purchase, L.L.C.
<PAGE> 3
AGREEMENT OF TRANSFER
FOR LIMITED PARTNERSHIP INVESTMENTS IN
REAL ESTATE ASSOCIATES LIMITED IV
Subject to and effective upon acceptance for payment, the undersigned
(the "Seller") hereby sells, assigns, transfers, conveys and delivers and
irrevocably directs any custodian or trustee to sell, assign, transfer, convey
and deliver (the "Transfer") to Bond Purchase, LLC or it's assigns, a Missouri
limited liability company (the "Purchaser"), all of the Seller's right, title
and interest in Partnership Units (the "Units") of Real Estate Associates
Limited IV, (the "Partnership"), for $307.00 per Unit, net to the Seller in
cash, which amount shall be reduced by any distributions declared by the
Partnership after June 26, 1998.
Such Transfer shall include, without limitation, all rights in, and
claims to, any Partnership profits and losses, cash distributions, voting rights
and other benefits of any nature whatsoever distributable or allocable to such
Units under the Partnership's Certificate and Agreement of Limited Partnership,
as amended (the "Partnership Agreement"). The Seller hereby irrevocably
constitutes and appoints the Purchaser as the true and lawful agent and
attorney-in-fact of the Seller with respect to such Units, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to vote, inspect Partnership books and records or act
in such manner as any such attorney-in-fact shall in its sole discretion, deem
proper with respect to such Units, to deliver such Units and transfer ownership
of such Units on the Partnership's books maintained by the General Partner of
the Partnership, together with all accompanying evidences of transfer and
authenticity to, or upon the order of, the Purchaser of the purchase price, to
receive all benefits and cash distributions, endorse Partnership checks payable
to Seller and otherwise exercise all rights of beneficial ownership of such
Units. The Purchaser shall not be required to post bond of any nature in
connection with this power of attorney.
The Seller hereby represents and warrants to the Purchaser that the
Seller owns such Units and has full power and authority to validly sell, assign,
transfer, convey and deliver such Units to the Purchaser, and that when any such
Units are accepted for payment by the Purchaser, the Purchaser will acquire
good, marketable and unencumbered title thereto, free and clear of all options,
liens, restrictions, charges, encumbrances, conditional sales agreements or
other obligations relating to the sale or transfer thereof, and such Units will
not be subject to any adverse claim. The Seller further represents and warrants
that the Seller is a "United States person", as defined in Section 7701 (a)(30)
of the Internal Revenue Code of 1986, as amended, or if the Seller is not a
United States person, that the Seller does not own beneficially or of record
more than 5% of the outstanding Units.
<PAGE> 4
Agreement of Transfer
Page 2
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity or liquidation of the Seller and any obligations of the
Seller shall be binding upon the heirs, personal representatives, successors and
assigns of the undersigned. This agreement is irrevocable and may not be
withdrawn or rescinded.
Upon request, the Seller will execute and deliver, and irrevocably
directs any custodian to execute and deliver, any additional documents deemed by
the Purchaser to be necessary or desirable to complete the assignment, transfer
and purchase of such Units.
The Seller releases and discharges the General Partners, any IRA or
KEOGH Custodian, and their respective officers, shareholders, directors,
employees and agents from all causes of action, claims, or demands the Seller
has or may have against them resulting from their reliance on this Agreement of
Transfer or any of the terms and conditions contained herein.
The Seller hereby certifies, under penalties of perjury, that (1) the
number shown below on this form and the Sellers Taxpayer Identification Number
is correct and (2) Seller is not subject to backup withholding either because
Seller has not been notified by the Internal Revenue Service (the "IRS") that
Seller is subject to backup withholding as a result of a failure to report all
interest on dividends, or the IRS has notified Seller that Seller is no longer
subject to backup withholding.
The Seller hereby also certifies, under penalties of perjury, that the
Seller, if an individual, is not a nonresident alien for purposes of U.S. income
taxation, and if not an individual, is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations). The Seller understands that
this certification may be disclosed to the IRS by the Purchaser and that any
false statements contained herein could be punished by fine, imprisonment, or
both.
<PAGE> 5
Agreement of Transfer
Page 3
Date:________1998
__________________________________ ___________________________________
(Specify Number of Units Tendered: (Signature of Owner)
Indicate "ALL" if Number Not Available)
___________________________________
Place Medallion Guarantee Stamp
Here
__________________________________ ___________________________________
(Your Telephone Number) (Signature of Co-Owner)
___________________________________
Place Medallion Guarantee Stamp
Here
___________________________________
(Your Social Security or Taxpayer ID Bond Purchase, LLC
Number) P.O. Box 26730
City, MO 64196
(816) 421-4670
FAX (816) 221-1829
___________________________________ Bond Purchase, LLC
(Name of IRA Custodian,
if applicable) BY:________________________________
Its Authorized Representative
NOTE: All signatures on this agreement most be guaranteed by a member from
a registered national securities exchange, a member of the National Association
of Securities Dealers, Inc. or a commercial bank, savings bank, credit union,
savings and loan association or trust company having an office, branch or agency
in the United States, which is a participant in the Security Transfer Agent
Medallion Program
<PAGE> 6
POWER OF ATTORNEY/PROXY
In conjunction with the Assignor's (seller's) Assignment of Partnership Units
dated as of even date herewith, Seller irrevocably constitutes and appoints
David L. Johnson, William C. Teel and Christine Robinson, or any of them, to be
Seller's true and lawful special attorneys-in-fact, with full power of
substitution to exercise in the name, place and stead of Seller any and all
rights, interests, powers, and duties with respect to or arising out of the
Seller's interest in:
REAL ESTATE ASSOCIATES LIMITED IV
which Units have been assigned to Bond Purchase, L.L.C. (the "Buyer") pursuant
to the Agreement of Transfer. This Power of Attorney shall include with
limitation, (1) the right to execute on behalf of Seller, all assignments,
certificates, documents and instruments that may be required for the purpose of
transferring the Units owned by the Seller, (2) the right to vote the Units or
to require or receive an information or report with respect to the partnerships'
books and records, (3) the right to endorse and cash any check made payable by
the partnership to Seller on or after the date hereof and (4) the right, if the
Units are held in an IRA account or pension account, to contact the Sellers
custodian and direct him to facilitate in the transfer of the Units from the
Seller to Buyer Fund. This Power of Attorney is part of and hereby incorporated
in the application for transfer. This Power of Attorney shall not be affected by
the subsequent mental disability of the undersigned, as principal, is
irrevocable and coupled with an interest, and Buyer shall not be required to
post bond in any nature in connection with this Power of Attorney. This Power of
Attorney shall also serve as a Letter of Authorization directing the Assignor's
custodian(s) and trustee(s) to sign any documents necessary to facilitate the
transfer of the units being assigned in conjunction with this Power of Attorney
as required by the herein named attorneys-in-fact.
__________________________________ ___________________________________
PRINT Assignor (Registered Name) PRINT Joint Assignor or
Custodian/Trustee
__________________________________ ___________________________________
SIGNATURE of Assignor SIGNATURE Jnt. Assignor or
Custodian/Trustee
DATE______________,199__ DATE______________,199__
Signature Medallion Guarantee Signature Medallion Guarantee
__________________________________ ___________________________________
<PAGE> 1
EXHIBIT 4
[REAL ESTATE ASSOCIATES LIMITED IV LETTERHEAD]
July 15, 1998
RE: REAL ESTATE ASSOCIATES LIMITED IV
Dear Investor:
Several limited partners have called or written us to tell us that they
have received an unsolicited tender offer to buy their interests in REAL IV from
Bond Purchase LLC for $307 per $5,000 unit. The buyers represent that these
purchases would be for investment purposes only.
While the General Partners are unable to value the interests because of
a lack of market for them, and therefore cannot comment on the fairness of Bond
Purchase LLC's offer. Limited partners should also be aware that a sale of their
interests in REAL IV will have tax consequences that should be evaluated in
consultation with each Limited Partner's own tax advisor.
In addition, the General Partners of REAL IV expect to solicit the
consent of the Limited Partners to a proposed transaction pursuant to which
several of the properties in which REAL IV has invested will be sold to a real
estate investment trust (the "REIT") to be organized by affiliates of the
General Partners. Proxy materials have been filed with the Securities and
Exchange Commission and solicitation of consents is expected to commence in the
third quarter of 1998. If the REIT transaction is consummated, Limited Partners
would receive distributions of net sales proceeds according to their interests
in the Partnership. It should be noted that the REIT transaction will be subject
to a number of conditions in addition to approval by Limited Partners of REAL
IV; including completion of a proposed private placement of shares of the REIT.
Accordingly, there can be no assurance that the proposed purchases will be
consummated or that, if consummated, will be on the currently proposed terms.
Most of the Limited Partners have negative capital account balances with
respect to their interests in REAL IV. Our accountants tell us that on average,
the negative capital account balance for a $5,000 investor at the end of
December 1997 was approximately $8,100. This means that an investor who sold his
or her unit on December 31, 1997 would recognize gain from the sale of his or
her REAL IV unit in an amount equal to approximately $8,407 (the $8,100
negative capital account balance plus the $307 cash sales price). This gain
would be "passive" and would be offset by passive losses which such investor may
have from REAL IV (suspended from prior years) or other sources. Unless a
limited partner has suspended or current losses available, a substantial portion
of the gain would still be subject to tax liability.
PLEASE CONSULT WITH YOUR TAX ADVISOR ABOUT THE IMPACT OF SUCH A SALE ON
YOUR OWN PARTICULAR SITUATION.
<PAGE> 2
Page 2
REAL IV
The Corporate General Partner urges each investor to carefully consider
the foregoing information before tendering his or her Units to the tendering
buyer. Although the offer letter states that investors cannot withdraw units
which may already have been tendered, you should consult with your attorney to
determine if this requirement is enforceable should you wish to reconsider your
decision to tender.
Sincerely,
National Partnership Investments Corp.
/s/ CHARLES H. BOXENBAUM /s/ BRUCE E. NELSON
Charles H. Boxenbaum Bruce E. Nelson
Chairman of the Board President
