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
March 31, 1998 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 March 31, 1998 the issuer had 23,365.9 units of limited partnership
interest outstanding.
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
--------------------------------------------------
INDEX
-----
<TABLE>
<CAPTION>
PAGE NO.
--------
PART I: FINANCIAL INFORMATION
- ------ ---------------------
<S> <C> <C>
Balance Sheets -
March 31, 1998 and December 31, 1997 3
Statements of Operations -
Three Months Ended March 31, 1998 and 1997 4
Statements of Cash Flows -
Three Months Ended March 31, 1998 and 1997 5
Statements of Partners' (Deficit) -
Three Months Ended March 31, 1998 and 1997 6
Notes to Financial Statements 7 - 16
PART II: MANAGEMENT'S DISCUSSION & ANALYSIS OF
- ------- -------------------------------------
FINANCIAL CONDITION & RESULTS OF OPERATIONS 17 - 18
-------------------------------------------
</TABLE>
-2-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
--------------------------------------------------
BALANCE SHEETS
--------------
March 31, 1998 and December 31, 1997
------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
ASSETS ---- ----
- ------
<S> <C> <C>
Property, at cost:
Land $ 1,077,322 $ 1,722,672
Buildings and improvements 16,589,007 27,450,004
Furniture, fixtures and equipment 1,843,938 2,571,795
------------------ ------------------
19,510,267 31,744,471
Less accumulated depreciation 8,715,755 13,950,395
------------------ ------------------
Property, net 10,794,512 17,794,076
Escrow deposits 662,119 819,397
Interest and other receivables - 5,829
Prepaid expenses 48,652 232,506
Mortgage costs, net of accumulated amortization
of $256,835 and $475,463 208,564 217,287
Other assets 19,825 19,825
------------------ ------------------
Total Assets $ 11,733,672 $ 19,088,920
================== ==================
LIABILITIES AND PARTNERS' (DEFICIT)
- ----------------------------------
Liabilities:
Cash overdraft $ 6,009 526,439
Mortgages and notes payable 10,703,709 17,740,913
Accounts payable and accrued expenses 967,945 1,146,631
Accounts payable - affiliates 1,286,513 3,666,949
Accrued interest 210,017 203,119
Security deposits and prepaid rents 299,309 421,189
------------------ ------------------
Total Liabilities 13,473,502 23,705,240
------------------ ------------------
Minority interest in joint venture (48,456) (28,677)
------------------ ------------------
Partners' (Deficit):
General partners (623,720) (710,608)
Limited partners (1,067,654) (3,877,035)
------------------ ------------------
Total Partners' (Deficit) (1,691,374) (4,587,643)
------------------ ------------------
Total Liabilities and Partners' (Deficit) $ 11,733,672 $ 19,088,920
================== ==================
</TABLE>
See notes to financial statements
-3-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
--------------------------------------------------
STATEMENTS OF OPERATIONS
------------------------
Three Months Ended March 31, 1998 and 1997
------------------------------------------
(Unaudited)
-----------
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1997
---- ----
<S> <C> <C>
Income:
Rental $ 785,611 $ 1,320,386
Interest and other income 37,759 88,007
------------------ ------------------
Total income 823,370 1,408,393
------------------ ------------------
Expenses:
Property operations 652,656 676,102
Interest:
Paid to affiliates 25,923 90,809
Other 288,698 389,837
Depreciation and amortization 206,233 96,218
Administrative:
Paid to affiliates 112,455 130,463
Other 220,248 203,077
------------------ ------------------
Total expenses 1,506,213 1,586,506
------------------ ------------------
Loss before allocated loss from joint venture
and extraordinary items (682,843) (178,113)
Loss allocated to minority interest 19,779 2,393
Extraordinary items:
Gain on sale
3,559,333 -
Net income (loss)
$ 2,896,269 $ (175,720)
================== ==================
Gain/(loss) per limited partnership unit before
extraordinary gains $ (28.35) $ (7.39)
Extraordinary gains per limited partnership 147.76 $ -
------------------ ------------------
Income (loss) per limited partnership unit $ 120.23 $ (7.29)
================== ==================
Distributions per limited partnership unit $ - $ -
================== ==================
Weighted average number of limited
partnership units
outstanding 23,366 23,366
================== ==================
</TABLE>
See notes to financial statements
-4-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
--------------------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
Three Months Ended March 31, 1998 and 1997
------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1997
---- ----
<S> <C> <C>
Cash flow from operating activities:
Net loss $ 2,896,269 $ (175,720)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation and amortization 206,233 96,218
Loss allocated to minority interest (19,779) (2,393)
Extraordinary gains (3,559,333) -
Changes in operating assets and liabilities:
Escrow deposits 157,278 (23,335)
Interest and other receivables 5,829 13,191
Prepaid expenses 183,854 74,390
Prepaid commisions - (29,763)
Other assets - -
Accounts payable and accrued expenses (178,686) (163,290)
Accrued interest 6,898 21,444
Security deposits and prepaid rent (121,880) 9,093
------------------ ------------------
Net cash (used in) operating activities (423,317) (180,165)
------------------ ------------------
Cash flow from investing activities:
Capital expenditures 10,352,664 (69,599)
Increase in note(s) receivable - -
------------------ ------------------
Net cash (used in) investing activities 10,352,664 (69,599)
------------------ ------------------
Cash flows from financing activities:
Mortgage costs 8,723 (2,888)
Cash overdraft (520,430) 335,309
Accounts payable - affiliates (2,380,436) (5,060)
Principal payments on mortgages and notes (7,037,204) (77,597)
Proceeds from mortgage - -
------------------ ------------------
Net cash provided by financing activities (9,929,347) 249,764
------------------ ------------------
Increase (decrease) in cash - 0
Cash - beginning of period - -
------------------ ------------------
Cash - end of period $ - $ 0
================== ==================
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 307,723 $ 459,202
================== ==================
</TABLE>
See notes to financial statements
-5-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
--------------------------------------------------
STATEMENTS OF PARTNERS' (DEFICIT)
----------------------------------
Three Months Ended March 31, 1998
---------------------------------
(Unaudited)
<TABLE>
<CAPTION>
General Limited Partners
Partners
Amount Units Amount
------ ----- ------
<S> <C> <C> <C>
Balance, January 1, 1998 $ (710,608) 23,366 $ (3,877,035)
Net loss
86,888 - 2,809,381
------------------ --------------- -----------------
Balance, March 31, 1998 $ (623,720) 23,366 $ (1,067,654)
================== =============== =================
</TABLE>
See notes to financial statements
-6-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP IV
--------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Three Months Ended March 31, 1998 and 1997
------------------------------------------
(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 three month periods ended March 31, 1998 and 1997,
have been made in the financial statements. Such financial statements are
unaudited and subject to any 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 23,363 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.
Underthe 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.
-7-
<PAGE>
FORMATION AND OPERATION OF PARTNERSHIP (CONTINUED)
- ---------------------------------------------------
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Use of Estimates:
----------------
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
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 and totaled $853,248 and $770,643
for the years ended December 31, 1997 and 1996, respectively. Generally,
buildings and improvements are depreciated over 25 years, and furniture,
fixture, and equipment are depreciated. 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.
-8-
<PAGE>
Rents Receivable:
----------------
Due to the nature if these accounts, residential rent receivables are
fully reserved for at December 31, 1997 and 1996.
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, 1990 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 February 1996, the Partnership sold Airlane I and Airlane III, two
office/warehouse buildings located in Nashville, Tennessee. The sale of
the property generated a gain for financial statement purposes of
$1,148,604 for the period ended March 31, 1998.
In March 1998, the Partnership sold Creekside Apartments, two apartment
complexes consisting of 96 and 144 units located in Flat Rock Michigan.
The sale of the property generated a gain for financial statement purposes
of $2,410,729 for the period ended March 31, 1998.
-11-
<PAGE>
5. 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 $2,481,746 and $2,501,582 at March 31, 1998
and 1997, respectively, provides for annual principal and interest
payments at 8.25% payable in equal monthly installments of $37,204. The
term of the mortgage is ten years with the remaining balance due and
payable on February 1, 2006.
The Partnership is currently not in compliance with certain debt covenants
requiring timely submission of income tax returnsto the financial
institution within thirty days of filing.
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 March 31, 1998 and 1997
was $3,322,801 and $3,361,461, 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 10.25%
at March 31, 1997). At March 31, 1998 and 1997 the outstanding balance was
$0 and $22,921, respectively.
Creekside
---------
An adjustable rate mortgage with an outstanding principal balance of $0
and $3,651,727 at March 31, 1998 and 1997, respectively. The interest rate
is adjustable quarterly to a maximum rate of 13.5% and a minimum rate of
7% (7.09% at March 31, 1997). The mortgage is payable monthly in amounts
which vary with the interest rate. This property was sold March 1998, and
the mortgage was paid in full.
-12-
<PAGE>
MORTGAGES AND NOTES PAYABLE (CONTINUED)
---------------------------------------
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 extended to March 1, 1997. The balance
as of March 31, 1998 and 1997 was $3,879,229 and $3,911,790, respectively.
Evergreen Terrace
-----------------
An adjustable rate mortgage with a balance at March 31, 1998 and 1997 of
$1.009,005 and $1,017,156 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; the interest rate shall
never be less than 9% over the life of the loan (9.00% at March 31, 1997).
The mortgage is payable monthly in amounts which vary with the interest
rate. As a result of the Partnership's failure to make regular principal
and interest payements, the property was placed in receivership in October
1997. There is a pending foreclosure action with respect to the property.
Management has until September 1998 to either pay off the mortgage or sell
the property, or the mortgagor will foreclose on the property.
Chapelwood Estates (formerly Cedar Court)
----------------------------------------
A 9.25% mortgage with a balance of $0 and $894,551 at March 31, 1998 and
1997, 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 property is no longer owned
by the Partnerhsip.
The mortgages described above are secured by the Partnership properties to
which they relate.
-13-
<PAGE>
MORTGAGES AND NOTES PAYABLE (CONTINUED)
--------------------------------------
The aggregate maturities of mortgages and notes payable for each of the
next five years and thereafter are as follows:
Year Amount
---- ------
1998 $ 4,959,069
1999 76,794
2000 76,056
2001 89,653
2002 97,194
Thereafter 5,404,943
--------------
TOTAL $10,703,709
==============
6. 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. The interests of the
Partnerships in the property were determined based on the fair value of
the property as estimated by the General Partners. The Partnership has all
the rights and responsibilities if a General Partner in the project.
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:
1998
----
Balance, January 1 $ (28,677)
Allocated Loss (19,779)
-----------
Balance, March 31 $(48,456)
===========
-14-
<PAGE>
LAKEVIEW JOINT VENTURE
----------------------
BALANCE SHEETS
--------------
March 31, 1998 and December 31, 1997
------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
ASSETS
<S> <C> <C>
Propery, net of accumulated depreciation $ 2,319,107 $ 2,359,318
Other assets 212,799 192,873
--------------- ---------------
Total Assets $ 2,531,906 $ 2,552,191
=============== ===============
LIABILITIES AND PARTNERS' (DEFICIENCY)
Liabilities:
Cash overdraft $ 30,944 $ 97,360
Mortgage payable 2,481,746 2,487,288
Accounts payable and accrued expenses 237,124 229,389
Accounts payable - affiliates 280,729 123,894
Other liabilities 48,313 39,270
--------------- ---------------
Total Liabilities 3,078,856 2,977,201
--------------- ---------------
Partners' (Deficiency) (546,950) (425,010)
--------------- ---------------
Total Liabilities and Partners' (Deficiency) $ 2,531,906 $ 2,552,191
=============== ===============
</TABLE>
-15-
<PAGE>
LAKEVIEW JOINT VENTURE
----------------------
STATEMENTS OF OPERATIONS
------------------------
Three Months Ended March 31, 1998 and 1997
------------------------------------------
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1997
Income:
Rental $ 81,081 $ 187,098
Interest and other income 3,744 12,259
--------------- ---------------
Total income 84,825 199,357
--------------- ---------------
Expenses:
Property operations 82,732 91,523
Depreciation and amortization 43,743 3,487
Interest 51,544 73,397
Administrative 28,746 45,705
--------------- ---------------
Total expenses 206,765 214,112
--------------- ---------------
Net loss $ (121,940) $ (14,755)
=============== ===============
Allocation of net loss:
The Partnership $ (19,779) $ (2,393)
Other Joint Venturer
(102,161) (12,362)
--------------- ---------------
$ (121,940) $ (14,755)
=============== ===============
-16-
<PAGE>
7. 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 $53,838 and $83,192 for the three months
ended March 31, 1998 and 1997, respectively.
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 three months ended
March 31, 1998 and 1997.
Accounts payable to affiliates amounted to $1,286,513 and $3,115,423 at
March 31, 1998 and 1997, respectively. The payables represent fees due and
advances from the Corporate General Partner or an affiliate of the General
Partners. Interest charged on accounts payable to affiliates totaled
$25,923 and $90,809 for the three months ended March 31, 1998 and 1997.
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 $20,394 for both the three months ended March
31, 1998 and 1997.
-17-
<PAGE>
RELATED PARTY TRANSACTIONS (CONTINUED)
--------------------------------------
Pursuant to the terms of the Partnership Agreement, the Corporate General
partner charged 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. These
charges totaled $58,617 and $59,173 for the three months ended March 31,
1998 and 1997, respectively.
8. 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.
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 three months ended March 31, 1998
and 1997 as reported in the statements of operations, and as would be
reported for tax purposes, is as follows:
March 31, March 31,
1998 1997
---- ----
Net Gain/(loss) statement of operations $2,896,269 $ (175,720)
Add to (deduct from):
Difference in depreciation (95,170) ( 80,140)
Gain on foreclosure ---- 1,101
Allowance for doubtful accounts 40,614 46,443
------------ --------------
Net loss - tax return purposes $2,841,713 $ ( 208,316)
============ ==============
-18-
<PAGE>
INCOME TAXES (CONTINUED)
- ------------------------
The reconciliation of Partners' (Deficit) as of March 31, 1998 and
December 31, 1997 as reported in the balance sheet, and as reported for
tax purposes, is as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---- ----
<S> <C> <C>
Partners' (Deficit) - balance sheet $ (1,691,374) $(3,383,185)
$ (1,691,374)
Add to (deduct from):
Accumulated difference in
depreciation (5,723,445) (5,628,275)
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 - -
Other 1,420,967 1,380,353
--------------- ---------------
Partners' (Deficit) - tax return purposes $ 3,895,292 $ (5,149,852)
=============== ===============
</TABLE>
-19-
<PAGE>
PART II MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS.
---------------------
The Partnership continues to encounter cash flow difficulties, primarily
stemming from poor cash collections, low occupancies. The General Partner and
its affiliates continue to loan the Partnership funds to cover cash flow
shortages, although under no obligation to do so. There continues to be no
assurance that the General Partner will continue to advance funds to the
Partnership. All advances are payable on demand. The Partnership did not make
any distributions for the three month periods ended March 31, 1998 and 1997, and
it does not envision making any future distributions until all partnership
obligations are satisfied, which will most likely not occur until the sale of
one or more properties in the Partnership.
Attractive incentive plans have been put in place to bring in new tenants; plans
for capital improvements, such as exterior painting and repairs to woodwork, are
also in place. The units destroyed by fire at Sutton Park were upgraded in hopes
of commanding higher rents. The on-site personnel at this property has been
successful in leasing almost all of the upgraded (i.e. re-built) units to date.
Results of Operations:
- ---------------------
Net income for the three month period ended March 31, 1998 amounted to
$2,896,269 or $120.23 per limited partnership unit versus a net loss of $175,720
or $7.29 per limited partnership unit for the quarter ended March 31, 1997.
On a tax basis, the partnership generated a gain of $ 2,841,713or $ 117.97 per
limited partnership unit for the three month period ended March 31, 1998
compared to a tax loss of $208,316 or $8.65 per unit for the three month period
ended March 31, 1997.
-20-
<PAGE>
Results of Operations (continued):
- ----------------------------------
Partnership revenue for the quarter ended March 31, 1998 totaled $823,370
decreasing just over $ from the corresponding 1997 period relates to the sale of
Airlanes and Creekside during the quarter, decreasing rental income.
For the three month period ended March 31, 1998, partnership expenses totaled
$652,656 a decrease of $23,446 from the quarter ended March 31, 1997.
For the three month period ended March 31, 1998, the Lakeview Joint Venture
generated a net loss of $121,940 For the three months ended March 31, 1997, the
joint venture had a net loss of $14,755 with 16.22% of the loss, or $2,393,
allocated to the minority venturer.
Management is putting forth every effort to decrease expenses and increase
income in the Partnership. Additional advertising and marketing is planned as a
means of attracting new tenants. Capital improvements are underway at virtually
all of the residential properties in the Partnership, thus cash flow is expected
to remain tight for the next several months. It is management's hope that one of
the properties with a signed sales contract will close shortly, but in the event
that this does not occur, there is a possibility that the Partnership will go
into default on one of its mortgages.
-21-
<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
- -----------------------------------------
None.
-22-
<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 May 20, 1998
------------------------------ -------------------------
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 May 20, 1998
------------------------------ ------------------------
Joseph M. Jayson, Date
President and Director
/s/ Michael J. Colmerauer May 20, 1998
------------------------------ ------------------------
Michael J. Colmerauer Date
Secretary
-23-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> MAR-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 730,596
<PP&E> 19,510,267
<DEPRECIATION> 8,715,755
<TOTAL-ASSETS> 11,733,672
<CURRENT-LIABILITIES> 2,769,793
<BONDS> 10,703,709
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,733,672
<SALES> 0
<TOTAL-REVENUES> 823,370
<CGS> 0
<TOTAL-COSTS> 1,486,434
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 314,621
<INCOME-PRETAX> (663,064)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 3,559,333
<CHANGES> 0
<NET-INCOME> 2,896,269
<EPS-PRIMARY> 120.23
<EPS-DILUTED> 0
</TABLE>
