FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-10884
SHELTER PROPERTIES IV LIMITED PARTNERSHIP
(Exact name of small business issuer as specified in its charter)
South Carolina 57-0721760
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X . No .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) SHELTER PROPERTIES IV LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands)
January 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash and cash equivalents:
Unrestricted $ 1,734
Restricted--tenant security deposits 270
Accounts receivable 40
Escrow for taxes 261
Restricted escrows 1,696
Other assets 534
Investment properties:
Land $ 3,442
Buildings and related personal property 55,791
59,233
Less accumulated depreciation (30,805) 28,428
$32,963
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 192
Tenant security deposits 270
Accrued taxes 68
Other liabilities 243
Mortgage notes payable 24,464
Partners' Capital
General partners $ (7)
Limited partners (49,995 units
issued and outstanding) 7,733 7,726
$32,963
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
b) SHELTER PROPERTIES IV LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended January 31,
1997 1996
Revenues:
Rental income $2,600 $2,531
Other income 164 148
Total revenues 2,764 2,679
Expenses:
Operating 805 827
General and administrative 64 90
Maintenance 470 446
Depreciation 468 446
Interest 559 569
Property taxes 200 183
Loss on disposal of property 39 --
Total expenses 2,605 2,561
Net income $ 159 $ 118
Net income allocated to general partners (1%) $ 2 $ 1
Net income allocated to limited partners (99%) 157 117
$ 159 $ 118
Net income per limited partnership unit $ 3.16 $ 2.33
See Accompanying Notes to Consolidated Financial Statements
c) SHELTER PROPERTIES IV LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 50,000 $ 2 $50,000 $50,002
Partners' capital at
October 31, 1996 49,995 $ (4) $ 8,076 $ 8,072
Net income for the three
months ended January 31, 1997 2 157 159
Partners' distributions (5) (500) (505)
Partners' capital at
at January 31, 1997 49,995 $ (7) $ 7,733 $ 7,726
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) SHELTER PROPERTIES IV LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended January 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 159 $ 118
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 468 446
Amortization of discounts and loan costs 68 66
Loss on disposition of property 39 --
Change in accounts:
Restricted cash 3 (9)
Accounts receivable 7 (4)
Escrows for taxes 562 513
Other assets 10 --
Accounts payable (82) (240)
Tenant security deposit liabilities (5) 13
Accrued taxes (574) (538)
Other liabilities (255) (45)
Net cash provided by operating activities 400 320
Cash flows from investing activities:
Property improvements and replacements (261) (263)
Deposits to restricted escrows (18) (16)
Receipts from restricted escrows -- 7
Net cash used in investing activities (279) (272)
Cash flows from financing activities:
Partners' distributions (505) (1,000)
Payments on mortgage notes payable (173) (161)
Net cash used in financing activities (678) (1,161)
Net decrease in cash (557) (1,113)
Cash at beginning of period 2,291 2,764
Cash at end of period $1,734 $ 1,651
Supplemental disclosure of cash flow information:
Cash paid for interest $ 491 $ 503
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e) SHELTER PROPERTIES IV LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of the Corporate General Partner, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended January 31,
1997, are not necessarily indicative of the results that may be expected for the
fiscal year ending October 31, 1997. For further information, refer to the
financial statements and footnotes thereto included in the Partnership's annual
report on Form 10-KSB for the year ended October 31, 1996.
Certain reclassifications have been made to the 1996 information to conform to
the 1997 presentation.
Note B - Reconciliation of Cash Flows
The following is a reconciliation of the subtotal on the accompanying statements
of cash flows captioned "net cash provided by operating activities" to "net cash
used in operations", as defined in the partnership agreement. However, "net
cash used in operations" should not be considered an alternative to net income
as an indicator of the Partnership's operating performance or to cash flows as a
measure of liquidity.
For the Three Months Ended
January 31,
1997 1996
Net cash provided by operating activities $ 400 $ 320
Payments on mortgage notes payable (173) (161)
Property improvements and replacements (261) (263)
Change in restricted escrows, net (18) (9)
Changes in reserves for net operating
liabilities 334 310
Additional reserves (282) (197)
Net cash used in operations $ -- $ --
The Corporate General Partner reserved approximately $282,000 and $197,000 on
January 31, 1997, and 1996, respectively, to fund capital improvements and
repairs at its properties.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following transactions with
Insignia Financial Group, Inc. and affiliates were charged to expense in 1997
and 1996 (in thousands):
For the Three Months Ended
January 31,
1997 1996
Property management fees $138 $133
Reimbursement for services of affiliates (1) 54 30
(1) Included in "reimbursements for services of affiliates" for the three months
ended January 31, 1997, is approximately $9,000 in reimbursements for
construction oversight costs.
The Partnership insures its properties under a master policy through an agency
and insurer unaffiliated with the Corporate General Partner. An affiliate of
the Corporate General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The current agent
assumed the financial obligations to the affiliate of the Corporate General
Partner who receives payments on these obligations from the agent. The amount
of the Partnership's insurance premiums accruing to the benefit of the affiliate
of the Corporate General Partner by virtue of the agent's obligations is not
significant.
Note D - Disposal of Property
The Partnership incurred a loss on disposal of property of approximately $39,000
due to a roof replacement project at Quail Run.
PART II - OTHER INFORMATION
Item 2. Management's Discussion and Analysis or Plan of Operation
The Partnership's investment properties consist of three apartment complexes.
The following table sets forth the average occupancy of the properties for the
three months ended January 31, 1997 and 1996:
Average
Occupancy
Property 1997 1996
Baymeadows Apartments
Jacksonville, Florida 94% 96%
Quail Run Apartments
Columbia, South Carolina 92% 96%
Countrywood Village Apartments
Raleigh, North Carolina 95% 96%
The Corporate General Partner believes the decrease in occupancy at Quail Run is
attributed to military transfers resulting from a large number of troops at Fort
Jackson being reassigned to other bases. Also, interest rates have made home
ownership more attractive, and the property has lost tenants to first time home
buying. In an effort to counteract these occupancy decreases, management is
utilizing an aggressive marketing plan, and the property has been undergoing
exterior renovations in order to attract quality residents.
The Partnership's net income for the three months ended January 31, 1997, was
approximately $159,000 compared to approximately $118,000 for the corresponding
period in 1996. The increase in net income is primarily attributable to an
increase in rental income and other income, as well as a decrease in general and
administrative expenses. Rental income increased primarily as a result of
periodic rental rate increases at Baymeadows, Quail Run, and Countrywood. Other
income increased primarily due to an increase in lease cancellation fees at
Baymeadows, most of which resulted from first time home buyers vacating their
units. General and administrative expense decreased due to a decrease in legal
expenses related to a discrimination case at Baymeadows, which was settled in
November 1996. Partially offsetting the increase in net income was an increase
in maintenance expense which resulted primarily from exterior painting projects
at Quail Run and Baymeadows. These painting costs were incurred to improve the
building exteriors in order to attract new tenants and ultimately increase
occupancy at these properties. The Partnership incurred a loss on disposal of
property of approximately $39,000 due to a roof replacement project at Quail
Run. Included in maintenance expense in 1997 is approximately $181,000 of major
repair and maintenance comprised primarily of major landscaping and exterior
painting.
As part of the ongoing business plan of the Partnership, the Corporate General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increase in
expense. As part of this plan, the Corporate General Partner attempts to
protect the Partnership from the burden of inflation-related increases in
expenses by increasing rents and maintaining a high overall occupancy level.
However, due to changing market conditions, which can result in the use of
rental concessions and rental reductions to offset softening market conditions,
there is no guarantee that the Corporate General Partner will be able to sustain
such a plan.
Liquidity and Capital Resources
At January 31, 1997, the Partnership had unrestricted cash of approximately
$1,734,000 compared to approximately $1,651,000 at January 31, 1996. Net cash
provided by operating activities increased primarily due to the increase in net
income, as discussed above and a decrease in escrows for taxes. Net cash used
in investing activities remained stable. Finally, net cash used in financing
activities decreased due to a decrease in distributions from operations paid to
the partners, compared to the first quarter of 1996.
The Partnership has budgeted approximately $1.2 million in capital improvements
in 1997 for it three investment properties in 1997. Of this amount,
approximately $261,000 in capital improvement projects were completed during
the first quarter. Projects planned for the next quarter include resurfacing of
parking lots at Baymeadows, and roof replacements and major sewer replacements
at Quail Run. Other projects planned throughout 1997 include major carpet
replacement at Countrywood and Baymeadows. These capital expenditures and
maintenance expenses will be incurred only if cash is available from operations.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. The mortgage
indebtedness of approximately $24,464,000 net of discount, is amortized over 257
months with a balloon payment of approximately $20,669,000 due on November 15,
2002, at which time the properties will either be refinanced or sold. Cash
distributions of approximately $505,000 were made in the first quarter of 1997.
Cash distributions of approximately $1 million were made in the first quarter of
1996. These distributions were made from property operations. Future cash
distributions will depend on the levels of net cash generated from operations,
property sales and the availability of cash reserves.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K filed in the quarter ended January 31, 1997:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SHELTER PROPERTIES IV LIMITED PARTNERSHIP
By: Shelter Realty IV Corporation
Corporate General Partner
By:/s/ William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
By:/s/ Ronald Uretta
Ronald Uretta
Vice President/Treasurer
Date: March 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Shelter
Properties IV Limited Partnership 1997 First Quarter 10-QSB and is qualified by
reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000702174
<NAME> SHELTER PROPERTIES IV LIMITED PARTNERSHIP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 1,734
<SECURITIES> 0
<RECEIVABLES> 40
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 59,233
<DEPRECIATION> (30,805)
<TOTAL-ASSETS> 32,963
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 24,464
0
0
<COMMON> 0
<OTHER-SE> 7,726
<TOTAL-LIABILITY-AND-EQUITY> 32,963
<SALES> 0
<TOTAL-REVENUES> 2,764
<CGS> 0
<TOTAL-COSTS> 2,605
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 559
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 159
<EPS-PRIMARY> 3.16<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
