UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-13329
HUTTON/CONAM REALTY INVESTORS 4
(Exact name of registrant as specified in its charter)
California 11-2685746
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 World Financial Center, 29th Floor, New York, NY
ATTN: Andre Anderson 10285
(Address of principal executive offices) (Zip Code)
(212) 526-3237
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Condolidated Balance Sheet
June 30, December 31,
Assets 1995 1994
Investments in real estate:
Land $ 12,088,984 $ 12,088,984
Buildings and improvements 48,386,402 48,236,772
60,475,386 60,325,756
Less accumulated depreciation (19,884,268) (18,896,846)
40,591,118 41,428,910
Cash and cash equivalents 4,861,093 3,234,383
Other assets 25,101 22,527
Total Assets $ 45,477,312 $ 44,685,820
Liabilities and Partners' Capital
Liabilities:
Distribution payable $ 533,792 $ -
Mortgage payable 5,029,661 5,051,086
Security deposits 275,887 288,335
Accounts payable and accrued expenses 539,442 137,009
Due to general partners and affiliates 55,791 54,369
Total Liabilities 6,434,573 5,530,799
Partners' Capital:
General Partners - -
Limited Partners 39,042,739 39,155,021
Total Partners' Capital 39,042,739 39,155,021
Total Liabilities and Partners'
Capital $ 45,477,312 $ 44,685,820
Consolidated Statement of Partners' Capital
For the six months ended June 30, 1995
General Limited
Partners Partners Total
Balance at January 1, 1995 $ - $39,155,021 $39,155,021
Net income 53,379 368,131 421,510
Distribution payable (53,379) (480,413) (533,792)
Balance at June 30, 1995 $ - $39,042,739 $39,042,739
Consolidated Statements of Operations
Three months ended Six months ended
June 30, June 30,
Income 1995 1994 1995 1994
Rental $1,919,473 $1,882,931 $3,846,998 $3,767,816
Interest 55,279 13,509 98,472 24,679
Total Income 1,974,752 1,896,440 3,945,470 3,792,495
Expenses
Property operating 1,097,657 984,394 2,184,401 1,941,037
Depreciation 490,093 508,630 987,422 1,017,260
Interest 127,497 128,538 255,264 257,319
General and
administrative 53,133 41,675 96,873 91,266
Total Expenses 1,768,380 1,663,237 3,523,960 3,306,882
Net income $ 206,372 $ 233,203 $ 421,510 $ 485,613
Net Income Allocated:
To the General Partners $ 53,379 $ 160,252 $ 53,379 $ 339,711
To the Limited Partners 152,993 72,951 368,131 145,902
$ 206,372 $ 233,203 $ 421,510 $ 485,613
Per limited partnership
unit (128,110 outstanding) $ 1.19 $ .57 $ 2.87 $ 1.14
Consolidated Statements of Cash Flows
For the six months ended June 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income $ 421,510 $ 485,613
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 987,422 1,017,260
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Other assets (2,574) (430)
Security deposits (12,448) 769
Accounts payable and accrued expenses 402,433 399,818
Due to general partners and affiliates 1,422 (2,450)
Net cash provided by operating activities 1,797,765 1,900,580
Cash Flows from Investing Activities:
Additions to real estate (149,630) (21,981)
Net cash used for investing activities (149,630) (21,981)
Cash Flows from Financing Activities:
Mortgage principal payments (21,425) (19,371)
Distributions - (1,281,100)
Net cash used for financing activities (21,425) (1,300,471)
Net increase in cash and cash equivalents 1,626,710 578,128
Cash and cash equivalents at beginning of period 3,234,383 2,201,276
Cash and cash equivalents at end of period $ 4,861,093 $ 2,779,404
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 255,264 $ 257,319
Notes to the Consolidated Financial Statements
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1994 consolidated financial
statements within Form 10-K.
The unaudited consolidated financial statements include all adjustments which
are, in the opinion of management, necessary to present a fair statement of
financial position as of June 30, 1995 and the results of operations and cash
flows for the six months ended June 30, 1995 and 1994 and the statement of
changes in partners' capital for the six months ended June 30, 1995. Results
of operations for the periods are not necessarily indicative of the results to
be expected for the full year.
The following significant events have occurred subsequent to fiscal year 1994,
which require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
On July 20, 1995, the Partnership closed on the sale of Trails at Meadowlakes
and Cypress Lakes Apartments to an institutional buyer, which is unaffiliated
with the Partnership. Trails at Meadowlakes and Cypress Lakes Apartments were
sold for $8,940,000 and $8,825,000, respectively. The transaction resulted in
a gain on sale for Trails at Meadowlakes and Cypress Lakes Apartments of
approximately $1,961,000 and $894,000, respectively, which will be reflected in
the Partnership's Form 10-Q for the period ended September 30, 1995.
The Partnership used a portion of the sale proceeds to pay off the remaining
principal balance on the Trails at Meadowlakes mortgage payable in the amount
of $5,029,661.
Part 1, Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
At June 30, 1995, the Partnership had cash and cash equivalents of $4,861,093,
which were invested in unaffiliated money market funds, compared with
$3,234,383 at December 31, 1994. The increase is primarily attributable to net
cash from operations exceeding capital improvement expenditures and mortgage
principal payments. The Partnership expects sufficient cash flow to be
generated from operations to meet its current operating expenses.
Accounts payable and accrued expenses were $539,442 at June 30, 1995 compared
to $137,009 at December 31, 1994. The increase reflects principally the
accrual and timing of payments due for real estate taxes, for the four Florida
properties and the one Texas property, for the first six months of 1995.
The sales of Trails at Meadowlakes and Cypress Lakes, to an institutional
buyer, were completed on July 20, 1995. The Partnership received gross sales
proceeds of $8,940,000 and $8,825,000, respectively, and will recognize a gain
on sale of approximately $1,961,000 and $894,000 in the third quarter. The
Partnership used a portion of the sale proceeds to pay off the remaining
principal balance on the Trails at Meadowlakes mortgage payable in the amount
of $5,029,661. As a result of this and other sales expenses, the Partnership
received net proceeds of approximately $12,064,000 from the sales. Following
an analysis of the Partnership's projected capital requirements, the General
Partners intend to distribute the remaining sales proceeds to the Limited
Partners as a return of capital.
The General Partners have reviewed the Partnership's cash requirements
following the property sales and loan resolution, and have determined that
quarterly cash distributions can be reinstated beginning with the 1995 second
quarter distribution payable in August. Accordingly, a distribution in the
amount of $3.75 per Unit, will be paid to limited partners on August 15, 1995.
The General Partners currently anticipate that this level of distributions will
be maintained through year end. Cash distributions, however, will be
determined on a quarterly basis and will be based on cash flow generated by the
Partnership.
Results of Operations
Net income for the three and six months ended June 30, 1995 totalled $206,372
and $421,510, respectively, compared with net income of $233,203 and $485,613
for the corresponding periods in 1994. After adding back depreciation, a
non-cash expense, and subtracting mortgage amortization and additions to real
estate, operations generated cash flow of $674,211 and $1,237,877,
respectively, for the three and six months ended June 30, 1995, compared with
cash flow of $732,025 and $1,461,521 for the corresponding periods in 1994.
The decrease in net income and cash flow is primarily attributable to an
increase in property operating expenses, partially offset by an increase in
rental and interest income.
Rental income for the three and six months ended June 30, 1995 totalled
$1,919,473 and $3,846,998, respectively, compared with $1,882,931 and
$3,767,816 for the corresponding periods in 1994. The increases in 1995
reflect higher revenues at five of the Partnership's six properties due to
rental rate increases instituted during the past year. Interest income for the
three and six months ended June 30, 1995 totalled $55,279 and $98,472,
respectively, compared with interest income of $13,509 and $24,679 for the
corresponding periods in 1994. The increases in 1995 are due primarily to
higher interest rates and higher cash balances as a result of the suspension of
cash distributions beginning in the third quarter of 1994. The suspension was
implemented to increase cash reserves for the mortgage coming due on Trails at
Meadowlakes.
Total expenses for the three and six months ended June 30, 1995
totalled $1,768,380 and $3,523,960, respectively, compared with total expenses
of $1,663,237 and $3,306,882 for the corresponding periods in 1994. The
increases in 1995 reflect higher property operating expenses including repairs
and maintenance, utilities, insurance and advertising. All other components
of total expenses remained relatively in line with 1994 levels.
For the three- and six-month periods ended June 30, 1995 and 1994, average
occupancy levels at each of the properties were as follows:
Three Months Ended Six Months Ended
June 30, June 30,
Property 1995 1994 1995 1994
Cypress Lakes 92% 95% 94% 96%
Pelican Landing 97% 97% 97% 98%
River Hill 95% 95% 95% 96%
Shadowood Village 93% 95% 94% 95%
Trails at Meadowlakes 95% 96% 96% 97%
Village at the Foothills II 93% 94% 94% 96%
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on Form 8-K were filed
during the three months ended June 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HUTTON/CONAM REALTY INVESTORS 4
BY: RI 3-4 REAL ESTATE SERVICES, INC.
General Partner
Date: August 11, 1995
BY: /s/Paul L. Abbott
Name: Paul L. Abbott
Title: Director, President, Chief
Executive Officer and Chief
Financial Officer
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