CAPITAL REALTY INVESTORS IV LIMITED PARTNERSHIP, 10QSB, 2000-05-12

CAPITAL REALTY INVESTORS IV LIMITED PARTNERSHIP
10QSB, 2000-05-12
OPERATORS OF APARTMENT BUILDINGS

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<PAGE>

FORM 10-QSB
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2000
--------------

Commission file number 0-13523
--------------

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
- --------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)

Maryland 52-1328767
- ----------------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

11200 Rockville Pike, Rockville, Maryland 20852
- ----------------------------------------- ------------------------
(Address of principal executive offices) (Zip Code)

(301) 468-9200
- --------------------------------------------------------------------------
(Issuer's telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months, and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:

Not applicable Not applicable
- -------------------------- ---------------------------------------
(Class) (Outstanding at March 31, 2000)
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

INDEX TO FORM 10-QSB

FOR THE QUARTER ENDED MARCH 31, 2000

Page
----

PART I. Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets - March 31, 2000 and
December 31, 1999 . . . . . . . . . . . . . . . . 1

Consolidated Statements of Operations and Accumulated
Losses - for the three months ended March 31, 2000
and 1999 . . . . . . . . . . . . . . . . . . . . 2

Consolidated Statements of Cash Flows - for the
three months ended March 31, 2000 and 1999 . . . 3

Notes to Consolidated Financial Statements -
March 31, 2000 and 1999 . . . . . . . . . . . . . 4

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . 21

PART II. Other Information

Item 3. Defaults upon Senior Securities . . . . . . . . . . 26

Item 5. Other Information . . . . . . . . . . . . . . . . . 26

Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 27

Signature . . . . . . . . . . . . . . . . . . . . . . . . . 28

Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . 29
<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,
2000 1999
------------- ------------
(Unaudited)
<S> <C> <C>
Investments in and advances to partnerships $ 29,286,913 $ 29,175,280
Investment in partnerships held for sale 2,476,204 2,476,204
Partnership interest held in escrow 928,160 928,160
Cash and cash equivalents 7,675,648 7,607,687
Restricted cash equivalents 50,400 50,400
Acquisition fees, principally paid to related parties, net
of accumulated amortization of $378,002 and $371,870, respectively 603,052 609,184
Property purchase costs, net of accumulated amortization
of $354,389 and $348,713, respectively 554,289 559,966
Other assets 61,227 --
------------- -------------

Total assets $ 41,635,893 $ 41,406,881
============= =============

LIABILITIES AND PARTNERS' DEFICIT

Due on investments in partnerships $ 39,410,081 $ 39,367,113
Accrued interest payable 110,709,596 107,616,493
Accounts payable and accrued expenses 88,592 175,592
------------- -------------
Total liabilities 150,208,269 147,159,198
------------- -------------

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 (8,388,540) (8,388,540)
Offering costs (7,562,894) (7,562,894)
Accumulated losses (166,124,442) (163,304,383)
------------- -------------
Total partners' deficit (108,572,376) (105,752,317)
------------- -------------
Total liabilities and partners' deficit $ 41,635,893 $ 41,406,881
============= =============
</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

AND ACCUMULATED LOSSES

(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
March 31,
-------------------------------
2000 1999
------------- -------------
<S> <C> <C>
Share of income from partnerships $ 437,303 $ 530,557
------------- -------------

Other revenue and expenses:

Revenue:
Interest and other income 103,743 120,269
------------- -------------
Expenses:
Interest 3,158,780 4,696,282
Management fee 93,750 93,750
General and administrative 67,102 63,449
Professional fees 29,661 26,597
Amortization of deferred costs 11,812 13,220
------------- -------------
3,361,105 4,893,298
------------- -------------
Total other revenue and expenses (3,257,362) (4,773,029)
------------- -------------
Net loss (2,820,059) (4,242,472)

Accumulated losses, beginning of period (163,304,383) (148,161,376)
------------- -------------

Accumulated losses, end of period $(166,124,442) $(152,403,848)
============= =============

Net loss allocated to General Partners (1.51%) $ (42,583) $ (64,061)
============= =============

Net loss allocated to Initial and Special Limited Partners (1.49%) $ (42,019) $ (63,213)
============= =============

Net loss allocated to Additional Limited Partners (97%) $ (2,735,457) $ (4,115,198)
============= =============

Net loss per unit of Additional Limited
Partner Interest based on 73,500 units $ (37.22) $ (55.99)
============= =============
</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)

For the three months ended
March 31,
-----------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (2,820,059) $ (4,242,472)

Adjustments to reconcile net loss to net cash used in
operating activities:
Share of income from partnerships (437,303) (530,557)
Amortization of discount on purchase money notes 42,968 1,800,321
Amortization of deferred costs 11,812 13,220

Changes in assets and liabilities:
(Increase) decrease in other assets (61,227) 43,853
Increase in accrued interest payable 3,115,812 2,895,961
Payment of purchase money note interest (22,709) (177,542)
Decrease in accounts payable and accrued expenses (87,000) (44,604)
------------ ------------
Net cash used in operating activities (257,706) (241,820)
------------ ------------

Net cash provided by investing activities:
Receipt of distributions from partnerships 325,667 420,620
------------ ------------

Net increase in cash and cash equivalents 67,961 178,800

Cash and cash equivalents, beginning of period 7,607,687 10,765,753
------------ ------------

Cash and cash equivalents, end of period $ 7,675,648 $ 10,944,553
============ ============

Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 22,709 $ 177,542
============ ============

</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

March 31, 2000 and 1999

(Unaudited)

1. BASIS OF PRESENTATION

In the opinion of C.R.I., Inc. (CRI), the Managing General Partner, the
accompanying unaudited financial statements reflect all adjustments, consisting
of normal recurring accruals, necessary for a fair presentation of the financial
position of Capital Realty Investors-IV Limited Partnership (the Partnership) as
of March 31, 2000, and the results of its operations and its cash flows for the
three months ended March 31, 2000 and 1999. The results of operations for the
interim period ended March 31, 2000, are not necessarily indicative of the
results to be expected for the full year.

The accompanying unaudited financial statements have been prepared in
conformity with accounting principles generally accepted in the United States
and with the instructions to Form 10-QSB. Certain information and accounting
policies and footnote disclosures normally included in financial statements
prepared in conformity with accounting principles generally accepted in the
United States have been condensed or omitted pursuant to such instructions.
These condensed financial statements should be read in conjunction with the
financial statements and notes thereto included in the Partnership's annual
report on Form 10-KSB at December 31, 1999.

2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS

a. Due on investments in partnerships
----------------------------------

The Partnership's obligations with respect to its investments in Local
Partnerships, in the form of purchase money notes having an aggregate principal
balance of $39,410,081 plus aggregate accrued interest of $110,709,596 as of
March 31, 2000, are payable in full upon the earliest of: (1) sale or
refinancing of the respective Local Partnership's rental property; (2) payment
in full of the respective Local Partnership's permanent loan; or (3) maturity.
A purchase money note in the principal amounts of $1,370,000 matured on July 27,
1994 but has not been paid or extended. A purchase money note in the principal
amount of $1,330,000 matured on August 31, 1997 and was extended to January 3,
2000, but has not been paid or further extended. Purchase money notes in the
aggregate principal amounts of $2,035,000 and $434,000 matured on July 1, 1999
and July 31, 1999, respectively, and have not been paid or extended. A purchase
money note in the principal amount of $434,000 matured on July 31, 1999, and has
been extended to July 31, 2004. A purchase money note in the principal amount
of $2,301,310 matured on July 31, 1999, and was paid in full on July 30, 1999.
Purchase money notes in the aggregate principal amount of $2,355,000 matured on
August 1, 1999 and have been extended to July 1, 2000. A purchase money note in
the original principal amount of $3,732,081 matured on August 31, 1999, was
partially paid down, and was extended to August 31, 2004. Purchase money notes
in the aggregate principal amount of $10,310,000 matured during August and
September, 1999, and have not been paid or extended. A purchase money note in
the principal amount of $1,400,000 matured on October 1, 1999 and has been
extended to July 1, 2000. Purchase money notes in the aggregate principal
amount of $10,795,000 matured during the fourth quarter of 1999, and have not
been paid or extended. Purchase money notes in the principal amounts of

-4-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000 and 1999

(Unaudited)

2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

$1,500,000 and $1,350,000 were due to mature on September 27, 1999 and October
31, 1999, respectively, and were extended to September 27, 2002 and April 30,
2001, respectively. The remaining two purchase money notes mature in April 2000
($2,165,000) and October 2025 ($500,000).

The purchase money notes, which are nonrecourse to the Partnership, 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 respective Local Partnership. The Partnership's inability to pay certain of
the purchase money note principal and accrued interest balances when due, and
the resulting uncertainty regarding the Partnership's continued ownership
interest in the related Local Partnerships, does not adversely impact the
Partnership's financial condition because the purchase money notes are
nonrecourse and secured solely by the Partnership's interest in the related
Local Partnerships. Therefore, should the investment in any of the Local
Partnerships with maturing purchase money notes not produce sufficient value to
satisfy the related purchase money notes, the Partnership's exposure to loss is
limited because the amount of the nonrecourse indebtedness of each of the
maturing purchase money notes exceeds the carrying amount of the investment in,
and advances to, each of the related Local Partnerships. Thus, even a complete
loss of the Partnership's interest in one of these Local Partnerships would not
have a material adverse impact on the financial condition of the Partnership.
See further discussion of certain purchase money notes, below.

The following chart presents information related to purchase money notes
which have matured, have been extended to mature, or are scheduled to mature
through March 31, 2001, and which remain unpaid or unextended as of May 12,
2000. Excluded from the following chart are purchase money notes which matured
through March 31, 2000, and which have been paid off, cancelled, or extended on
or before May 12, 2000.

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<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000 and 1999

(Unaudited)

2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

Carrying Amount
Aggregate of Partnership's
Aggregate Accrued Investment in
Number of Principal Interest and Advances to
Purchase Underlying Balance Balance Underlying Local
Money Note Local Percentage as of March Percentage as of March Percentage Partnerships as Percentage
(PMN) Maturity Partnerships of Total 31, 2000 of Total 31, 2000 of Total March 31, 2000 of Total
- ---------------- ------------ ---------- ----------- ---------- ------------ ---------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3rd Quarter 1994 1 3% $ 1,370,000 3% $ 6,627,623 6% $ 1,570,829 5%
3rd Quarter 1999 11 31% 12,779,000 32% 29,673,596 27% 12,017,519 37%
4th Quarter 1999 8 23% 10,795,000 27% 28,387,229 26% 5,961,658 18%
1st Quarter 2000 1 3% 1,330,000 3% 3,680,466 3% 898,095 3%
2nd Quarter 2000 1 3% 2,165,000 6% 12,325,541 11% 2,560,344 8%
3rd Quarter 2000 3 8% 3,755,000 10% 10,065,617 9% 4,626,905 14%
---- ----- ----------- ----- ------------ ----- ----------- -----
Total through
12/31/2000 25 71% $32,194,000 81% $ 90,760,072 82% $27,635,350 85%
==== ===== =========== ===== ============ ===== =========== =====

Total, Local
Partnerships 35 100% $39,410,081 100% $110,709,596 100% $32,548,362 (1) 100%
==== ===== =========== ===== ============ ===== =========== =====

</TABLE>

(1) Includes $2,381,700 for two partnerships reported as investment in
partnerships held for sale on the consolidated balance sheet at March 31,
2000, and $879,749 for one partnership reported as partnership interest
held in escrow on the consolidated balance sheet at March 31, 2000.

The Managing General Partner is continuing to investigate possible
alternatives to reduce the Partnership's debt obligations. These alternatives
include, among others, retaining the cash available for distribution to meet the
purchase money note requirements, paying off certain purchase money notes at a
discounted price, extending the due dates of certain purchase money notes,
refinancing the respective properties' underlying debt, or selling the
underlying real estate and using the Partnership's share of the proceeds to pay
or buy down certain purchase money note obligations. Although the Managing
General Partner has had some success applying these strategies in the past, the
Managing General Partner cannot assure that these strategies will be successful
in the future. Based on preliminary discussions with the holders of purchase
money notes maturing through March 31, 2001, the Managing General Partner
anticipates that, at least in some instances, the noteholders may not be willing
to negotiate any extension or discounted payoff. In such instances, upon
maturity of the purchase money notes, if the purchase money notes remain unpaid,
the noteholders may have the right to foreclose on the Partnership's interest in
the related Local Partnerships. In the event of a foreclosure, the excess of
the nonrecourse indebtedness over the carrying amount of the Partnership's
investment in the related Local Partnership would be deemed cancellation of

-6-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000 and 1999

(Unaudited)

2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

indebtedness income, which would be taxable to Limited Partners at a federal tax
rate of up to 39.6%. Additionally, in the event of a foreclosure, the
Partnership would lose its investment in the Local Partnership and, likewise,
its share of any future cash flow distributed by the Local Partnership from
rental operations, mortgage debt refinancings, or the sale of the real estate.
Of the 35 Local Partnerships in which the Partnership is invested as of March
31, 2000, the 25 Local Partnerships with associated purchase money notes which
mature through March 31, 2001 and which remain unpaid or unextended as of May
12, 2000, represent the following percentages of the Partnership's total
distributions received from Local Partnerships and share of income from Local
Partnerships for the previous two calendar years.

Percentage of Total Partnership's Share of
Distributions Received Income from
For the Years Ending from Local Partnerships Local Partnerships
-------------------- ----------------------- ----------------------
<S> <C> <C>
December 31, 1999 74% $995,085
December 31, 1998 85% $879,537

</TABLE>

Interest expense on the Partnership's purchase money notes for the three
months ended March 31, 2000 and 1999 was $3,158,780 and $4,696,282,
respectively. Amortization of discount on purchase money notes increased
interest expense during the three months ended March 31, 2000 and 1999 by
$42,968 and $1,800,321, respectively. The accrued interest on the purchase
money notes of $110,709,596 and $107,616,493 as of March 31, 2000 and December
31, 1999, respectively, is due on the respective maturity dates of the purchase
money notes or earlier, in some instances, if (and to the extent of a portion
thereof) the related Local Partnership has distributable net cash flow, as
defined in the relevant Local Partnership agreement.

Cannonsburg House, Char House, and Liberty Tower
------------------------------------------------

The Partnership defaulted on its six purchase money notes related to
Cannonsburg Housing Associates Limited Partnership (Cannonsburg House), Char
House Highrise Association Limited Partnership (Char House), and Liberty Tower
Associates Limited Partnership (Liberty Tower) on December 1, 1999 when the
notes matured and were not paid. The default amount included aggregate
principal and accrued interest of $4,510,000 and $12,951,810, respectively. As
of May 12, 2000, aggregate principal and accrued interest of $4,510,000 and
$13,720,985, respectively, were due. Pursuant to the terms of the notes, the
Partnership had 120 days to cure the default, which period commenced on December
1, 1999. The Partnership continues to negotiate to extend the maturity date of
the purchase money notes for up to five years. There is no assurance that an
extension will be obtained.

-7-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000 and 1999

(Unaudited)

2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

Cedar Point
-----------

The Partnership defaulted on its purchase money note related to Southwest
Development Company (Cedar Point) on August 30, 1999 when the note matured and
was not paid. The default amount included principal and accrued interest of
$1,320,000 and $2,460,115, respectively. As of May 12, 2000, principal and
accrued interest of $1,320,000 and $2,586,886, respectively, were due. The
Partnership is currently negotiating to extend the maturity date of the purchase
money note for five years. There is no assurance that an extension will be
obtained.

Chippewa County
---------------

The Partnership defaulted on its purchase money note related to Chippewa
County Housing Partners (Chippewa County) on August 1, 1999 when the note
matured and was not paid. The default amount included principal and accrued
interest of $860,000 and $2,297,462, respectively. In March 2000, in exchange
for a non-refundable deposit, the noteholders agreed to forbear from exercising
their remedies until July 1, 2000, at which time they have agreed to accept a
discounted payoff. Upon payment by the Partnership of an additional deposit by
July 1, 2000, the noteholders shall continue the forbearance until January 4,
2001. The noteholders have agreed to accept a discounted payoff of the note
provided that such payment is made during the agreed period of forbearance. The
deposit which was paid on February 15, 2000, to an escrow agent, to be
subsequently released to the noteholders, shall be applied to the note balance.
There is no assurance that the Partnership will be able to timely pay the
additional deposit or the agreed upon discounted payoff on the note and thus
retain its interest in Chippewa County.

Cottonwood Park
---------------

The Partnership defaulted on its purchase money note related to Shawnee
Heights Limited Partnership (Cottonwood Park) on August 1, 1999 when the note
matured and was not paid. The default amount included principal and accrued
interest of $975,000 and $2,576,421, respectively. As of May 12, 2000,
principal and accrued interest of $975,000 and $2,830,028, respectively, were
due. The Partnership is currently negotiating a five year extension of the
maturity date of the purchase money note, while also pursuing a possible sale of
the property. There is no assurance that an extension or sale will occur.

Crescent Gardens
----------------

The Partnership defaulted on its two purchase money notes related to
Crescent Gardens Associates Limited Partnership (Crescent Gardens) on July 31,
1999 when the notes matured and were not paid. The default amount included
aggregate principal and accrued interest of $868,000 and $2,033,388,
respectively. As of May 12, 2000, aggregate principal and accrued interest of
$434,000 and $1,920,000, respectively, were due on the Second Crescent Note
(hereinafter defined.) The Partnership successfully negotiated an agreement to

-8-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000 and 1999

(Unaudited)

2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

extend the maturity date of one of the purchase money notes (First Crescent
Note) in the principal amount of $434,000, effective October 15, 1999. Pursuant
to the extension agreement, the Partnership made a payment to the noteholder, to
be applied against accrued but unpaid interest. The agreement extends the
maturity date to July 31, 2004, requires semi-annual interest payments and
reduces the interest rate of the First Crescent Note. The Partnership has not
been contacted by the holders of the other note (the Second Crescent Note) and
thus cannot predict the course of action with regard to the Second Crescent
Note.

De Angelis Manor
----------------

The Partnership defaulted on its purchase money note related to Natick
Associates (De Angelis Manor) on July 1, 1999 when the note matured and was not
paid. The default amount included principal and accrued interest of $1,015,000
and $2,670,689, respectively. As of May 12, 2000, principal and accrued
interest of $1,015,000 and $2,962,978, respectively, were due. The Partnership
is currently negotiating to extend the maturity date of the purchase money note,
or to pay it off at a discount. Currently, the local non-profit general partner
is preparing an offer to purchase the property. There is no assurance that an
extension or a discounted payoff of the purchase money note will be obtained, or
that a sale of the property will occur.

Glenridge Gardens
-----------------

The Partnership defaulted on its purchase money note related to Glenridge
Development Company (Glenridge Gardens) on August 1, 1999 when the note matured
and was not paid. The default amount included principal and accrued interest of
$740,000 and $1,928,809, respectively. As of May 12, 2000, principal and
accrued interest of $740,000 and $2,119,390, respectively, were due. The
Partnership and noteholder have agreed in principle to extend the maturity date
of the purchase money note to January, 2001. There is no assurance that an
extension will be obtained.

Harborview Apartments
---------------------

The Partnership defaulted on its purchase money notes related to Harborview
Apartments Associates Limited Partnership (Harborview Apartments) on August 1,
1999 when the notes matured and were not paid. The default amount included
principal and accrued interest of $3,000,000 and $5,342,321, respectively. As
of May 12, 2000, principal and accrued interest of $3,000,000 and $5,662,599,
respectively, were due. The Partnership is currently negotiating an extension
of the maturity date or a discounted payoff of the purchase money notes. There
is no assurance that an extension or a discounted payoff will occur.

Highland Village
----------------

The Partnership defaulted on its purchase money notes related to Highland
Village Associates (Highland Village) on October 31, 1999 when the notes matured

-9-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000 and 1999

(Unaudited)

2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

and were not paid. The default amount included principal and accrued interest
of $1,100,000 and $4,123,565, respectively. As of May 12, 2000, principal and
accrued interest of $1,100,000 and $4,423,849, respectively, were due. The
Partnership is currently negotiating to extend the maturity date of the purchase
money notes for five years. In connection with the proposed extension of the
maturity date, the Managing General Partner, the local managing general partner
and the noteholders are jointly exploring various options to refinance the
Massachusetts Housing Finance Agency (MHFA) and HUD Section 236 interest rate
subsidized mortgage loan related to this property. There is no assurance that
an extension will be obtained, or that a refinancing of the mortgage loan will
occur.

Holiday Village
---------------

The Partnership defaulted on its purchase money note related to Holiday
Village Apartments (Holiday Village) 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 May 12, 2000, principal and
accrued interest of $1,370,000 and $6,734,564, respectively, were due. The
Managing General Partner and the noteholder have reached an agreement on a
discounted payoff of the note in connection with, and contingent upon, a
potential sale of the property agreed to by the Local Partnership and an
unrelated third party. The sale is anticipated to close in June 2000. There is
no assurance that the sale will be completed, and therefore, that the payoff of
the note at a discount will occur. Should the noteholder begin foreclosure
proceedings on the Partnership's interest in the related Local Partnership, the
Partnership intends to vigorously defend against 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 adversely impact the Partnership's financial condition, as discussed above.

Due to the impending and likely sale of the property related to the
Partnership's investment in Holiday Village, the Partnership's basis in the
Local Partnership, along with net unamortized acquisition fees and property
purchase costs, which totaled $1,562,844 as of December 31, 1999, has been
reclassified to investment in partnerships held for sale in the accompanying
consolidated balance sheets at March 31, 2000 and December 31, 1999.

Hometown Village
----------------

The Partnership defaulted on its purchase money note related to Hometown
Villages Limited Partnership (Hometown Village) on August 1, 1999 when the note
matured and was not paid. The default amount included principal and accrued
interest of $1,495,000 and $5,010,398, respectively. In March 2000, in exchange
for a non-refundable deposit, the noteholders agreed to forbear from exercising
their remedies until July 1, 2000, at which time they have agreed to accept a
discounted payoff. Upon payment by the Partnership of an additional deposit by
July 1, 2000, the noteholders shall continue the forbearance until January 4,
2001. The noteholders have agreed to accept a discounted payoff of the note
provided that such payment is made during the agreed period of forbearance. The

-10-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000 and 1999

(Unaudited)

2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

deposit which was paid on February 15, 2000, to an escrow agent, to be
subsequently released to the noteholders, shall be applied to the note balance.
There is no assurance that the Partnership will be able to timely pay the
additional deposit or the agreed upon discounted payoff on the note and thus
retain its interest in Hometown Village.

Jewish Federation
-----------------

The purchase money note related to Jewish Federation Apartments Associates
(Jewish Federation), in the principal amount of $1,350,000, was due to mature on
October 31, 1999. In 1997, the Managing General Partner entered into an
agreement with the noteholder to extend the maturity date for five years,
subject to the donation and transfer by the Local Partnership of an unimproved
portion of the property to an entity affiliated with the local managing general
partner and the noteholder. The Local Partnership had entered into an agreement
to make such donation and transfer, but the transaction was denied by HUD in
January 1998. In April 1998, the local managing general partner indicated that
it had received verbal approval from HUD and intended to reapply for financing
with HUD. There is no assurance that such financing will be obtained. On May
21, 1999, the noteholder extended the maturity date of the purchase money note
to April 30, 2000, to allow time for the donation and transfer to occur. On
April 24, 2000, the noteholder further extended the maturity date to April 30,
2001. There is no assurance that any further extensions will be obtained.

Matthew XXV
-----------

The Partnership defaulted on its purchase money note related to Diakonia
Associates (Matthew XXV) on July 1, 1999 when the note matured and was not paid.
The default amount included principal and accrued interest of $1,020,000 and
$2,695,752, respectively. As of May 12, 2000, principal and accrued interest of
$1,020,000 and $2,989,973, respectively, were due. The Partnership is currently
negotiating to extend the maturity date or to pay off the purchase money note at
a discount. Currently, the local non-profit general partner is preparing an
offer to purchase the property. There is no assurance that an extension or a
discounted payoff of the purchase money note will be obtained, or that a sale of
the property will occur.

Pilgrim Tower East
------------------

The Partnership defaulted on its purchase money note related to Pilgrim
Tower East Associates Limited Partnership (Pilgrim Tower East) on December 1,
1999, when the note matured and was not paid. The default amount included
principal and accrued interest of $1,650,000 and $2,719,372, respectively. As
of May 12, 2000, principal and accrued interest of $1,650,000 and $2,817,089,
respectively, were due. The Partnership is currently negotiating with the
noteholder to extend the maturity date of the purchase money note for five
years, in exchange for a partial payment. There is no assurance that an
extension will be obtained.

-11-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000 and 1999

(Unaudited)

2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

Pilgrim Tower North
-------------------

The Partnership defaulted on its purchase money note related to Pilgrim
Tower North Associates Limited Partnership (Pilgrim Tower North) on April 30,
2000 when the note matured and was not paid. The default amount included
principal and accrued interest of $2,165,000 and $12,480,569, respectively. As
of May 12, 2000 principal and accrued interest of $2,165,000 and $12,542,580,
respectively, were due. The Partnership is currently negotiating to extend the
maturity date of the purchase money note for five years, in exchange for a
partial payment. There is no assurance that an extension will be obtained.

Redden Gardens
--------------

The Partnership defaulted on its purchase money note related to Redden
Development Company (Redden Gardens) on August 31, 1997 when the note matured
and was not paid. The default amount included principal and accrued interest of
$1,330,000 and $2,783,593, respectively. The noteholders extended the maturity
date of the purchase money note to January 3, 2000, at which time the
Partnership again defaulted on the purchase money note. As of May 12, 2000,
principal and accrued interest of $1,330,000 and $3,731,081, respectively, were
due. In connection with the extension, the Partnership placed in escrow
documents transferring its interest in Redden Gardens to the noteholders, to be
released to the noteholders upon a future default by the Partnership on the
purchase money note. As of May 12, 2000, the noteholders had not exercised their
right to have the escrowed documents released to them. The uncertainty about
the continued ownership of the Partnership's interest in the related Local
Partnership does not adversely impact the Partnership's financial condition, as
discussed above.

Due to the possible transfer of the Partnership's interest in the Local
Partnership to the noteholders, the Partnership's basis in the Local
Partnership, along with net unamortized acquisition fees and property purchase
costs, which totaled $928,160 as of December 31, 1999, has been reclassified to
partnership interest held in escrow in the accompanying consolidated balance
sheets at March 31, 2000 and December 31, 1999.

Riverview Manor
---------------

The Partnership defaulted on its purchase money notes related to Riverview
Manor Company Limited Partnership (Riverview Manor) on September 30, 1999 when
the notes matured and were not paid. The default amount included principal and
accrued interest of $740,000 and $1,853,014, respectively. As of May 12, 2000,
principal and accrued interest of $740,000 and $1,939,071, respectively, were
due. The Partnership is currently negotiating with the noteholders to extend
the maturity date of the purchase money notes for up to five years. There is no
assurance that an extension will be obtained.

-12-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000 and 1999

(Unaudited)

2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

Scoville Center
---------------

The Partnership defaulted on its purchase money notes related to Beloit
Housing Partners (Scoville Center) on October 1, 1999 when the notes matured and
were not paid. The default amount included principal and accrued interest of
$1,400,000 and $2,123,397, respectively. In March 2000, in exchange for a non-
refundable deposit, the noteholders agreed to forbear from exercising their
remedies until July 1, 2000, at which time they have agreed to accept a
discounted payoff. Upon payment by the Partnership of an additional deposit by
July 1, 2000, the noteholders shall continue the forbearance until January 4,
2001. The noteholders have agreed to accept a discounted payoff of the note
provided that such payment is made during the agreed period of forbearance. The
deposit which was paid on February 15, 2000, to an escrow agent, to be
subsequently released to the noteholders, shall be applied to the note balance.
There is no assurance that the Partnership will be able to timely pay the
additional deposit or the agreed upon discounted payoff on the note and thus
retain its interest in Scoville Center.

Thornwood House
---------------

The Partnership defaulted on its purchase money notes related to Thornwood
House Associates (Thornwood House) on August 30, 1999 when the notes matured and
were not paid. The default amount included principal and accrued interest of
$1,775,000 and $3,218,691, respectively. As of May 12, 2000, principal and
accrued interest of $1,775,000 and $3,387,523, respectively, were due. The
Partnership is currently negotiating to extend the maturity date of the purchase
money notes for five years. There is no assurance that an extension will be
obtained.

Tradewinds Terrace
------------------

The Partnership defaulted on its purchase money note related to Tradewinds
West LDHA Limited Partnership (Tradewinds Terrace) on December 3, 1999, when the
note matured and was not paid. The default amount included principal and
accrued interest of $925,000 and $1,228,429, respectively. As of May 12, 2000,
principal and accrued interest of $925,000 and $1,265,067, respectively, were
due. The Partnership is negotiating with the noteholder to extend the maturity
date of the purchase money note. There is no assurance that an extension will
be obtained.

Valley View
-----------

The Partnership defaulted on its purchase money notes related to Valley
View Associates (Valley View) on September 1, 1999 when the notes matured and
were not paid. The default amount included principal and accrued interest of
$920,000 and $1,788,829, respectively. The Partnership has been sued by the
noteholders for payment and for confirmation of the transfer of the collateral
to the noteholders. On January 7, 2000, the Partnership filed a motion to
dismiss the suit. The noteholders subsequently filed an amended complaint

-13-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000 and 1999

(Unaudited)

2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

seeking confirmation of the transfer of the collateral to the noteholders but
not seeking payment. On February 9, 2000, the Partnership filed a motion to
dismiss the amended complaint, which was granted. A further amended complaint
and motion to dismiss have been filed, but no ruling on the latest motion has
been made as of May 12, 2000. As of May 12, 2000, principal and accrued
interest of $920,000 and $1,877,999, respectively, were due. The Partnership
and the noteholders are currently exploring various settlement options. There
is no assurance that any settlement will be reached.

Wellington Woods
----------------

The Partnership defaulted on its purchase money note related to Clarkson
Associates of Wellington Woods Limited Partnership (Wellington Woods) on
December 1, 1999, when the note matured and was not paid. The default amount
included principal and accrued interest of $485,000 and $2,169,679,
respectively. As of May 12, 2000, principal and accrued interest of $485,000
and $2,312,766, respectively, were due. The Partnership is negotiating with the
noteholder to extend the maturity date of the purchase money note for five
years. There is no assurance that an extension will be obtained.

Westport Village
----------------

The Partnership defaulted on its purchase money notes related to Westport
Associates (Westport Village) on September 1, 1999 when the notes matured and
were not paid. The default amount included principal and accrued interest of
$840,000 and $1,615,644, respectively. The Partnership has been sued by the
noteholders for payment and for confirmation of the transfer of the collateral
to the noteholders. On January 7, 2000, the Partnership filed a motion to
dismiss the suit. The noteholders subsequently filed an amended complaint
seeking confirmation of the transfer of the collateral to the noteholders but
not seeking payment. On February 9, 2000, the partnership filed a motion to
dismiss the amended complaint, which was granted. A further amended complaint
and motion to dismiss have been filed, but no ruling on the latest motion has
been made as of May 12, 2000. As of May 12, 2000, principal and accrued
interest of $840,000 and $1,696,474, respectively, were due. The Partnership
and the noteholders are currently exploring various settlement options. There
is no assurance that any settlement will be reached.

Wollaston Manor
---------------

The Partnership defaulted on its purchase money notes related to Wollaston
Manor Associates (Wollaston Manor) on October 1, 1999 when the notes matured and
were not paid. The default amount included aggregate principal and accrued
interest of $2,125,000 and $4,111,380, respectively. As of May 12, 2000,
principal and accrued interest of $2,125,000 and $4,218,311, respectively, were
due. The Partnership is currently negotiating a discounted payoff of the
purchase money notes in conjunction with a possible sale of the property. A
contract for the sale of the property was signed in January 2000, contingent
upon, among other things, a satisfactory agreement with the noteholders
regarding the purchase money note and the approval of the Partnership. There is

-14-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000 and 1999

(Unaudited)

2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

no assurance that a sale of the property and a settlement with the noteholders
will occur.

Due to the impending and likely sale of the property related to the
Partnership's investment in Wollaston Manor, the Partnership's basis in the
Local Partnership, along with net unamortized acquisition fees and property
purchase costs, which totaled $913,360 as of December 31, 1999, has been
reclassified to investment in partnerships held for sale in the accompanying
consolidated balance sheets at March 31, 2000 and December 31, 1999.

b. Advances to Local Partnerships
------------------------------

The advances made to the Local Partnerships were as follows.

March 31, December 31,
Local Partnership 2000 1999
----------------- ------------ ------------
<S> <C> <C>
Lakes of Northdale:
Principal amount of funds advanced $ 54,500 $ 54,500
------------ ------------
Total $ 54,500 $ 54,500
============ ============
</TABLE>

Lakes of Northdale
------------------

To cover operating deficits incurred in prior years by Lakes of Northdale,
the Partnership advanced funds totaling $54,500 as of both March 31, 2000 and
December 31, 1999. No advances have been made to Lakes of Northdale since
September 1989. These non-interest bearing advances are payable from cash flow
of Lakes of Northdale after payment of first mortgage debt service and after
satisfaction by the Partnership of certain other interest obligations on the
purchase money notes relating to the Local Partnership. For financial reporting
purposes, these advances have been reduced to zero by the Partnership as a
result of losses at the Local Partnership level during prior years.

c. Property matters
----------------
Garden Court
------------

On December 31, 1998, the local managing general partner of Garden Court
Associates Limited Partnership (Garden Court) sold the property. The net
proceeds to the Partnership of $50,000 were received on March 2, 1999.

-15-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000 and 1999

(Unaudited)

2. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

d. Summarized financial information
--------------------------------

Combined statements of operations for the 35 Local Partnerships in which
the Partnership is invested as of both March 31, 2000 and 1999, follow. The
combined statements have been compiled from information supplied by the
management agents of the projects and are unaudited.

COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>

For the three months ended
March 31,
-----------------------------
2000 1999
------------ ------------
<S> <C> <C>
Revenue:
Rental $ 8,698,976 $ 8,474,682
Other, principally interest 586,778 593,449
------------ ------------
Total revenue 9,285,754 9,068,131
------------ ------------
Expenses:
Operating and other 5,727,874 5,476,715
Interest 1,398,023 1,456,535
Depreciation and amortization 1,847,338 1,816,625
------------ ------------
Total expenses 8,973,235 8,749,875
------------ ------------
Net income $ 312,519 $ 318,256
============ ============

</TABLE>

As of March 31, 2000 and 1999, the Partnership's share of cumulative losses
of six and nine of the 35 Local Partnerships exceeded the amount of the
Partnership's investments in and advances to those Local Partnerships by
$12,698,573 and $12,375,619, 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. AFFORDABLE HOUSING LEGISLATION

-16-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000 and 1999

(Unaudited)

3. AFFORDABLE HOUSING LEGISLATION - Continued

renewed for one year. Expiring Section 8 HAP contracts with rents that exceed
100% of fair market rents could be renewed for one year, but at rents reduced to
100% of fair market rents (Mark-to-Market). All expiring Section 8 HAP
contracts with rents exceeding comparable market rents, and properties with
mortgage loans insured by the Federal Housing Administration (FHA), became
subject to the Mark-to-Market legislation.

Mark-to-Market implementation will reduce rental income at properties which
are currently subsidized at higher-than-market rental rates, and will therefore
lower cash flow available to meet mortgage payments and operating expenses.
Each affected property may undergo debt restructuring according to terms
determined by an individual property and operations evaluation. This may
involve reducing the first mortgage loan balance to an amount supportable by the
property, taking into account the property's operating expenses and reduced
income. The balance of the amount written down from the first mortgage loan
will be converted to a non-performing but accruing (soft) second mortgage loan.

Seven properties in which the Partnership is invested may be affected by
the Mark-to-Market program since they have Section 8 HAP contracts which have
already expired, or which will expire in 2000. Of these seven properties, rent
studies for five properties indicate that the current HAP rents are below fair
market rents, and therefore these properties should not be subject to a Mark-to-
Market restructuring. A rent study is being performed for the sixth property.
The seventh property did not renew its Section 8 HAP contract when it expired in
June 1999. Properties with expiring HAP contract rents greater than 100% of
fair market rents in the area where each property is located may be affected
immediately by the legislation. All seven properties have related purchase
money notes which have matured, as discussed in Note 2.a. These seven
properties with expired or expiring Section 8 HAP contracts are as follows.

-17-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000 and 1999

(Unaudited)

3. AFFORDABLE HOUSING LEGISLATION - Continued

Units Original Renewed
Authorized for Expiration of Expiration of
Number of Rental Assistance Section 8 Section 8
Property Rental Units Under Section 8 HAP Contract HAP Contract
-------- ------------ ----------------- ------------- -------------
<S> <C> <C> <C> <C>
Cottonwood Park 126 6 06/30/98 12/31/99 (1)
Glenridge Gardens 120 24 05/31/99 05/01/00 (2)
Harborview 300 299 06/01/00 (2)
Pilgrim Tower North 258 205 10/31/98 02/29/04
Redden Gardens 150 30 09/30/98 09/01/00 (2)
Tradewinds Terrace 122 44 09/30/98 09/30/00 (2)
Wellington Woods 109 73 10/19/99 10/19/00 (2)
---- ---
Total 1185 681
==== ===

</TABLE>

(1) The Section 8 HAP contract was not renewed at the election of the
Managing General Partner.

(2) The Managing General Partner expects that these Section 8 HAP
Contracts will be renewed for one year upon expiration.

With the uncertainty of continued project-based Section 8 subsidies for
properties with expiring HAP contracts, there is no assurance that these rental
properties will be able to maintain the rental income and occupancy levels
necessary to pay operating costs and debt service. As a result, it is not
possible to predict the impact on the Local Partnerships' operations and the
resulting impact on the Partnership's investments in and advances to Local
Partnerships at this time. As of March 31, 2000, the carrying amount of the
Partnership's investments in and advances to Local Partnerships with Section 8
HAP contracts expiring in 2000 was $6,536,103.

There is a new HUD-sponsored program generally referred to as "Mark-up-to-
Market." Under this program, properties with expiring Section 8 contracts that
are located in high-rent areas as defined by HUD are eligible for rent increases
which would be necessary to bring Section 8 rents in line with market rate
rents. For properties which enter the program and which have subsidized FHA
loans, the rents are adjusted to take into account the benefits the property is
already receiving from the below-market interest rate by means of a HUD
determined Interest Subsidy Adjustment Factor. The purpose of this program is
to incentivize owners of properties with expiring Section 8 contracts not to
convert these properties to market rate housing.

In return for receiving market rate rents under Mark-up-to-Market, the
property owner must enter into a five year conditional Section 8 contract with
HUD, subject to the annual availability of funding by Congress. In addition,
property owners who enter into the Mark-up-to-Market program will receive a

-18-
<PAGE>
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2000 and 1999

(Unaudited)

3. AFFORDABLE HOUSING LEGISLATION - Continued

waiver from the cash flow restriction imposed on the property by the limited
dividend limitation.

4. 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. The Partnership paid $70,542 and $38,368 for the
three months ended March 31, 2000 and 1999, respectively, as direct
reimbursement of expenses incurred on behalf of the Partnership. Such expenses
are included in the accompanying consolidated statements of operations as
general and administrative expenses.

In accordance with the terms of the Partnership Agreement, the Partnership
is obligated to pay the Managing General Partner an annual incentive management
fee (the Management Fee) after all other expenses of the Partnership are paid.
The Partnership paid the Managing General Partner a Management Fee of $93,750
for each of the three month periods ended March 31, 2000 and 1999.

The Managing General Partner and/or its affiliates may receive a fee of not
more than 2% of the sales price of an investment in a Local Partnership or the
property it owns, payable under certain conditions upon the sale of an
investment in a Local Partnership or the property it owns. The payment of the
fee is subject to certain restrictions, including the achievement of a certain
level of sales proceeds and making certain minimum distributions to limited
partners. No such fees were earned by the Managing General Partner or its
affiliates for the three months ended March 31, 2000 or 1999.

-19-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------

Capital Realty Investors-IV Limited Partnership's (the Partnership)
Management's Discussion and Analysis of Financial Condition and Results of
Operations section contains information that may be considered forward looking,
including statements regarding the effect of governmental regulations. Actual
results may differ materially from those described in the forward looking
statements and will be affected by a variety of factors including national and
local economic conditions, the general level of interest rates, governmental
regulations affecting the Partnership and interpretations of those regulations,
the competitive environment in which the Partnership operates, and the
availability of working capital.

General
-------

Some of the rental properties owned by the Local Partnerships are financed
by state housing agencies. The Managing General Partner has sold or refinanced,
and will continue to sell or refinance, certain properties pursuant to programs
developed by these agencies. These programs may include opportunities to sell a
property to a qualifying purchaser who would agree to maintain the property as
low to moderate income housing in perpetuity, or to refinance a property, or to
obtain supplemental financing. The Managing General Partner continues to
monitor certain state housing agency programs, and/or programs provided by
certain lenders, to ascertain whether the properties would qualify within the
parameters of a given program and whether these 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 project-based Section 8 Rental Housing Assistance Payments
(HAP) provided by the U.S. Department of Housing and Urban Development (HUD)
pursuant to Section 8 HAP contracts. Current legislation allows all expired
Section 8 HAP contracts with rents at less than 100% of fair market rents to be
renewed for one year. Expiring Section 8 HAP contracts with rents that exceed
100% of fair market rents could be renewed for one year, but at rents reduced to
100% of fair market rents (Mark-to-Market). All expiring Section 8 HAP
contracts with rents exceeding comparable market rents, and properties with
mortgage loans insured by the Federal Housing Administration (FHA), became
subject to the Mark-to-Market legislation.

-20-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS - Continued
-----------------------------------

fair market rents in the area where each property is located may be affected
immediately by the legislation. All seven properties have related purchase
money notes which have matured, as discussed in the notes to the consolidated
financial statements.

In many instances, the Mark-to-Market rental rate restructuring may require
the write down of an FHA-insured mortgage loan, which would trigger cancellation
of indebtedness income to the partners, a taxable event, even though no actual
cash is received. Additionally, if the existing first mortgage loan is
bifurcated into a first and second mortgage loan, the newly created second
mortgage loan will accrue interest at a below-market rate; however, the Internal
Revenue Service issued a ruling in July 1998 that concluded that the below-
market rate of interest will not generate additional ordinary income. Each
property subject to Mark-to-Market will be affected in a different manner, and
it is very difficult to predict the exact form of restructuring, or potential
tax liabilities to the limited partners, at this time.

The Managing General Partner is considering new strategies to deal with the
ever changing environment of affordable housing policy. The Section 236 and
Section 221(d)(3) mortgage loans may be eligible for pre-payment in their 18th
year or later. Properties with expiring Section 8 HAP contracts may become
convertible to market-rate apartment properties. Currently there are few
lenders that will provide financing either to prepay existing mortgage loans of
these types or provide additional funds to allow a property to convert to
market-rate units. Where opportunities exist, the Managing General Partner will
continue to work with the Local Partnerships to develop strategies that make
economic sense for all parties involved.

Financial Condition/Liquidity
-----------------------------

The Partnership's liquidity, with unrestricted cash resources of $7,675,648
as of March 31, 2000, along with anticipated future cash distributions from the
Local Partnerships, is expected to be adequate to meet its current and
anticipated operating cash needs. As of May 12, 2000, $50,400 of cash resources
were restricted for future interest payments on one of the purchase money notes.
As of May 12, 2000, there were no material commitments for capital expenditures.

-21-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS - Continued
-----------------------------------

-22-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS - Continued
-----------------------------------

-23-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS - Continued
-----------------------------------

Total, Local
Partnerships 35 100% $39,410,081 100% $110,709,596 100% $32,548,362 (1) 100%
==== ===== =========== ===== ============ ===== =========== =====

</TABLE>

-24-
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS - Continued
-----------------------------------

its share of any future cash flow distributed by the Local Partnership from
rental operations, mortgage debt refinancings, or the sale of the real estate.
Of the 35 Local Partnerships in which the Partnership is invested as of March
31, 2000, the 25 Local Partnerships with associated purchase money notes which
mature through March 31, 2001 and which remain unpaid or unextended as of May
12, 2000, represent the following percentages of the Partnership's total
distributions received from Local Partnerships and share of income from Local
Partnerships for the previous two calendar years.

</TABLE>

The Partnership closely monitors its cash flow and liquidity position in an
effort to ensure that sufficient cash is available for operating requirements.
For the three months ended March 31, 2000 and 1999, the receipt of distributions
from Local Partnerships was adequate to support operating cash requirements.
Cash and cash equivalents increased during the three months ended March 31,
2000, as the receipt of distributions from partnerships was in excess of net
cash used in operating activities.

Results of Operations
---------------------

The Partnership's net loss for the three month period March 31, 2000
decreased from the corresponding period in 1999 primarily due to a decrease in
interest expense related to a decrease in amortization of discount on purchase
money notes. Offsetting the decrease in the Partnership's net loss were a
decrease in share of income from partnerships generally due to increased
operating expenses at six properties partially offset by an increase in
operating income at four properties, and a decrease in interest income due to
lower cash and cash equivalent balances.

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 that 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, 2000 did not include losses of $177,741, compared to excluded losses of
$217,943 for the three months ended March 31, 1999.

No other significant changes in the Partnership's operations have taken
place during this period.

-25-
<PAGE>
PART II. OTHER INFORMATION
-----------------
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------

See Note 2.a. of the notes to consolidated financial statements contained
in Part I, Item 1, hereof, for information concerning the Partnership's defaults
on purchase money notes.

ITEM 5. OTHER INFORMATION
-----------------

The Managing General Partner has reason to believe that in April 2000,
Peachtree Partners (Peachtree) initiated an unregistered tender offer to
purchase up to 4.9% of the outstanding units of additional limited partnership
interest (Units) in the Partnership at a price of $40 per Unit. Peachtree is
unaffiliated with the Managing General Partner. The price offered was
determined solely at the discretion of Peachtree and does not necessarily
represent the fair market value of each Unit. There is no established market
for the purchase and sale of Units in the Partnership, although various informal
secondary market services exist in addition to the current tender offer by
Peachtree. Due to the limited markets, however, investors may be unable to sell
or otherwise dispose of their Units in the Partnership.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------

a. None

b. No Reports on Form 8-K were filed with the Commission during the
quarter ended March 31, 2000.

All other items are not applicable.

-26-
<PAGE>
SIGNATURE

In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
-----------------------------------------------
(Registrant)

by: C.R.I., Inc.
-------------------------------------------
Managing General Partner

May 12, 2000 by: /s/ Michael J. Tuszka
- ----------------- ---------------------------------------
DATE Michael J. Tuszka
Vice President
and Chief Accounting Officer
(Principal Financial Officer
and Principal Accounting Officer)

-27-
<PAGE>

EXHIBIT INDEX
-------------

Exhibit Method of Filing
- ------- -----------------------------

27 Financial Data Schedule Filed herewith electronically

-28-

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FIRST QUARTER 10-QSB AND IS QUALIFED IN ITS ENTIRETY BY REFERENCE
TO SUCH 10-QSB.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 7,675,648
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 41,635,893
<CURRENT-LIABILITIES> 0
<BONDS> 150,119,677
0
0
<COMMON> 0
<OTHER-SE> (108,572,376)
<TOTAL-LIABILITY-AND-EQUITY> 41,635,893
<SALES> 0
<TOTAL-REVENUES> 541,046
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 202,325
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,158,780
<INCOME-PRETAX> (2,820,059)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,820,059)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,820,059)
<EPS-BASIC> (37.22)
<EPS-DILUTED> (37.22)

</TABLE>