FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(D)
(As last amended by 34-31905, eff. 4/26/93)
[X] Annual Report Under to Section 13 or 15(d) of the Securities Exchange Act
of 1934 [Fee Required]
For the fiscal year ended October 31, 1996
or
[ ] Transition Report Under to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For the transition period.........to.........
Commission file number 0-10884
SHELTER PROPERTIES IV LIMITED PARTNERSHIP
(Name of small business issuer 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
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $10,910,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of October 31, 1996. Market Value information for the
Registrant's partnership interests is not available. Should a trading market
develop for these interest, it is the Managing General Partners' belief that
such trading would not exceed $25,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Prospectus of Registrant dated June 8, 1982 (included in
Registration Statement, No.2-77217, of Registrant) are incorporated by
reference into Parts I and III.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Shelter Properties IV Limited Partnership (the "Registrant" or the
"Partnership") is engaged in the business of acquiring, operating and holding
real properties for investment. The Registrant acquired five existing apartment
properties during 1982 and 1983 and has been operating such properties since
that time with the exception of Rushcreek Village Apartments, which was deeded
back to the lender in lieu of foreclosure in June 1987, and The Corners
Apartments, which was foreclosed upon on November 2, 1992.
Commencing June 8, 1982, the Registrant offered through E. F. Hutton & Company
Inc. ("Hutton") up to 49,900 Units of Limited Partnership Interest (the "Units")
at a purchase price of $1,000 per Unit with a minimum purchase of 5 Units
($5,000) or 2 Units ($2,000) for an Individual Retirement Account. An additional
100 Units were purchased by the Corporate General Partner. Limited partners are
not required to make any additional capital contributions.
The Units were registered under the Securities Act of 1933 via Registration
Statement No. 2-77217 (the "Registration Statement"). Reference is made to the
Prospectus of Registrant dated June 8, 1982 (the "Prospectus") contained in said
Registration Statement, which is incorporated herein by reference thereto.
The offering terminated on December 15, 1982. Upon termination of the offering,
the Registrant had accepted subscriptions for 50,000 Units, including 100 Units
purchased by the Corporate General Partner, for an aggregate of $50,000,000. The
Registrant invested approximately $38,000,000 of such proceeds in five existing
apartment properties and thereby completed its acquisition program in March 1983
at approximately the expenditure level estimated in the Prospectus. Funds not
expended because they are held as reserves have been invested by the Registrant,
in accordance with the policy described in the Prospectus, in U. S. Government
securities or other highly liquid, short-term investments where the General
Partner believes there is appropriate safety of principal.
A further description of the Partnership's business is included in Management's
Discussion and Analysis or Plan of Operation included in "Item 6" of this Form
10-KSB.
The Registrant has no employees. Management and administrative services are
performed by Shelter Realty IV Corporation, the Corporate General Partner, and
by Insignia Management Group, L.P., an affiliate of Insignia Financial Group,
Inc. ("Insignia"), the ultimate parent company of the Corporate General Partner.
Pursuant to a management agreement between them, Insignia Management Group, L.P.
provides property management services to the Registrant.
The real estate business in which the Partnership is engaged is highly
competitive and the Partnership is not a significant factor in this industry.
The Registrant's property is subject to competition from similar properties in
the vicinity in which the property is located. In addition, various limited
partnerships have been formed by the General Partners and/or their affiliates to
engage in business which may be competitive with the Registrant.
ITEM 2. DESCRIPTION OF PROPERTIES:
The following table sets forth the Registrant's investments in properties:
Date of
Property Purchase Type of Ownership Use
Baymeadows Apartments 9/30/82 Fee ownership subject to Apartment
Jacksonville, Florida first and second 904 units
mortgages.
Quail Run Apartments 1/03/83 Fee ownership subject to Apartment
Columbia, South Carolina first and second 332 units
mortgages.
Countrywood Village Apartments 3/31/83 Fee ownership subject to Apartment
Raleigh, North Carolina first and second 384 units
mortgages.
Schedule of Properties:
(in thousands)
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
<S> <C> <C> <C> <C> <C>
Baymeadows
Apartments $ 32,697 $ 16,839 5-36 yrs S/L $ 5,498
Quail Run
Apartments 13,049 6,080 5-34 yrs S/L 2,128
Countrywood
Village Apts. 13,292 7,446 5-30 yrs S/L 2,423
Total $ 59,038 $ 30,365 $10,049
</TABLE>
See "Note A" to the financial statements included in "Item 7" for a description
of the Partnership's depreciation policy.
Principal Principal
Balance At Stated Balance
October 31, Interest Period Maturity Due At
Property 1996 Rate Amortized Date Maturity
Baymeadows
1st Mortgage $14,595 7.60% (1) 11/15/02 $11,554
2nd Mortgage 493 7.60% (1) 11/15/02 493
Quail Run
1st Mortgage 5,885 7.60% (1) 11/15/02 4,659
2nd Mortgage 199 7.60% (1) 11/15/02 199
Countrywood Village
1st Mortgage 4,560 7.60% (1) 11/15/02 3,610
2nd Mortgage 154 7.60% (1) 11/15/02 154
25,886
Less unamortized
discounts (1,296)
$24,590
(1)The principal balance is being amortized over 257 months with a balloon
payment due November 15, 2002.
Average annual rental rate and occupancy for 1996 and 1995 for each property:
Average Annual Average Annual
Rental Rates Occupancy
Property 1996 1995 1996 1995
Baymeadows $6,572 $6,309 96% 96%
Quail Run 7,182 6,783 95% 96%
Countrywood Village 6,479 6,159 95% 95%
As noted under "Item 1., Description of Business," the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other residential apartment complexes in the area. The
Corporate General Partner believes that all of the properties are adequately
insured. The multi-family residential properties' lease terms are for one year
or less. No residential tenant leases 10% or more of the available rental
space.
Real estate taxes and rates in 1996 for each property were:
1996 1996
Billing Rate
(in thousands)
Baymeadows $ 492* 2.08
Quail Run 172* 3.02
Countrywood 103* 1.17
*These properties have a fiscal year end different than the real estate tax
year, therefore tax expense does not agree to the 1996 billing.
ITEM 3. LEGAL PROCEEDINGS
The Secretary of Housing and Urban Development ("HUD") issued an administrative
Reasonable Cause Determination which found that a former tenant of Baymeadows
Apartments in Jacksonville, Florida had been discriminated against on the basis
of race in violation of the Fair Housing Act. Specifically, HUD found that the
tenant was discriminated against because of her race when she did not get new
carpet, a new oven and new dishwasher and when her lease was not renewed. HUD's
administrative investigation and Reasonable Cause Determination names Insignia
Management Corporation and Shelter Realty IV Corporation, along with several
current and former employees of each, as respondents. The case proceeded to a
civil complaint filed by the Department of Justice in the United States District
Court for the Middle District of Florida. Although management believes that the
claim is not meritorious and has defended the claim vigorously, in November 1996
it reached an agreement to settle the claims asserted and avoid the uncertainty
and expense of further litigation. The settlement of the action will not have a
materially adverse effect upon the business, financial condition or operations
of the Partnership.
The general partner responsible for management of the Partnership's business is
Shelter Realty IV Corporation, a South Carolina corporation (the "Corporate
General Partner"). The only other general partner of the Partnership, N. Barton
Tuck, Jr. is effectively prohibited by the Partnership's partnership agreement
(the "Partnership Agreement") from participating in the management of the
Partnership. The Corporate General Partner is an indirect subsidiary of
Insignia Financial Group, Inc. ("Insignia"). The directors and officers of the
Corporate General Partner also serve as executive officers of Insignia.
The Corporate General Partner owns 100 Limited Partnership Units ("Units"). On
or about April 26 and 27, 1995, six entities ("Affiliated Purchasers")
affiliated with the Partnership commenced tender offers for limited partner
interests in six limited partnerships, including the Partnership (collectively,
the "Shelter Properties Partnerships"). On May 27, 1995, the Affiliated
Purchasers acquired 11,050 units of the Partnership pursuant to the tender
offer. On or about May 12, 1995, in the United States District Court for the
District of South Carolina, certain limited partners of the Shelter Properties
Partnerships commenced a lawsuit, on behalf of themselves, on behalf of a
putative class of plaintiffs, and derivatively on behalf of the partnerships,
challenging the actions taken by the defendants (including Insignia, the
acquiring entities and certain officers of Insignia) in the management of the
Shelter Properties Partnerships and in connection with the tender offers and
certain other matters.
The plaintiffs alleged that, among other things: (i) the defendants
intentionally mismanaged the partnerships and acted contrary to the limited
partners' best interests by prolonging the existence of the partnerships in
order to perpetuate the revenues derived by Insignia (an affiliate of the
Corporate General Partner) and its affiliates from the partnerships; (ii) the
defendants' actions reduced the demand for the partnerships' limited partner
interests in the limited resale market by artificially depressing the trading
prices for limited partners interests in order to create a favorable environment
for the tender offers; (iii) through the tender offers, the acquiring entities
sought to acquire effective voting control over the partnerships while paying
highly inadequate prices; and (iv) the documents disseminated to the class in
connection with the tender offers contained false and misleading statements and
omissions of material facts concerning such issues as the advantages to limited
partners of tendering pursuant to the tender offers, the true value of the
interest, the true financial condition of the partnerships, the factors
affecting the likelihood that properties owned by the partnerships will be sold
or liquidated in the near future, the liquidity and true value of the limited
partner interests, the reasons for the limited secondary market for limited
partner interests, and the true nature of the market for the underlying real
estate assets owned by the Shelter Properties Partnerships, all in violation of
the federal securities laws.
On September 27, 1995, the parties entered into a stipulation to settle the
matter. The principal terms of the stipulation require supplemental payments to
tendering limited partners aggregating approximately $6 million to be paid by
the Affiliated Purchasers of which approximately $1,254,175 is the Partnership's
portion; waiver by the Shelter Properties Partnerships' general partners of any
right to certain proceeds from a sale or refinancing of the Shelter Properties
Partnerships' properties; some restrictions on Insignia's ability to vote the
limited partner interests it acquired; payment of $1.25 million (which amount is
divided among the various partnerships and acquiring entities) for plaintiffs'
attorney fees and expenses in the litigation; and general releases of all the
defendants.
On June 24, 1996, after notice to the class and a hearing on the fairness and
adequacy of the notice and the terms of settlement, the court orally approved
the settlement. The court signed the written order approving the settlement on
July 30, 1996. No appeal was filed within thirty days after the court entered
the formal order, and the settlement became effective on August 30, 1996. The
Affiliated Purchasers made payments to investors pursuant to the settlement in
early September 1996.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fiscal year ended October 31, 1996, no matter was submitted to a vote
of unit holders through the solicitation of proxies or otherwise.
PART II
Item 5. MARKET FOR PARTNERSHIP EQUITY AND RELATED PARTNER MATTERS
As of October 31, 1996, there was minimal trading of the Units in the secondary
market establishing a high and low value of $300 and $274, respectively, per
Unit quoted in the September 1996 Stanger Report. SP IV Acquisition, LLC
purchased additional shares during the year ended October 31, 1996. On
May 1, 1996, it purchased 5 units at $250 per unit and on August 1, 1996, it
purchased 45 units at $265 per unit. There are 3,721 holders of record owning
an aggregate of 49,995 Units. No public trading market has developed for the
Units, and it is not anticipated that such a market will develop in the future.
During the year ended October 31, 1996, distributions of $1,000,000 were paid.
Subsequent to October 31, 1996, a distribution of $505,000 was made to the
partners. Future distributions will depend on the levels of cash generated from
operations, property sales and the availability of cash reserves. Distributions
may also be restricted by the requirement to deposit net operating income (as
defined in the mortgage note) into the Reserve Account until the Reserve Account
is funded in an amount equal to $1,000 per apartment unit for each respective
property. (See "Note A" of the financial statements.)
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
RESULTS OF OPERATIONS
The Partnership's net income as shown in the consolidated statement of
operations for the year ended October 31, 1996, was approximately $246,000
versus a net loss of approximately $574,000 for the same period in 1995 (see
"Note C" of the financial statements for a reconciliation of these amounts to
the Partnership's federal taxable losses). The increase in net income for the
year ended October 31, 1996, is attributable to an increase in rental income,
a decrease in general and administrative expenses and a decrease in maintenance
expense. Rental income increased due to an increase in rental rates at all
three investment properties. General and administrative expenses decreased due
to a decrease in legal costs. The 1995 legal costs resulted from lawsuits
related to the tender offers. The decrease in legal expenses in 1996 has been
slightly offset by an increase in the legal costs related to an ongoing
discrimination case as disclosed in "Item 3., Legal Proceedings." Maintenance
expense decreased as a result of painting, exterior renovations, and interior
building improvements at Baymeadows and Countrywood Village which were performed
throughout 1995 and completed in the fourth quarter of 1995. Partially
offsetting these items was an increase in property tax expense resulting from an
increase in the assessed property value of Baymeadows in late 1995.
Management relies on the annual appraisals performed by outside appraisers to
assess the impairment of investment properties. There are three recognized
approaches or techniques available to the appraiser. When applicable, these
approaches are used to process the data considered significant to each to arrive
at separate value indications. In all instances the experience of the
appraiser, coupled with his objective judgment, plays a major role in arriving
at the conclusions of the indicated value from which the final estimate of value
is made. The three approaches commonly known are the cost approach, the sales
comparison approach, and the income approach. The cost approach is often not
considered to be reliable due to the lack of land sales and the significant
amount of depreciation and, therefore, is often not presented. Upon receipt of
the appraisals, any property which is stated on the books of the partnership
above the estimated value given in the appraisal, is written down to the
estimated value given by the appraiser. The appraiser assumes a stabilized
occupancy at the time of the appraisal and, therefore, any impairment of value
is considered to be permanent by Management. For the year ended October 31,
1996, no adjustments for the impairment of value were recorded.
As part of the ongoing business plan of the Partnership, the Corporate General
Partner monitors the rental market environment at each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels, and protecting the Partnership from increases in
expenses. 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 assurance that the Corporate General Partner will be able to
sustain this plan.
Liquidity and Capital Resources
At October 31, 1996, the Partnership had unrestricted cash of approximately
$2,291,000 as compared to approximately $2,765,000 at October 31, 1995. Net
cash provided by operating activities increased primarily due to the increase
in net income described above and an increase in other liabilities. Other
liabilities increased primarily as a result of accrued legal and settlement
costs associated with the litigation discussed in "Item 3., Legal Proceedings."
Offsetting this increase was an increase in escrow for taxes and a decrease in
accounts payable. The increase in escrow for taxes resulted from the additional
assessment at Baymeadows based on increased property value. The decrease in
accounts payable resulted from the payment of property improvements in 1996 for
work performed in 1995 and accrued at December 31, 1995. Net cash used in
investing activities increased primarily due to an increase in property
improvements and replacements for the year ended October 31, 1996, as compared
to the year ended October 31, 1995. This increase in property improvements and
replacements was partially offset by a decrease in receipts from restricted
escrows during the year ended October 31, 1996. Net cash used in financing
activities increased as a result of a $1,000,000 distribution made during the
year ended October 31, 1996.
The Partnership has budgeted approximately $1.2 million in capital improvements
for the three properties in 1997. Budgeted capital improvements at Baymeadows
include resurfacing of parking lots and carpet replacement. Budgeted capital
improvements at Quail Run include roof replacement and major sewer replacement.
Countrywood has budgeted major carpet replacement in 1997. These capital
expenditures will be incurred only if cash is available from operations or from
partnership reserves mentioned previously.
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 $24,590,000, net of discount, is amortized over
257 months with balloon payments of approximately $20,669,000 due on November
15, 2002, at which time the properties will either be refinanced or sold. Cash
distributions of $1,000,000 were made during the year ended October 31, 1996.
These distributions were made from net cash from operations as defined by the
Partnership Agreement. Subsequent to October 31, 1996, a distribution of net
cash from operations of $505,000 was made to the partners. Future cash
distributions will depend on the levels of net cash generated from operations,
property sales, and the availability of cash reserves.
ITEM 7. FINANCIAL STATEMENTS
SHELTER PROPERTIES IV LIMITED PARTNERSHIP
LIST OF FINANCIAL STATEMENTS
Report of Independent Auditors
Consolidated Balance Sheet--October 31, 1996
Consolidated Statements of Operations--Years ended October 31, 1996 and
1995
Consolidated Statements of Changes in Partners' Capital--Years ended
October 31, 1996 and 1995
Consolidated Statements of Cash Flows--Years ended October 31, 1996 and
1995
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Shelter Properties IV Limited Partnership
We have audited the accompanying consolidated balance sheet of Shelter
Properties IV Limited Partnership as of October 31, 1996, and the related
consolidated statements of operations, changes in partners' capital and cash
flows for each of the two years in the period ended October 31, 1996. These
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
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 the
Partnership's management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Shelter Properties
IV Limited Partnership as of October 31, 1996, and the results of its operations
and its cash flows for each of the two years in the period ended October 31,
1996, in conformity with generally accepted accounting principles.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
November 26, 1996
SHELTER PROPERTIES IV LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(in thousands)
October 31, 1996
Assets
Cash:
Unrestricted $ 2,291
Restricted--tenant security deposits 273
Accounts receivable 47
Escrow for taxes 823
Restricted escrows 1,678
Other assets 565
Investment properties (Notes B & E):
Land $ 3,442
Buildings and related personal property 55,596
59,038
Less accumulated depreciation (30,365) 28,673
$ 34,350
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 274
Tenant security deposits 275
Accrued taxes 642
Other liabilities 497
Mortgage notes payable (Note B) 24,590
Partners' Capital
General partners $ (4)
Limited partners (49,995 units
issued and outstanding) 8,076 8,072
$ 34,350
See Accompanying Notes to Consolidated Financial Statements
SHELTER PROPERTIES IV LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended October 31,
1996 1995
Revenues:
Rental income $ 10,282 $ 9,833
Other income 628 606
Total revenues 10,910 10,439
Expenses:
Operating 2,931 2,931
General and administrative 390 521
Property management fees 540 514
Maintenance 1,937 2,276
Depreciation 1,846 1,757
Interest 2,257 2,301
Property taxes 763 713
Total expenses 10,664 11,013
Net income (loss) (Note C) $ 246 $ (574)
Net income (loss) allocated to general
partners (1%) $ 2 $ (6)
Net income (loss) allocated to limited
partners (99%) 244 (568)
$ 246 $ (574)
Net income (loss) per limited partnership unit $ 4.86 $ (11.36)
See Accompanying Notes to Consolidated Financial Statements
SHELTER PROPERTIES IV LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(in thousands, except for unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital
contributions 50,000 $ 2,000 $50,000,000 $50,002,000
Partners' capital at
October 31, 1994 49,995 $ 10 $ 9,390 $ 9,400
Net loss for the year
ended October 31, 1995 (6) (568) (574)
Partners' capital at
October 31, 1995 49,995 4 8,822 8,826
Net income for the year
ended October 31, 1996 2 244 246
Distributions to Partners (10) (990) (1,000)
Partners' capital at
October 31, 1996 49,995 $ (4) $ 8,076 $ 8,072
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
SHELTER PROPERTIES IV LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended October 31,
1996 1995
Cash flows from operating activities:
Net income (loss) $ 246 $ (574)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 1,846 1,757
Amortization of discounts and loan costs 267 259
Change in accounts:
Restricted cash (36) (10)
Accounts receivable (24) (1)
Escrow for taxes (106) (61)
Other assets (21) 77
Accounts payable (194) 189
Tenant security deposit liabilities 37 10
Accrued taxes 41 154
Other liabilities 209 (82)
Net cash provided by operating activities 2,265 1,718
Cash flows from investing activities:
Property improvements and replacements (1,034) (639)
Deposits to restricted escrows (70) (63)
Receipts from restricted escrows 26 107
Net cash used in investing activities (1,078) (595)
Cash flows from financing activities:
Payments on mortgage notes payable (661) (613)
Partners' distributions (1,000) --
Net cash used in financing activities (1,661) (613)
Net (decrease) increase in cash (474) 510
Cash at beginning of period 2,765 2,255
Cash at end of period $ 2,291 $ 2,765
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,995 $ 2,043
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACITIVITY
Accounts payable was adjusted $105,000 at October 31, 1995, for non-cash
amounts in connection with property improvements and replacements.
See Accompanying Notes to Consolidated Financial Statements
SHELTER PROPERTIES IV LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization: Shelter Properties IV Limited Partnership (the "Partnership" or
"Registrant") was organized as a limited partnership under the laws of the State
of South Carolina pursuant to a Certificate and Agreement of Limited Partnership
filed August 21, 1981. The general partner responsible for management of the
Partnership's business is Shelter Realty IV Corporation, a South Carolina
corporation (the "Corporate General Partner"). The only other general partner
of the Partnership, N. Barton Tuck, Jr. is effectively prohibited by the
Partnership's partnership agreement (the "Partnership Agreement") from
participating in the management of the Partnership. The Corporate General
Partner is an indirect subsidiary of Insignia Financial Group, Inc.
("Insignia"). The directors and officers of the Corporate General Partner also
serve as executive officers of Insignia. The partnership agreement terminates
December 31, 2022. The Partnership commenced operations on July 22, 1982, and
completed its acquisition of apartment properties on March 31, 1983. The
Partnership operates three apartment properties located in the Southeast.
Principles of Consolidation: The financial statements include all the accounts
of the Partnership and its 99.99% owned partnership. All significant
interpartnership balances have been eliminated.
Uses of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Allocation of Cash Distributions: Cash distributions by the Partnership are
allocated between general and limited partners in accordance with the provisions
of the partnership agreement. The partnership agreement provides that net cash
from operations means revenue received less operating expenses paid, adjusted
for certain specified items which primarily include mortgage payments on debt,
property improvements and replacements not previously reserved, and the effects
of other adjustments to reserves including reserve amounts deemed necessary by
the Corporate General Partners. In the following notes to financial statements,
whenever net cash from operations is used, it has the aforementioned meaning.
The following is a reconciliation of the subtotal in the accompanying statements
of cash flows captioned net cash provided by operating activities to net cash
from operations, as defined in the partnership agreement. However, "net cash
from 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.
Years Ended October 31,
1996 1995
(in thousands)
Net cash provided by operating activities $ 2,265 $ 1,718
Property improvements and replacements (1,034) (639)
Payments on mortgage notes payable (661) (613)
Changes in reserves for net operating
liabilities 94 (276)
Changes in restricted escrows, net (44) 44
Additional operating reserves (115) --
Net cash from operations $ 505 $ 234
The General Partner believed it to be in the best interest of the Partnership to
reserve net cash from operations of approximately $115,000 at October 31, 1996,
to fund continuing capital improvements at the three properties.
Distributions made from reserves no longer considered necessary by the general
partners are considered to be additional net cash from operations for allocation
purposes. Cash distributions of $1,000,000 were made during the year ended
October 31, 1996. Subsequent to October 31, 1996, a distribution of $505,000 was
made to the partners.
The partnership agreement provides that 99% of distributions of net cash from
operations are allocated to the limited partners until they receive net cash
from operations for such fiscal year equal to 7% of their adjusted capital
values (as defined in the partnership agreement), at which point the general
partners will be allocated all net cash from operations until they have received
distributions equal to 10% of the aggregate net cash from operations distributed
to partners for such fiscal year. Thereafter, the general partners will be
allocated 10% of any distributions of remaining net cash from operations for
such fiscal year.
All distributions of distributable net proceeds (as defined in the partnership
agreement) from property dispositions and refinancings will be allocated to the
limited partners until each limited partner has received an amount equal to a
cumulative 7% per annum of the average of the limited partners' adjusted capital
value, less any prior distributions of net cash from operations and
distributable net proceeds, and has also received an amount equal to the limited
partners' adjusted capital value. Thereafter, the general partners receive 1%
of the selling prices of properties sold where they acted as a broker, and then
the limited partners will be allocated 85% of any remaining distributions of
distributable net proceeds and the general partners will receive 15%.
Distributions may be restricted by the requirement to deposit net operating
income (as defined in the mortgage note) into the Reserve Account until the
Reserve Account is funded in an amount equal to $1,000 per apartment unit for
each respective property.
Allocation of Profits, Gains and Losses: Profits, gains and losses of the
Partnership are allocated between general and limited partners in accordance
with the provisions of the partnership agreement.
Profits, not including gains from property dispositions, are allocated as if
they were distributions of net cash from operations.
Any gain from property dispositions attributable to the excess, if any, of the
indebtedness relating to a property immediately prior to the disposition of such
property over the Partnership's adjusted basis in the property shall be
allocated to each partner having a negative capital account balance, to the
extent of such negative balance. The balance of any gain shall be treated on a
cumulative basis as if it constituted an equivalent amount of distributable net
proceeds and shall be allocated to the general partners to the extent that
general partners would have received distributable net proceeds in connection
therewith; the balance shall be allocated to the limited partners. However, the
interest of the general partners will be equal to at least 1% of each gain at
all times during the existence of the Partnership.
All losses, including losses attributable to property dispositions, are
allocated 99% to the limited partners and 1% to the general partners.
Accordingly, net income (loss) as shown in the statements of operations and
changes in partners' capital for 1996 and 1995 were allocated 99% to the limited
partners and 1% to the general partners. Net income (loss) per limited
partnership unit for each such year was computed as 99% of net income (loss)
divided by 49,995 units outstanding.
Other Reserves: The general partners may designate a portion of cash generated
from operations as "other reserves" in determining net cash from operations.
The general partners designated as other reserves an amount equal to the net
liabilities related to the operations of apartment properties during the current
fiscal year that are expected to require the use of cash during the next fiscal
year. The changes in other reserves during 1996 and 1995 were approximately
$94,000 and approximately $(276,000) respectively, which amounts were determined
by considering changes in the balances of restricted cash, accounts receivable,
other assets, escrow for taxes, accounts payable, tenant security deposit
liabilities, accrued taxes and other liabilities. At this time, the general
partners expect to continue to adjust other reserves based on the net change in
the aforementioned account balances.
Restricted Escrow:
Reserve Account - A general Reserve Account was established in 1992 with the
refinancing proceeds for each mortgaged property. These funds were established
to cover necessary repairs and replacements of existing improvements, debt
service, out of pocket expenses incurred for ordinary and necessary
administrative tasks, and payment of real property taxes and insurance premiums.
The Partnership is required to deposit net operating income (as defined in the
mortgage note) from each refinanced property to the respective reserve account
until they equal $1,000 per apartment unit or $1,620,000 in total. The balance
at October 31, 1996, is approximately $1,678,000, which includes interest.
Escrows for Taxes: These escrows are held by the Partnership and are designated
for the payment of real estate taxes.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the apartment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 15 years for additions prior to March 16, 1984, 18 years
for additions after March 15, 1984 and before May 9, 1985, and 19 years for
additions after May 8, 1985, and before January 1, 1987, and (2) for personal
property over 5 years for additions prior to January 1, 1987. As a result of the
Tax Reform Act of 1986, for additions after December 31, 1986, the modified
accelerated cost recovery method is used for depreciation of (1) real property
over 27 1/2 years and (2) personal property additions over 7 years.
Loan Costs: Loan costs of approximately $849,000 less accumulated amortization
of approximately $331,000 are included in other assets and are being amortized
on a straight-line basis over the life of the loans.
Cash and Cash Equivalents:
Unrestricted - Unrestricted cash includes cash on hand and in banks, money
market funds and certificates of deposit with original maturities less than 90
days. At certain times, the amount of cash deposited at a bank may exceed the
limit on insured deposits.
Restricted Cash - Tenant Security Deposits - The Partnership requires security
deposits from lessees for the duration of the lease and such deposits are
considered restricted cash. Deposits are refunded when the tenant vacates,
provided the tenant has not damaged its space and is current on its rental
payments.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In
addition, the Corporate General Partner's policy is to offer rental concessions
during particularly slow months or in response to heavy competition from other
similar complexes in the area. Concessions are charged to expense as incurred.
Investment Properties: Investment properties consist of three apartment
complexes and are stated at cost. Costs of apartment properties that have been
permanently impaired have been written down to appraised value. The Corporate
General Partner relies on the annual appraisals performed by the outside
appraisers for the estimated value of the Partnership's properties. There are
three recognized approaches or techniques available to the appraiser. When
applicable, these approaches are used to process the data considered significant
to each to arrive at separate value indications. In all instances the
experience of the appraiser, coupled with his objective judgment, plays a major
role in arriving at the conclusions of the indicated value from which the final
estimate of value is made. The three approaches commonly known are the cost
approach, the sales comparison approach, and the income approach. The cost
approach is often not considered to be reliable due to the lack of land sales
and the significant amount of depreciation and, therefore, is often not
presented. Upon receipt of the appraisals, any property which is stated on the
books of the Partnership above the estimated value given in the appraisal, is
written down to the estimated value given by the appraiser. The appraiser
assumes a stabilized occupancy at the time of the appraisal and, therefore, any
impairment of value is considered to be permanent by the Corporate General
Partner. No adjustments for the impairment of value were recorded in the years
ended October 31, 1996 or 1995.
As of October 31, 1995, the Partnership adopted "FASB Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," which requires impairment losses to be recognized for long-
lived assets used in operations when indicators of impairment are present and
the undiscounted cash flows are not sufficient to recover the assets' carrying
amount. The impairment loss is measured by comparing the fair value of the
asset to its carrying amount. The adoption of "FASB No. 121" did not have a
material effect on the Partnership's financial statements.
Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising expense, included in operating expenses, was approximately $105,000
and $98,000 for the years ended October 31, 1996 and 1995, respectively.
Fair Value: In 1995, the Partnership implemented "Statement of Financial
Accounting Standards No. 107, Disclosure about Fair Value of Financial
Instruments," which requires disclosure of fair value information about
financial instruments for which it is practicable to estimate that value. The
carrying amount of the Partnership's cash and cash equivalents approximates fair
value due to short-term maturities. The Partnership estimates the fair value
of its fixed rate mortgages by discounted cash flow analysis, based on estimated
borrowing rates currently available to the Partnership.
Reclassification: Certain reclassifications have been made to the 1995
information to conform to the 1996 presentation.
NOTE B - MORTGAGE NOTES PAYABLE
The principal terms of mortgage notes payable are as follows (in thousands):
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
October 31, Including Interest Maturity Due At
Property 1996 Interest Rate Date Maturity
<S> <C> <C> <C> <C> <C>
Baymeadows
1st Mortgage $14,595 $ 126 7.60% 11/15/02 $11,554
2nd Mortgage 493 3 7.60% 11/15/02 493
Quail Run
1st Mortgage 5,885 51 7.60% 11/15/02 4,659
2nd Mortgage 199 1 7.60% 11/15/02 199
Countrywood Village
1st Mortgage 4,560 39 7.60% 11/15/02 3,610
2nd Mortgage 154 1 7.60% 11/15/02 154
25,886 $ 221
Less unamortized
discounts (1,296)
$24,590
</TABLE>
The Partnership exercised interest rate buy-down options for the three
properties when the debt was refinanced, reducing the stated rate from 8.76% to
7.6%. The fee for the interest rate reduction amounted to approximately
$1,964,000 and is being amortized as a loan discount on the interest method over
the life of the loans. The unamortized discount fee is reflected as a reduction
of the mortgage notes payable and increases the effective rate of the debt to
8.76%.
The mortgage notes payable are non-recourse and are secured by pledge of the
respective apartment properties and by pledge of revenues from the respective
apartment properties. The notes cannot be prepaid prior to November 15, 1997,
thereafter, they require prepayment penalties if repaid prior to maturity and
prohibit resale of the property subject to existing indebtedness.
The estimated fair values of the Partnership's aggregate debt is approximately
$25,886,000. This estimate is not necessarily indicative of the amounts the
Partnership may pay in actual market transactions.
Scheduled principal payments of mortgage notes payable subsequent to October 31,
1996, are as follows (in thousands):
1997 $ 713
1998 770
1999 830
2000 896
2001 966
Thereafter 21,711
$25,886
NOTE C - INCOME TAXES
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the financial statements
of the Partnership. Taxable income or loss of the Partnership is reported in
the income tax returns of its partners.
The following is a reconciliation of reported net income (loss) and Federal
taxable (loss) (in thousands, except per unit data):
1996 1995
Net income (loss) as reported $ 246 $ (574)
Add (deduct):
Amortization of present value discounts (14) (22)
Depreciation differences (1,486) (1,485)
Change in prepaid rental 56 (69)
Accrued expenses 14 (3)
Accrued legal expenses -- 100
Other 33 --
Federal taxable loss $(1,151) $(2,053)
Federal taxable loss per limited
partnership unit $(22.79) $(40.64)
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net assets as reported $ 8,072
Land and buildings 9,189
Accumulated depreciation (27,814)
Syndication 6,293
Other 217
Net liabilities - tax basis $ (4,043)
NOTE D - 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. Balances and other transactions with
affiliates of Insignia Financial Group, Inc. in 1996 and 1995 are (in
thousands):
For The Years Ended
October 31,
1996 1995
Property management fees $ 540 $ 514
Reimbursement for services of affiliates 196 174
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 E - REAL ESTATE AND ACCUMULATED DEPRECIATION
Investment Properties
(in thousands)
<TABLE>
<CAPTION>
Initial Cost
To Partnership
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
<S> <C> <C> <C> <C>
Baymeadows
Jacksonville, Florida $15,088 $ 1,884 $26,916 $ 3,897
Quail Run
Columbia, South Carolina 6,084 875 10,642 1,532
Countrywood Village
Raleigh, North Carolina 4,714 683 10,711 1,898
Totals $25,886 $ 3,442 $48,269 $ 7,327
</TABLE>
(in thousands)
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At October 31, 1996
Buildings
And Related
Personal Accumulated Date of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C> <C>
Baymeadows
Jacksonville, Florida $ 1,884 $30,813 $32,697 $16,839 1969-1975 09/30/82 5-36
Quail Run
Columbia, South Carolina 875 12,174 13,049 6,080 1970-1973 01/03/83 5-34
Countrywood Village
Raleigh, North Carolina 683 12,609 13,292 7,446 1973-1974 03/31/83 5-30
Totals $ 3,442 $55,596 $59,038 $30,365
</TABLE>
Reconciliation of "Real Estate and Accumulated Depreciation":
Years Ended October 31,
1996 1995
(in thousands)
Real Estate
Balance at beginning of year $58,092 $57,348
Property improvements 1,034 744
Disposals of property (88) --
Balance at End of Year $59,038 $58,092
Accumulated Depreciation
Balance at beginning of year $28,574 $26,817
Additions charged to expense 1,846 1,757
Disposals of property (55) --
Balance at end of year $30,365 $28,574
The aggregate cost of the real estate for Federal income tax purposes at October
31, 1996 and 1995 is approximately $68,228,000 and approximately $67,194,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at October 31, 1996 and 1995 is approximately $58,179,000 and approximately
$54,847,000, respectively.
NOTE F - CONTINGENCIES
Discrimination Claim: The Secretary of Housing and Urban Development ("HUD")
issued an administrative Reasonable Cause Determination which found that a
former tenant of Baymeadows Apartments in Jacksonville, Florida, had been
discriminated against on the basis of race in violation of the Fair Housing Act.
Specifically, HUD found that the tenant was discriminated against because of her
race when she did not get new carpet, a new oven and new dishwasher and when her
lease was not renewed. HUD's administrative investigation and Reasonable Cause
Determination names Insignia Management Corporation and Shelter Realty IV
Corporation, along with several current and former employees of each, as
respondents. The case proceeded to a civil complaint filed by the Department of
Justice in the United States District Court for the Middle District of Florida.
Although Management believes that the claim is not meritorious and has defended
the claim vigorously, in November 1996 it reached an agreement to settle the
claims asserted and avoid the uncertainty and expense of further litigation.
The settlement of the action will not have a materially adverse effect upon the
business, financial condition or operations of the Partnership.
Tender Offer Litigation: The Corporate General Partner owns 100 Limited
Partnership Units ("Units"). On or about April 26 and 27, 1995, six entities
("Affiliated Purchasers") affiliated with the Partnership commenced tender
offers for limited partner interests in six limited partnerships, including the
Partnership (collectively, the "Shelter Properties Partnerships"). On May 27,
1995, the Affiliated Purchasers acquired 11,050 units of the Partnership
pursuant to the tender offer. On or about May 12, 1995, in the United States
District Court for the District of South Carolina, certain limited partners of
the Shelter Properties Partnerships commenced a lawsuit, on behalf of
themselves, on behalf of a putative class of plaintiffs, and derivatively on
behalf of the partnerships, challenging the actions taken by defendants
(including Insignia, the acquiring entities and certain officers of Insignia)
in the management of the Shelter Properties Partnerships and in connection with
the tender offers and certain other matters.
The plaintiffs alleged that, among other things: (i) the defendants
intentionally mismanaged the partnerships and acted contrary to the limited
partners' best interests by prolonging the existence of the partnerships in
order to perpetuate the revenues derived by Insignia (an affiliate of the
Corporate General Partner) and its affiliates from the partnerships; (ii) the
defendants' actions reduced the demand for the partnerships' limited partner
interests in the limited resale market by artificially depressing the trading
prices for limited partners interests in order to create a favorable environment
for the tender offers; (iii) through the tender offers, the acquiring entities
sought to acquire effective voting control over the partnerships while paying
highly inadequate prices; and (iv) the documents disseminated to the class in
connection with the tender offers contained false and misleading statements and
omissions of material facts concerning such issues as the advantages to limited
partners of tendering pursuant to the tender offers, the true value of the
interest, the true financial condition of the partnerships, the factors
affecting the likelihood that properties owned by the partnerships will be sold
or liquidated in the near future, the liquidity and true value of the limited
partner interests, the reasons for the limited secondary market for limited
partner interests, and the true nature of the market for the underlying real
estate assets owned by the Shelter Properties Partnerships, all in violation of
the federal securities laws.
On September 27, 1995, the parties entered into a stipulation to settle the
matter. The principal terms of the stipulation require supplemental payments to
tendering limited partners aggregating approximately $6 million to be paid by
the Affiliated Purchasers of which approximately $1,254,000 is the Partnership's
portion; waiver by the Shelter Properties Partnerships' general partners of any
right to certain proceeds from a sale or refinancing of the Shelter Properties
Partnerships' properties; some restrictions on Insignia's ability to vote the
limited partner interests it acquired; payment of $1.25 million (which amount is
divided among the various partnerships and acquiring entities) for plaintiffs'
attorney fees and expenses in the litigation; and general releases of all the
defendants.
On June 24, 1996, after notice to the class and a hearing on the fairness and
adequacy of the notice and the terms of settlement, the court orally approved
the settlement. The court signed the written order approving the settlement on
July 30, 1996. No appeal was filed within thirty days after the court entered
the formal order, and the settlement became effective on August 30, 1996. The
Affiliated Purchasers made payments to investors pursuant to the settlement in
early September 1996.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Registrant has no officers or directors. The Individual and Corporate
General Partners are as follows:
Individual General Partner - N. Barton Tuck, Jr., age 58, is the Individual
General Partner of the Registrant. Mr. Tuck is Chairman of GolfSouth
Management, Inc. Until August 1990, he served as Chairman and Chief Executive
Officer of U.S. Shelter Corporation ("Shelter"), the former parent of AmReal
Corporation (parent of the Corporate General Partner of the Partnership). For
six years prior to 1966, Mr. Tuck was employed in Greenville, South Carolina by
the certified public accounting firm of S.D. Leidesdorf & Company. From 1966 to
1970, he was a registered representative with the investment banking firm of
Harris Upham & Co., Inc. in Greenville, South Carolina. Since 1970, Mr. Tuck has
been engaged in arranging equity investments for individuals and partnerships.
Mr. Tuck is a graduate of the University of North Carolina. Mr. Tuck has
delegated to the Corporate General Partner all of his authority, as a general
partner of the Partnership, to manage and control the Partnership and its
business and affairs.
Corporate General Partner - The names and ages of, as well as the positions and
offices held by, the executive officers and directors of Shelter Realty IV
Corporation are set forth below. There are no family relationships between or
among any officers or directors.
Name Age Position
William H. Jarrard, Jr. 50 President and Director
Ronald Uretta 40 Vice President and Treasurer
John K. Lines, Esq. 37 Vice President and Secretary
Kelley M. Buechler 39 Assistant Secretary
Mr. Jarrard, who had previously served as Vice President, became President in
August 1994. In August 1994, Mr. Lines became Vice President and Secretary.
William H. Jarrard, Jr. has been Managing Director - Partnership Administration
of Insignia since January 1991. Mr. Jarrard served as Managing Director -
Partnership Administration & Asset Management from July 1994 until January 1996.
Ronald Uretta has been Insignia's Treasurer since January 1992. Since August
1996, he has also served as Chief Operating Officer. He also served as
Secretary from January 1992 to June 1994 and as Chief Financial Officer from
January 1992 to August 1996. Since September 1990, Mr. Uretta has also served as
the Chief Financial Officer and controller of MAG.
John K. Lines, Esq. has been Vice President and Secretary of the Corporate
General Partner since August 1994, Insignia's General Counsel since June 1994
and General Counsel and Secretary since July 1994. From May 1993 until June
1994, Mr. Lines was the Assistant General Counsel and Vice President of Ocwen
Financial Corporation, West Palm Beach, Florida. From October 1991 until May
1993, Mr. Lines was a Senior Attorney with Banc One Corporation, Columbus, Ohio.
From May 1984 until October 1991, Mr. Lines was an attorney with Squire Sanders
& Dempsey, Columbus, Ohio.
Kelley M. Buechler is Assistant Secretary of the Corporate General Partner and
Assistant Secretary of Insignia since 1991. During the five years prior to
joining Insignia in 1991, she served in similar capacities with U.S. Shelter
ITEM 10. EXECUTIVE COMPENSATION
Neither the Individual General Partner nor any of the directors and officers of
the Corporate General Partner received any remuneration from the Registrant.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Except as noted below, no person or entity was known by the Registrant to be the
beneficial owner of more than 5% of the Limited Partnership Units of the
Registrant as of October 31, 1996.
Number
Entity of Units Percentage
SP IV Acquisition, LLC 11,100 22.20%
High River Limited Partnership 4,263 8.53%
No director or officer of the Corporate General Partner owns any Units. The
Corporate General Partner owns 100 Units as required by the terms of the
partnership agreement governing the Partnership.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Individual General Partner and the Corporate General Partner received no
cash distributions from operations as General or Limited Partners during or with
respect to, the fiscal year ended October 31, 1996. For a description of the
share of cash distributions from operations, if any, to which the general
partners are entitled, reference is made to the material contained in the
Prospectus under the heading "PROFITS AND LOSSES AND CASH DISTRIBUTIONS."
The Registrant has a property management agreement with Insignia Management
Group, L.P. pursuant to which Insignia Management Group, L.P. has assumed direct
responsibility for day-to-day management of the Partnership's properties. This
service includes the supervision of leasing, rent collection, maintenance,
budgeting, employment of personnel, payment of operating expenses, etc.
Insignia Management Group, L.P. receives a property management fee equal to 5%
of apartment revenues. During the fiscal year ended October 31, 1996, Insignia
Management Group, L.P. received approximately $540,000 in fees for property
management.
ITEM 13. 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 fourth quarter of fiscal year 1996:
None.
SIGNATURES
In accordance with Section 13 or 15(d) 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
Date: January 3, 1997
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the date indicated.
/s/William H. Jarrard, Jr. Date: January 3, 1997
William H. Jarrard, Jr.
President and Director
/s/Ronald Uretta Date: January 3, 1997
Ronald Uretta
Treasurer
(Principal Financial Officer
and Principal Accounting Officer)
EXHIBIT INDEX
EXHIBIT
3 See Exhibit 4(a)
4 (a) Amended and Restated Certificate and Agreement of Limited Partnership
[included as Exhibit A to the Prospectus of Registrant dated June 8,
1982 contained in Amendment No. 1 to Registration Statement No. 2-77217,
of Registrant filed June 8, 1982 (the "Prospectus") and incorporated
herein by reference].
(b) Subscription Agreement and Signature Page [included as Exhibit 8 to the
Prospectus and incorporated herein by reference].
10(I) Contracts related to acquisition of properties:
(a) Real Estate Sales Agreement dated May 5, 1982, First Modification to
Real Estate Sales Agreement dated June 18, 1982 (filed as Exhibit 12(B)
to Amendment No. 1 to Registration Statement No. 2-77217 of Registrant
filed June 8, 1982 and incorporated herein by reference) and Second
Modification to Real Estate Sales Agreement dated September 30, 1982
between Baymeadows Associates and U.S. Shelter Corporation to purchase
Baymeadows Apartments (Filed as Exhibit 10(a) to Form 10-K of Registrant
dated January 26, 1983 and incorporated herein by reference).
(b) Agreement for Purchase and Sale dated May 14, 1982 between Lincoln
Spartanburg Corners Associates and U.S. Shelter Corporation to purchase
The Corners Apartments. (Filed as Exhibit 12(A) to Amendment No. 1 to
Registration Statement, No. 2-77217, of Registrant filed June 8, 1982
and incorporated herein by reference).
(c) Real Estate Purchase Agreement dated October 11, 1982 and Second
Addendum to Real Estate Purchase Agreement dated December 10, 1982
between Rushcreek Village Apartments, Ltd. and U.S. Shelter Corporation
to purchase Rushcreek Village Apartments. (Filed as Exhibit 10(a) to
Form 8-K of Registrant dated December 15, 1982 and incorporated herein
by reference).
(d) Real Estate Purchase Agreement dated December 3, 1982 between Quail Run
Apartments, a Limited Partnership and Percival Partnership and U.S.
Shelter Corporation to purchase Quail Run Apartments. (Filed as Exhibit
10(b) to Form 8-K of Registrant dated December 15, 1982 and incorporated
herein by reference).
(e) Real Estate Purchase Agreement dated March 13, 1983 between Europco
Management Company of America, Inc. and U.S. Shelter Corporation to
purchase Countrywood Village Apartments. (Filed as Exhibit 10 to Form
8-K of Registrant dated March 31, 1983 and incorporated herein by
reference).
(II) Form of Management Agreement with U.S. Shelter Corporation subsequently
assigned to Shelter Management Group, L.P. (now known as Insignia
Management Group, L.P.) [Filed with Amendment No. 1 of Registration
Statement No. 2-77217 of Registrant filed June 8, 1982 and incorporated
herein by reference].
EXHIBIT INDEX
EXHIBIT
(III) Contracts related to refinancing of debt:
(a) First Deeds of Trust and Security Agreements dated October 28, 1992
between Shelter Properties IV Limited Partnership and Joseph Philip
Forte (Trustee) and First Commonwealth Realty Credit Corporation, a
Virginia Corporation, securing the following properties: Baymeadows,
Quail Run and Countrywood Village.*
(b) Second Deeds of Trust and Security Agreements dated October 28, 1992
between Shelter Properties IV Limited Partnership and Joseph Philip
Forte (Trustee) and First Commonwealth Realty Credit Corporation, a
Virginia Corporation, securing the following properties: Baymeadows,
Quail Run and Countrywood Village.*
(c) First Assignments of Leases and Rents dated October 28, 1992 between
Shelter Properties IV Limited Partnership and Joseph Philip Forte
(Trustee) and First Commonwealth Realty Credit Corporation, a Virginia
Corporation, securing the following properties: Baymeadows, Quail Run
and Countrywood Village.*
(d) Second Assignments of Leases and Rents dated October 28, 1992 between
Shelter Properties IV Limited Partnership and Joseph Philip Forte
(Trustee) and First Commonwealth Realty Credit Corporation, a Virginia
Corporation, securing the following properties: Baymeadows, Quail Run
and Countrywood Village. *
(e) First Deeds of Trust Notes dated October 28, 1992 between Shelter
Properties IV Limited Partnership and First Commonwealth Realty Credit
Corporation, relating to the following properties: Baymeadows, Quail
Run and Countrywood Village.
(f) Second Deeds of Trust Notes dated October 28, 1992 between Shelter
Properties IV Limited Partnership and First Commonwealth Realty Credit
Corporation, relating to the following properties: Baymeadows, Quail Run
and Countrywood Village.*
*Filed as Exhibits 10 (iii) a through 10 (iii) f, respectively, to Form
10-KSB - Annual or Transitional Report filed January 29, 1993 and
incorporated herein by reference.
22 Subsidiaries of the Registrant.
27 Financial Data Schedule.
28 (a) Prospectus of Registrant dated June 8, 1982 (included in Registration
Statement No. 2-77217 of Registrant and incorporated herein by
reference).
(b) Agreement of Limited Partnership for Quail Run IV Limited Partnership
between Shelter IV GP Limited Partnership and Shelter Properties IV
Limited Partnership entered into on February 12, 1992. (Filed as
Exhibit 28 to Form 10-QSB - Quarterly or Transitional Report filed June
11, 1993 and incorporated herein by reference.)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Shelter
Properties IV Limited Partnership 1996 Year End 10-KSB and is qualified in its
entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000702174
<NAME> SHELTER PROPERTIES IV LIMITED PARTNERSHIP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<CASH> 2,291
<SECURITIES> 0
<RECEIVABLES> 47
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 59,038
<DEPRECIATION> (30,365)
<TOTAL-ASSETS> 34,350
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 24,590
0
0
<COMMON> 0
<OTHER-SE> 8,072
<TOTAL-LIABILITY-AND-EQUITY> 34,350
<SALES> 0
<TOTAL-REVENUES> 10,910
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,664
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,257
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 246
<EPS-PRIMARY> 4.86<F2>
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
