FORM 10-Q
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 Quarter Ended Commission File Number
June 30, 1997 0-14386
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
(Exact Name of Registrant as specified in its charter)
Delaware 16-1245153
- -------------------- ------------------------------------
(State of Formation) (IRS Employer Identification Number)
2350 North Forest Road
Suite 12 A
Getzville, New York 14068
(Address of Principal Executive Office)
Registrant's Telephone Number: (716) 636-0280
Indicate by a 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
--- ---
Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-Q or any
amendment to this Form 10-Q. (X)
As of June 30, 1997 the issuer had 23,365.9 units of limited partnership
interest outstanding.
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
--------------------------------------------------
INDEX
-----
PAGE NO.
--------
PART I: FINANCIAL INFORMATION
- ------- ---------------------
Balance Sheets -
June 30, 1997 and December 31, 1996 3
Statements of Operations -
Three Months Ended June 30, 1997 and 1996 4
Statements of Operations -
Six Months Ended June 30, 1997 and 1996 5
Statements of Cash Flows -
Six Months Ended June 30, 1997 and 1996 6
Statements of Partners' (Deficit) -
Six Months Ended June 30, 1997 and 1996 7
Notes to Financial Statements 8 - 18
PART II: MANAGEMENT'S DISCUSSION & ANALYSIS OF
- -------- FINANCIAL CONDITION & RESULTS OF
--------------------------------
OPERATIONS 19 - 20
----------
-2-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
BALANCE SHEETS
June 30, 1997 and December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
June 30 December 31,
1997 1996
---- ----
<S> <C> <C>
ASSETS
Property, at cost:
Land $ 1,773,922 $ 1,773,922
Buildings and improvements 28,070,956 27,898,057
Furniture, fixtures and equipment 2,711,794 2,711,794
------------ ------------
32,556,672 32,383,773
Less accumulated depreciation 13,899,255 13,753,437
------------ ------------
Property, net 18,657,417 18,630,336
Escrow deposits 973,661 764,566
Interest and other receivables 589,642 591,255
Prepaid expenses 71,468 216,629
Prepaid commissions, net of accumulated amortization
of $136,746 and $122,454 34,469 14,932
Mortgage costs, net of accumulated amortization
of $522,003 and $493,159 239,997 265,953
Other assets 9,915 4,455
------------ ------------
Total Assets $ 20,576,569 $ 20,488,126
============ ============
LIABILITIES AND PARTNERS' (DEFICIT)
Liabilities:
Cash overdraft $ 489,038 $ 138,032
Mortgages and notes payable 18,811,433 18,939,324
Accounts payable and accrued expenses 955,327 864,429
Accounts payable - affiliates 3,263,141 3,167,754
Accrued interest 212,424 172,452
Security deposits and prepaid rents 417,384 395,123
------------ ------------
Total Liabilities 24,148,747 23,677,114
------------ ------------
Minority interest in joint venture 14,776 18,477
------------ ------------
Partners' (Deficit):
General partners (680,588) (669,203)
Limited partners (2,906,366) (2,538,262)
------------ ------------
Total Partners' (Deficit) (3,586,954) (3,207,465)
------------ ------------
Total Liabilities and Partners' (Deficit) $ 20,576,569 $ 20,488,126
============ ============
</TABLE>
See notes to financial statements
-3-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
STATEMENTS OF OPERATIONS
Three Months Ended June 30, 1997 and 1996
(Unaudited)
Three Months Three Months
Ended Ended
June 30, June 30,
1997 1996
---- ----
Income:
Rental $ 1,261,306 $ 1,200,395
Interest and other income 88,333 79,839
----------- -----------
Total income 1,349,639 1,280,234
----------- -----------
Expenses:
Property operations 771,192 674,519
Interest:
Paid to affiliates 63,995 62,216
Other 397,133 379,923
Depreciation and amortization 88,636 275,558
Administrative:
Paid to affiliates 123,142 100,624
Other 110,618 118,006
----------- -----------
Total expenses 1,554,716 1,610,846
----------- -----------
Loss before allocated loss from joint venture (205,077) (330,612)
Loss allocated to minority interest 1,308 0
----------- -----------
Net loss ($ 203,769) ($ 330,612)
=========== ===========
Loss per limited partnership unit ($ 8.46) ($ 13.72)
=========== ===========
Distributions per limited partnership unit $ 0.00 $ 0.00
=========== ===========
Weighted average number of
limited partnership units
outstanding 23,366 23,366
=========== ===========
See notes to financial statements
-4-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
STATEMENTS OF OPERATIONS
Six Months Ended June 30, 1997 and 1996
(Unaudited)
Six Months Six Months
Ended Ended
June 30, June 30,
1997 1996
---- ----
Income:
Rental $ 2,581,692 $ 2,584,882
Interest and other income 176,340 188,391
----------- -----------
Total income 2,758,032 2,773,273
----------- -----------
Expenses:
Property operations 1,447,294 1,335,876
Interest:
Paid to affiliates 154,804 125,439
Other 786,970 798,056
Depreciation and amortization 184,854 514,291
Administrative:
Paid to affiliates 253,605 187,820
Other 313,695 285,500
----------- -----------
Total expenses 3,141,222 3,246,982
----------- -----------
Loss before allocated loss from joint venture (383,190) (473,709)
Loss allocated to minority interest 3,701 19,812
----------- -----------
Net loss ($ 379,489) ($ 453,897)
=========== ===========
Loss per limited partnership unit ($ 15.75) ($ 18.84)
=========== ===========
Distributions per limited partnership unit $ 0.00 $ 0.00
=========== ===========
Weighted average number of
limited partnership units
outstanding 23,366 23,366
=========== ===========
See notes to financial statements
-5-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1997 and 1996
(Unaudited)
Six Months Six Months
Ended Ended
June 30, June 30,
1997 1996
---- ----
Cash flow from operating activities:
Net loss ($379,489) ($453,897)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation and amortization 184,854 514,291
Loss allocated to minority interest (3,701) (19,812)
Changes in operating assets and liabilities:
Escrow deposits (209,095) 0
Interest and other receivables 1,613 28,617
Prepaid expenses 145,161 0
Prepaid commissions (29,729) 0
Other assets (5,460) (685,841)
Accounts payable and accrued expenses 90,898 60,660
Accrued interest 39,972 (70,000)
Security deposits and prepaid rent 22,261 (51,186)
--------- ---------
Net cash (used in) operating activities (142,715) (677,168)
--------- ---------
Cash flow from investing activities:
Capital expenditures (172,899) 0
--------- ---------
Net cash (used in) investing activities (172,899) 0
--------- ---------
Cash flows from financing activities:
Mortgage costs (2,888) (182,620)
Cash overdraft 351,006 (46,747)
Accounts payable - affiliates 95,387 401,374
Principal payments on mortgages and notes (127,891) (276,175)
Proceeds from mortgage 0 781,336
--------- ---------
Net cash provided by financing activities 315,614 677,168
--------- ---------
Increase (decrease) in cash 0 0
Cash - beginning of period 0 0
--------- ---------
Cash - end of period $ 0 $ 0
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 746,998 $ 868,056
========= =========
See notes to financial statements
-6-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
STATEMENTS OF PARTNERS' (DEFICIT)
Six Months Ended June 30, 1997 and 1996
(Unaudited)
General Limited Partners
Partners ---------------------------
Amount Units Amount
------ ----- ------
Balance, January 1, 1996 ($ 678,636) 23,366 ($2,843,271)
Net loss (13,617) 0 (440,280)
----------- ----------- -----------
Balance, June 30, 1996 ($ 692,253) 23,366 ($3,283,551)
=========== =========== ===========
Balance, January 1, 1997 ($ 669,203) 23,366 ($2,538,262)
Net loss (11,385) 0 (368,104)
----------- ----------- -----------
Balance, June 30, 1997 ($ 680,588) 23,366 ($2,906,366)
=========== =========== ===========
See notes to financial statements
-7-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
NOTES TO FINANCIAL STATEMENTS
Six Months Ended June 30, 1997 and 1996
(Unaudited)
1. GENERAL PARTNERS' DISCLOSURE
----------------------------
In the opinion of the General Partners of Realmark Property Investors
Limited Partnership IV, all adjustments necessary for a fair presentation
of the Partnership's financial position, results of operations and changes
in cash flows for the six month periods ended June 30, 1997 and 1996, have
been made in the financial statements. Such financial statements are
unaudited and subject to any year-end adjustments which may be necessary.
2. FORMATION AND OPERATION OF PARTNERSHIP
--------------------------------------
Realmark Property Investors Limited Partnership IV (the "Partnership"), a
Delaware Limited Partnership, was formed on February 12, 1985, to invest
in a diversified portfolio of income-producing real estate investments.
In April 1985, the Partnership commenced the public offering of units of
limited partnership interest. Other than matters relating to organization,
it had no business activities and, accordingly, had not incurred any
expenses or earned any income until the first interim closing (minimum
closing) of the offering, which occurred on September 20, 1985. On June
22, 1986 the offering was concluded, at which time 23,362.9 units of
limited partnership interest were outstanding, excluding 3 units held by
an affiliate of the General Partners. The General Partners are Realmark
Properties, Inc., a wholly-owned subsidiary of J.M. Jayson & Company, Inc.
and Joseph M. Jayson, the Individual General Partner. Joseph M. Jayson is
the sole shareholder of J.M. Jayson & Company, Inc.
Under the partnership agreement, the general partners and their affiliates
can receive compensation for services rendered and reimbursement for
expenses incurred on behalf of the Partnership.
Net income or loss and proceeds arising from a sale or refinancing shall
be distributed first to the limited partners in amounts equivalent to a 7%
return on the average of their adjusted capital contributions, then an
amount equal to their capital contributions, then an amount equal to an
additional 5% of the average of their adjusted capital contributions after
the general partners receive a disposition fee, then to all partners in an
amount equal to their respective positive capital balances and, finally,
in the ratio of 87% to the limited partners and 13% to the general
partners.
-8-
<PAGE>
FORMATION AND OPERATION OF PARTNERSHIP (CONTINUED)
--------------------------------------------------
The partnership agreement also provides that distribution of funds,
revenues, costs and expenses arising from partnership activities,
exclusive of any sale or refinancing activities, are to be allocated 97%
to the limited partners and 3% to the general partners.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Cash
----
For purposes of reporting cash flows, cash includes the following items:
cash on hand; cash in checking; and money market savings.
Property and Depreciation
-------------------------
Depreciation is provided using the straight-line method over the estimated
useful lives of the respective assets. Expenditures for maintenance and
repairs are expensed as incurred, and major renewals and betterments are
capitalized. The Accelerated Cost Recovery System and Modified Accelerated
Cost Recovery System are used to determine depreciation expense for tax
purposes.
Rental Income
-------------
Leases for residential properties have terms of one year or less.
Commercial leases have terms of from one to five years. Rental income is
recognized on the straight line method over the term of the lease.
Minority Interest in Consolidated Joint Venture
-----------------------------------------------
The minority interest in a consolidated joint venture is stated at the
amount of capital contributed by the minority investors adjusted for their
share of joint venture losses.
4. ACQUISITION AND DISPOSITION OF RENTAL PROPERTY
----------------------------------------------
In November 1985, the Partnership acquired a 168 unit apartment complex
(Lakeview Village) located in Milwaukee, Wisconsin, for a purchase price
of $4,411,659, which included $320,779 in acquisition fees.
In December 1985, the Partnership acquired a 288 unit apartment complex
(Sutton Park, formerly Bristol Square) located in Lansing, Michigan for a
purchase price of $7,252,858, which included $588,716 in acquisition fees.
-9-
<PAGE>
ACQUISITION AND DISPOSITION OF RENTAL PROPERTY (CONTINUED)
----------------------------------------------------------
In August 1986, the Partnership acquired two office/warehouse buildings
consisting of 62,598 square feet (Airlane I) and 68,300 square feet
(Airlane III), consisting of approximately 25% office space and 75%
warehouse space located in Nashville, Tennessee, for a purchase price of
$6,180,920, which included $383,169 in acquisition fees.
In October 1986, the Partnership acquired an 86 unit apartment complex
(Gold Key Village II) located in Englewood, Ohio for a purchase price of
$2,354,615, which included $152,744 in acquisition fees.
In December 1986, the Partnership acquired two apartment complexes
consisting of 96 and 144 units (Creekside Apartments, formerly Bretton
Park I and II) located in Flat Rock, Michigan, for a purchase price of
$5,462,176, which included $445,964 in acquisition fees.
In December 1986, the Partnership acquired a 215 unit apartment complex
(Willow Creek) located in Greenville, South Carolina, for a purchase price
of $5,040,560, which included $477,987 in acquisition fees.
In December 1986, the Partnership acquired a 72 unit apartment complex
(Evergreen Terrace) located in Lansing, Michigan for a purchase price of
$1,1711,093, which included $314,379 in acquisition fees.
In May 1987, the Partnership acquired a 56 unit apartment complex (Cedar
Court) located in Monroeville, Pennsylvania, for a purchase price of
$1,439,832, which included $370,728 in acquisition fees.
In 1988, the Partnership acquired, upon its dissolution, the net assets
and liabilities of the Willow Lake Joint Venture, which amounted to
$1,635,474. Since the date of the acquisition, the Partnership had
capitalized additional construction costs of $5,059,296 which included
capitalized interest of $151,993. Construction on this project was
substantially complete in early 1991. During September 1992, Willow Lake's
lender foreclosed and took possession of the property because the
Partnership had difficulty in obtaining tenant leases and financing to
complete tenant build-out costs. The disposal generated a $1,328,352 loss
for financial statement purposes.
In October, 1989 the Partnership sold the Gold Key II apartment complex
for $2,881,136 which generated a gain of $911,177 for financial statement
purposes.
-10-
<PAGE>
ACQUISITION AND DISPOSITION OF RENTAL PROPERTY (CONTINUED)
----------------------------------------------------------
In July 1996, the Partnership entered into a plan to dispose of the
property, plant and equipment of the following properties: Lakeview
Village (anticipated sales price of $4,090,000), Sutton Park (anticipated
sales price of $5,800,000), Creekside (anticipated sales price of
$5,900,000), Willow Creek (anticipated sales price of $5,425,000), and
Evergreen Terrace (anticipated sales price of $1,200,000). Management
determined that the sale of the properties was in the best interests of
the limited partners. The contracts for the sale of the above-identified
residential properties (i.e. apartment complexes) were terminated
recently. In the cases of the contracts for Creekside Apartments, Sutton
Park Apartments and Evergreen Apartments, the purchaser was unable to
secure the necessary tax credits and bonds allocated through the state
agencies. The sale of Lakeview Apartments located in Milwaukee, Wisconsin
was terminated because the city was unwilling to use their bond
allocations for multi-family housing. The sale of Willow Creek Apartments
was not consummated as the purchaser felt the extent of the needed rehab
work at the property was more than the economics of the deal could
support.
Financial Accounting Standards Statement No. 121, Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed
Of (the "Statement") requires that assets to be disposed of be recorded at
the lower of carrying value or fair value, less costs to sell. The
Statement also requires that such assets not be depreciated during the
disposal period, as the assets will be recovered through sale rather than
through operations. In accordance with this Statement, the long-lived
assets of the Partnership, classified as held for sale on the balance
sheet, are recorded at the carrying amount which is the lower of carrying
value or fair value less costs to sell, and have not been depreciated
during the disposal period. Depreciation expense, not recorded during the
disposal period, for the six months ended June 30, 1997 totaled
approximately $300,000.
-11-
<PAGE>
5. NOTE RECEIVABLE
---------------
In connection with the sale of the Gold Key II apartment complex, the
Partnership took back a second mortgage as security for two notes
receivable. The first note for $155,000 carried an interest rate of 10%
with interest payable monthly and the remaining balance payable at
maturity on October 11, 1995. The second note for $75,000 carried an
interest rate of 10% with principal payments payable in five annual
installments of $15,000 and any remaining interest payable at maturity on
October 11, 1995. Neither of the notes were paid in full by the maturity
date, and according to the provisions of the notes, interest continued to
accrue at 15% annually on the unpaid balances. The Partnership received a
settlement in the amount of $175,000 during 1996. The remainder of the
balances were written off.
6. MORTGAGES AND NOTES PAYABLE
---------------------------
The Partnership has the following mortgages and notes payable:
Lakeview
--------
In January 1996, the Partnership refinanced the mortgage. The refinanced
mortgage, with a balance of $2,494,900 and $2,520,822 at June 30, 1997 and
1996 respectively, provides for annual principal and interest payments at
8.25% payable in equal monthly installments of $232,924. The term of the
mortgage is ten years with the remaining balance due and payable on
February 1, 2006.
Sutton Park (formerly Bristol Square)
-------------------------------------
The property was refinanced January 11, 1996 with an 8% mortgage for
$3,400,000, and an unsecured $50,000 promissory note. The new mortgage
provides for annual principal and interest payments of $306,168 in equal
monthly installments. The balance outstanding at June 30, 1997 and 1996
was $3,363,529 and $3,388,494 respectively. The term of the mortgage is 10
years with the remaining balance due and payable on February 1, 2006. The
promissory note provides for monthly principal payments of $2,083 plus
interest accruing at the lenders reference rate plus 2% (total of 8.00% at
June 30, 1997). At June 30, 1997 the outstanding balance was $16,672. The
note is due and payable February 1, 1998.
-12-
<PAGE>
MORTGAGES AND NOTES PAYABLE (CONTINUED)
---------------------------------------
Airlanes I & III
----------------
A 7.625% mortgage with a balance of $3,474,658 and $3,575,294 at June 30,
1997 and 1996 respectively, which provides for annual principal and
interest payments of $369,783 payable in equal monthly installments, with
the remaining balance due January 1, 1999.
Creekside
---------
An adjustable rate mortgage with an outstanding principal balance of
$3,632,663 and $3,706,512 at June 30, 1997 and 1996, respectively. The
interest rate is adjustable quarterly to a maximum rate of 13.5% and a
minimum rate of 7% (7.01% at June 30, 1997). The mortgage is payable
monthly in amounts which vary with the interest rate. Monthly payments at
June 30, 1997 based on 7.01% interest rate were $27,671.90. The balance of
the mortgage is due and payable March 31, 1998.
Willow Creek
------------
A 9.25% mortgage with an original balance of $4,080,000 which provides for
annual principal and interest payments of $393,023 payable in equal
monthly installments with the remaining balance of $3,929, 432 due on
September 1, 1996; the maturity was then extended to March 1, 1997. The
balance as of June 30, 1997 and 1996 was $3,903,934 and $3,934,300,
respectively. The mortgage is now in default and therefore payable on
demand.
Evergreen Terrace
-----------------
An adjustable rate mortgage with a balance at June 30, 1997 and 1996 of
$1,013,126 and $1,028,717, respectively. The interest rate is adjustable
annually to a maximum rate of 15% during the first five years of the loan
term and 17% for the remaining life of the loan with a minimum rate of 9%
(9% at June 30, 1997). The mortgage is payable monthly in amounts which
vary with the interest rate. Monthly payments at June 30, 1997 based on a
9% interest rate were $8,962. The balance of the mortgage is due and
payable May 24, 1998.
-13-
<PAGE>
MORTGAGES AND NOTES PAYABLE (CONTINUED)
---------------------------------------
Chapelwood Estates (formerly Cedar Court)
-----------------------------------------
A 9.25% mortgage with a balance of $894,551 and $897,334 at June 30, 1997
and 1996, respectively, which provides for annual principal and interest
payments of $89,586 payable in equal monthly installments with remaining
balance of $895,117 due September 1, 1996. The mortgage is now in default
and therefore payable on demand.
The mortgages described above are secured by the Partnership properties to
which they relate.
The aggregate maturities of mortgages and notes payable for each of the
next five years and thereafter are as follows:
Year Amount
1997 $ 5,104,085
1998 4,783,112
1999 3,384,889
2000 82,696
2001 89,653
Thereafter 5,494,889
-------------
TOTAL $ 18,939,324
=============
7. INVESTMENT IN JOINT VENTURE
---------------------------
On September 1, 1992, the Partnership entered into an agreement to form a
joint venture with Realmark Property Investors Limited Partnership VI-B
(RPILP VI-B). The joint venture was formed for the purpose of operating
the Lakeview Apartment complex owned by the Partnership. Under the terms
of the agreement, RPILP VI-B contributed $175,413, with the Partnership
contributing the property net of the first mortgage.
-14-
<PAGE>
INVESTMENT IN JOINT VENTURE (CONTINUED)
---------------------------------------
The joint venture agreement provides that any income, loss, gain, cash
flow, or sale proceeds be allocated 83.78% to the Partnership and 16.22%
to RPILP VI-B. The net loss from the date of inception has been allocated
to the minority interest in accordance with the agreement and has been
recorded as a reduction of the capital contribution.
A reconciliation of the minority interest share in the Lakeview Joint
Venture is as follows:
1997
----
Balance, January 1 $ 18,477
Allocated Loss (3,701)
----------
Balance, June 30 $ 14,776
==========
8. RELATED PARTY TRANSACTIONS
--------------------------
Management fees for the management of certain of the Partnership's
properties are paid to an affiliate of the General Partners. The
management agreement provides for 5% of gross monthly receipts of the
complexes to be paid as fees for administering the operations of the
properties. These fees totaled $140,002 and $127,651 for the six months
ended June 30, 1997 and 1996, respectively.
The Partnership entered into a management agreement with an unrelated
third party for the management of Airlane I and III on August 15, 1986.
The agreement provides for the payment of a management fee equal to 4% of
monthly gross rental income. An affiliate of the General Partners also
receives a management fee of 2% of monthly gross rental income.
According to the terms of the Partnership Agreement, the Corporate General
Partner is also entitled to receive a partnership management fee equal to
7% of net cash flow (as defined in the Partnership Agreement), 2% of which
is subordinated to the limited partners having received an annual cash
return equal to 7% of their average adjusted capital contributions. No
such fee was paid or accrued by the partnership for the six months ended
June 30, 1997 and 1996.
-15-
<PAGE>
RELATED PARTY TRANSACTIONS (CONTINUED)
--------------------------------------
Accounts payable to affiliates amounted to $3,263,141 and $2,485,013 at
June 30, 1997 and 1996, respectively. The payable represents fees due and
advances from the Corporate General Partner or an affiliate of the General
Partners. Interest charged on accounts payable to affiliates totaled
$154,804 and $125,979 for the six months ended June 30, 1997 and 1996.
The General Partners are also allowed to collect a property disposition
fee upon sale of acquired properties. This fee is not to exceed the lesser
of 50% of amounts customarily charged in arm's-length transactions by
others rendering similar services for comparable properties, or 3% of the
sales price. The property disposition fee is subordinate to payments to
the limited partners of a cumulative annual return (not compounded) equal
to 7% of their average adjusted capital balances and to repayment to the
limited partners of an amount equal to their original capital
contributions. Since these conditions have not been met, no fees have been
recorded or paid on the sale of the Gold Key II apartment complex.
Computer service charges for the partnerships are paid or accrued to an
affiliate of the General Partner. The fee is based upon the number of
apartment units and totaled $6,600 for both the six months ended June 30,
1997 and 1996, respectively.
Pursuant to the terms of the Partnership Agreement, the Corporate General
Partner charges the Partnership for reimbursement of certain costs and
expenses incurred by the Corporate General Partner and its affiliates in
connection with the administration of the Partnership. These charges were
for the Partnership's allocated share of such costs and expenses which
include payroll, legal, rent, depreciation, printing, mailing, travel and
communication costs related to Partnership accounting, partner
communication and relations and property marketing. Accounting,
communication and marketing expenses are allocated based on total assets,
number of partners, and the market value of properties respectively.
9. INCOME TAXES
------------
No provision has been made for income taxes since the income or loss of
the partnership is to be included in the tax returns of the Individual
Partners.
-16-
<PAGE>
INCOME TAXES (CONTINUED)
------------------------
The tax returns of the Partnership are subject to examination by the
Federal and state taxing authorities. Under federal and state income tax
laws, regulations and rulings, certain types of transactions may be
accorded varying interpretations and, accordingly, reported partnership
amounts could be changed as a result of any such examination.
The reconciliation of net loss for the six months ended June 30, 1997 and
1996 as reported in the statements of operations, and as would be reported
for tax purposes, is as follows:
June 30, June 30,
1997 1996
---- ----
Net loss - statement of operations $ (379,489) $ (453,897)
Add to (deduct from):
Difference in depreciation (160,280) ( 29,600)
Gain on sale of property 2,202 2,202
Allowance for doubtful accounts 92,886 164,000
----------- -----------
Net loss - tax return purposes $ (444,681) $ (317,295)
=========== ===========
-17-
<PAGE>
INCOME TAXES (CONTINUED)
------------------------
The reconciliation of Partners' (Deficit) as of June 30, 1997 and December
31, 1996 as reported in the balance sheet, and as reported for tax
purposes, is as follows:
June 30, December 31,
1997 1996
---- ----
Partners' (Deficit) - balance sheet $ (3,586,954) $ (3,521,907)
Add to (deduct from):
Accumulated difference in
depreciation (5,708,415) (5,548,135)
Accumulated amortization 382,695 382,695
Syndication fees 2,734,297 2,734,297
Difference in book and tax
basis in partnership investments (635,737) (635,737)
Gain from fire loss (706,158) (706,158)
Other 1,427,897 1,332,809
------------ -------------
Partners' (Deficit) - tax return purposes $ (6,092,375) $ (5,647,694)
============ =============
-18-
<PAGE>
PART II MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
The General Partner continues to fund the Partnership's shortfalls in cash flow,
although under no obligation to do so. Such advances to the Partnership are
considered payable on demand to the General Partner, and at this point in time,
there is no assurance that these advances will continue. The Partnership did not
make any distributions during the second quarter of 1997, and is not likely to
make any in the future until all Partnership obligations are satisfied and the
General Partner is reimbursed for the advances it has made to the Partnership.
The General Partner continues its efforts to locate a buyer for the properties
in this Partnership as it is felt that the sale of the properties is in the best
interests of the Limited Partners. Until such time as the properties are sold,
it is highly unlikely that the Limited Partners will receive any return of their
investments. Management is also aggressively seeking refinancing for the
properties in an effort to decrease the interest rates currently being paid;
such a decrease will result in lower monthly payments, thus increasing cash
flow.
Results of Operations:
- ----------------------
Net loss for the three month period ended June 30, 1997 amounted to $203,769 or
$8.46 per limited partnership unit versus a net loss for the three month period
ended June 30, 1996 of $330,612 or $13.72 per limited partnership unit. For the
six month period ended June 30, 1997, the net loss amounted to $379,489 versus a
net loss of $453,897 for the six month period ended June 30, 1996.
On a tax basis, the Partnership generated a loss of $444,681 or $18.46 per
limited partnership unit for the six month period ended June 30, 1997 versus a
tax loss of $317,295 or $13.17 per limited partnership unit for the six month
period ended June 30, 1996.
-19-
<PAGE>
Results of Operations (continued):
- -----------------------------------
Partnership revenue for the quarter ended June 30, 1997 totaled $1,349,639, an
increase of $69,405 from the same period in 1996. For the six month period ended
June 30, 1997 total income decreased by $15,241 from the corresponding period in
1996. Rental income for the six month period ended June 30, 1997, totaled
$2,581,692, which was a slight decrease of $3,190 over the same time period in
1996. The decrease is directly related to the decrease in occupancy and an
increase in delinquencies at several of the complexes. Other income also
increased slightly by just over $12,000 between the six month periods ended June
30, 1997 and June 30, 1996 primarily due to increased laundry income at the
residential properties.
For the three month period ended June 30, 1997, the Partnership expenses totaled
$1,554,716, a decrease of $56,000 from the quarter ended June 30, 1996. For the
six months ended June 30, 1997, the Partnership expenses totaled $3,141,222,
decreasing over $105,500 from quarter ended June 30, 1996. There was an increase
in property operations expenses even with management's continual cost
controlling factors and monitoring. Payroll and associated costs increased by
more than $70,000, while repairs and maintenance and contracted service expenses
increased by over $84,000. Several of the residential complexes in this
Partnership are currently undergoing much needed capital improvement and
"fix-up" work, so it is expected that maintenance expenses will continue to be
higher than in the previous year. The Partnership did see a large decrease in
both insurance expense and real estate taxes during the first six months of 1997
as compared to the same period during 1996. Administrative costs also saw a
fairly large increase during the six months ended June 30, 1997 over those from
the six months ended June 30, 1996. The increase is primarily related to
increased management fees accrued during the first six months of 1997. There was
also a notable increase in brokerage fees resulting from management's increased
efforts to sell the properties in this partnership.
Management continues to put forth great effort to control and manage the
Partnership's expenses while also focusing heavily on both increasing
occupancies and improving collections in those complexes that are struggling
financially, such as Sutton Park (formerly Bristol Square), Evergreen Terrace
and Chapelwood Estates (formerly Cedar Court).
For the six month period ended June 30, 1997, the Lakeview Joint Venture
generated net loss of $22,819, with $3,701 of the loss allocated to the minority
venturer. For the six months ended June 30, 1996, the joint venture had a net
loss of $122,143, with $19,812 of the loss allocated to the minority venturer.
Although total income increased slightly (i.e., by just over $3,200), property
expenditures decreased by over $96,000. The decrease in expenses resulted in a
much improved six month period for the Joint Venture.
-20-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
--------------------------------------------------
PART II
-------
OTHER INFORMATION
-----------------
Item 1 - Legal Proceedings
- --------------------------
The Partnership is not party to, nor is it the subject of, any material pending
legal proceedings other than ordinary routine litigation incidental to the
Partnership's business.
Item 2, 3, 4 and 5
- ------------------
Not applicable.
Item 6 - Exhibits and reports on Form 8-K
- -----------------------------------------
Form 8-K was filed August 1, 1997 to report the termination of the sales
contracts previously reported on Form 8-K filed in July 1996.
-21-
<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.
REALMARK PROPERTY INVESTORS
LIMITED PARTNERSHIP IV
By: /s/Joseph M. Jayson August 8, 1997
------------------------------ ------------------------
Joseph M. Jayson, Date
Individual General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: REALMARK PROPERTIES, INC.
Corporate General Partner
/s/Joseph M. Jayson August 8, 1997
------------------------------ ------------------------
Joseph M. Jayson, Date
President and Director
/s/Michael J. Colmerauer August 8, 1997
------------------------------ ------------------------
Michael J. Colmerauer Date
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV FOR
SIX MONTHS ENDED JUNE 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 589,642
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,679,155
<PP&E> 32,556,672
<DEPRECIATION> 13,899,255
<TOTAL-ASSETS> 20,576,569
<CURRENT-LIABILITIES> 5,337,314
<BONDS> 18,811,433
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 20,576,569
<SALES> 0
<TOTAL-REVENUES> 2,758,032
<CGS> 0
<TOTAL-COSTS> 3,137,521
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 941,774
<INCOME-PRETAX> (379,489)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (379,489)
<EPS-PRIMARY> (15.75)
<EPS-DILUTED> 0
</TABLE>
