<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended March 31, 1996
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Commission file number 0-13523
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CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
Maryland 52-1328767
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11200 Rockville Pike, Rockville, Maryland 20852
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(Address of principal executive offices) (Zip Code)
(301) 468-9200
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(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 and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at March 31, 1996
- ---------------------------------- ----------------------------------
(Not applicable) (Not applicable)
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
Page
----
PART I. Financial Information (Unaudited)
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1996 and
December 31, 1995 . . . . . . . . . . . . . . . . 1
Consolidated Statements of Operations - for the
three months ended March 31, 1996 and 1995 . . . 2
Consolidated Statements of Cash Flows - for the
three months ended March 31, 1996 and 1995 . . . 3
Notes to Consolidated Financial Statements . . . . 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . 12
PART II. Other Information
Item 3. Defaults upon Senior Securities . . . . . . . . . . 18
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 18
Signature . . . . . . . . . . . . . . . . . . . . . . . . . 19
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . 20
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
--------------------
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------- -------------
(Unaudited)
<S> <C> <C>
Investments in and advances to partnerships $ 33,278,619 $ 33,458,291
Investment in partnerships held for sale -- 1,479,864
Cash and cash equivalents 7,992,331 6,801,118
Restricted cash 44,800 44,800
Acquisition fees, principally paid to related parties, net of
accumulated amortization of $373,445 and $365,275, respectively 933,740 941,910
Property purchase costs, net of accumulated amortization of
$355,701 and $348,023, respectively 872,875 880,553
Other assets 20,776 14,232
------------- -------------
Total assets $ 43,143,141 $ 43,620,768
============= =============
LIABILITIES AND PARTNERS' DEFICIT
Due on investments in partnerships, net of unamortized discount
on purchase money notes of $22,381,223 and $23,472,463,
respectively $ 26,274,020 $ 27,313,495
Accrued interest payable 84,453,071 84,441,538
Accounts payable and accrued expenses 89,566 116,689
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Total liabilities 110,816,657 111,871,722
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Commitments and contingencies
Partners' capital (deficit):
Capital paid-in:
General Partners 2,000 2,000
Limited Partners 73,501,500 73,501,500
------------- -------------
73,503,500 73,503,500
Less:
Accumulated distributions to partners (3,452,583) (3,452,583)
Offering costs (7,562,894) (7,562,894)
Accumulated loss (130,161,539) (130,738,977)
------------- -------------
Total partners' deficit (67,673,516) (68,250,954)
------------- -------------
Total liabilities and partners' deficit $ 43,143,141 $ 43,620,768
============= =============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-1-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
--------------------
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
March 31,
---------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Share of income from partnerships $ 206,744 $ 225,735
------------- -------------
Other revenue and expenses:
Revenue:
Interest and other income 188,320 107,985
------------- -------------
Expenses:
Interest 3,999,314 3,662,918
Management fee 93,750 93,750
General and administrative 35,985 42,319
Professional fees 28,705 25,657
Amortization 15,848 16,692
------------- -------------
4,173,602 3,841,336
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Total other revenue and expenses (3,985,282) (3,733,351)
------------- -------------
Loss before gain on disposition of investment in partnerships (3,778,538) (3,507,616)
Gain on disposition of investment in partnerships 4,355,976 3,055,176
------------- -------------
Net income (loss) 577,438 (452,440)
Accumulated losses, beginning of period (130,738,977) (119,303,455)
------------- -------------
Accumulated losses, end of period $(130,161,539) $(119,755,895)
============= =============
Income (loss) allocated to General Partners (1.51%) $ 8,719 $ (6,832)
============= =============
Income (loss) allocated to Initial and Special Limited Partners (1.49%) $ 8,604 $ (6,741)
============= =============
Income (loss) allocated to Additional Limited Partners (97%) $ 560,115 $ (438,867)
============= =============
Income (loss) per unit of Additional Limited Partnership Interest based
on 73,500 units outstanding $ 7.62 $ (5.97)
============= =============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-2-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
--------------------
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
March 31,
--------------------------------
1996 1995
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 577,438 $ (452,440)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Share of income from partnerships (206,744) (225,735)
(Increase) decrease in accrued interest receivable on
advances to partnerships (4,745) 65,325
Amortization of deferred costs 15,848 16,692
Amortization of discount on purchase money notes 1,091,240 924,053
Gain on disposition of investment in partnerships (4,355,976) (3,055,176)
Payment of purchase money note interest (219,292) (258,924)
Changes in assets and liabilities:
Increase in other assets (6,544) (19,536)
Increase in accrued interest payable 2,908,074 2,749,892
Decrease in accounts payable and accrued expenses (27,123) (11,319)
------------- ------------
Net cash used in operating activities (227,824) (267,168)
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Cash flows from investing activities:
Receipt of distributions from partnerships 324,022 331,171
Repayment of advances to partnerships 67,139 --
Net proceeds from disposition of investment in partnerships 4,333,142 4,712,726
------------- ------------
Net cash provided by investing activities 4,724,303 5,043,897
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Cash flows from financing activities:
Payment of purchase money note principal (8,865) (10,973)
Pay-off of purchase money notes (3,296,401) (3,217,005)
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Net cash used in financing activities (3,305,266) (3,227,978)
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Net increase in cash and cash equivalents 1,191,213 1,548,751
Cash and cash equivalents, beginning of period 6,801,118 5,435,555
------------- ------------
Cash and cash equivalents, end of period $ 7,992,331 $ 6,984,306
============= ============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-3-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
In the opinion of C.R.I., Inc. (CRI), the Managing General Partner, the
accompanying unaudited consolidated financial statements of Capital Realty
Investors-IV Limited Partnership (the Partnership) contain all adjustments of a
normal recurring nature necessary to present fairly the Partnership's
consolidated financial position as of March 31, 1996 and December 31, 1995 and
the consolidated results of its operations for the three months ended March 31,
1996 and 1995 and its consolidated cash flows for the three months ended March
31, 1996 and 1995.
These unaudited financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in consolidated financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. While the Managing General Partner believes
that the disclosures presented are adequate to make the information not mis-
leading, it is suggested that these consolidated financial statements be read in
conjunction with the consolidated financial statements and the notes included in
the Partnership's Annual Report filed on Form 10-K for the year ended December
31, 1995.
Certain amounts in the 1995 consolidated financial statements have been
reclassified to conform with the 1996 presentation.
2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS
As of March 31, 1996, the Partnership's obligations with respect to its
investments in Local Partnerships, in the form of purchase money notes of
$48,655,243 (exclusive of unamortized discount on purchase money notes of
$22,381,223) plus accrued interest of $84,453,071, are payable upon the earliest
of: (i) sale or refinancing of the respective Local Partnership's rental
property; (ii) payment in full of the respective Local Partnership's permanent
loan; or (iii) maturity. Purchase money notes in an aggregate principal amount
of $1,370,000 matured in 1994 but have not been paid, as discussed below. The
remaining purchase money notes mature from 1997 to 2025. The purchase money
notes are generally secured by the Partnership's interest in the respective
Local Partnerships. There is no assurance that the underlying properties will
have sufficient appreciation and equity to enable the Partnership to pay the
purchase money notes' principal and accrued interest when due. If a purchase
money note is not paid in accordance with its terms, the Partnership will either
have to renegotiate the terms of repayment or risk losing its partnership
interest in the Local Partnership. The Managing General Partner is continuing
to investigate possible alternatives to reduce the Partnership's long-term debt
obligations. These alternatives include, among others, retaining the cash
available for distribution to meet the purchase money note requirements, buying
out certain purchase money notes at a discounted price, extending the due dates
of certain purchase money notes, or refinancing the respective properties'
underlying debt and using the Partnership's share of the proceeds to pay off or
buy down certain purchase money note obligations.
Interest expense on the Partnership's purchase money notes for the three
months ended March 31, 1996 and 1995 was $3,999,314 and $3,662,918 respectively.
Amortization of the imputed interest on purchase money notes increased interest
expense by $1,091,240 and $924,053 during the three months ended March 31, 1996
and 1995, respectively.
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<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued
On May 22, 1992, Clearfield Hills I Limited Partnership filed a notice of
intent to participate under the Low Income Housing Preservation and Resident
Homeownership Act of 1990 (LIHPHRA). The sale of the property was completed on
February 6, 1996. The sale price of the property of approximately $3.2 million
generated sufficient proceeds to the Partnership to retire, at a discount, the
purchase money note obligation of the Partnership with respect to such property,
which matured on October 30, 1994. The sale provided proceeds to the
Partnership in excess of its investment in the Local Partnership, and resulted
in a net financial statement gain and a net tax gain in 1996 of approximately
$1.8 million and $2.4 million, respectively. The Managing General Partner
intends to retain all of the Partnership's share of the net sale proceeds for
the repayment, prepayment or purchase of outstanding purchase money notes of
other Local Partnerships, as discussed above. As such, the Managing General
Partner and/or its affiliates received no fees for services relating to the
sale.
On March 1, 1994, New Village Apartments North filed a notice of intent to
participate under the LIHPHRA program. The sale of the property was completed
on February 6, 1996. The sale price of the property of approximately $2.86
million generated sufficient proceeds to the Partnership to retire, at a
discount, the purchase money note obligation of the Partnership with respect to
such property, which matured on September 27, 1994. The sale provided proceeds
to the Partnership in excess of its investment in the Local Partnership, and
resulted in a net financial statement gain and a net tax gain in 1996 of
approximately $2.6 million and $3.3 million, respectively. The Managing General
Partner intends to retain all of the Partnership's share of the net sale
proceeds for the repayment, prepayment or purchase of outstanding purchase money
notes of other Local Partnerships, as discussed above. As such, the Managing
General Partner and/or its affiliates received no fees for services relating to
the sale.
On May 11, 1992, Southgate Apartments Company (Southgate) filed a plan of
action under Title II of the Emergency Low Income Housing Preservation Act of
1987 to sell the real estate to a non-profit entity. The sale was completed on
January 31, 1995. The sale price of the property of approximately $9.3 million
generated sufficient proceeds to the Partnership to retire, at a discount, the
purchase money note obligation of the Partnership with respect to such property.
The sale provided proceeds to the Partnership in excess of its investment in the
Local Partnership, and resulted in a net financial statement gain and a net tax
gain in 1995 of $3,055,176 and $6,982,026, respectively. The Partnership
distributed $745,290 (or $10.14 per Additional Limited Partner unit) on April
28, 1995 to the Additional Limited Partners as return of capital on a Generally
Accepted Accounting Principles basis. The Managing General Partner intends to
retain all of the Partnership's remaining undistributed net sale proceeds for
the repayment, prepayment or purchase of purchase money notes of other Local
Partnerships, as discussed above. The General Partner and/or its affiliates
received net fees for services relating to the sale of $186,512 on February 2,
1995.
The Partnership defaulted on its purchase money note relating to Holiday
Village Apartments on July 27, 1994 when the note matured and was not paid. The
default amount included principal and accrued interest of $1,370,000 and
$2,862,342, respectively. As of April 23, 1996, principal and accrued interest
totalling $1,370,000 and $3,767,894, respectively, were due. In June 1994, an
offer was made to extend the maturity date of this note to coincide with the
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<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued
future sale of the property under the LIHPRHA program or refinancing of the
first mortgage. As of April 17, 1996, discussions with the noteholder were
ongoing. There is no assurance, however, that the offer to extend the maturity
date will be accepted. Should the noteholder begin foreclosure proceedings on
the Partnership's interest in the related Local Partnership, the Partnership
intends to vigorously defend any action by the noteholder. However, there is no
assurance that the Partnership will be able to retain its interest in the Local
Partnership. The uncertainty about the continued ownership of the Partnership's
interest in the related Local Partnership does not impact the Partnership's
financial condition because the related purchase money note is nonrecourse and
secured solely by the Partnership's interest in the Local Partnership.
Therefore, should the investment in Holiday Village Apartments not produce
sufficient value to satisfy the related purchase money note, the Partnership's
exposure to loss is limited since the amount of the nonrecourse indebtedness
exceeds the carrying amount of the investment in and advances to the Local
Partnership. Thus, even a complete loss of this investment would not have a
material impact on the operations of the Partnership.
Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments" (SFAS 107), requires the disclosure of fair
value information about financial instruments for which it is practicable to
estimate that value. The Partnership implemented SFAS 107 in 1995. The
Partnership has determined that the carrying amount of its cash and cash
equivalents approximates fair value due to the short-term nature of the related
financial instruments. The Partnership has determined that it is not
practicable to estimate the fair value of its purchase money notes, either
individually or in the aggregate, due to: (i) the lack of an active market for
this type of financial instrument, (ii) the variable nature of purchase money
note interest payments as a result of fluctuating cash flow distributions
received from the related Local Partnerships, and (iii) the excessive costs
associated with an independent appraisal of the purchase money notes.
On January 5, 1996, the Managing General Partner received $1,000 for an
option to purchase its limited partner interest in New Second Lakewood
Associates Limited Partnership (Second Lakewood). The sale was dependent on the
purchaser exercising the option by February 15, 1996 and completing the
transaction by March 15, 1996. On March 15, 1996, the option holder requested
an extension from the Managing General Partner of the February 15th and March
15th deadlines to April 15, 1996 and May 15, 1996, respectively. On March 20,
1996, the Managing General Partner agreed to this request and mailed an
amendment to the option holder for signature. As of April 17, 1996, the option
holder had not returned the signed amendment. On April 17, 1996, the Managing
General Partner notified the option holder that the option to purchase the
limited partner interest has been revoked.
In 1989, Second Lakewood was experiencing rent losses due to units being
taken off the market because of roof leakage. The Partnership advanced a total
of $750,000 during 1990 to fund roof replacement in order to maintain the
marketability and income of the property. The loan bears interest at 11% and is
to be repaid from the property's cash flow. As of March 31, 1996 and December
31, 1995, the outstanding loan to Second Lakewood totalled $159,119 and
$224,543, respectively. Accrued interest on the loan was $3,646 and $617 as of
March 31, 1996 and December 31, 1995, respectively.
-6-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued
The letter of credit related to the tax-exempt bonds on Lakes of Northdale,
which originally matured in June 1995, had been extended to February 15, 1996.
The letter of credit fee increased from its previous level of 1% per annum to a
maximum of 4% per annum in October 1995. The Managing General Partner of Lakes
of Northdale is currently negotiating for the letter of credit issuer to
purchase the existing tax-exempt bonds issued by the Florida Housing Finance
Agency and re-market these bonds in June 1996. There is no assurance that Lakes
of Northdale will be successful in its efforts. If new financing is not
obtained, the letter of credit issuer could begin foreclosure proceedings on the
Local Partnership's property. The uncertainty about the Local Partnership's
continued ownership of the property does not impact the Partnership's financial
condition because the Partnership's purchase money notes related to Lakes of
Northdale are nonrecourse and secured solely by the Partnership's interest in
the Local Partnership. Therefore, should the investment in Lakes of Northdale
not produce sufficient value to satisfy the related purchase money notes, the
Partnership's exposure to loss is limited since the amount of the nonrecourse
indebtedness exceeds the carrying amount of the investment in and advances to
the Local Partnership. Thus, even a complete loss of this investment would not
have a material impact on the operations of the Partnership.
Some of the rental properties owned by the Local Partnerships have
mortgages which are federally insured under Section 236 or Section 221(d)(3) of
the National Housing Act, as amended. These properties may be eligible for
sale, subject to numerous requirements, under the LIHPRHA program. This program
may provide incentives to owners of qualifying multifamily housing who commit to
permanently maintain their properties as low to moderate income housing.
Incentives originally available under LIHPRHA included selling the property to
qualified buyers or obtaining supplemental financing for the property. On March
28, 1996, Congress enacted the Housing Opportunity Program Extension Act of 1996
which includes revisions to the LIHPRHA program. These revisions include: (i)
severely limiting the availability of the supplemental financing option for
owners of qualifying multifamily housing, (ii) allowing owners who no longer
qualify for supplemental financing under the revised guidelines to elect to
pursue a sale of the property under the LIHPRHA program, provided that the
election to sell was made by April 15, 1996, and (iii) continuing the funding of
sale transactions under the LIHPRHA program through October 1, 1996, but only
for transactions in which the owner's plan of action is approved by HUD by
August 15, 1996. As of April 17, 1996, there can be no assurance that Congress
will extend the LIHPRHA program beyond the October 1 deadline, or that a
modified program will be developed in place of the existing program. Also,
there is no assurance that the sale of any of the properties owned by the Local
Partnerships will occur.
On February 27, 1996, the local general partner's plan of action regarding
the sale of the property owned by River Run Company (River Run) under the
LIHPRHA program was approved by HUD. The local general partner is currently
seeking funding under the LIHPRHA program for the proposed sale of the property.
There is no assurance that a sale of River Run will ultimately occur.
Some of the rental properties owned by the Local Partnerships are financed
by state housing agencies. The Managing General Partner has been working to
develop a strategy to sell or refinance certain properties pursuant to programs
developed by these agencies. These programs may include opportunities to sell
the property to a qualifying purchaser who would agree to maintain the property
as low to moderate income housing in perpetuity, or may include opportunities to
-7-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued
refinance the property or obtain supplemental financing. The Managing General
Partner continues to monitor these programs to ascertain whether the properties
would qualify within the parameters of the programs and whether the programs
would provide an appropriate economic benefit to the limited partners of the
Partnership.
Some of the rental properties owned by the Local Partnerships are dependent
on the receipt of housing assistance payments guaranteed by contract under the
Department of Housing and Urban Development (HUD) Section 8 program. The level
of funding for the Section 8 program, and HUD-insured multifamily housing in
general, is dependent upon the continuation of appropriations approved by
Congress for subsidy payments. In the event that the rental subsidy programs
are reduced or phased out, there is no assurance that the rental properties will
be able to maintain the occupancy levels necessary to pay debt service and
operating costs or that the rents necessary to pay debt service and operating
costs will be competitive with rents for comparable units in the rental
properties' respective market areas. While the Managing General Partner has no
reason to believe that HUD will not honor its obligations under the contracts,
some uncertainty exists in light of the recent Congressional scrutiny of
appropriations for HUD programs.
The following are combined statements of operations for the Local
Partnerships in which the Partnership has invested. The statements are compiled
from information supplied by the management agents of the projects and are
unaudited.
-8-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued
COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
March 31,
-------------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Revenue:
Rental revenue $ 9,760,343 $ 9,863,573
Other 559,381 501,520
------------ ------------
10,319,724 10,365,093
------------ ------------
Expenses:
Operating 6,434,794 6,289,673
Interest 1,992,980 2,173,033
Depreciation and amortization 2,019,041 2,048,523
------------ ------------
10,446,815 10,511,229
------------ ------------
Net loss $ (127,091) $ (146,136)
============ ============
</TABLE>
As of March 31, 1996 and December 31, 1995, the Partnership's share of
cumulative losses of ten of the Local Partnerships exceeds the amount of the
Partnership's investments in and advances to those Local Partnerships by
$15,068,837 and $14,737,878, respectively. Since the Partnership has no further
obligation to advance funds or provide financing to these Local Partnerships,
the excess losses have not been reflected in the accompanying consolidated
financial statements.
3. RELATED-PARTY TRANSACTIONS
In accordance with the terms of the Partnership Agreement, the Partnership
is obligated to reimburse the Managing General Partner for its direct expenses
in managing the Partnership and to pay an annual incentive management fee
(Management Fee), after all other expenses of the Partnership are paid. The
Partnership paid $36,178 and $24,676 for the three months ended March 31, 1996
and 1995, respectively, as direct reimbursement of expenses incurred on behalf
of the Partnership. Additionally, the Partnership paid the Managing General
Partner a Management Fee of $93,750 for each of the three-month periods ended
March 31, 1996 and 1995.
The Managing General Partner and/or its affiliates may receive a fee in an
amount of not more than 2% of the sales price of the investment in a Local
Partnership or the property it owns, payable under certain conditions upon the
sale of the investment in a Local Partnership or the property its owns. The
payment of the fee is subject to certain restrictions, including achievement of
a certain level of sales proceeds and making certain minimum distributions to
limited partners. The Managing General Partner and/or its affiliates received
-9-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. RELATED-PARTY TRANSACTIONS - Continued
net fees for services relating to the sale of the Southgate property of $186,512
on February 2, 1995. No fees were paid to the Managing General Partner and/or
its affiliates for services performed in connection with the 1996 sales of
Clearfield Hills I and New Village Apartments North.
4. CONTINGENCIES
In 1990, CRI, as managing general partner of the Partnership and various
other entities, subcontracted certain property-level asset management functions
for certain properties to Capital Management Strategies, Inc. (CMS). Among
these properties were properties owned by some of the Local Partnerships in
which the Partnership invested. CMS was formed by Martin C. Schwartzberg, a
nominal general partner of the Partnership and a former stockholder of CRI, when
he retired from and cashed out of CRI and its related businesses as of January
1, 1990. Mr. Schwartzberg agreed not to act as a general partner with respect
to any of the CRI-sponsored partnerships, including this Partnership, and has
not done so since that time. In late 1995, a dispute arose between CRI and CMS
over the funding level of the 1996 contract for CMS. On November 9, 1995, CRI
filed a complaint against CMS to determine the proper amount of fees to be paid
in 1996 under the asset management agreement. CMS answered on January 10, 1996,
but asserted no counterclaims.
Thereafter, Mr. Schwartzberg launched a hostile consent solicitation to be
designated as managing general partner of approximately 125 private partnerships
sponsored by CRI. On January 18, 1996, Mr. Schwartzberg and CMS filed a
complaint in the Circuit Court of Montgomery County, Maryland (the Circuit
Court), against CRI and Messrs. Dockser and Willoughby (who are general partners
of the Partnership) alleging, among other things, that CRI and Messrs. Dockser
and Willoughby have breached the asset management agreement pursuant to which
Mr. Schwartzberg's company, CMS, agreed to perform limited functions related to
property-level issues for a portion of CRI's subsidized housing portfolio
(including some of the properties in which the Partnership invested), by
reducing the proposed budget for 1996. The Partnership is not named as a
defendant in this action. Messrs. Dockser and Willoughby have entered an answer
denying all of Mr. Schwartzberg's claims. Messrs. Dockser and Willoughby have
publicly responded that Mr. Schwartzberg's suit is motivated by his budget
dispute with CRI and personal animosity. On February 6, 1996, CRI terminated
the CMS contract for cause. Mr. Schwartzberg and CMS responded by filing a
motion for injunctive relief in the Circuit Court, asking the court to enjoin
CRI from terminating the contract. In a ruling issued on February 12, 1996, the
Circuit Court, among other things, refused to grant the injunction requested by
CMS. A hearing in this case is scheduled for April 29, 1996. On February 12,
1996, the Circuit Court also issued a memorandum opinion and order enjoining CMS
and Mr. Schwartzberg from disclosing information made confidential under the
asset management agreement.
On February 1, 1996 and February 16, 1996, Mr. Schwartzberg sent letters to
the Partnership requesting investor lists and other forms of investor
information. On February 5, 1996, the Partnership, acting through its managing
general partner, CRI, denied Mr. Schwartzberg's request. On February 20, 1996,
counsel for the Partnership responded to Mr. Schwartzberg's second request,
denying that Mr. Schwartzberg had standing or a proper purpose for requesting
the investor lists. In view of Mr. Schwartzberg's solicitation efforts against
other CRI-sponsored partnerships, CRI anticipates that litigation may arise from
this request.
-10-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Financial Condition/Liquidity
----------------------------
The Partnership's liquidity, with unrestricted cash resources of $7,992,331
and $6,801,118 as of March 31, 1996 and December 31, 1995, respectively, along
with anticipated future cash distributions from the Local Partnerships, is
expected to meet its current and anticipated operating cash needs. As of March
31, 1996, $44,800 of cash resources was restricted for future interest payments
on one of the purchase money notes. As of April 17, 1996, there were no
material commitments for capital expenditures.
As of March 31, 1996, the Partnership's obligations with respect to its
investments in Local Partnerships, in the form of purchase money notes of
$48,655,243 (exclusive of unamortized discount on purchase money notes of
$22,381,223) plus accrued interest of $84,453,071, are payable upon the earliest
of: (i) sale or refinancing of the respective Local Partnership's rental
property; (ii) payment in full of the respective Local Partnership's permanent
loan; or (iii) maturity. Purchase money notes in an aggregate principal amount
of $1,370,000 matured in 1994 but have not been paid, as discussed below. The
remaining purchase money notes mature from 1997 to 2025. The purchase money
notes are generally secured by the Partnership's interest in the respective
Local Partnerships. There is no assurance that the underlying properties will
have sufficient appreciation and equity to enable the Partnership to pay the
purchase money notes' principal and accrued interest when due. If a purchase
money note is not paid in accordance with its terms, the Partnership will either
have to renegotiate the terms of repayment or risk losing its partnership
interest in the Local Partnership. The Managing General Partner is continuing
to investigate possible alternatives to reduce the Partnership's long-term debt
obligations. These alternatives include, among others, retaining the cash
available for distribution to meet the purchase money note requirements, buying
out certain purchase money notes at a discounted price, extending the due dates
of certain purchase money notes, or refinancing the respective properties'
underlying debt and using the Partnership's share of the proceeds to pay off or
buy down certain purchase money note obligations.
On May 22, 1992, Clearfield Hills I Limited Partnership (Clearfield Hills
I) filed a notice of intent to participate under the Low Income Housing
Preservation and Resident Homeownership Act of 1990 (LIHPHRA). The sale of the
property was completed on February 6, 1996. The sale price of the property of
approximately $3.2 million generated sufficient proceeds to the Partnership to
retire, at a discount, the purchase money note obligation of the Partnership
with respect to such property, which matured on October 30, 1994. The sale
provided proceeds to the Partnership in excess of its investment in the Local
Partnership, and resulted in a net financial statement gain and a net tax gain
in 1996 of approximately $1.8 million and $2.4 million, respectively. The
Managing General Partner intends to retain all of the Partnership's share of the
net sale proceeds for the repayment, prepayment or purchase of outstanding
purchase money notes of other Local Partnerships, as discussed above. As such,
the Managing General Partner and/or its affiliates received no fees for services
relating to the sale.
On March 1, 1994, New Village Apartments North (Village North) filed a
notice of intent to participate under the LIHPHRA program. The sale of the
property was completed on February 6, 1996. The sale price of the property of
approximately $2.86 million generated sufficient proceeds to the Partnership to
-11-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS - Continued
-----------------------------------
retire, at a discount, the purchase money note obligation of the Partnership
with respect to such property, which matured on September 27, 1994. The sale
provided proceeds to the Partnership in excess of its investment in the Local
Partnership, and resulted in a net financial statement gain and a net tax gain
in 1996 of approximately $2.6 million and $3.3 million, respectively. The
Managing General Partner intends to retain all of the Partnership's share of
the net sale proceeds for the repayment, prepayment or purchase of outstanding
purchase money notes of other Local Partnerships, as discussed above. As such,
the Managing General Partner and/or its affiliates received no fees for services
relating to the sale.
On May 11, 1992, Southgate Apartments Company (Southgate) filed a plan of
action under Title II of the Emergency Low Income Housing Preservation Act of
1987 to sell the real estate to a non-profit entity. The sale was completed on
January 31, 1995. The sale price of the property of approximately $9.3 million
generated sufficient proceeds to the Partnership to retire, at a discount, the
purchase money note obligation of the Partnership with respect to such property.
The sale provided proceeds to the Partnership in excess of its investment in the
Local Partnership, and resulted in a net financial statement gain and a net tax
gain in 1995 of $3,055,176 and $6,982,026, respectively. The Partnership
distributed $745,290 (or $10.14 per Additional Limited Partner unit) on April
28, 1995 to the Additional Limited Partners as return of capital on a Generally
Accepted Accounting Principles basis. The Managing General Partner intends to
retain all of the Partnership's remaining undistributed net sale proceeds for
the repayment, prepayment or purchase of purchase money notes of other Local
Partnerships, as discussed above. The General Partner and/or its affiliates
received net fees for services relating to the sale of $186,512 on February 2,
1995.
The Partnership defaulted on its purchase money note relating to Holiday
Village Apartments on July 27, 1994 when the note matured and was not paid. The
default amount included principal and accrued interest of $1,370,000 and
$2,862,342, respectively. As of April 23, 1996, principal and accrued interest
totalling $1,370,000 and $3,767,894, respectively, were due. In June 1994, an
offer was made to extend the maturity date of this note to coincide with the
future sale of the property under the LIHPRHA program or refinancing of the
first mortgage. As of April 17, 1996, discussions with the noteholder were
ongoing. There is no assurance, however, that the offer to extend the maturity
date will be accepted. Should the noteholder begin foreclosure proceedings on
the Partnership's interest in the related Local Partnership, the Partnership
intends to vigorously defend any action by the noteholder. However, there is no
assurance that the Partnership will be able to retain its interest in the Local
Partnership. The uncertainty about the continued ownership of the Partnership's
interest in the related Local Partnership does not impact the Partnership's
financial condition because the related purchase money note is nonrecourse and
secured solely by the Partnership's interest in the Local Partnership.
Therefore, should the investment in Holiday Village Apartments not produce
sufficient value to satisfy the related purchase money note, the Partnership's
exposure to loss is limited since the amount of the nonrecourse indebtedness
exceeds the carrying amount of the investment in and advances to the Local
Partnership. Thus, even a complete loss of this investment would not have a
material impact on the operations of the Partnership.
The Partnership closely monitors its cash flow and liquidity position in an
effort to ensure that sufficient cash is available for operating requirements.
-12-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS - Continued
-----------------------------------
For the three months ended March 31, 1996, the receipt of distributions from
Local Partnerships was adequate to support operating cash requirements. Cash
and cash equivalents increased for the three months ended March 31, 1996
primarily due to the receipt of the net proceeds from the sales of Clearfield
Hills I and Village North, as discussed above.
Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments" (SFAS 107), requires the disclosure of fair
value information about financial instruments for which it is practicable to
estimate that value. The Partnership implemented SFAS 107 in 1995. The
Partnership has determined that the carrying amount of its cash and cash
equivalents approximates fair value due to the short-term nature of the related
financial instruments. The Partnership has determined that it is not
practicable to estimate the fair value of its purchase money notes, either
individually or in the aggregate, due to: (i) the lack of an active market for
this type of financial instrument, (ii) the variable nature of purchase money
note interest payments as a result of fluctuating cash flow distributions
received from the related Local Partnerships, and (iii) the excessive costs
associated with an independent appraisal of the purchase money notes.
Results of Operations
---------------------
The Partnership's net income for the three months ended March 31, 1996
increased from the corresponding period in 1995 primarily due to the gain on
disposition of Clearfield Hills I and Village North, as discussed above.
Contributing to the increase in net income was an increase in interest and other
income as a result of the receipt of final surplus cash distributions from one
former Local Partnership which had been sold in 1995. Partially offsetting the
increase in the Partnership's net income was an increase in interest expense as
a result of the amortization of imputed interest.
For financial reporting purposes, the Partnership, as a limited partner in
the Local Partnerships, does not record losses from the Local Partnerships in
excess of its investment to the extent the Partnership has no further obligation
to advance funds or provide financing to the Local Partnerships. As a result,
the Partnership's recognized losses for the three months ended March 31, 1996
did not include losses of $330,959, compared to excluded losses of $367,105 for
the three months ended March 31, 1995.
On January 5, 1996, the Managing General Partner received $1,000 for an
option to purchase its limited partner interest in New Second Lakewood
Associates Limited Partnership (Second Lakewood). The sale was dependent on the
purchaser exercising the option by February 15, 1996 and completing the
transaction by March 15, 1996. On March 15, 1996, the option holder requested
an extension from the Managing General Partner of the February 15th and March
15th deadlines to April 15, 1996 and May 15, 1996, respectively. On March 20,
1996, the Managing General Partner agreed to this request and mailed an
amendment to the option holder for signature. As of April 17, 1996, the option
holder had not returned the signed amendment. On April 17, 1996, the Managing
General Partner notified the option holder that the option to purchase the
limited partner interest has been revoked.
In 1989, Second Lakewood was experiencing rent losses due to units being
taken off the market because of roof leakage. The Partnership advanced a total
of $750,000 during 1990 to fund roof replacement in order to maintain the
-13-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS - Continued
-----------------------------------
marketability and income of the property. The loan bears interest at 11% and is
to be repaid from the property's cash flow. As of March 31, 1996 and December
31, 1995, the outstanding loan to Second Lakewood totalled $159,119 and
$224,543, respectively. Accrued interest on the loan was $3,646 and $617 as of
March 31, 1996 and December 31, 1995, respectively.
The letter of credit related to the tax-exempt bonds on Lakes of Northdale,
which originally matured in June 1995, had been extended to February 15, 1996.
The letter of credit fee increased from its previous level of 1% per annum to a
maximum of 4% per annum in October 1995. The Managing General Partner of Lakes
of Northdale is currently negotiating for the letter of credit issuer to
purchase the existing tax-exempt bonds issued by the Florida Housing Finance
Agency and re-market these bonds in June 1996. There is no assurance that Lakes
of Northdale will be successful in its efforts. If new financing is not
obtained, the letter of credit issuer could begin foreclosure proceedings on the
Local Partnership's property. The uncertainty about the Local Partnership's
continued ownership of the property does not impact the Partnership's financial
condition because the Partnership's purchase money notes related to Lakes of
Northdale are nonrecourse and secured solely by the Partnership's interest in
the Local Partnership. Therefore, should the investment in Lakes of Northdale
not produce sufficient value to satisfy the related purchase money notes, the
Partnership's exposure to loss is limited since the amount of the nonrecourse
indebtedness exceeds the carrying amount of the investment in and advances to
the Local Partnership. Thus, even a complete loss of this investment would not
have a material impact on the operations of the Partnership.
Some of the rental properties owned by the Local Partnerships have
mortgages which are federally insured under Section 236 or Section 221(d)(3) of
the National Housing Act, as amended. These properties may be eligible for
sale, subject to numerous requirements, under the LIHPRHA program. This program
may provide incentives to owners of qualifying multifamily housing who commit to
permanently maintain their properties as low to moderate income housing.
Incentives originally available under LIHPRHA included selling the property to
qualified buyers or obtaining supplemental financing for the property. On March
28, 1996, Congress enacted the Housing Opportunity Program Extension Act of 1996
which includes revisions to the LIHPRHA program. These revisions include: (i)
severely limiting the availability of the supplemental financing option for
owners of qualifying multifamily housing, (ii) allowing owners who no longer
qualify for supplemental financing under the revised guidelines to elect to
pursue a sale of the property under the LIHPRHA program, provided that the
election to sell was made by April 15, 1996, and (iii) continuing the funding of
sale transactions under the LIHPRHA program through October 1, 1996, but only
for transactions in which the owner's plan of action is approved by HUD by
August 15, 1996. As of April 17, 1996, there can be no assurance that Congress
will extend the LIHPRHA program beyond the October 1 deadline, or that a
modified program will be developed in place of the existing program. Also,
there is no assurance that the sale of any of the properties owned by the Local
Partnerships will occur.
On February 27, 1996, the local general partner's plan of action regarding
the sale of the property owned by River Run Company (River Run) under the
LIHPRHA program was approved by HUD. The local general partner is currently
seeking funding under the LIHPRHA program for the proposed sale of the property.
There is no assurance that a sale of River Run will ultimately occur.
-14-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS - Continued
-----------------------------------
Some of the rental properties owned by the Local Partnerships are financed
by state housing agencies. The Managing General Partner has been working to
develop a strategy to sell or refinance certain properties pursuant to programs
developed by these agencies. These programs may include opportunities to sell
the property to a qualifying purchaser who would agree to maintain the property
as low to moderate income housing in perpetuity, or may include opportunities to
refinance the property or obtain supplemental financing. The Managing General
Partner continues to monitor these programs to ascertain whether the properties
would qualify within the parameters of the programs and whether the programs
would provide an appropriate economic benefit to the limited partners of the
Partnership.
Some of the rental properties owned by the Local Partnerships are dependent
on the receipt of housing assistance payments guaranteed by contract under the
Department of Housing and Urban Development (HUD) Section 8 program. The level
of funding for the Section 8 program, and HUD-insured multifamily housing in
general, is dependent upon the continuation of appropriations approved by
Congress for subsidy payments. In the event that the rental subsidy programs
are reduced or phased out, there is no assurance that the rental properties will
be able to maintain the occupancy levels necessary to pay debt service and
operating costs or that the rents necessary to pay debt service and operating
costs will be competitive with rents for comparable units in the rental
properties' respective market areas. While the Managing General Partner has no
reason to believe that HUD will not honor its obligations under the contracts,
some uncertainty exists in light of the recent Congressional scrutiny of
appropriations for HUD programs.
No other significant changes in the Partnership's operations have taken
place during this period.
General
-------
In 1990, CRI, as managing general partner of the Partnership and various
other entities, subcontracted certain property-level asset management functions
for certain properties to Capital Management Strategies, Inc. (CMS). Among
these properties were properties owned by some of the Local Partnerships in
which the Partnership invested. CMS was formed by Martin C. Schwartzberg, a
nominal general partner of the Partnership and a former stockholder of CRI, when
he retired from and cashed out of CRI and its related businesses as of January
1, 1990. Mr. Schwartzberg agreed not to act as a general partner with respect
to any of the CRI-sponsored partnerships, including this Partnership, and has
not done so since that time. In late 1995, a dispute arose between CRI and CMS
over the funding level of the 1996 contract for CMS. On November 9, 1995, CRI
filed a complaint against CMS to determine the proper amount of fees to be paid
in 1996 under the asset management agreement. CMS answered on January 10, 1996,
but asserted no counterclaims.
Thereafter, Mr. Schwartzberg launched a hostile consent solicitation to be
designated as managing general partner of approximately 125 private partnerships
sponsored by CRI. On January 18, 1996, Mr. Schwartzberg and CMS filed a
complaint in the Circuit Court of Montgomery County, Maryland (the Circuit
Court), against CRI and Messrs. Dockser and Willoughby (who are general partners
of the Partnership) alleging, among other things, that CRI and Messrs. Dockser
and Willoughby have breached the asset management agreement pursuant to which
Mr. Schwartzberg's company, CMS, agreed to perform limited functions related to
-15-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS - Continued
-----------------------------------
property-level issues for a portion of CRI's subsidized housing portfolio
(including some of the properties in which the Partnership invested), by
reducing the proposed budget for 1996. The Partnership is not named as a
defendant in this action. Messrs. Dockser and Willoughby have entered an answer
denying all of Mr. Schwartzberg's claims. Messrs. Dockser and Willoughby have
publicly responded that Mr. Schwartzberg's suit is motivated by his budget
dispute with CRI and personal animosity. On February 6, 1996, CRI terminated
the CMS contract for cause. Mr. Schwartzberg and CMS responded by filing a
motion for injunctive relief in the Circuit Court, asking the court to enjoin
CRI from terminating the contract. In a ruling issued on February 12, 1996, the
Circuit Court, among other things, refused to grant the injunction requested by
CMS. A hearing in this case is scheduled for April 29, 1996. On February 12,
1996, the Circuit Court also issued a memorandum opinion and order enjoining CMS
and Mr. Schwartzberg from disclosing information made confidential under the
asset management agreement.
On February 1, 1996 and February 16, 1996, Mr. Schwartzberg sent letters to
the Partnership requesting investor lists and other forms of investor
information. On February 5, 1996, the Partnership, acting through its managing
general partner, CRI, denied Mr. Schwartzberg's request. On February 20, 1996,
counsel for the Partnership responded to Mr. Schwartzberg's second request,
denying that Mr. Schwartzberg had standing or a proper purpose for requesting
the investor lists. In view of Mr. Schwartzberg's solicitation efforts against
other CRI-sponsored partnerships, CRI anticipates that litigation may arise from
this request.
PART II. OTHER INFORMATION
-----------------
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
The Partnership defaulted on its purchase money note relating to Holiday
Village Apartments on July 27, 1994 when the note matured and was not paid. The
default amount included principal and accrued interest of $1,370,000 and
$2,862,342, respectively. As of April 23, 1996, principal and accrued interest
totalling $1,370,000 and $3,767,894, respectively, were due. In June 1994, an
offer was made to extend the maturity date of this note to coincide with the
future sale of the property under the LIHPRHA program or refinancing of the
first mortgage. As of April 17, 1996, discussions with the noteholder were
ongoing. There is no assurance, however, that the offer to extend the maturity
date will be accepted. Should the noteholder begin foreclosure proceedings on
the Partnership's interest in the related Local Partnership, the Partnership
intends to vigorously defend any action by the noteholder. However, there is no
assurance that the Partnership will be able to retain its interest in the Local
Partnership. The uncertainty about the continued ownership of the Partnership's
interest in the related Local Partnership does not impact the Partnership's
financial condition because the related purchase money note is nonrecourse and
secured solely by the Partnership's interest in the Local Partnership.
Therefore, should the investment in Holiday Village Apartments not produce
sufficient value to satisfy the related purchase money note, the Partnership's
exposure to loss is limited since the amount of the nonrecourse indebtedness
exceeds the carrying amount of the investment in and advances to the Local
Partnership. Thus, even a complete loss of this investment would not have a
material impact on the operations of the Partnership.
-16-
<PAGE>
PART II. OTHER INFORMATION
-----------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
A report on Form 8-K was filed with the Commission on February 26, 1996
regarding the sale of the properties relating to the Partnership's investment in
Clearfield Hills I Limited Partnership and New Village Apartments North.
All other items are not applicable.
-17-
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CAPITAL REALTY INVESTORS-IV
LIMITED PARTNERSHIP
(Registrant)
By: C.R.I., Inc.
Managing General Partner
April 23, 1996 By: /s/ Richard J. Palmer
- -------------------- ------------------------------
Date Richard J. Palmer
Senior Vice President/Finance
Signing on behalf of the Registrant and as
Principal Accounting Officer
-18-
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Method of Filing
- ------- -----------------------------
27 Financial Data Schedule Filed herewith electronically
-19-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FIRST QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 8,037,131
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 43,143,141
<CURRENT-LIABILITIES> 0
<BONDS> 110,727,091
0
0
<COMMON> 0
<OTHER-SE> (67,673,516)
<TOTAL-LIABILITY-AND-EQUITY> 43,143,141
<SALES> 0
<TOTAL-REVENUES> 395,064
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 174,288
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,999,314
<INCOME-PRETAX> (3,778,538)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,778,538)
<DISCONTINUED> 0
<EXTRAORDINARY> 4,355,976
<CHANGES> 0
<NET-INCOME> 577,438
<EPS-PRIMARY> 7.62
<EPS-DILUTED> 7.62
</TABLE>
