FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-14207
RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
California 33-0016355
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 South El Camino Real, Suite 1100
San Mateo, California 94402
(Address of principal (Zip Code)
executive offices)
(415) 343-9300
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
Total number of units outstanding as of September 30, 1996: 79,846
Page 1 of 17
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Balance Sheets
(in thousands, except units outstanding)
(Unaudited)
September 30, December 31,
1996 1995
<S> <C> <C>
Assets
Real estate investments:
Rental property, net of accumulated depreciation
of $12,658 and $11,800 at September 30, 1996
and December 31, 1995, respectively $39,002 $30,766
Construction in progress 1,018 2,931
Land held for development 8,728 9,088
Land held for sale 1,386 1,632
------- -------
Total real estate investments 50,134 44,417
Cash and cash equivalents 363 1,296
Restricted cash 100 926
Accounts and interest receivable 60 8
Note receivable 405 405
Deferred financing costs and other fees, net of
accumulated amortization of $738 and $674 at
September 30, 1996 and December 31, 1995,
respectively 705 640
Prepaid expenses and other assets 723 590
------- -------
Total assets $52,490 $48,282
======= =======
- continued -
Page 2 of 17
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Balance Sheets - continued
(in thousands, except units outstanding)
(Unaudited)
September 30, December 31,
1996 1995
<S> <C> <C>
Liabilities and Partners' Equity (Deficit)
Liabilities:
Accounts payable and accrued expenses $ 544 $ 356
Interest payable 47 --
Notes payable 17,318 11,757
-------- --------
Total liabilities 17,909 12,113
-------- --------
Commitments and contingent liabilities (see Note 5)
Partners' equity (deficit):
General partners (891) (891)
Limited partners, 79,846 limited
partnership units outstanding at
September 30, 1996 and December 31, 1995 35,472 37,060
-------- --------
Total partners' equity 34,581 36,169
-------- --------
Total liabilities and partners' equity $ 52,490 $ 48,282
======== ========
See accompanying notes to financial statements.
Page 3 of 17
</TABLE>
<PAGE>
RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
Consolidated Statements of Operations
(in thousands, except per unit amounts and units outstanding)
(Unaudited)
Three Months Ended Nine
Months Ended
September 30, July 31, September 30,
July 31,
1996 1995 1996
1995
----------- ---------- ----------
- - --------
<S> <C> <C> <C>
<C>
Revenues:
Rental income $ 1,410 $ 1,398 $ 3,579
$ 4,378
Interest and other income 56 35 110
89
-------- -------- --------
- - --------
Total revenues 1,466 1,433 3,689
4,467
-------- -------- --------
- - --------
Expenses:
Operating, including $61 reimbursed
to Sponsor in 1995 583 667 1,671
1,903
Interest expense 390 209 968
534
Depreciation and amortization 280 422 1,008
1,155
Expenses associated with
undeveloped land, including
$4 reimbursed to Sponsor
in 1995 290 209 692
620
General and administrative expenses,
including $304 to Sponsor in 1995 283 295 938
1,098
-------- -------- --------
- - --------
Total expenses 1,826 1,802 5,277
5,310
-------- -------- --------
- - --------
Net loss $ (360) $ (369) $ (1,588)
$ (843)
======== ======== ========
========
Net loss per limited partnership unit $ (4.51) $ (4.62) $ (19.89)
$ (10.56)
======== ======== ========
========
Weighted average number of limited
partnership units outstanding during
each period used to compute net loss
per limited partnership unit 79,846 79,844 79,846
79,852
======== ======== ========
========
See accompanying notes to financial statements.
Page 4 of 17
</TABLE>
<PAGE>
RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
Consolidated Statements of Partners' Equity (Deficit) (in thousands)
For the nine months ended September 30, 1996 and July 31, 1995
(Unaudited)
General Limited
Partners Partners
Total
---------- -----------
- - -----------
<S> <C> <C>
<C>
Balance at December 31, 1995 $ (891) $ 37,060
$ 36,169
Net loss --- (1,588)
(1,588)
---------- -----------
- - -----------
Balance at September 30, 1996 $ (891) $ 35,472
$ 34,581
========== ===========
===========
Balance at October 31, 1994 $ (891) $ 50,797
$ 49,906
Retirement of limited partnership units --- (12)
(12)
Net loss --- (843)
(843)
---------- -----------
- - -----------
Balance at July 31, 1995 $ (891) $ 49,942
$ 49,051
========== ===========
===========
See accompanying notes to financial statements.
Page 5 of 17
</TABLE>
<PAGE>
RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows (in thousands)
(Unaudited)
Nine months ended
September 30, July 31,
1996 1995
----------- --------
Cash flows from operating activities:
Net loss $(1,588) $ (843)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation and amortization 1,008 1,155
Amortization of loan fees,
included in interest expense 53 28
Changes in certain assets and liabilities:
Accounts and interest receivable (52) 3
Prepaid expenses and other assets (133) 164
Accounts payable and accrued expenses 188 (246)
Interest payable 47 2
Payable to Sponsor -- (8)
Lease commissions paid (57) (4)
------- -------
Net cash provided by (used for) operating activities (534) 251
------- -------
Cash flows from investing activities:
Funds released from restricted cash 826 --
Proceeds from sale of real estate 248 --
Collection on notes receivable -- 720
Additions to real estate and property
development costs (6,823) (1,642)
------- -------
Net cash used for investing activities $(5,749) $ (922)
------- -------
- continued -
Page 6 of 17
<PAGE>
RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows (in thousands) - continued
(Unaudited)
Nine months ended
September 30, July 31,
1996 1995
----------- --------
Cash flows from financing activities:
Net loan proceeds $ 12,136 $ 2,625
Notes payable principal payments (6,575) (139)
Other liabilities -- 13
Retirement of limited partnership units -- (12)
Payment of loan fees (211) (190)
-------- --------
Net cash provided by financing activities 5,350 2,297
-------- --------
Net increase (decrease) in cash and cash equivalents (933) 1,626
Cash and cash equivalents at beginning of period 1,296 1,555
-------- --------
Cash and cash equivalents at end of period $ 363 $ 3,181
======== ========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 864 $ 609
======== ========
Interest capitalized $ -- $ 103
======== ========
See accompanying notes to financial statements.
Page 7 of 17
<PAGE>
RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
September 30, 1996
(Unaudited)
Note 1. THE PARTNERSHIP AND ITS SIGNIFICANT ACCOUNTING POLICIES
In the opinion of Rancon Financial Corporation (RFC) and Daniel Lee Stephenson
(the Sponsors) and Glenborough Inland Realty Corporation, the accompanying
unaudited financial statements contain all adjustments (consisting of only
normal accruals) necessary to present fairly the financial position of Rancon
Realty Fund IV, A California Limited Partnership (the Partnership) as of
September 30, 1996 and December 31, 1995, and the related statements of
operations for the three and nine months ended September 30, 1996 and July 31,
1995, and changes in partners' equity and cash flows for the nine months ended
September 30, 1996 and July 31, 1995.
Effective with the year ending December 31, 1995, the Partnership's reporting
year end changed from October 31 to December 31.
Effective January 1, 1994 the Partnership had contracted with RFC to perform on
the Partnership's behalf, financial, accounting, data processing, marketing,
legal, investor relations, asset and development management and consulting
services. These services are subject to the provisions of the Partnership
Agreement.
In December, 1994, RFC entered into an agreement with Glenborough Inland Realty
Corporation (Glenborough) whereby RFC sold to Glenborough the contract to
perform the rights and responsibilities under RFC's agreement with the
Partnership and other related Partnerships (collectively, the Rancon
Partnerships) to perform or contract on the Partnership's behalf financial,
accounting, data processing, marketing, legal, investor relations, asset and
development management and consulting services for the Partnership for a period
of ten years or until the liquidation of the Partnership, whichever comes first.
Pursuant to the contract, the Partnership will pay Glenborough for its services
as follows: (i) a specified asset administration fee of $993,000 per year, which
is fixed for five years subject to reduction in the year following the sale of
assets; (ii) sales fees of 2% for improved properties and 4% for land; (iii) a
refinancing fee of 1% and (iv) a management fee of 5% of gross rental receipts.
As part of this agreement, Glenborough will perform certain tasks for the
General Partner of the Rancon Partnerships and RFC agreed to cooperate with
Glenborough, should Glenborough attempt to obtain a majority vote of the limited
partners to substitute itself as the General Partner for the Rancon
Partnerships. This agreement became effective January 1, 1995. Glenborough is
not an affiliate of RFC.
As a result of this agreement, RFC terminated several of its employees between
December 31, 1994 and February 28, 1995. Also as a result of this agreement,
certain of the officers of RFC resigned from their positions effective February
28, 1995, June 30, 1995 and July 1, 1995.
Consolidation - In order to satisfy certain lender requirements for the
Partnership's new loan secured by Carnegie Business Center I, Service Retail
Center and Promotional Retail Center (see
Page 8 of 17
<PAGE>
RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
September 30, 1996
(Unaudited)
Note 6), Rancon Realty Fund IV Tri City Limited Partnership, a Delaware limited
partnership ("RRF IV Tri City") was formed in April, 1996. The three properties
securing the loan were contributed to RRF IV Tri City by the Partnership. The
limited partner of RRF IV Tri-City is the Partnership and the general partner is
Rancon Realty Fund IV, Inc., wholly owned by the Partnership.
Since the Partnership indirectly owns 100% of RRF IV Tri City, the financial
statements of RRF IV Tri City have been consolidated with those of the
Partnership.
Reclassification - Certain 1995 balances have been reclassified to conform with
the current period presentation.
Note 2. REFERENCE TO 1995 AUDITED FINANCIAL STATEMENTS
These unaudited financial statements should be read in conjunction with the
Notes to Financial Statements included in the October 31, 1995 audited financial
statements.
Note 3. RELATED PARTY TRANSACTIONS
The Partnership had an agreement with the Sponsor for property management
services through December 31, 1994. The agreement provided for a management fee
equal to 5% of gross rents collected while managing the properties. Fees
incurred under this agreement totaled $54,000 for the two months ended December
31, 1994. Effective January 1, 1995, the Partnership contracted with Glenborough
to provide these services to the Partnership (see Note 1).
The Partnership incurred $4,000 in program management fees to the Sponsor during
the two months ended December 31, 1994. The Sponsor received this fee for its
management and administration of unimproved or non-income producing properties.
As a result of the agreement with Glenborough (see Note 1), effective January 1,
1995, this fee is no longer payable to the Sponsor or to Glenborough.
The Partnership Agreement also provides for the reimbursement of actual costs
incurred by the Sponsor in providing certain administrative, legal and
development services necessary for the prudent operation of the Partnership.
Effective January 1, 1995, such services are being provided by Glenborough as
described in Note 1.
As a result of the agreement between the RFC and Glenborough, RFC terminated
approximately 82 employees who were previously responsible for performing the
administrative, legal and development services to the Partnership. Upon
termination, certain employee costs including severance benefits were allocated
to the various Rancon Partnerships. Such costs allocated to the
Page 9 of 17
<PAGE>
RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
September 30, 1996
(Unaudited)
Partnership aggregated $201,000 and are included in administrative costs for the
nine months ended July 31, 1995.
The remainder of the reimbursable costs incurred by the Partnership totaled
$104,000 for the nine months ended July 31, 1995. In addition to these costs,
$43,000 was capitalized.
Note 4. INVESTMENT IN REAL ESTATE
In the second quarter of 1996, construction was officially completed on the
Inland Regional Center ("IRC") project and the tenant commenced its 13-year
lease. As a result, $8,431,000 of the IRC construction cost was reclassified
from construction in progress to rental property.
During the first and third quarters of 1996, the Partnership received letters of
intent for leases on two single tenant retail buildings to be constructed on
3.19 acres of Tri-City Corporate Center in San Bernardino, California. The
Partnership commenced preliminary site planning on the 3.19 acres in 1996 and
accordingly reclassified $990,000 from land held for development to construction
in progress.
On March 26, 1996, 1.3 acres of land in Temecula, California was sold for
$275,000. The Partnership's net sale proceeds, after reserving $165,000 for
future site improvements, was $84,000. The net proceeds were added to the
Partnership's cash reserves and will be used to complete improvements on the
remaining lots, which are expected to greatly assist marketing efforts for the
property. Since a provision for impairment of investment in real estate was
established in 1995, this sale did not result in a gain or loss on the
transaction.
Note 5. COMMITMENTS AND CONTINGENT LIABILITIES
The Partnership is contingently liable for subordinated real estate commissions
payable to the Sponsor in the amount of $643,000 at September 30, 1996. The
subordinated real estate commissions are payable only after the Limited Partners
have received distributions equal to their original invested capital plus a
cumulative non-compounded return of six percent per annum on their adjusted
invested capital.
The Partnership is also contingently liable for a subordinated note payable in
connection with 12.4 acres of land in Temecula, California, that the Partnership
reacquired in June 1992 through a deed in lieu of foreclosure in satisfaction of
a $2,276,000 note receivable held by the Partnership that had gone into default
during 1991. The subordinated note payable and accrued interest total $489,000
as of September 30, 1996. This amount is payable upon the sale of the property
only after the Partnership receives the full amount of the prior note receivable
with
Page 10 of 17
<PAGE>
RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
September 30, 1996
(Unaudited)
accrued and unpaid interest, costs of development, costs of sale, and other
amounts paid to obtain good title to the property, subject to certain release
provisions.
Note 6. NOTES PAYABLE
On April 19, 1996, the Partnership obtained new permanent financing of
$6,500,000, secured by real estate referred to as Carnegie Business Center I,
Service Retail Center and Promotional Retail Center. After disbursing $5,620,000
for the payoff of the existing Far East National Bank, Chino Valley Bank, and
Imperial Bank loans, $232,000 in loan fees and funding $200,000 in
reserves/escrow, the Partnership netted $448,000 in refinancing proceeds. The
net proceeds were added to the Partnership's cash reserves for future site
improvements.
The new loan is a 10-year fixed rate loan with a 25-year amortization and
matures on May 1, 2006. The loan accrues interest at a rate of 8.744% per annum
with $53,413 of principal and interest payments due monthly, commencing June 1,
1996.
On May 14, 1996, the Partnership obtained a $2,500,000 construction loan from
Citizens Business Bank, secured by the IRC building in order to complete
construction of the building. As of September 30, 1996, the Partnership had
drawn the entire $2,500,000 available and completed construction of the IRC
building.
The loan is a five year fixed rate loan due April 23, 2001, accruing interest at
the rate of 8.75% per annum. Monthly payments of interest only were due for
three months commencing May 23, 1996. Beginning August 23, 1996, payments of
$20,771 in principal and interest are due monthly.
Page 11 of 17
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Conditions and Results
of Operations.
LIQUIDITY AND CAPITAL RESOURCES
As of July, 1987, Rancon Realty Fund IV (the Partnership) was fully funded from
the sale of all limited partnership units in the amount of $72,556,000 (net of
selling and organization expenses). As of September 30, 1996, after the
Partnership has spent $5,499,000 in 1996 on the construction of the Inland
Regional Center building ("IRC building") and $1,324,000 on other additions to
real estate, the Partnership had cash of $363,000 and $50,134,000 in real estate
investments, net of accumulated depreciation.
The Partnership's primary sources of funds consist of the proceeds of its public
offering of limited partnership units, new financing and cash provided by its
rental activities. Other sources of funds include property sales and interest
income on other deposits of funds invested temporarily, pending their use in the
development of properties.
A majority of the Partnership's assets are located within the Inland Empire
submarket of the Southern California region. The Southern California regional
economy in general, and the real estate industry in particular, are considered
to be in a recessionary cycle. The Partnership may realize both positive and
negative effects from these current market conditions. Potential negative
effects include the delinquency of lease and mortgage payments owed to the
Partnership and a decrease in competitive market lease rates and land prices,
and an inability to obtain financing for further property development. The
Partnership may benefit from the current economic and financing conditions due
to the general lack of new competitive product being constructed, potentially
causing greater absorption of existing inventory.
The Partnership currently owns the following properties in the Tri-City
Corporate Center area within the Inland Empire submarket of the Southern
California region:
Property Type Square Feet
One Vanderbilt Office 73,800
Two Vanderbilt Office 69,100
Service Retail Center Commercial 20,800
Carnegie Business Center Office 62,600
Promotional Retail Center-Phase I Commercial 66,300
Inland Regional Center Office 81,100
With the signing of a 13-year lease with Inland Regional Center and the
completion of construction of the 81,000 square foot IRC building discussed
above, the Partnership now has nine operating properties within the Tri-City
project in San Bernardino, California with approximately 373,000 total leasable
square feet.
The Partnership also owns approximately 55 acres of unimproved land in the
Tri-City area.
Additionally, the Partnership currently owns the Shadowridge Woodbend Apartments
(240 unit apartment complex) in Vista, California plus approximately 54 acres of
unimproved land in Riverside County, California.
Page 12 of 17
<PAGE>
Prepaid expenses and other assets increased 23% or $133,000 as of September 30,
1996 from December 31, 1995 largely as a result of the $53,000 remaining in
escrow for further site improvements from the March, 1996, 1.3 acre land sale in
Temecula, California and an increase in property tax impounds.
Accounts payable and accrued expenses increased approximately 54% or $192,000
from December 31, 1995 to September 30, 1996 primarily due to an increase in
accrued property taxes payable. These property taxes are due to be paid in
December, 1996 partially from the property tax impounds discussed above and the
difference from operating cash flow.
On April 19, 1996, the Partnership borrowed $6,500,000 under new permanent
financing. The loan is a 10-year fixed rate loan with a 25-year amortization,
bearing interest at 8.744% per annum with monthly principal and interest
payments of $53,413. The loan proceeds were used to payoff three existing loans.
After paying refinancing and other fees, and placing funds in escrow for tenant
improvements for the Promotional Retail Center, the Partnership netted
approximately $465,000 in proceeds. In addition to the financing proceeds, the
Partnership benefitted from the extension of the weighted average maturity of
the three existing loans from 1.75 years to 10 years on the new loan, and the
reduction of the weighted average interest rate from 9.72% to 8.74%.
On May 14, 1996, the Partnership obtained a $2,500,000 construction loan,
secured by the IRC building. This loan required monthly interest only payments
at a rate of 8.75% per annum through July 23, 1996 at which time $20,771 in
principal and interest payments commence through its April 23, 2001 maturity. As
of September 30, 1996, the entire $2,500,000 has been drawn by the Partnership.
Offsite improvements remain on hold at Lake Elsinore Square in Lake Elsinore,
California pending recovery of the housing market. The tentative parcel map has
been approved and the final map was being processed when further activity was
put on hold. Subsequently, the tentative parcel map expired.
There has been no development of the Perris property to date. The Partnership
continues to market the property for sale to retail users and interested
developers.
The 12.4 acre property in Temecula, California has been divided into 12 separate
parcels via a parcel map approved December, 1995. Final map approval was
received January 2, 1996. In March, 1996, the Partnership executed the sale of a
1.3 acre parcel. The Partnership's net sale proceeds, after allocating $165,000
for future site improvements, was $84,000. The proceeds from this sale will be
used to complete improvements on the remaining lots, which should greatly assist
marketing efforts of such property. As of September 30, 1996, $112,000 of the
$165,000 has been spent, leaving $53,000 still available for future improvement
costs.
Portions of the property at Tri-City sold during fiscal 1989, 1991 and 1993
included lots 8 and 9, the Chili's and TGI Friday's restaurants and a 1.5 acre
fire station site. The Partnership continues to hold a note receivable in the
amount of $405,000 related to the sale of the TGI Friday's restaurant. The
Partnership does not anticipate the sale of any significant portion of the
balance of the Tri-City property (except the Land fill) until after the
completion of development of such property or the liquidation of the
Partnership. Any cash generated from property sales
Page 13 of 17
<PAGE>
may be utilized in the development of other properties or distributed to the
partners. The General Partners continue to assess the real estate market in
Southern California in an effort to determine an appropriate time to dispose of
the Partnership's assets.
Aside from the foregoing, the Partnership knows of no demands, commitments,
events, or uncertainties which might affect its liquidity or capital resources
in any material respect. The effect of inflation on the Partnership's business
should be no greater than its effect on the economy as a whole.
Management believes that the Partnership's cash balance and prepaid expenses as
of September 30, 1996, together with cash from operations, will be sufficient to
finance the Partnership's and the properties' continued operations and
development plans.
RESULTS OF OPERATIONS
The Partnership's reporting year end has been changed from October 31 to
December 31. Since the Partnership's operations are not seasonal, comparisons
will reflect the three and nine months ended September 30, 1996 versus the three
and nine months ended July 31, 1995.
Rental income for the nine months ended September 30, 1996 decreased $799,000 or
18% from the nine months ended July 31, 1995, primarily as a result of the
November, 1995 vacancy upon lease expiration of one tenant, Aetna Health
Management ("Aetna"), who occupied an aggregate of 74,000 square feet of space
at One Vanderbilt, Two Vanderbilt and Carnegie Business Center I. This caused a
decrease in average occupancy, as further detailed in the table of Tri-City
properties below. Aetna's vacancy was primarily a function of the tenant's
desire to consolidate its various spaces into one building.
Occupancy rates at the Partnership's Tri-City properties as of September 30,
1996 and July 31, 1995 were as follows:
September 30, July 31,
1996 1995
One Vanderbilt 64% 72%
Two Vanderbilt 25% 97%
Service Retail Center 100% 90%
Carnegie Business Center I 87% 97%
Promotional Retail Center-Phase I 97% 94%
Inland Regional Center 100% ---
(commencing June, 1996)
As of September 30, 1996, there are five tenants that in the aggregate, occupy
approximately 178,000 square feet or 48% of the 374,000 total leasable square
feet of the Tri-City properties. The Partnership has positioned itself well in
respect to the timing of lease expirations, as these five tenants have leases
that expire at various dates between 1997 and 2009.
Management is currently in negotiations on a new lease with one potential tenant
for 19,000 square feet of space. Management is also negotiating a lease for a
38,000 square foot build-to- suit retail building on vacant land in Tri-City.
Page 14 of 17
<PAGE>
Interest and other income increased $21,000 for both the three and nine months
ended September 30, 1996 over the three and nine months ended July 31, 1995 due
to the receipt of a partial payment from a negotiated settlement with a former
tenant in September, 1996.
Operating expenses (expenses applicable to rental operations) for the three and
nine months ended September 30, 1996 decreased $84,000 and $232,000 or 13% and
12%, respectively, from the three and nine months ended July 31, 1995 due
primarily to: (i) lowered utility costs and management fees associated with
decreased occupancy from July 31, 1995 to September 30, 1996, discussed above;
and (ii) net property tax refunds, after appeal fees, as a result of successful
tax appeals.
Interest expense for the three and nine months ended September 30, 1996
increased $181,000 and $434,000 or 87% and 81% from the three and nine months
ended July 31, 1995, respectively, primarily as a result of the new $6,500,000
financing discussed above and the additional notes payable obtained to
facilitate construction in 1995 and 1996.
Depreciation and amortization for the three and nine months ended September 30,
1996 decreased $142,000 and $147,000 or 34% and 13% from the three and nine
months ended July 31, 1995, respectively, as a result of fully amortizing
leasing commissions paid in connection with a tenants' early vacancy of their
space in the One Vanderbilt building in the third quarter of fiscal year 1995.
Expenses associated with undeveloped land increased $81,000 and $72,000 or 39%
and 12% for the three and nine months ended September 30, 1996 over the three
and nine months ended July 31, 1995 due to an increase in maintenance
association dues and property taxes on the undeveloped land.
General and administrative expenses during the nine months ended September 30,
1996 decreased $160,000 or 15% from the nine months ended July 31, 1995. This
decrease is primarily the result of a one-time payment of severance to RFC's
terminated employees in the nine months ended July 31, 1995.
Page 15 of 17
<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
#27 - Financial Data Schedule
(b) Reports on Form 8-K:
None.
Page 16 of 17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RANCON REALTY FUND IV,
a California Limited Partnership
(Registrant)
Date: November 13, 1996 By:/s/ Daniel L. Stephenson
Daniel L. Stephenson, General Partner
and Director, President,
Chief Executive Officer and
Chief Financial Officer of
Rancon Financial Corporation,
General Partner of
Rancon Realty Fund IV,
a California Limited Partnership
Page 17 of 17
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000743870
<NAME> RANCON REALTY FUND IV
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 463
<SECURITIES> 0
<RECEIVABLES> 60
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 523
<PP&E> 62792
<DEPRECIATION> (12658)
<TOTAL-ASSETS> 52490
<CURRENT-LIABILITIES> 591
<BONDS> 17,318
0
0
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