<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended DECEMBER 31, 1999
Commission File Number
0-12439
REAL ESTATE ASSOCIATES LIMITED IV
A CALIFORNIA LIMITED PARTNERSHIP
I.R.S. Employer Identification No. 95-3718731
9090 WILSHIRE BLVD., SUITE 201, BEVERLY HILLS, CALIFORNIA 90211
Registrant's Telephone Number, Including Area Code (310) 278-2191
Securities Registered Pursuant to Section 12(b) or 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed with the Commission by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding twelve months (or 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 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 registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
<PAGE> 2
PART I.
ITEM 1. BUSINESS:
Real Estate Associates Limited IV ("REAL IV" or the "Partnership") is a limited
partnership which was formed under the laws of the State of California on August
24, 1981. On March 12, 1982, REAL IV offered 3,000 units consisting of 6,000
Limited Partnership Interests and Warrants to purchase a maximum of 6,000
Additional Limited Partnership Interests through a public offering managed by
E.F. Hutton Inc.
The general partners of Real IV are National Partnership Investments Corp.
("NAPICO"), a California corporation (the "Corporate General Partner"), and
National Partnership Investments Associates ("NAPIA"). NAPIA is a limited
partnership formed under the California Limited Partnership Act and consists of
Messrs. Nicholas G. Ciriello, an unrelated individual, as general partner, and
Charles H. Boxenbaum as limited partner. The business of REAL IV is conducted
primarily by NAPICO.
Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden
Investment Corporation ("CIC"), which is wholly owned by Alan I. Casden. On
December 30, 1998, Casden Properties Operating Partnership, L.P. (the "Operating
Partnership"), a majority owned subsidiary of Casden Properties Inc., a real
estate investment trust organized by Alan I. Casden, purchased a 95.25% economic
interest in NAPICO. The current members of NAPICO's Board of Directors are
Charles H. Boxenbaum, Bruce E. Nelson and Alan I. Casden.
REAL IV holds limited partnership interests in 7 local limited partnerships as
of December 31, 1999 and a general partner interest in Real Estate Associates II
("REA II") which in turn holds limited partnership interests in an additional 2
limited partnerships. Therefore, REAL IV holds directly or indirectly through
REA II investments in 9 local limited partnerships. The general partners of REA
II are REAL IV and NAPICO. In December 1998, the Partnership sold its interests
in 20 local limited partnerships to the Operating Partnership. Each of the local
partnerships own a low income housing project which is subsidized and/or has a
mortgage note payable to or insured by agencies of the federal or local
government.
In order to stimulate private investment in low income housing, the federal
government and certain state and local agencies have provided significant
ownership incentives, including interest subsidies, rent supplements, and
mortgage insurance, with the intent of reducing certain market risks and
providing investors with certain tax benefits, plus limited cash distributions
and the possibility of long-term capital gains. There remains, however,
significant risks. The long-term nature of investments in government assisted
housing limits the ability of REAL IV to vary its portfolio in response to
changing economic, financial and investment conditions. These investments are
also subject to changes in local economic circumstances and housing patterns, as
well as rising operating costs, vacancies, rent collection difficulties, energy
shortages and other factors which have an impact on real estate values. These
projects also require greater management expertise and may have higher operating
expenses than conventional housing projects.
Under recently adopted law and policy, the United States Department of Housing
and Urban Development ("HUD") has determined not to renew the Housing Assistance
Payment ("HAP") Contracts on a long term basis on the existing terms. In
connection with renewals of the HAP Contracts under such new law and policy, the
amount of rental assistance payments under renewed HAP Contracts will be based
on market rentals instead of above market rentals, which may be the case under
existing HAP Contracts. The payments under the renewed HAP Contracts are not
expected to be in an amount that would provide sufficient cash flow to permit
owners of properties subject to HAP Contracts to meet the debt service
requirements of existing loans insured by the Federal Housing Administration of
HUD ("FHA") unless such mortgage loans are restructured. In order to address the
reduction in payments under HAP Contracts as a result of this new policy, the
Multi-family Assisted Housing Reform and Affordability Act of 1997 ( "MAHRAA"),
which was adopted in October 1997, provides for the restructuring of mortgage
loans insured by the FHA with respect to properties subject to the Section 8
program. Under MAHRAA, an FHA-insured mortgage loan can be restructured into a
first mortgage loan which will be amortized on a current basis and a low
interest second mortgage loan payable to FHA which will only be payable on
maturity of the first mortgage loan. This restructuring results in a reduction
in annual debt service payable by the owner of the FHA-insured mortgage loan and
is expected to result in an insurance payment from FHA to the holder
1
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of the FHA-insured loan due to the reduction in the principal amount. MAHRAA
also phases out project-based subsidies on selected properties serving families
not located in rental markets with limited supply, converting such subsidies to
a tenant-based subsidy.
On September 11, 1998, HUD issued interim regulations implementing MAHRAA and
final regulations are expected to be issued in 2000.
When the HAP Contracts are subject to renewal, there can be no assurance that
the local limited partnerships in which the Partnership has an investment will
be permitted to restructure its mortgage indebtedness under MAHRAA. In addition,
the economic impact on the Partnership of the combination of the reduced
payments under the HAP Contracts and the restructuring of the existing
FHA-insured mortgage loans under MAHRAA is uncertain.
The partnerships in which REAL IV has invested were, at least initially,
organized by private developers who acquired the sites, or options thereon, and
applied for applicable mortgage insurance and subsidies. REAL IV became the
principal limited partner in these local limited partnerships pursuant to
arm's-length negotiations with these developers, or others, who act as general
partners. As a limited partner, REAL IV's liability for obligations of the local
limited partnership is limited to its investment. The local general partner of
the local limited partnership retains responsibility for developing,
constructing, maintaining, operating and managing the project. Under certain
circumstances of default, REAL IV has the right to replace the general partner
of the local limited partnerships, but otherwise does not have control of sale,
refinancing, etc.
Although each of the partnerships in which REAL IV has invested generally owns a
project which must compete in the market place for tenants, interest subsidies
and rent supplements from governmental agencies make it possible to offer these
dwelling units to eligible "low income" tenants at a cost significantly below
the market rate for comparable conventionally financed dwelling units in the
area.
2
<PAGE> 4
During 1999, the projects in which REAL IV had invested were substantially
rented. The following is a schedule of the status as of December 31, 1999, of
the projects owned by local limited partnerships in which REAL IV, either
directly or indirectly, has invested.
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL IV HAS AN INVESTMENT
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Units Authorized
For Rental
Assistance Under
Section 8/or
Other Rent Percentage of
No. of Supplement Units Total Units
Name and Location Units Program Occupied Occupied
- ----------------- ------ ---------- -------- --------
<S> <C> <C> <C> <C>
Branford Elderly II
Branford, CT 44 44/ 0 44 100%
Daniel Scott Commons
Chester, PA 72 72/ 0 72 100%
Ninety-Five Vine Street
Hartford, CT 31 31/ 0 31 100%
Oakridge Park Apartments
North Biloxi, MS 40 0/ 0 40 100%
One Madison Avenue
Madison, ME 27 27/ 0 25 93%
Queensbury Heights
Middlesboro, KY 64 0/ 0 30 47%
Scituate Vista
Cranston, RI 232 230/ 0 229 99%
Village of Albany/
Village of Brodhead
Albany & Brodhead, WI 32 0/ 25 26 81%
Wright Park Phase II
Rome, NY 99 0/ 0 24 24%
------ ------- -----
TOTALS 641 404/25 521 81%
====== ======= =====
</TABLE>
3
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ITEM 2. PROPERTIES:
The local limited partnerships in which REAL IV holds interests own various
multi-family rental properties. See Item 1 for information pertaining to these
properties.
ITEM 3. LEGAL PROCEEDINGS:
On August 27, 1998, two investors holding an aggregate of eight units of limited
partnership interests in Real Estate Associates Limited III (an affiliated
partnership in which NAPICO is the managing general partner) and two investors
holding an aggregate of five units of limited partnership interest in Real
Estate Associates Limited VI (another affiliated partnership in which NAPICO is
the managing general partner) commenced an action in the United States District
Court for the Central District of California against the Partnership, NAPICO and
certain other affiliated entities. The complaint alleges that the defendants
breached their fiduciary duty to the limited partners of certain NAPICO managed
partnerships and made materially false and misleading statements in the consent
solicitation statements sent to the limited partners of such partnerships
relating to approval of the transfer of partnership interests in limited
partnerships, owning certain of the properties, to the Operating Partnership
organized by an affiliate of NAPICO. The plaintiffs seek equitable relief, as
well as compensatory damages and litigation related costs. On August 4, 1999,
one investor holding one unit of limited partnership interest in Housing
Programs Limited (another affiliated partnership in which NAPICO is the managing
general partner) commenced a virtually identical action in the United States
District Court for the Central District of California against the Partnership,
NAPICO and certain other affiliated entities. The managing general partner of
such NAPICO managed partnerships and the other defendants believe that the
plaintiffs' claims are without merit and intend to contest the actions
vigorously.
As of December 31, 1999, the Partnership's Corporate General Partner was a
plaintiff or defendant in several other lawsuits. None of these suits were
related to REAL IV.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the limited
partners' interests, held for investment by the Partnership, by the Operating
Partnership, together with certain amendments to the Partnership Agreement and
other disclosures of various conflicts of interest in connection with the
proposed transaction. Prior to the sale of the partnership interests in 1998,
the consents of the limited partners to the sale and amendments to the
Partnership Agreement were obtained.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS AND RELATED SECURITY
HOLDER MATTERS:
The limited partnership interests are not traded on a public exchange but were
sold through a public offering managed by E.F. Hutton Inc. It is not anticipated
that any public market will develop for the purchase and sale of any partnership
interest. Limited partnership interests may be transferred only if certain
requirements are satisfied. At December 31, 1999, there were 2.519 registered
holders of units in REAL IV. No distributions have been made from the inception
of the Partnership to December 31, 1999. The Partnership has invested in certain
government assisted projects under programs which in many instances restrict the
cash return available to project owners. The Partnership was not designed to
provide cash distributions to investors in circumstances other than refinancing
or disposition of its investments in limited partnerships. In March 1999, the
Partnership has made distributions of $7,782,355 to the limited partners and
$78,603 to the general partners, which included using proceeds from the sale of
the partnership interests.
4
<PAGE> 6
ITEM 6. SELECTED FINANCIAL DATA:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Loss From Operations $ (176,559) $ (1,114,270) $ (643,236) $ (636,501) $ (654,466)
Gain on Sale of Limited
Partnership Interests - 5,096,902 - - -
Distributions From
Limited Partnerships
Recognized as Income 159,512 1,316,421 1,406,888 1,107,630 1,222,286
Equity in (Loss) Income
of Limited Partnerships
and Amortization of
Acquisition Costs (91,899) (1,609,650) 355,483 483,414 487,116
------------ ------------ ------------ ------------ ------------
Net (Loss) Income $ (108,946) $ 3,689,403 $ 1,119,135 $ 954,543 $ 1,054,936
============ ============ ============ ============ ============
Net (Loss) Income per Limited
Partnership Interest $ (8) $ 277 $ 84 $ 72 $ 79
============ ============ ============ ============ ============
Total assets $ 5,169,423 $ 13,481,690 $ 10,896,957 $ 9,774,550 $ 8,997,384
============ ============ ============ ============ ============
Investments in Limited
Partnerships $ - $ - $ 3,374,262 $ 3,098,674 $ 3,221,339
============ ============ ============ ============ ============
Notes Payable $ - $ - $ 1,042,524 $ 1,230,743 $ 1,230,743
============ ============ ============ ============ ============
</TABLE>
5
<PAGE> 7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
LIQUIDITY
The Partnership's primary sources of funds include interest income on money
market funds and certificates of deposit and distributions from local
partnerships in which the Partnership has invested. It is not expected that any
of the local limited partnerships in which the Partnership has invested will
generate cash flow sufficient to provide for distributions to the Partnership's
limited partners in any material amount. The Partnership made a cash
distribution to investors in March 1999, which included using proceeds from the
disposition of its investments in certain limited partnerships.
CAPITAL RESOURCES
REAL IV received $16,500,000 in subscriptions for units of limited partnership
interests (at $5,000 per unit) during the period March 12, 1982 to July 15,
1982, pursuant to a registration statement on Form S-11. As of March 31, 1983,
REAL IV received an additional $16,500,000 in subscriptions pursuant to the
exercise of warrants and the sale of Additional Limited Partnership Interests.
RESULTS OF OPERATIONS
The Partnership was formed to provide various benefits to its partners as
discussed in Item 1. It is anticipated that the local limited partnerships in
which REAL IV has invested could produce tax losses for as long as 20 years from
the date of formation. Tax benefits will decline over time as the advantages of
accelerated depreciation are greatest in the earlier years, as deductions for
interest expense will decrease as mortgage principal is amortized and as the Tax
Reform Act of 1986 limits the deductions available.
At December 31, 1999, the Partnership has investments in 9 limited partnerships,
all of which own housing projects that were substantially all rented. The
Partnership sold its interests in 20 local partnerships in December 1998. The
Partnership, as a limited partner, is entitled to 80% to 99% of the profits and
losses of the local limited partnerships. The Partnership accounts for its
investments in the local limited partnerships on the equity method, thereby
adjusting its investment balance by its proportionate share of the income or
loss of the local limited partnerships. Equity in losses of limited partnerships
is recognized in the financial statements until the limited partnership
investment account are reduced to a zero balance. Losses incurred after the
limited partnership investment account is reduced to zero are not recognized.
Limited partners are not liable for losses beyond their contributed capital. At
December 31, 1999 and 1998, the Partnership does not have a positive investment
balance in any local limited partnership.
Distributions received from limited partnerships are recognized as return of
capital until the investment balance has been reduced to zero or to a negative
amount equal to future capital contributions required. Subsequent distributions
received are recognized as income.
The total losses from the local partnerships that was allocated to the
Partnership were $87,000, $23,000 and $317,000 for the years ended December 31,
1999, 1998 and 1997, respectively. However, because losses incurred after the
investment account is reduced to a zero balance are not recognized, the
Partnership recognized equity in (loss) income of limited partnerships,
substantially all from the partnerships with a positive investment balance, of
approximately $92,000, ($1,200,000) and $355,000 for the years ended December
31, 1999, 1998 and 1997, respectively. In addition, the loss recorded by the
Partnership in 1998 includes an impairment losses of approximately $2,810,000
recognized to the carrying values of the investments in certain local limited
partnerships. The cumulative amount of the unrecognized equity in losses of
certain limited partnerships was approximately $7,638,000 and $7,388,000 as of
December 31, 1999 and 1998, respectively.
6
<PAGE> 8
Distributions from the local limited partnerships in which the Partnership did
not have a positive investment balance were approximately $160,000, $1,316,000
and $1,406,000 for the years ended December 31, 1999, 1998 and 1997,
respectively. These amounts were recognized as income on the accompanying
statements of operations, in accordance with the equity method of accounting.
Distributions have decreased as a result of the sale of certain partnership
interests in 1998.
As of December 31, 1999, 1998 and 1997, the Partnership has cash and cash
equivalents of $5,169,423, $7,609,491 and $7,430,796, respectively.
Substantially all of these amounts are on deposit primarily with two high credit
quality financial institutions, earning interest. Interest income has increased
as a result of increasing cash and cash equivalent balances. This resulted in
the Partnership earning $188,935, $353,645 and $325,842 in interest income for
the years ended December 31, 1999, 1998 and 1997, respectively. The amount of
interest income varies with market rates available on deposits and with the
amount of funds available for investment. Cash equivalents can be converted to
cash to meet obligations of the Partnership as they arise. The Partnership
intends to continue investing available funds in this manner.
A recurring partnership expense is the annual management fee. The fee is payable
to the Corporate General Partner of the Partnership and is calculated at .4
percent of the Partnership's original remaining invested assets. The management
fee is paid to the Corporate General Partner for its continuing management of
partnership affairs. The fee is payable beginning with the month following the
Partnership's initial investment in a local limited partnership. Because of the
decrease in invested assets at the end of 1998 as a result of the sale of
partnership interests, management fees decreased from $505,392 for 1998 and 1997
to $111,125 for 1999.
Until the sale of the partnership interests on December 30, 1998, the
Partnership was obligated on non-recourse notes payable of $1,042,524 which bore
interest at 10 percent per annum and had principal maturities ranging from 2015
to 2022. The notes and related interest were payable from cash flow generated
from operations of the related rental properties as defined in the notes. These
obligations were collateralized by the Partnership's investments in the limited
partnerships. Unpaid interest was due at maturity of the notes. Interest expense
was $119,252 and $74,057 for the years ended December 31, 1998 and 1997,
respectively. The Partnership was relieved of these notes in connection with the
sale of the partnership interests.
Under recently adopted law and policy, the United States Department of Housing
and Urban Development ("HUD") has determined not to renew the Housing Assistance
Payment ("HAP") Contracts on a long term basis on the existing terms. In
connection with renewals of the HAP Contracts under such new law and policy, the
amount of rental assistance payments under renewed HAP Contracts will be based
on market rentals instead of above market rentals, which may be the case under
existing HAP Contracts. The payments under the renewed HAP Contracts are not
expected to be in an amount that would provide sufficient cash flow to permit
owners of properties subject to HAP Contracts to meet the debt service
requirements of existing loans insured by the Federal Housing Administration of
HUD ("FHA") unless such mortgage loans are restructured. In order to address the
reduction in payments under HAP Contracts as a result of this new policy, the
Multi-family Assisted Housing Reform and Affordability Act of 1997 ( "MAHRAA"),
which was adopted in October 1997, provides for the restructuring of mortgage
loans insured by the FHA with respect to properties subject to the Section 8
program. Under MAHRAA, an FHA-insured mortgage loan can be restructured into a
first mortgage loan which will be amortized on a current basis and a low
interest second mortgage loan payable to FHA which will only be payable on
maturity of the first mortgage loan. This restructuring results in a reduction
in annual debt service payable by the owner of the FHA-insured mortgage loan and
is expected to result in an insurance payment from FHA to the holder of the
FHA-insured loan due to the reduction in the principal amount. MAHRAA also
phases out project-based subsidies on selected properties serving families not
located in rental markets with limited supply, converting such subsidies to a
tenant-based subsidy.
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<PAGE> 9
MAHRAA provides that properties begin the restructuring process in federal
fiscal year 1999 (beginning October 1, 1998). On September 11, 1998, HUD issued
interim regulations implementing MAHRAA and final regulations are expected to be
issued in 1999. With respect to the local limited partnerships' expiring HAP
Contracts, it is expected that the HAP payments will be reduced or terminated
pursuant to the terms of MAHRAA.
When the HAP Contracts are subject to renewal, there can be no assurance that
the local limited partnerships in which the Partnership has an investment will
be permitted to restructure its mortgage indebtedness under MAHRAA. In addition,
the economic impact on the Partnership of the combination of the reduced
payments under the HAP Contracts and the restructuring of the existing
FHA-insured mortgage loans under MAHRAA is uncertain.
As a result of the foregoing, the Partnership in 1997 undertook an extensive
review of disposition, refinancing or re- engineering alternatives for the
properties in which the limited partnerships have invested and are subject to
HUD mortgage and rental subsidy programs. The Partnership has incurred expenses
in connection with this review by various third party professionals, including
accounting, legal, valuation, structural and engineering costs, which amounted
to $85,548, $584,565 and $185,099 for the years ended December 31, 1999, 1998
and 1997, are included in administrative expenses.
On December 30, 1998, the Partnership sold its limited partnership interests in
20 local limited partnerships. with a total carrying value of $1,489,865, to the
Operating Partnership. The sale resulted in net proceeds to the Partnership of
$5,860,300 and a gain of $5,096,902, after being relieved of notes and interest
payable of $1,270,045 and incurring selling costs of $543,578, some of which are
included in accounts payable at December 31, 1999. In March 1999, the
Partnership has made cash distributions of $7,782,355 to the limited partners
and $78,603 to the general partners, which included using proceeds from the sale
of the partnership interests.
The Operating Partnership purchased such limited partner interests for cash,
which it raised in connection with a private placement of its equity securities.
The purchase was subject to, among other things, (i) the purchase of the general
partner interests in the local limited partnerships by the Operating
Partnership; (iii) the approval of HUD and certain state housing finance
agencies; and (iii) the consent of the limited partners to the sale of the local
limited partnership interests held for investment by the Partnership.
In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the limited
partners' interests held for investment by the Partnership, together with
certain amendments to the Partnership Agreement and other disclosures of various
conflicts of interest in connection with the proposed transaction. Prior to the
sale of the partnership interests, the consents of the limited partners to the
sale and amendments to the Partnership Agreement were obtained.
Operating expenses, other than management fees and interest expense, consist of
legal and accounting fees for services rendered to the Partnership and
administrative expenses. Legal and accounting fees were $97,739, $130,203 and
$109,635 for the years ended December 31, 1999 and 1998 and 1997, respectively.
Administrative expenses were $156,626, $713,068 and $279,994 for the years ended
December 31, 1999, 1998 and 1997, respectively. Included in administrative
expenses are reimbursements to NAPICO for certain expenses, which totaled
$13,080, $37,680 and, $37,681 for the years ended December 31, 1999, 1998 and
1997, respectively. Also included in administrative expenses for 1999, 1998 and
1997 is $85,548, $584,565 and $185,099, respectively, related to the
aforementioned third party review of the properties owned by the local
partnerships.
Revenues and expenses of the local limited partnerships decreased during the
year ended December 31, 1999 as compared to prior years, as a result of the sale
of 20 partnership interests on December 30, 1998.
Total revenue for the local partnerships has decreased from $23,684,000 and
$24,215,000 for the years ended December 31, 1998 and 1997, respectively, to
$4,931,000 for the year ended December 31, 1999.
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<PAGE> 10
Total expenses for the local partnerships decreased from $23,661,000 and
$23,897,000 for the years ended December 31, 1998 and 1997, respectively, to
$5,021,000 for the year ended December 31, 1999.
The total net income (loss) for the local partnerships for 1999, 1998 and 1997
aggregated approximately $(90,000), $23,000 and $319,000, respectively. The
income (losses) allocated to the Partnership were approximately $(87,000),
$23,000 and $317,000 for 1999, 1998 and 1997, respectively.
The Partnership, as a limited partner in the local limited partnerships in which
it has invested, is subject to the risks incident to the management and
ownership of improved real estate. The Partnership investments are also subject
to adverse general economic conditions, and, accordingly, the status of the
national economy, including substantial unemployment, concurrent inflation and
changing legislation, could increase vacancy levels, rental payment defaults,
and operating expenses, which in turn, could substantially increase the risk of
operating losses for the projects.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
The Financial Statements and Supplementary Data are listed under Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE:
Not applicable.
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REAL ESTATE ASSOCIATES LIMITED IV
(A California limited partnership)
FINANCIAL STATEMENTS,
FINANCIAL STATEMENT SCHEDULES
AND INDEPENDENT PUBLIC ACCOUNTANTS' REPORT
DECEMBER 31, 1999
10
<PAGE> 12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Real Estate Associates Limited IV
(A California limited partnership)
We have audited the accompanying balance sheets of Real Estate Associates
Limited IV (a California limited partnership) as of December 31, 1999 and 1998,
and the related statements of operations, partners' equity (deficiency) and cash
flows for each of the three years in the period ended December 31, 1999. Our
audits also included the financial statement schedules listed in the index in
item 14. These financial statements and financial statement schedules are the
responsibility of the management of the Partnership. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits. We did not audit the financial statements of
certain limited partnerships, the investments in which are reflected in the
accompanying financial statements using the equity method of accounting. The
equity in loss of these limited partnerships represents 9 percent and 19 percent
of the total net income of the Partnership for the years ended December 31, 1998
and 1997, respectively, and these limited partnerships represent a substantial
portion of the investee information in Note 2 and the financial statement
schedules. The financial statements of these limited partnerships were audited
by other auditors. Their reports have been furnished to us and our opinion,
insofar as it relates to the amounts included for these limited partnerships, is
based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits and the reports of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Real Estate Associates Limited IV as of December 31,
1999 and 1998, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1999 in conformity with
generally accepted accounting principles. Also, in our opinion, based on our
audits and the reports of other auditors, such financial statement schedules,
when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Los Angeles, California
March 31, 2000
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REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
INVESTMENTS IN LIMITED PARTNERSHIPS (Note 2) $ - $ -
CASH AND CASH EQUIVALENTS (Note 1) 5,169,423 7,609,491
CASH DUE FROM ESCROW (Note 2) - 5,860,300
OTHER ASSETS 11,899
------------ ------------
TOTAL ASSETS $ 5,169,423 $ 13,481,690
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIENCY)
LIABILITIES:
Accounts payable $ 46,443 $ 388,806
------------ ------------
COMMITMENTS AND CONTINGENCIES (Notes 3 and 4)
PARTNERS' EQUITY (DEFICIENCY):
General partners (220,794) (141,102)
Limited partners 5,343,774 13,233,986
------------ ------------
5,122,980 13,092,884
------------ ------------
TOTAL LIABILITIES AND PARTNERS'
EQUITY (DEFICIENCY) $ 5,169,423 $ 13,481,690
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE> 14
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
INTEREST AND OTHER INCOME $ 188,935 $ 353,645 $ 325,842
----------- ----------- -----------
OPERATING EXPENSES:
Legal and accounting 97,739 130,203 109,635
Management fees - general partner (Note 3) 111,125 505,392 505,392
Interest (Note 2) - 119,252 74,057
Administrative (Note 3) 156,630 713,068 279,994
----------- ----------- -----------
TOTAL OPERATING EXPENSES 365,494 1,467,915 969,078
----------- ----------- -----------
LOSS FROM OPERATIONS (176,559) (1,114,270) (643,236)
GAIN ON SALE OF LIMITED PARTNERSHIP
INTERESTS (Note 2) - 5,096,902 -
DISTRIBUTIONS FROM LIMITED
PARTNERSHIPS RECOGNIZED AS
INCOME (Note 2) 159,512 1,316,421 1,406,888
EQUITY IN (LOSS) INCOME OF LIMITED
PARTNERSHIPS AND AMORTIZATION
OF ACQUISITION COSTS (Note 2) (91,899) (1,609,650) 355,483
----------- ----------- -----------
NET (LOSS) INCOME $ (108,946) $ 3,689,403 $ 1,119,135
=========== =========== ===========
NET (LOSS) INCOME PER LIMITED PARTNERSHIP
INTEREST (Note 1) $ (8) $ 277 $ 84
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE> 15
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
EQUITY (DEFICIENCY),
January 1, 1997 $ (189,187) $ 8,473,533 $ 8,284,346
Net income for 1997 11,191 1,107,944 1,119,135
------------ ------------ ------------
EQUITY (DEFICIENCY),
December 31, 1997 (177,996) 9,581,477 9,403,481
Net income for 1998 36,894 3,652,509 3,689,403
------------ ------------ ------------
EQUITY (DEFICIENCY),
December 31, 1998 (141,102) 13,233,986 13,092,884
Distributions (78,603) (7,782,355) (7,860,958)
Net loss for 1999 (1,089) (107,857) (108,946)
------------ ------------ ------------
EQUITY (DEFICIENCY),
December 31, 1999 $ (220,794) $ 5,343,774 $ 5,122,980
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE> 16
REAL ESTATE ASSOCIATES LIMITED IV
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (108,946) $ 3,689,403 $ 1,119,135
Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:
Gain on sale of partnership interests - (5,096,902) -
Equity in loss (income) of limited partnerships and amorti-
zation of additional basis and acquisition costs 91,899 1,609,650 (355,483)
Decrease (increase) in other assets 11,899 80,000 (19,070)
Decrease in accrued interest payable - (92,580)
(Decrease) increase in accounts payable (342,363) 257,955 191,491
----------- ----------- -----------
Net cash (used in) provided by operating activities (347,511) 447,526 936,073
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Costs related to sale of Partnership interests - (543,578)
Capital contributions (91,899) (102,500) -
Distributions from limited partnerships
recognized as return of capital - 377,247 79,895
Proceeds from the sale of limited partnership interests 5,860,300 - -
----------- ----------- -----------
Net cash provided by (used in) investing activities 5,768,401 (268,831) 79,895
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of notes payable - - (188,219)
Distributions to partners (7,860,958) - -
----------- ----------- -----------
Net cash used in financing activities (7,860,958) - (188,219)
----------- ----------- -----------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (2,440,068) 178,695 827,749
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 7,609,491 7,430,796 6,603,047
----------- ----------- -----------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 5,169,423 $ 7,609,491 $ 7,430,796
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the year for interest $ - $ 211,832 $ 1,284
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF
NON-CASH FINANCING ACTIVITIES
See Note 2 to financial statements regarding
notes and interest payable
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 17
REAL ESTATE ASSOCIATES LIMITED IV
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Real Estate Associates Limited IV (the Partnership) was formed under the
California Limited Partnership Act on August 24, 1981. The Partnership
was formed to invest either directly or indirectly in other limited
partnerships which own and operate primarily federal, state and local
government-assisted housing projects. The general partners are National
Partnership Investments Corp. (NAPICO), the corporate general partner,
and National Partnership Investments Associates ("NAPIA"), a limited
partnership. The business of REAL IV is conducted primarily by NAPICO.
Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of
Casden Investment Corporation ("CIC"), which is wholly owned by Alan I.
Casden. On December 30, 1998, Casden Properties Operating Partnership,
L.P. (the "Operating Partnership"), a majority owned subsidiary of
Casden Properties Inc., a real estate investment trust organized by Alan
I. Casden, purchased a 95.25% economic interest in NAPICO.
These financial statements include the accounts of the Partnership and
Real Estate Associates II (REA II), a California general partnership in
which the Partnership holds a 99.9 percent general partner interest.
Losses in excess of the minority interest in equity that would otherwise
be attributed to the minority interest, are being allocated to the
Partnership.
The Partnership issued 13,200 limited partner interests through a public
offering. The general partners have a 1 percent interest in operating
profits and losses of the Partnership. The limited partners have the
remaining 99 percent interest in proportion to their respective
investments.
The Partnership shall be dissolved only upon the expiration of 52
complete calendar years (December 31, 2033) from the date of formation
of the Partnership or the occurrence of various other events as
specified in the terms of the Partnership Agreement.
Upon total or partial liquidation of the Partnership or the disposition
or partial disposition of a project or project interest and distribution
of the proceeds, the general partners will be entitled to a liquidation
fee as stipulated in the Partnership Agreement. The limited partners
will have a priority return equal to their invested capital attributable
to the project(s) or project interest(s) sold and shall receive from the
sale of the project(s) or project interest(s) sold an
16
<PAGE> 18
REAL ESTATE ASSOCIATES LIMITED IV
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
amount sufficient to pay state and federal income taxes, if any,
calculated at the maximum rate then in effect. The general partners'
liquidation fee may accrue but shall not be paid until the limited
partners have received distributions equal to 100 percent of their
capital contributions.
On December 30, 1998, the Partnership sold its interests in 20 local
limited partnerships for $5,860,300 to the Operating Partnership.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Method of Accounting for Investments in Limited Partnerships
The investments in limited partnerships are accounted for on the equity
method. Acquisition, selection and other costs related to the
acquisition of the projects have been capitalized as part of the
investment account and are being amortized on a straight line basis over
the estimated lives of the underlying assets, which is generally 30
years.
Net Income Per Limited Partnership Interest
Net income per limited partnership interest was computed by dividing the
limited partners' share of net income by the number of limited
partnership interests outstanding during the year. The number of limited
partnership interests was 13,202 for all years presented.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and bank certificates of
deposit with an original maturity date of three months or less. The
Partnership has its cash and cash equivalents on deposit primarily with
two high credit quality financial institutions. Such cash and cash
equivalents are in excess of the FDIC insurance limit.
17
<PAGE> 19
REAL ESTATE ASSOCIATES LIMITED IV
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Impairment of Long-Lived Assets
The Partnership reviews long-lived assets to determine if there has been
any permanent impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable.
If the sum of the expected future cash flows is less than the carrying
amount of the assets, the Partnership recognizes an impairment loss.
During 1998, the Partnership recognized an impairment loss of
approximately $2,810,000, related to certain investments in local
limited partnerships, which has been included in equity in loss of
limited partnerships.
2. INVESTMENTS IN LIMITED PARTNERSHIPS
The Partnership holds limited partnership interests in 7 limited
partnerships as of December 31, 1999 and 1998, after selling its
interests in 20 limited partnerships in 1998. In addition, the
Partnership holds a general partner interest in REA II. NAPICO is also a
general partner in REA II. REA II, in turn, holds limited partner
interests in 2 additional limited partnerships. In total, therefore, the
Partnership holds interests, either directly or indirectly through REA
II, in 9 partnerships which own residential low income rental projects
consisting of 641 apartment units. The mortgage loans of these projects
are payable to or insured by various governmental agencies.
The Partnership, as a limited partner, is entitled to between 80 percent
and 99 percent of the profits and losses of the limited partnerships it
has invested in directly. The Partnership is also entitled to 99.9
percent of the profits and losses of REA II. REA II is entitled to a 99
percent interest in each of the limited partnerships in which it has
invested.
Equity in loss of the limited partnerships is recognized until the
investment balance is reduced to zero. Losses incurred after the limited
partnership investment account is reduced to zero are not recognized.
The cumulative amount of the unrecognized equity in losses of certain
limited partnerships was approximately $7,638,000 and $7,388,000 as of
December 31, 1999 and 1998, respectively.
Distributions from the limited partnerships are accounted for as a
return of capital until the investment balance is reduced to zero or to
a negative amount equal to further capital contributions required.
Subsequent distributions received are recognized as income.
18
<PAGE> 20
REAL ESTATE ASSOCIATES LIMITED IV
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
The following is a summary of the investments in limited partnerships
and reconciliation to the limited partnership accounts:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Investment balance, beginning of year $ - $ 3,374,262
Equity in loss of limited partnerships (91,899) (1,434,692)
Investment balance in partnership interests sold - (1,489,865)
Amortization of capitalized additional basis
and acquisition costs and fees - (174,958)
Capital contributions 91,899 102,500
Distributions recognized as return of capital - (377,247)
----------- -----------
Investment balance, end of year $ - $ -
=========== ===========
</TABLE>
The difference between the investment per the accompanying balance
sheets at December 31, 1999 and 1998, and the deficiency per the limited
partnerships' combined financial statements is due primarily to
cumulative unrecognized equity in losses of certain limited
partnerships, additional basis and costs capitalized to the investment
account, cumulative distributions recognized as income and recognition
of impairment losses.
Selected financial information from the combined financial statements at
December 31, 1999 and 1998 and for each of the three years in the period
ended December 31, 1999, of the limited partnerships in which the
Partnership has invested directly or indirectly, is as follows:
Balance Sheets
<TABLE>
<CAPTION>
1999 1998
-------- --------
(in thousands)
<S> <C> <C>
Land and buildings, net $ 12,726 $ 13,563
======== ========
Total assets $ 17,464 $ 18,045
======== ========
Mortgages payable $ 19,123 $ 20,013
======== ========
Total liabilities $ 22,719 $ 23,194
======== ========
Deficiency of Real Estate Associates Limited IV $ (5,085) $ (5,004)
======== ========
Deficiency of other partners $ (170) $ (145)
======== ========
</TABLE>
19
<PAGE> 21
REAL ESTATE ASSOCIATES LIMITED IV
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
Statements of Operations
<TABLE>
<CAPTION>
1999 1998 1997
--------- ------- -------
(in thousands)
<S> <C> <C> <C>
Total revenue $ 4,931 $23,684 $24,215
========= ======= =======
Interest expense $ 1,527 $ 7,733 $ 7,975
========= ======= =======
Depreciation $ 813 $ 4,319 $ 3,725
========= ======= =======
Total expenses $ 5,021 $23,661 $23,897
========= ======= =======
Net income (loss) $ (90) $ 23 $ 319
========= ======= =======
Net income (loss) allocable to the Partnership $ (87) $ 23 $ 317
========= ======= =======
</TABLE>
Land and buildings above have been adjusted for the amount by which the
investments in the limited partnerships exceed the Partnership's share
of the net book value of the underlying net assets of the investee which
are recorded at historical costs. Depreciation on the adjustment is
provided for over the estimated remaining useful lives of the
properties.
An affiliate of NAPICO was the general partner in two of the limited
partnerships in which the partnership interests were sold on December
30, 1998, and another affiliate received property management fees of 5
percent of their revenue. The affiliate received property management
fees of approximately $15,980, $154,000 and $121,000 in 1999, 1998 and
1997, respectively.
20
<PAGE> 22
REAL ESTATE ASSOCIATES LIMITED IV
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
Under recently adopted law and policy, the United States Department of
Housing and Urban Development ("HUD") has determined not to renew the
Housing Assistance Payment ("HAP") Contracts on a long term basis on the
existing terms. In connection with renewals of the HAP Contracts under
such new law and policy, the amount of rental assistance payments under
renewed HAP Contracts will be based on market rentals instead of above
market rentals, which may be the case under existing HAP Contracts. The
payments under the renewed HAP Contracts are not expected to be in an
amount that would provide sufficient cash flow to permit owners of
properties subject to HAP Contracts to meet the debt service
requirements of existing loans insured by the Federal Housing
Administration of HUD ("FHA") unless such mortgage loans are
restructured. In order to address the reduction in payments under HAP
Contracts as a result of this new policy, the Multi-family Assisted
Housing Reform and Affordability Act of 1997 ( "MAHRAA"), which was
adopted in October 1997, provides for the restructuring of mortgage
loans insured by the FHA with respect to properties subject to the
Section 8 program. Under MAHRAA, an FHA-insured mortgage loan can be
restructured into a first mortgage loan which will be amortized on a
current basis and a low interest second mortgage loan payable to FHA
which will only be payable on maturity of the first mortgage loan. This
restructuring results in a reduction in annual debt service payable by
the owner of the FHA-insured mortgage loan and is expected to result in
an insurance payment from FHA to the holder of the FHA-insured loan due
to the reduction in the principal amount. MAHRAA also phases out
project-based subsidies on selected properties serving families not
located in rental markets with limited supply, converting such subsidies
to a tenant-based subsidy.
On September 11, 1998, HUD issued interim regulations implementing
MAHRAA and final regulations are expected to be issued in 2000.
When the HAP Contracts are subject to renewal, there can be no assurance
that the local limited partnerships in which the Partnership has an
investment will be permitted to restructure its mortgage indebtedness
under MAHRAA. In addition, the economic impact on the Partnership of the
combination of the reduced payments under the HAP Contracts and the
restructuring of the existing FHA-insured mortgage loans under MAHRAA is
uncertain.
21
<PAGE> 23
REAL ESTATE ASSOCIATES LIMITED IV
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
As a result of the foregoing, the Partnership in 1997 undertook an
extensive review of disposition, refinancing or re-engineering
alternatives for the properties in which the limited partnerships have
invested and are subject to HUD mortgage and rental subsidy programs.
The Partnership has incurred expenses in connection with this review by
various third party professionals, including accounting, legal,
valuation, structural and engineering costs, which amounted to $85,548,
$584,565 and $185,099 for the years ended December 31, 1999, 1998 and
1997, respectively, and are included in general and administrative
expenses.
On December 30, 1998, the Partnership sold its limited partnership
interests in 20 local limited partnerships, with a total carrying value
of $1,489,865, to the Operating Partnership. The sale resulted in net
proceeds to the Partnership of $5,860,300 and a net gain of $5,096,902,
after being relieved of notes and interest payable of $1,270,045 and
incurring selling costs of $543,578. The cash proceeds were held in
escrow at December 31, 1998 and were collected in 1999. In March 1999,
the Partnership made cash distributions of $7,782,355 to the limited
partners and $78,603 to the general partners, which included using
proceeds from the sale of the partnership interests.
The Operating Partnership purchased such limited partner interests for
cash, which it raised in connection with a private placement of its
equity securities. The purchase was subject to, among other things, (i)
the purchase of the general partner interests in the local limited
partnerships by the Operating Partnership; (iii) the approval of HUD and
certain state housing finance agencies; and (iii) the consent of the
limited partners to the sale of the local limited partnership interests
held for investment by REAL IV.
In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the
limited partners' interests held for investment by the Partnership,
together with certain amendments to the Partnership Agreement and other
disclosures of various conflicts of interest in connection with the
proposed transaction. Prior to the sale of the partnership interests,
the consents of the limited partners to the sale and amendments to the
Partnership Agreement were obtained.
3. FEES AND EXPENSES DUE GENERAL PARTNER
Under the terms of the Restated Certificate and Agreement of Limited
Partners, the Partnership is obligated to NAPICO for an annual
management fee equal to .4 percent of the original remaining invested
assets of the limited partnerships. Invested assets is defined as the
costs of acquiring project interests, including the proportionate amount
of the mortgage loans related to the Partnerships interest in the
capital accounts of the respective partnerships.
22
<PAGE> 24
REAL ESTATE ASSOCIATES LIMITED IV
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
3. FEES AND EXPENSES DUE GENERAL PARTNER (CONTINUED)
The Partnership reimburses NAPICO for certain expenses. The
reimbursement to NAPICO was $13,080, $37,680 and $37,681 in 1999, 1998
and 1997, respectively, and is included in operating expenses.
4. CONTINGENCIES
On August 27, 1998, two investors holding an aggregate of eight units of
limited partnership interests in Real Estate Associates Limited III (an
affiliated partnership in which NAPICO is the managing general partner)
and two investors holding an aggregate of five units of limited
partnership interest in Real Estate Associates Limited VI (another
affiliated partnership in which NAPICO is the managing general partner)
commenced an action in the United States District Court for the Central
District of California against the Partnership, NAPICO and certain other
affiliated entities. The complaint alleges that the defendants breached
their fiduciary duty to the limited partners of certain NAPICO managed
partnerships and made materially false and misleading statements in the
consent solicitation statements sent to the limited partners of such
partnerships relating to approval of the transfer of partnership
interests in limited partnerships, owning certain of the properties, to
the Operating Partnership organized by an affiliate of NAPICO. The
plaintiffs seek equitable relief, as well as compensatory damages and
litigation related costs. On August 4, 1999, one investor holding one
unit of limited partnership interest in Housing Programs Limited
(another affiliated partnership in which NAPICO is the managing general
partner) commenced a virtually identical action in the United States
District Court for the Central District of California against the
Partnership, NAPICO and certain other affiliated entities. The managing
general partner of such NAPICO managed partnerships and the other
defendants believe that the plaintiffs' claims are without merit and
intend to contest the actions vigorously.
The corporate general partner of the Partnership is a plaintiff in
various lawsuits and has also been named a defendant in other lawsuits
arising from transactions in the ordinary course of business. In the
opinion of management and the corporate general partner, the claims will
not result in any material liability to the Partnership.
5. INCOME TAXES
No provision has been made for income taxes in the accompanying
financial statements since such taxes, if any, are the liability of the
individual partners. The major differences in tax and financial
reporting result from the use of different bases and depreciation
methods for the properties held by the limited partnerships. Differences
in tax and financial reporting also arise as losses are not recognized
for financial reporting purposes when the investment balance has been
reduced to zero.
23
<PAGE> 25
REAL ESTATE ASSOCIATES LIMITED IV
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosure about
Fair Value of Financial Instruments," requires disclosure of fair value
information about financial instruments. The carrying amount of assets
and liabilities reported on the balance sheets that require such
disclosure approximates fair value due to their short-term maturity.
7. FOURTH-QUARTER ADJUSTMENT
The Partnership's policy is to record its equity in the income (loss) of
limited partnerships on a quarterly basis, using estimated financial
information furnished by the various local operating general partners.
The equity in income (loss) of limited partnerships reflected in the
accompanying financial statements is based primarily upon audited
financial statements of the investee limited partnerships. The increase
of approximately $92,000, between the estimated nine-month equity in
loss and the actual 1999 equity in loss has been recorded in the fourth
quarter.
24
<PAGE> 26
SCHEDULE
REAL ESTATE ASSOCIATES LIMITED IV
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
Year Ended December 31, 1999
---------------------------------------------------------------------
Cash
Balance Capital Distri- Equity Balance
January Contri- butions in December
Limited Partnerships 1, 1999 butions Received Income (Loss) 31, 1999
- -------------------- ------- ------- -------- ------------- --------
<S> <C> <C> <C> <C> <C>
Branford Elderly II $ $ $ $ $ -
Daniel Scott Commons
Ninety-Five Vine St. - 91,899 (91,899) -
Oakridge Park Apts.
One Madison
Queensbury Heights
Scituate Vista
Village of Albany/Brodhead
Wright Park Phase II
------- ------- -------- -------- --------
$ $91,899 $ $(91,899) $ -
======= ======= ======== ======== ========
</TABLE>
25
<PAGE> 27
SCHEDULE
(Continued)
REAL ESTATE ASSOCIATES LIMITED IV
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
Year Ended December 31, 1998
------------------------------------------------------------------------
Cash Equity
Balance Capital Distri- in Balance
January Contri- butions Income December
Limited Partnerships 1, 1998 butions Received (Loss) Sale 31, 1998
- ---------------------------- ---------- -------- --------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Alliance Towers* $ $ $ $ $ $ -
Antelope Village Apts.* (139,183) 139,183
Armitage Commons*
Barnesboro Family Project* 225,875 (24,924) (40,777) (160,174) -
Baughman Towers*
Beacon Hill/Hillsdale Place*
Branford Elderly II 243,286 (11,961) (231,325) -
Buckingham Apts.*
Coatesville Towers* (137,541) 137,541 -
Daniel Scott Commons
Ethel Arnold Bradley* 292,946 102,500 (12,959) 85,464 (467,951) -
Glen Oaks Townhomes*
Lakeland Place* 181,345 (37,632) 124,589 (268,302) -
Loch Haven Apts.* 456,781 (13,047) 149,704 (593,438) -
Ninety-Five Vine St.
Oakridge Park Apts.
O'Fallon Apts.*
One Madison
Pacific Coast Villa*
Queensbury Heights
Rosewood Apts.*
Sandwich Apts.*
Scituate Vista 1,974,029 (1,974,029)
Sterling Village*
Villa del Sol*
Village of Albany/Brodhead
Vista Chino Park*
Wasco Arms Apts.*
Wright Park Phase II
---------- -------- --------- ----------- ----------- --------
$3,374,262 $102,500 $(377,247) $(1,609,650) $(1,489,865) $ -
========== ======== ========= =========== =========== ========
</TABLE>
*Sold to the Operating Partnership on December 30, 1998.
26
<PAGE> 28
SCHEDULE
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED IV
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
Year Ended December 31, 1997
-----------------------------------------------------------
Cash Equity
Balance Capital Distri- in Balance
January Contri- butions Income December
Limited Partnerships 1, 1997 butions Received (Loss) 31, 1997
- ---------------------------- ---------- -------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Alliance Towers $ $ $ $ $
Antelope Village Apts.
Armitage Commons
Barnesboro Family Project 263,910 (21,033) (17,002) 225,875
Baughman Towers
Beacon Hill/Hillsdale Place
Branford Elderly II 215,082 (18,124) 46,328 243,286
Buckingham Apts.
Coatesville Towers
Daniel Scott Commons
Ethel Arnold Bradley 275,218 (13,223) 30,951 292,946
Glen Oaks Townhomes
Lakeland Place 153,592 (27,515) 55,268 181,345
Loch Haven Apts. 437,851 18,930 456,781
Ninety-Five Vine St.
Oakridge park Apts.
O'Fallon Apts.
One Madison
Pacific Coast Villa
Queensbury Heights
Rosewood Apts.
Sandwich Apts.
Scituate Vista 1,753,021 221,008 1,974,029
Sterling Village
Villa del Sol
Village of Albany/Brodhead
Vista Chino Park
Wasco Arms Apts
Wright Park Phase II
---------- -------- --------- ----------- ----------
$3,098,674 $ -- $ (79,895) $ 355,483 $3,374,262
========== ======== ========= =========== ==========
</TABLE>
27
<PAGE> 29
SCHEDULE
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED IV
INVESTMENT IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTES: 1. Equity in income (losses) of the limited partnerships
represents the Partnership's allocable share of the net income
(loss) from the limited partnerships for the year. Equity in
income (losses) of the limited partnerships will be recognized
until the investment balance is reduced to zero, or below zero to
an amount equal to future capital contributions to be made by the
Partnership.
2. Cash distributions from the limited partnerships will be treated
as a return on the investment and will reduce the investment
balance until such time as the investment is reduced to an amount
equal to additional contributions. Distributions subsequently
received will be recognized as income.
28
<PAGE> 30
SCHEDULE III
REAL ESTATE ASSOCIATES LIMITED IV
REAL ESTATE AND ACCUMULATED DEPRECIATION
OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL IV HAS INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Buildings,
Number of Outstanding Furnishing and Accumulated Construction
Partnership/Location Units Mortgage Loan Land Equipment Total Depreciation Period
- -------------------- ----- ------------- --------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Branford Elderly II 44 $ 1,339,600 $ 306,089 $ 1,821,527 $ 2,127,616 $ 705,601 1982-1983
Branford, CT
Daniel Scott Commons 72 3,147,713 91,864 3,930,719 4,022,583 1,703,993 1982-1983
Chester, PA
Oakridge Park Apts. 40 956,580 40,000 1,190,491 1,230,491 1,095,957 1982-1983
North Biloxi, Ms
One Madison Avenue 27 895,022 83,750 1,121,346 1,205,096 668,975 1982-1983
Madison, ME
Queensbury Heights 64 1,873,207 50,000 2,571,951 2,621,951 1,381,805 1982-1983
Middlesboro, KY
Scituate Vista 232 6,019,952 414,914 10,245,118 10,660,032 5,423,776 1981-1983
Cranston, RI
Village of Albany/ 32 1,045,430 59,850 1,159,328 1,219,178 645,301 1982-1983
Albany & Brodhead, WI
95 Vine Street 31 1,269,419 280,000 1,742,796 2,022,796 758,198 1982-1983
Hartford, CT
Wright Park Phase II 99 2,576,079 17,530 4,315,592 4,333,122 4,333,122 (A)
Rome, NY
--- ------------ ---------- ------------ ------------ -----------
TOTAL 641 $ 19,123,002 $1,343,997 $ 28,098,868 $ 29,442,865 $16,716,728
=== ============ ========== ============ ============ ===========
</TABLE>
(A) This projected was completed when REAL IV entered the local partnership
29
<PAGE> 31
SCHEDULE III
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED IV
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL IV HAS INVESTMENTS
DECEMBER 31, 1999
NOTES: 1. Each local limited partnership has developed, owns and operates the
housing project. Substantially all project costs, including
construction period interest expense, are being capitalized by the
limited partnerships.
2. Depreciation is, or will be, provided for by various methods over
the estimated useful lives of the projects. The estimated
composite useful lives of the buildings are generally from 25 to
40 years.
3. Investments in property and equipment:
<TABLE>
<CAPTION>
Buildings,
Furnishings,
And
Land Equipment Total
------------- ------------- -------------
<S> <C> <C> <C>
Balance, January 1, 1997 $ 10,475,320 $ 115,662,468 $ 126,137,788
Net additions during 1997 79,806 4,714,186 4,793,992
------------- ------------- -------------
Balance, December 31, 1997 10,555,126 120,376,654 130,931,780
Net additions during 1998 (88,797) 633,225 544,428
Sale of properties during 1998 (9,122,332) (93,247,737) (102,370,069)
------------- ------------- -------------
Balance, December 31, 1998 1,343,997 27,762,142 29,106,139
Net additions during 1999 - 336,726 336,726
------------- ------------- -------------
Balance, December 31, 1999 $ 1,343,997 $ 28,098,868 $ 29,442,865
============= ============= =============
</TABLE>
30
<PAGE> 32
SCHEDULE III
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED IV
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL IV HAS INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Buildings
Furnishings
and Equipment
-------------
Accumulated Depreciation:
- -------------------------
<S> <C>
Balance, January 1, 1997 $ 64,867,897
Net additions during 1997 7,031,886
------------
Balance, December 31, 1997 71,899,783
Net additions during 1998 3,982,518
Sale of properties during 1998 (60,339,330)
------------
Balance, December 31, 1998 15,542,971
Net additions during 1999 1,173,757
------------
Balance, December 31, 1999 $ 16,716,728
============
</TABLE>
31
<PAGE> 33
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
REAL ESTATE ASSOCIATES LIMITED IV (the "Partnership") has no directors or
executive officers of its own.
Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden
Investment Corporation ("CIC"), which is wholly owned by Alan I. Casden. On
December 30, 1998, Casden Properties Operating Partnership, L.P. (the "Operating
Partnership"), a majority owned subsidiary of Casden Properties Inc., a real
estate investment trust organized by Alan I. Casden, purchased a 95.25% economic
interest in NAPICO. The following biographical information is presented for the
directors and executive officers of NAPICO with principal responsibility for the
Partnership's affairs.
CHARLES H. BOXENBAUM, 70, Chairman of the Board of Directors and Chief Executive
Officer of NAPICO.
Mr. Boxenbaum has been associated with NAPICO since its inception. He has been
active in the real estate industry since 1960, and prior to joining NAPICO was a
real estate broker with the Beverly Hills firm of Carl Rhodes Company.
Mr. Boxenbaum has been a guest lecturer at national and state realty
conventions, certified properties exchanger's seminars, Los Angeles Town Hall,
National Association of Home Builders, International Council of Shopping
Centers, Society of Conventional Appraisers, California Real Estate Association,
National Institute of Real Estate Brokers, Appraisal Institute, various mortgage
banking seminars, and the North American Property Forum held in London, England.
In 1963, he was the winner of the Snyder Award, the highest annual award offered
by the National Association of Real Estate Boards for Best Exchange. He is one
of the founders and a past director of the First Los Angeles Bank, organized in
November 1974. Mr. Boxenbaum was a member of the Board of Directors of the
National Housing Council. Mr. Boxenbaum received his Bachelor of Arts degree
from the University of Chicago.
BRUCE E. NELSON, 48, President and a director of NAPICO.
Mr. Nelson joined NAPICO in 1980 and became President in February 1989. He is
responsible for the operations of all NAPICO sponsored limited partnerships.
Prior to that he was primarily responsible for the securities aspects of the
publicly offered real estate investment programs. Mr. Nelson is also involved in
the identification, analysis, and negotiation of real estate investments.
From February 1979 to October 1980, Mr. Nelson held the position of Associate
General Counsel at Western Consulting Group, Inc., private residential and
commercial real estate syndicators. Prior to that time, Mr. Nelson was engaged
in the private practice of law in Los Angeles. Mr. Nelson received his Bachelor
of Arts degree from the University of Wisconsin and is a graduate of the
University of Colorado School of Law. He is a member of the State Bar of
California and is a licensed real estate broker in California and Texas.
ALAN I. CASDEN, 54, Chairman of Casden Properties Inc., a director and member of
the audit committee of NAPICO, and chairman of the Executive Committee of
NAPICO.
Mr. Casden has been involved in approximately $3 billion of real estate
financings and sales and has been responsible for the development and
construction of more than 12,000 apartment units and 5,000 single-family homes
and condominiums.
Mr. Casden is a member of the American Institute of Certified Public Accountants
and of the California Society of Certified Public Accountants. Mr. Casden is a
member of the advisory board of the National Multi-Family Housing Conference,
the Multi-Family Housing Council, and the President's Council of the California
Building
32
<PAGE> 34
Industry Association. He also serves on the advisory board to the School of
Accounting of the University of Southern California. He holds a Bachelor of
Science degree and a Masters in Business Administration degree from the
University of Southern California.
PAUL PATIERNO, 43, Chief Financial Officer.
Mr. Patierno joined NAPICO in 1998 and is responsible for its financial affairs,
as well as the limited partnerships sponsored by it. From 1995 until joining
NAPICO in September 1998, Mr. Patierno was a senior manager in the affordable
housing group of Altschuler, Melvoin and Glasser LLP, a national public
accounting firm. From 1990 to 1995, he practiced public accounting with a firm
specializing in real estate syndication. Mr. Patierno received his bachelor of
science degree in accounting from California State University at Northridge, and
is a member of the American Institute of Certified Public Accountants and the
California Society of Certified Public Accountants.
PATRICIA W. TOY, 70, Senior Vice President - Communications and Assistant
Secretary.
Mrs. Toy joined NAPICO in 1977, following her receipt of an MBA from the
Graduate School of Management, UCLA. From 1952 to 1956, Mrs. Toy served as a
U.S. Naval Officer in communications and personnel assignments. She holds a
Bachelor of Arts Degree from the University of Nebraska.
MARK L. WALTHER, 39 Executive Vice President, General Counsel and Assistant
Secretary.
Mr. Walther joined NAPICO in 1987 and is responsible for the legal affairs of
the NAPICO sponsored limited partnerships. Prior to joining NAPICO, Mr. Walther
worked in the San Francisco law firm of Browne and Kahn which specialized in
construction litigation. Mr. Walther received his Bachelor of Arts Degree in
Political Science from the University of California, Santa Barbara and is a
graduate of the University of California, Davis, School of Law. He is a member
of the State Bar of Hawaii.
NAPICO and several of its officers, directors and affiliates, including Charles
H. Boxenbaum, Bruce E. Nelson and Alan I. Casden, consented to the entry, on
June 25, 1997, of an administrative cease and desist order by the U.S.
Securities and Exchange Commission (the "Commission"), without admitting or
denying any of the findings made by the Commission. The Commission found that
NAPICO and others had violated certain federal securities laws in connection
with transactions unrelated to the Partnership. The Commission's order did not
impose any cost, burden or penalty on any partnership managed by NAPICO and does
not impact NAPICO's ability to serve as the Partnership's Managing General
Partner.
ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS:
Real Estate Associates Limited IV has no officers, employees or directors.
However, under the terms of the Restated Certificate and Agreement of Limited
Partnership, the Partnership is obligated to pay the Corporate General Partner
an annual management fee. The annual management fee is approximately equal to .4
percent of the invested assets, including the Partnership's allocable share of
the mortgages related to real estate properties held by local limited
partnerships. The fee is earned beginning in the month the Partnership makes its
initial contribution to the limited partnership. In addition, the Partnership
reimburses the Corporate General Partner for certain expenses.
33
<PAGE> 35
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
(a) Security Ownership of Certain Beneficial Owners
The general partners own all of the outstanding general partnership
interests of REAL IV; no person is known to own beneficially in excess
of 5 percent of the outstanding limited partnership interests.
(b) At December 31, 1999, security ownership of management is as listed:
<TABLE>
<CAPTION>
Percentage of
Outstanding
Amount and Limited
Name of Nature of Partnership
Title of Class Owner Beneficial Owner Interests
- -------------- ----- ---------------- ---------
<S> <C> <C> <C>
Limited Charles H. Boxenbaum
Partnership 780 Latimer Road
Interest Santa Monica, CA 90402 $ 7,500 *
</TABLE>
* Cumulative limited partnership interests owned by corporate officers or
the General Partner is less than 1 percent interest of total outstanding
Limited Partnership interests.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
The Partnership has no officers, directors or employees of its own. All of its
affairs are managed by the Corporate General Partner, National Partnership
Investments Corp. The Partnership is obligated to NAPICO for an annual
management fee equal to .4 percent of the original remaining invested assets of
the limited partnerships. Invested assets is defined as the costs of acquiring
project interests, including the proportionate amount of the mortgage loans
related to the Partnership's interest in the capital accounts of the respective
partnerships. The management fee was $111,125 for the year ended December 31,
1999 and $505,392 for each of the two years in the period ended December 31,
1998.
The Partnership reimburses NAPICO for certain expenses. The reimbursement to
NAPICO was $13,080, $37,680 and $37,681 in 1999, 1998 and 1997, respectively,
and is included in operating expenses.
An affiliate of NAPICO was the general partner in two of the limited
partnerships in which the partnership interests were sold on December 30, 1998,
and another affiliate received property management fees of approximately 5
percent of their revenue. The affiliate received property management fees of
approximately $15,980, $154,000 and $121,000 in 1999, 1998 and 1997,
respectively.
On December 30, 1998, the Partnership sold its limited partnership interests in
20 local limited partnerships with a total carrying value of $1,489,865, to the
Operating Partnership. The sale resulted in net proceeds to the Partnership of
$5,860,000 and a net gain of $5,096,902, after being relieved of notes and
interest payable of $1,270,045 and incurring selling costs of $543,578. In March
1999, the Partnership made a cash distribution of $7,782,355 to the limited
partners and $78,603 to the general partners, which included using proceeds from
the sale of the partnership interests.
The Operating Partnership purchased such limited partner interests for cash,
which it raised in connection with a private placement of its equity securities.
The purchase was subject to, among other things, (i) the purchase of the general
partner interests in the local limited partnerships by the Operating
Partnership; (ii) the approval
34
<PAGE> 36
of HUD and certain state housing finance agencies; and (iii) the consent of the
limited partners to the sale of the local limited partnership interests held for
investment by the Partnership.
In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the limited
partners' interests held for investment by the Partnership, together with
certain amendments to the Partnership Agreement and other disclosures of various
conflicts of interest in connection with the proposed transaction. Prior to the
sale of the partnership interests, the consents of the limited partners to the
sale and amendments to the Partnership Agreement were obtained.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:
FINANCIAL STATEMENTS
Report of Independent Public Accountants.
Balance Sheets as of December 31, 1999 and 1998.
Statements of Operations for the years ended December 31, 1999, 1998 and 1997.
Statements of Partners' Equity (Deficiency) for the years ended December 31,
1999, 1998 and 1997.
Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997.
Notes to Financial Statements.
FINANCIAL STATEMENT SCHEDULES
APPLICABLE TO REAL ESTATE ASSOCIATES LIMITED IV, REAL ESTATE ASSOCIATES II AND
TO THE LIMITED PARTNERSHIPS IN WHICH REAL ESTATE ASSOCIATES IV AND REAL ESTATE
ASSOCIATES II HAVE INVESTMENTS:
Schedule - Investment in Limited Partnerships, December 31, 1999, 1998 and 1997.
Schedule III - Real Estate and accumulated Depreciation, December 31, 1999, 1998
and 1997.
The remaining schedules are omitted because any required information is included
in the financial statements and notes thereto.
EXHIBITS
(3) Articles of incorporation and bylaws: The registrant is not
incorporated. The Partnership Agreement was filed with Form S-11, File
#274063 which is hereby incorporated by reference.
(10) Material contracts: The registrant is not party to any material
contracts, other than the Restated Certificate and Agreement of Limited
Partnership dated August 24, 1981, and the twenty-nine contracts
representing the Partnership investment directly or indirectly in local
limited partnerships as previously filed at the Securities Exchange
Commission, File #274063 which is hereby incorporated by reference.
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the year ended December 31, 1999.
35
<PAGE> 37
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 in the City of Los Angeles,
State of California.
REAL ESTATE ASSOCIATES LIMITED IV
By: NATIONAL PARTNERSHIP INVESTMENTS CORP.
General Partner
/s/ CHARLES H. BOXENBAUM
- --------------------------------------
Charles H. Boxenbaum
Chairman of the Board of Directors
and Chief Executive Officer
/s/ BRUCE E. NELSON
- --------------------------------------
Bruce E. Nelson
Director and President
/s/ ALAN I. CASDEN
- --------------------------------------
Alan I. Casden
Director
/s/ PAUL PATIERNO
- --------------------------------------
Paul Patierno
Chief Financial Officer
36
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 5,169,423
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,169,423
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,169,423
<CURRENT-LIABILITIES> 46,443
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,122,980
<TOTAL-LIABILITY-AND-EQUITY> 5,169,423
<SALES> 0
<TOTAL-REVENUES> 256,548
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 365,494
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (108,946)
<INCOME-TAX> 0
<INCOME-CONTINUING> (108,946)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (108,946)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
