FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended December 31, 1999
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934. (NO FEE
REQUIRED)
Commission File Number 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 No.)
2350 North Forest Road
Suite 12-A
Getzville, New York 14068
(Address of Principal Executive Office)
Registrant's Telephone Number: (716) 636-9090
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interest
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-K or any
amendment to this Form 10-K.(X)
DOCUMENTS INCORPORATED BY REFERENCE
See page 13 for a list of all documents incorporated by reference
<PAGE>
PART I
ITEM 1: BUSINESS
-----------------
The Registrant, Realmark Property Investors Limited Partnership IV (the
"Partnership"), is a Delaware limited partnership organized in February 1985,
pursuant to an Agreement and Certificate of Limited Partnership (the
"Partnership Agreement"), under the Delaware Revised Uniform Limited Partnership
Act. The Partnership's general partners are Realmark Properties, Inc. (the
"Corporate General Partner"), a Delaware corporation, and Joseph M. Jayson (the
"Individual General Partner"). During 1988, Realmark Properties IV Associates
("Associates") and RPI Investors-IV, Inc. (formerly the "Corporate General
Partner") were merged with Realmark Properties, Inc. (the "Corporate General
Partner").
The Registrant commenced the public offering of its limited partnership
units, registered with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, on April 22, 1985, and concluded the
offering on June 22, 1986, having raised a total of $23,365,900 before deducting
sales commissions and expenses of the offering.
The Partnership's primary business and its only industry segment is to
own and operate income-producing real property for the benefit of its limited
partners. As of December 31, 1999, the Partnership owns one (1) apartment
complex totaling 215 units. This property is located in a relatively stable
community with a solid base from which to draw residents. There remains however,
strong competition from other complexes in the area. See also item 7. The
apartment complex is managed for the Partnership by Realmark Corporation, an
affiliate of the General Partners.
The business of the Partnership is not seasonal. As of December 31,
1999, the Partnership did not directly employ any persons in a full-time
position. All persons who regularly rendered services on behalf of the
Partnership through December 31, 1999 were employees of the Corporate General
Partner or its affiliates.
The Registrant's objectives are to acquire, operate and hold existing
income-producing properties to (1) provide long-term capital appreciation, (2)
provide cash distributions from operations, (3) provide investors with a
diversified real estate portfolio, and (4) preserve and protect Partnership
capital.
Occupancy for each complex as of December 31, 1999, 1998 and 1997 was
as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C>
Woodbridge Manor Apartments *** 68% 77%
Creekside Apartments * * 88%
Andover Park Apartments 83% 81% 87%
Evergreen Terrace Apartments ** ** 89%
Airlane Office Warehouse * * 90%
Lakeview Apartments (Joint Venture) * * 49%
</TABLE>
* This property was sold during 1998.
** The mortgagee put this property into receivership during 1998 and
foreclosed on the property in November 1998. No year-end occupancy is
available.
*** This property was sold during 1999.
2
<PAGE>
ITEM 1: BUSINESS (Con't.)
--------------------------
The percentage of total Partnership revenue generated from each complex
as of December 31, 1999, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Woodbridge Manor Apartments 40% 41% 25%
Creekside Apartments - 7% 22%
Andover Park Apartments 60% 31% 17%
Evergreen Terrace Apartments - 8% 6%
Chapelwood Estates - - 2%
Airlane Office Warehouse - 3% 15%
Lakeview Apartments (Joint Venture) - 10% 13%
</TABLE>
This annual report contains certain forward-looking statements
concerning the Partnership's current expectations as to future results. Such
forward-looking statements are contained in Item 7: Management's Discussion and
Analysis of Financial Conditions and Results of Operations. Words such as
"believes", "forecasts", "intends", "possible", "expects", "estimates",
"anticipates" or "plans" and similar expressions are intended to identify
forward-looking statements.
ITEM 2: PROPERTIES
-------------------
<TABLE>
<CAPTION>
Name and Location General Character of Property Purchase Date
----------------- ----------------------------- -------------
<S> <C> <C>
Lakeview Village Apts. Property was sold in December 1998.
Joint Venture
Milwaukee, WI
Woodbridge Manor Apts. Property was sold August 1999.
(formerly Sutton
Park Apts.)
Lansing, MI
Airlane I & III Property was sold in February 1998.
Nashville, TN
Evergreen Terrace Apts. Foreclosed on in November 1998.
(formerly Sunset Hills
Apts.)
Lansing, MI
3
<PAGE>
ITEM 2: PROPERTIES (Con't.)
-----------------------------
Name and Location General Character of Property Purchase Date
----------------- ----------------------------- -------------
Andover Park Apts. Apartment complex; 18 buildings on 12.4 December 1986
(formerly Willow acres; 215 units. The property's mortgage
Creek Apts.) was refinanced in June 1998 with a variable
Greenville, SC rate (equal to the LIBOR rate plus 300 basis points)
mortgage with a balance of $3,950,000 at December
31, 1999, which provides for monthly interest only
payments until maturity. The term of the
mortgage is two (2) years with the remaining
balance due and payable on July 25, 2000.
Creekside Apts. Property was sold in March 1998.
(formerly Bretton Park
Phase I and II)
Flat Rock, MI
</TABLE>
ITEM 3: LEGAL PROCEEDINGS
--------------------------
The Partnership is not a party to, nor is any of the Partnership's
property the subject of, any material pending legal proceedings; however, for a
discussion of litigation which is pending against the General Partners and
certain other associates, please see item 7.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
-------------------------------------------------------------
None.
PART II
-------
ITEM 5: MARKET FOR REGISTRANT'S UNITS OF LIMITED PARTNERSHIP INTEREST.
-----------------------------------------------------------------------
There is currently no established trading market for the units of
Limited Partnership Interest of the Partnership and it is not anticipated that
any will develop in the future.
The Partnership did not make any distributions for the years ended
December 31, 1999, 1998 or 1997. See also Item 6.
As of December 31, 1999, there were 2,496 record holders of units of
Limited Partnership Interest.
4
<PAGE>
<TABLE>
<CAPTION>
ITEM 6: SELECTED FINANCIAL DATA
-------------------------------
Realmark Properties Investors Limited Partnership-IV
----------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1995
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Total assets $ 4,554,061 $ 8,385,069 $ 19,088,920 $ 20,488,126 $ 19,982,793
============ ============ ============ ============ ============
Notes payable and
long-term obligations $ 3,950,000 $ 7,241,726 $ 17,740,913 $ 18,939,324 $ 19,414,288
============ ============ ============ ============ ============
------------------------------------------------------------------------------------------------------------------
Revenue $ 1,790,092 $ 3,005,495 $ 5,177,4635 $ 5,536,412 $ 5,753,559
Expenses 2,696,593 5,067,279 6,755,566 6,759,234 7,225,672
Loss before (income) loss
allocated to minority interest,
gain on sale of properties, and
extraordinary items (906,501) (2,061,784) (1,578,103) (1,222,822) (1,472,113)
(Income) Loss allocated to
minority interest (8,430) 8,277 47,154 36,106 42,625
Gain on sale of properties 1,131,370 3,509,473 -- -- --
Extraordinary items -- 477,871 150,771 1,501,158 --
------------ ------------ ------------ ------------ ------------
Net income (loss) $ 216,439 $ 1,933,837 $ (1,380,178) $ 314,442 $ (1,429,488)
============ ============ ============ ============ ============
------------------------------------------------------------------------------------------------------------------
Net cash provided by
(used in) operating activities $ (1,102,255) $ (2,654,306) $ 388,4086) $ (984,095) $ (875,686)
Principal payments on
long-term debt (3,291,726) (10,761,617) (303,860) (5,658,964) (467,195)
Proceeds from refinancing -- 3,950,000 -- -- --
Principal payments upon
refinancing -- (3,434,411) -- -- --
------------ ------------ ------------ ------------ ------------
Net cash provided
by (used in) operating activities
plus proceeds less principal
payments on long-term debt $ (4,393,981) $(12,900,334) $ 84,548) $ (6,643,059) $ (1,342,881)
============ ============ ============ ============ ============
------------------------------------------------------------------------------------------------------------------
Income (loss) per limited
partnership unit before
extraordinary gains $ 4.14 $ 54.53 $ (63.55) $ (49.26) $ (59.34)
Extraordinary gains per
limited partnership unit 0.00 20.45 6.26 62.32 --
------------ ------------ ------------ ------------ ------------
Income (loss) per limited
partnership unit $ 4.14 $ 74.98 $ (57.29) $ 13.06 $ (59.34)
============ ============ ============ ============ ============
Weighted average number
of limited partnership
units outstanding 23,366 23,366 23,366 23,366 23,366
============ ============ ============ ============ ============
------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Liquidity and Capital Resources:
--------------------------------
The Partnership continues to incur cash flow deficits (excluding gains
from property sales and extraordinary gains) and large losses from operations as
has been noted in prior years. The Corporate General Partner and its affiliates
have regularly advanced funds and/or not taken payment of fees otherwise
entitled to whenever it was necessary to cover its shortfalls. The Corporate
General Partner is under no obligation to make advances, and there is no
assurance that such advances will continue. As of December 31, 1999, the
Corporate General Partner (and affiliate) advances totaled $2,649,886, all of
which is payable on demand and accruing interest at 11% per annum. Due to the
operating shortfalls, the Partnership did not make any distributions in the
years ended December 31, 1999, 1998 and 1997. Until such time as the Partnership
can satisfy its obligations and repay the Corporate General Partner and
affiliate advances, which is not expected to happen prior to the sale of the
remaining property in the Partnership, no distributions are anticipated.
The mortgage on Andover Park Apartments is expected to be refinanced
prior to its July 2000 maturity.
Management was successful in negotiating sales contracts in 1998 and
1999 on Airlanes Office/Warehouse, Creekside Apartments and Lakeview Village
Apartments and Woodbridge Manor Apartments. The Airlanes Office/Warehouse
Complex sold on February 12, 1998 for a sales price of $4,700,000, while
Creekside Apartments sold on March 18, 1998 for $5,075,000. Lakeview Village
Apartments were sold on December 29, 1998 for a sales price of $3,400,000. The
sales resulted in a total gain for financial statement purposes totaling
$3,509,473 for the year ended December 31, 1998. In addition, the sale of
Lakeview Village Apartments resulted in an extraordinary gain from
extinguishment of debt which amounted to $253,159 for the year ended December
31, 1998 as the lender forgave a portion of the mortgage and/or accrued interest
on the debt.
During 1998, management allowed the foreclosure on Evergreen
Apartments, located in Lansing, Michigan. As a result of the foreclosure, the
bank took back the building and any personal property which the mortgage was
secured by, they kept all escrow account balances and other deposits which were
in their possession, and they forgave the mortgage and any accrued interest. The
foreclosure resulted in an extraordinary gain of $224,712 for the year ended
December 31, 1998.
During 1999, Woodbridge Manor Apartments, located in Lansing, Michigan
was sold for a sale price of $6,400,000. The sale resulted in a $1,131,370 total
gain for financial statement purposes for the year ended December 31, 1999.
Management has once again implemented a corrective action plan in
response to the going concern considerations discussed in Note 11 to the
financial statements. These plans include the closer monitoring of expenses such
as payroll and maintenance, which have typically been the expenses that have
increased from year to year. Management, however, realizes that with the
physical improvements needed at the remaining property, cutting expenses
drastically is not very likely. More attention has to be centered on increasing
revenues. Management must decrease vacancies and improve on its collection
6
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------- ---------------------------------------------------------------
RESULTS OF OPERATIONS (Con't.)
------------------------------
Liquidity and Capital Resources (Con't.):
-----------------------------------------
policies. This will be a major area of focus in the coming year. Management's
plans also include increased efforts to sell the one remaining property in the
Partnership. Marketing efforts will include advertising in national newspapers,
such as The Wall Street Journal, and mailing of sales packages and follow-up
telephone calls to brokers. Management has received offers on the property, but
either the offers have been lower than what management feels the property is
worth in the current marketplace or the sales were subject to a number of
contingencies and were eventually canceled by the buyer.
The Partnership conducted a review of its computer systems to identify
the systems that could have been affected by the "year 2000 issue" and
implemented a plan to resolve such issues. The year 2000 issue is the result of
computer programs being written using two digits rather than four digits to
define the applicable year. Computer programs that have time-sensitive software
may recognize a date using "00" as the year 1900 rather than the year 2000. This
could have resulted in a system failure or miscalculations causing disruptions
of operations, including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.
Management contracted with outside independent computer consultants to resolve
the issue. The majority of the software in use is "2000 compliant" or was added
at no significant cost. Management also engaged a computer firm to re-write its
tax software making it Year 2000 compliant. Management did not experience any
significant problems with its computers as a result of the year 2000 issue and
does not anticipate any such problems in the future.
The Partnership, as a nominal defendant, the General Partners of the Partnership
and the three individuals constituting the officers and directors of the
Corporate General Partner, as defendants, were served with a Summons and
Complaint on April 19, 2000 in a class and derivative action instituted by Ira
Gaines and on August 21, 2000 in a class and derivative action instituted by
Sean O'Reilly and Louise Homburger, each in Supreme Court, County of Erie, State
of New York. The actions allege breaches of contract and breaches of fiduciary
duty and seek, among other things, an accounting, the removal of the General
Partners, the liquidation of the Partnership and the appointment of a receiver
to supervise the liquidation, and damages. The General Partners and the officers
and directors of the Corporate General Partner have filed a motion to dismiss
the first complaint and are presently reviewing the second complaint and intend
to vigorously pursue their defense.
Results of Operations:
----------------------
For the years ended December 31, 1999 and 1998, respectively, the
Partnership had net income of $216,439 or $4.14 per limited partnership unit and
$1,933,837 or $74.98 per limited partnership unit. Included in net income was
the gain on sale of Woodbridge Manor Apartments of $1,131,370 in 1999 and the
gain on sale of Creekside Apartments, Lakeview Apartments and Airlane Office
Warehouse of $3,509,473 in 1998. Extraordinary gains in 1998 were due to
foreclosure on Evergreen Terrace Apartments by the mortgagee totaling $224,712
and from debt forgiveness totaling $253,159. Before such gains, the loss
incurred by the Partnership was $914,931 or $37.98 per limited partnership unit
in 1999 and $2,053,507 or $85.25 per limited partnership unit in 1998. For the
year ended December 31, 1997, the Partnership incurred a net loss totaling
$1,380,178 or $57.29 per limited partnership unit after extraordinary income
resulting from the foreclosure on Chapelwood Estates Apartments of $150,771.
7
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------- ---------------------------------------------------------------
RESULTS OF OPERATIONS (Con't.)
------------------------------
Results of Operations(Con't):
-----------------------------
Partnership revenues for the year ended December 31, 1999 totaled
$1,790,092, consisting of rental income of $1,549,105 and other income, which
includes interest, laundry income, and other miscellaneous sources of income of
$240,987. Rental income for the years ended December 31, 1998 and 1997 totaled
$2,766,367 and $4,861,019, respectively. The primary reason for the decrease in
total revenue when comparing the year ended December 31, 1999 to both 1998 and
1997 is the reduction in the number of properties owned over the three year
period. The Partnership sold one property in August of 1999 and two properties
(one residential and one commercial property) at the beginning of 1998 which had
reported income for the full year of 1997. Two other properties were disposed of
in late 1998. Declining average occupancy was evident over the last three years
and also contributed to the decline in revenue. Occupancy at the one property
remaining in the Partnership at December 31, 1999 increased slightly when
compared 1998 but was lower than 1997. Occupancies at Lakeview Apartments, which
was sold in December 1998, and Evergreen Apartments, which was foreclosed on by
the lender in November 1998, were extremely low up until the time of disposal.
As an example, Lakeview's occupancy dropped to approximately 60% just prior to
its sale. In an effort to increase occupancies, management continued to offer
incentive programs throughout the year.
Partnership expenses for the year ended December 31, 1999 totaled
$2,696,593, a decrease over the expenses of the years ended December 31, 1998
and 1997 when expenses totaled $5,067,279 and $6,755,566, respectively. The
primary reason for the decrease in total expenses is attributed, just as the
decrease in revenue, to there being fewer properties incurring expenses in the
Partnership. No depreciation was taken during 1999 or 1998 since all properties
were considered to be "held for sale" (see Note 3 to the financial statements)
in those years. Administrative expenses also decreased over the last several
years due to the decrease in the number of properties owned.
The Partnership expects to continue incurring higher than "normal"
property operations expenses in the near future as a considerable amount of
improvement work is still necessary to make the remaining property more
attractive to new tenants and potential buyers. Some of the needed future
improvements will result in capitalizable assets while others will be expensed
in the year made. The work planned includes interior and exterior painting,
replacing of carpeting and appliances at several of the units, and structural
work such as decks/patios. Cash generated from prior sales of properties and
currently held in reserve will be the primary source of funding for the
improvements. Although this work is necessary in order to increase rental
revenue generated in the Partnership, management continues to keep in mind that
expenditures must be closely monitored so as not to worsen the cash flow
situation of the Partnership.
For the year ended December 31, 1999, the tax basis income was
$3,827,897 or $158.91 per limited partnership unit compared to a tax basis
income of $3,048,632 or $126.56 per limited partnership unit for the year ended
December 31, 1998 and a tax basis loss of $1,127,838 or $46.82 per limited
partnership unit for the year ended December 31, 1997. The Partnership agreement
provides for the taxable income or losses other than from refinancing or
disposal of a property to be allocated 97% to the Limited Partners and 3% to the
General Partners.
8
<PAGE>
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
------- ----------------------------------------------------------
The Partnership does not have investments in instruments which are
subject to market risk (e.g., derivatives, options or other interest sensitive
instruments).
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
------- --------------------------------------------
Listed under Item 14 of the report.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
------- ---------------------------------------------------------------
FINANCIAL DISCLOSURE.
---------------------
As reported on Form 8-K/A, filed with the Securities and Exchange
Commission on April 17, 2000, and incorporated herein by reference in its
entirety: (i) Deloitte & Touche, LLP notified the Company on January 11, 2000
that its relationship as the principal accountants to audit the Company's
financial statements had ceased; and (ii) effective January 28, 2000, the
company engaged Toski, Schaefer & Co., P.C. as its independent accountants.
9
<PAGE>
PART III
--------
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
------------------------------------------------------------
The Partnership, as an entity, does not have any directors or officers.
The Individual General Partner of the Partnership is Joseph M. Jayson. The
directors and executive officers of Realmark Properties, Inc., the Partnership's
Corporate General Partner, as of December 31, 1999 are listed below. Each
director is subject to election on an annual basis.
<TABLE>
<CAPTION>
Title of All Positions Year First
Name Held With the Company Elected to Position
---- --------------------- -------------------
<S> <C> <C>
Joseph M. Jayson President and Director 1979
Judith P. Jayson Vice President and Director 1979
Michael J. Colmerauer Secretary 1991
</TABLE>
Joseph M. Jayson, President and Director of Realmark Properties, Inc.
and Judith P. Jayson, Vice President and Director of Realmark Properties, Inc.,
are married to each other.
The Director and Executive Officers of the Corporate General Partner
and their principal occupations and affiliations during the last five years or
more are as follows:
Joseph M. Jayson, age 61, is President and Director and sole
stockholder of J.M. Jayson & Company, Inc. and certain of its affiliated
companies: U.S. Apartments LLC, Westmoreland Capital Corporation, Oilmark
Corporation and U.S. Energy Development Corporation. In addition, Mr. Jayson is
President and Director of Realmark Corporation and Realmark Properties, Inc.,
wholly owned subsidiaries of J.M. Jayson & Company, Inc. and co-general partner
of Realmark Property Investors Limited Partnership, Realmark Property Investors
Limited Partnership-II, Realmark Property Investors Limited Partnership-III,
Realmark Property Investors Limited Partnership-IV, Realmark Property Investors
Limited Partnership-V, Realmark Property Investors Limited Partnership-VI A and
Realmark Property Investors Limited Partnership-VI B. Mr. Jayson is a member of
the Investment Advisory Board of the Corporate General Partner. Mr. Jayson has
been engaged in the real estate business for the last 37 years and is a
Certified Property manager as designated by the Institute of Real Estate
Management ("I.R.E.M."). Mr. Jayson received a B.S. Degree in Education in 1961
from Indiana University, a Masters Degree from the University of Buffalo in
1963, and has served on the Educational Faculty of the Institute of Real Estate
Management. Mr. Jayson has for the last 37 years been engaged in various aspects
of real estate brokerage and investment. He brokered residential properties from
1962 to 1964, commercial and investment properties from 1964 to 1967, and in
1967, left commercial real estate to form his own investment firm. Since that
time, Mr. Jayson and J.M. Jayson & Company, Inc. have formed, or participated in
various ways, in forming over 30 real estate related limited partnerships. For
the past 18 years, Mr. Jayson and J.M. Jayson & Company, Inc. and an affiliate
have also engaged in developmental drilling for gas and oil.
10
<PAGE>
Judith P. Jayson, age 59, is currently Vice-President and a Director of
Realmark Properties, Inc. She is also a Director of the property management
affiliate, Realmark Corporation. Mrs. Jayson has been involved in property
management for the last 28 years and has extensive experience in the hiring and
training of property management personnel and in directing, developing and
implementing property management systems and programs. Mrs. Jayson, prior to
joining the firm in 1973, taught business in the Buffalo, New York high school
system. Mrs. Jayson graduated from St. Mary of the Woods College in Terre Haute,
Indiana, with a degree in Business Administration. Mrs. Jayson is the wife of
Joseph M. Jayson, the Individual General Partner.
Michael J. Colmerauer, 42, is Secretary and in-house legal counsel for
J.M. Jayson & Company, Inc., Realmark Corporation, Realmark Properties, Inc. and
other companies affiliated with the General Partners. He received a Bachelor's
Degree (BA) from Canisius College in 1980 and a Juris Doctors (J.D.) from the
University of Tulsa in 1983. Mr. Colmerauer is a member of the American and Erie
County Bar Association and has been employed by the Jayson group of companies
for the last 16 years.
ITEM 11: EXECUTIVE COMPENSATION.
--------------------------------
No direct remuneration was paid or payable by the Partnership to
directors and officers (since it has no directors or officers) for its fiscal
years ended December 31, 1999, 1998 or 1997; nor was any direct remuneration
paid or payable by the Partnership to directors or officers of Realmark
Properties, Inc., the Corporate General Partner and sponsor for the years ended
December 31, 1999, 1998 or 1997.
The following table sets forth for the years ended December 31, 1999,
1998 and 1997 the compensation paid by the Partnership, directly or indirectly,
to affiliates of the General Partners:
<TABLE>
<CAPTION>
Entity Receiving Type of
Compensation Compensation 1999 1998 1997
------------ ------------ ---- ---- ----
<S> <C> <C> <C> <C>
Realmark Properties, Inc.
(The Corporate
General Partner) Interest charged on
accounts payable -
affiliates $324,016 $ 268,880 $ 306,514
------------ ------------- -----------
Reimbursement for
allocated partnership
operational expenses 141,167 175,385 249,667
Realmark Corporation Property Management Fees 83,345 129,086 264,396
Computer Service Charges 7,338 9,942 20,394
------------ ------------- -----------
231,850 314,413 534,457
------------ ------------- -----------
Total 555,866 $ 583,293 $ 840,971
============ ============= ===========
</TABLE>
The executive officers received compensation from J.M. Jayson & Co.,
Inc. Any portion of an officer's compensation attributable to an officer's
services to the Partnership are immaterial. The directors receive no
compensation from any entity. The Corporate General Partner is entitled to a
continuing Partnership Management Fee equal to 7% of net cash flow (as defined
in the Partnership Agreement) of which 2% is subordinated to the receipt by the
Limited Partners of a non cumulative annual cash return equal to 7% of the
average of their adjusted Capital Contributions (as defined in the Partnership
Agreement). No such fees were paid or accrued by the Partnership in or for the
11
<PAGE>
ITEM 11: EXECUTIVE COMPENSATION. (Con't)
----------------------------------------
years ended December 31, 1999, 1998 and 1997. The General Partners are entitled
to 3% of Distributable Cash (as defined in the Partnership Agreement) and to
certain expense reimbursements with respect to Partnership operations. No such
fee was paid or accrued by the Partnership in or for the years ended December
31, 1999, 1998 and 1997.
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, 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.
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 in 1990 and the Airlane Office Warehouse, Creekside
Apartments, and Lakeview Village Apartments in 1998 and the Woodbridge Manor
Apartments in 1999.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
------------------------------------------------------------------------
No person is known to the Partnership to own of record or beneficially
more than five percent (5%) of the units of Limited Partnership Interests of the
Partnership. Except for the General Partner's Interest in the Partnership
($3,000 initial capital contribution), the General Partners, as of December 31,
1999, owned no units of Limited Partnership Interest.
Affiliates of the General Partners own of record or beneficially 23.1 units of
Limited Partnership Interest constituting approximately .10% of the total
Partnership Interest.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
--------------------------------------------------------
(a) Transactions with Management and Others.
----------------------------------------
During 1999, no transactions occurred between the Partnership and those
in the management of Realmark Properties, Inc. All transactions between the
Partnership and Realmark Properties, Inc. (the Corporate General Partner) and
any other affiliated organization are described in Item 11 of this report and in
Note 6 to the Financial Statements.
12
<PAGE>
ITEM 14: EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
(a) Financial Statements and Schedules.
-----------------------------------
FINANCIAL STATEMENTS PAGE
-------------------- ----
<S> <C>
(i) Independent Auditors' Report F-1
(ii) Independent Auditors' Report for the F-2
two fiscal years ended December 31, 1998
(iii) Balance Sheets at December 31, 1999 and 1998 F-3
(iv) Statements of Operations for the years ended
December 31, 1999, 1998 and 1997 F-4
(v) Statements of Partners' Deficit for the
years ended December 31, 1999, 1998 and 1997 F-5
(vi) Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997 F-6
(vii) Notes to Financial Statements F-7 to F-16
FINANCIAL STATEMENT SCHEDULE
----------------------------
(i) Schedule III - Real Estate and Accumulated Depreciation F-17-F-18
All other schedules are omitted because they are not
applicable or the required information is shown in the
financial statements or the notes thereto.
(b) Reports on Form 8-K.
--------------------
(i) None.
(c) Exhibits
--------
4. Instruments defining the rights of security holders, including indentures.
(a) First Amended and Restated Agreement and
Certificate of Limited Partnership filed
with the Registration Statement of the
Registrant Form S-11, filed February 14,
1985, and subsequently amended, incorporated
herein by reference.
(b) Partnership Agreement included with the
Registration Statement of the Registrant as
filed and amended to date incorporated
herein by reference
10. Material contracts.
(a) Property Management Agreement with Realmark
Corporation included with the Registration
Statement of the Registrant as filed and
amended to date incorporated herein by
reference.
(b) Joint Venture Agreement with Realmark
Property Investors Limited Partnership VI B
as filed and amended to date incorporated
herin by reference.
27. Financial Data Schedule
(a) Schedule is included herewith.
</TABLE>
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 9/27/00
----------------------------- ---------------
JOSEPH M. JAYSON, Date
Individual General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below 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 9/27/00
----------------------------- ---------------
JOSEPH M. JAYSON, Date
President and Director
/s/ JUDITH P. JAYSON 9/27/00
----------------------------- ---------------
JUDITH P. JAYSON, Date
Director
/s/ MICHAEL J. COLMERAUER 9/27/00
----------------------------- ---------------
MICHAEL J. COLMERAUER Date
Secretary
14
<PAGE>
INDEPENDENT AUDITOR'S REPORT
----------------------------
The Partners
Realmark Property Investors Limited Partnership-IV:
We have audited the accompanying balance sheet of Realmark Property Investors
Limited Partnership-IV as of December 31, 1999, and the related statements of
operations, partners' deficit, and cash flows for the year ended December 31,
1999. Our audit also included the financial statement schedule listed in the
index at Item 14. These financial statements and the financial statement
schedule are the responsibility of the General Partners. Our responsibility is
to express an opinion on the financial statements and the financial statement
schedule based on our audit. The financial statements of Realmark Property
Investors Limited Partnership-IV for the years ended December 31, 1998 and 1997
were audited by other auditors whose report dated June 16, 1999, on those
statements included an explanatory paragraph that described substantial doubt
about the Partnership's ability to continue as a going concern as discussed in
note 12 to those financial statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
General Partners, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Realmark Property Investors
Limited Partnership-IV as of December 31, 1999, and the results of its
operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles. Also, in our opinion, the financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
The accompanying financial statements and financial statement schedule have been
prepared assuming that the Partnership will continue as a going concern. As
discussed in note 11 to the financial statements, the Partnership's recurring
losses from operations, operating cash flow deficiencies, partners' deficit and
the current nature of its mortgage payable raise substantial doubt about its
ability to continue as a going concern. Management's plans concerning these
matters are also described in note 11. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ TOSKI, SCHAEFER & CO., P.C.
-------------------------------
Williamsville, New York TOSKI, SCHAEFER & CO., P.C.
April 12, 2000
(August 21, 2000 as to note 13)
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Realmark Property Investors Limited Partnership - IV
We have audited the accompanying balance sheets of Realmark Property Investors
Limited Partnership - IV as of December 31, 1998 and the related statements of
operations, partners' capital (deficit), and cash flows for each of the two
years in the period ended December 31, 1998. Our audits also included the
financial statement schedule listed in the index at Item 14. These financial
statements and financial statement schedule are the responsibility of the
General Partners. Our responsibility is to express an opinion on the financial
statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
General Partners, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Realmark Property Investors Limited
Partnership - IV at December 31, 1998 and the results of its operations and its
cash flows for each of the two years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles. Also, in our opinion,
such financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
The accompanying financial statements and financial statement schedule have been
prepared assuming that the Partnership will continue as a going concern. As
discussed in Note 12 to those financial statements, the Partnership's recurring
losses, continuing cash flow deficiencies and partners' deficit, raise
substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are also described in Note 12 to
those financial statements. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ DELOITTE & TOUCHE LLP
-------------------------
DELOITTE & TOUCHE LLP
Buffalo, New York
June 16, 1999
F-2
<PAGE>
<TABLE>
<CAPTION>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Balance Sheets
December 31, 1999 and 1998
Assets 1999 1998
------ ---- ----
<S> <C> <C>
Property and equipment, at cost (including assets held for sale, see note 3):
Land $ 226,300 626,300
Buildings and improvements 4,354,553 11,385,396
Furniture and fixtures 537,500 1,237,500
------------ ------------
5,118,353 13,249,196
Less accumulated depreciation 2,365,276 5,598,075
------------ ------------
Net property and equipment 2,753,077 7,651,121
------------ ------------
Cash 1,686,913 29,981
Escrow deposits 76,876 437,505
Prepaid expenses -- 69,613
Mortgage costs, net of accumulated amortization of $95,909
in 1999 and $69,127 in 1998 31,970 182,879
Other assets 5,225 13,970
------------ ------------
Total assets $ 4,554,061 8,385,069
============ ============
Liabilities and Partners' Deficit
---------------------------------
Liabilities:
Mortgages payable 3,950,000 7,241,726
Notes payable - other -- 208,331
Accounts payable and accrued expenses 318,921 670,189
Interest payable 32,917 27,781
Accounts payable - affiliates 2,649,886 2,780,685
Security deposits and prepaid rents 68,228 147,117
------------ ------------
Total liabilities 7,019,952 11,075,829
------------ ------------
Minority interest in joint venture (28,524) (36,954)
Partners' deficit:
General partners (409,022) (528,652)
Limited partners (2,028,345) (2,125,154)
------------ ------------
Total partners' deficit (2,437,367) (2,653,806)
------------ ------------
Total liabilities and partners' deficit $ 4,554,061 8,385,069
============ ============
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Statements of Operations
Years ended December 31, 1999, 1998 and 1997
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Income:
Rental $ 1,549,105 2,766,367 4,861,019
Interest and other 240,987 239,128 316,444
----------- ----------- -----------
Total income 1,790,092 3,005,495 5,177,463
----------- ----------- -----------
Expenses:
Property operations 1,288,381 2,142,224 2,890,229
Interest:
To affiliates 324,016 268,880 306,514
Other 648,770 1,721,235 1,610,770
Depreciation -- -- 853,248
Administrative:
To affiliates 231,850 314,413 534,457
Other 203,576 620,527 560,348
----------- ----------- -----------
Total expenses 2,696,593 5,067,279 6,755,566
----------- ----------- -----------
Loss before (income) loss allocated to minority
interest, gain on sale of properties and extra-
ordinary items (906,501) (2,061,784) (1,578,103)
(Income) loss allocated to minority interest (8,430) 8,277 47,154
Gain on sale of properties 1,131,370 3,509,473 --
Extraordinary items - gain on extinguishment of debt -- 477,871 150,771
----------- ----------- -----------
Net income (loss) $ 216,439 1,933,837 (1,380,178)
=========== =========== ===========
Income (loss) per limited partnership unit before
extraordinary gains $ 4.14 54.53 (63.55)
Extraordinary gains per limited partnership unit -- 20.45 6.26
----------- ----------- -----------
Net income (loss) per limited partnership unit $ 4.14 74.98 (57.29)
=========== =========== ===========
Weighted average number of limited partnership
units outstanding 23,366 23,366 23,366
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Statements of Partners' Deficit
Years ended December 31, 1999, 1998 and 1997
Limited Partners
General -----------------------
Partners Units Amount
-------- ----- ------
<S> <C> <C> <C>
Balances at December 31, 1996 $ (669,203) 23,366 (2,538,262)
Net loss (41,405) -- (1,338,773)
---------- ---------- ----------
Balances at December 31, 1997 (710,608) 23,366 (3,877,035)
Net income 181,956 -- 1,751,881
---------- ---------- ----------
Balances at December 31, 1998 (528,652) 23,366 (2,125,154)
Net income 119,630 -- 96,809
---------- ---------- ----------
Balances at December 31, 1999 $ (409,022) 23,366 (2,028,345)
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Statements of Cash Flows
Years ended December 31, 1999, 1998 and 1997
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 216,439 1,933,837 (1,380,178)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 150,909 211,127 927,860
Income (loss) allocated to minority interest 8,430 (8,277) (47,154)
Gain on sale of properties (1,131,370) (3,509,473) --
Extraordinary gains -- (477,871) (150,771)
(Increase) decrease in:
Interest and other receivables -- 5,829 585,426
Prepaid expenses 69,613 162,893 (945)
Other assets 8,745 (46,519) (15,370)
Increase (decrease) in:
Accounts payable and accrued expenses (351,268) (476,442) 298,734
Interest payable 5,136 (175,338) 120,032
Security deposits and prepaid rents (78,889) (274,072) 50,774
----------- ----------- -----------
Net cash provided by (used in)
operating activities (1,102,255) (2,654,306) 388,408
----------- ----------- -----------
Cash flows from investing activities:
Escrow deposits 360,629 381,892 (122,780)
Proceeds from disposition of properties 6,029,414 13,880,685 --
Additions to property and equipment -- (3,545) (823,423)
----------- ----------- -----------
Net cash provided by (used in)
investing activities 6,390,043 14,259,032 (946,203)
----------- ----------- -----------
Cash flows from financing activities:
Increase (decrease) in cash overdraft -- (526,439) 388,407
Principal payments on debt (3,291,726) (10,761,617) (303,860)
Principal payments upon refinancing -- (3,434,411) --
Proceeds from refinancing -- 3,950,000 --
Mortgage acquisition costs -- (124,345) (25,947)
(Decrease) increase in accounts payable - due to
affiliates (130,799) (886,264) 499,195
Notes payable - other (208,331) 208,331 --
----------- ----------- -----------
Net cash provided by (used in)
financing activities (3,630,856) (11,574,745) 557,795
----------- ----------- -----------
Net increase in cash 1,656,932 29,981 --
Cash at beginning of year 29,981 -- --
----------- ----------- -----------
Cash at end of year $ 1,686,913 29,981 --
=========== =========== ===========
Supplemental disclosure of cash flow
information - cash paid for interest $ 816,741 1,685,446 1,416,126
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Notes to Financial Statements
December 31, 1999, 1998 and 1997
(1) 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.
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 (note 6).
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.
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,
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.
(2) Summary of Significant Accounting Policies
-----------------------------------------------
(a) Basis of Accounting
-----------------------
The accompanying financial statements have been prepared on the accrual
basis of accounting.
(b) Estimates
-------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those
estimates.
F-7
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Notes to Financial Statements, Continued
(2) Summary of Significant Accounting Policies, Continued
----------------------------------------------------------
(c) Cash
--------
For purposes of reporting cash flows, cash includes money market
accounts and any highly liquid debt instruments purchased with a
maturity of three months or less.
(d) Escrow Deposits
-------------------
Escrow deposits represent cash which is restricted for the payment of
property taxes or for repairs and replacements in accordance with
the mortgage agreement.
(e) Property and Equipment
--------------------------
Property and equipment are recorded at cost. Depreciation is provided
for in amounts sufficient to relate the cost of depreciable assets
to operations over their estimated service lives using the
straight-line method. The estimated useful lives of the
Partnership's assets range from 5 to 25 years. No depreciation
expense was recorded during the years ended December 31, 1999 and
1998. Depreciation expense amounted to $853,248 for the year ended
December 31, 1997. Improvements are capitalized, while
expenditures for maintenance and repairs are charged to expense as
incurred. Upon disposal of depreciable property, the appropriate
property accounts are reduced by the related costs and accumulated
depreciation. The resulting gains and losses are reflected in the
statements of operations. The accelerated cost recovery system and
modified accelerated cost recovery system are used to calculate
depreciation expense for tax purposes.
(f) Mortgage Costs
------------------
Mortgage costs incurred in obtaining the property mortgage financing
are recorded at cost less applicable amortization. Amortization is
computed using the straight-line method over the life of the
respective mortgages.
(g) Minority Interest in Consolidated Joint Venture
---------------------------------------------------
The minority interest in the Lakeview joint venture is stated at the
amount of capital contributed by the minority investors adjusted
for their share of joint venture losses. The Lakeview joint
venture is consolidated in the Partnership's financial statements
because the Partnership is the majority owner and exerts
significant control over its operations.
(h) Rental Income
-----------------
Rental income is recognized on the straight line method over the terms
of the leases. The outstanding leases with respect to rental
properties owned are for terms of no more than one year for
residential properties and no more than five years for commercial
properties.
(i) Income (Loss) Per Limited Partnership Unit
----------------------------------------------
The income (loss) per limited partnership unit is based on the
weighted average number of limited partnership units outstanding
for the year.
(j) Accrued Residential Rent Receivable
---------------------------------------
Due to the nature of accrued residential rent receivable, all such
receivables are fully reserved for at December 31, 1999 and 1998.
F-8
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Notes to Financial Statements, Continued
(2) Summary of Significant Accounting Policies, Continued
----------------------------------------------------------
(k) Income Taxes
----------------
No income tax provision has been included in the financial statements
since profit or loss of the Partnership is required to be reported
by the respective partners on their income tax returns.
(l) Comprehensive Income
------------------------
The Partnership has adopted Statement of Financial Accounting
Standards (SFAS) No. 130, "Reporting Comprehensive Income." SFAS
130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general
purpose financial statements. Comprehensive income is defined as
"the change in equity of a business enterprise during a period
from transactions and other events and circumstances from
non-owner sources." Other than net income (loss), the Partnership
has no other sources of comprehensive income.
(m) Segment Information
-----------------------
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" establishes standards for the way public business
enterprises report information about operating segments in annual
financial statements. The Partnership's only operating segment is
the ownership and operation of income-producing real property for
the benefit of its partners.
(n) Accounting Changes and Developments
---------------------------------------
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133 -
"Accounting for Derivative Instruments and Hedging Activities"
which establishes revised accounting and reporting standards for
derivative instruments and for hedging activities. It requires
that an entity measure all derivative instruments at fair value
and recognize such instruments as either assets or liabilities in
the balance sheets. The accounting for changes in the fair value
of a derivative instrument will depend on the intended use of the
derivative as either a fair value hedge, a cash flow hedge or a
foreign currency hedge. The effect of the changes in fair value of
the derivatives and, in certain cases, the hedged items are to be
reflected in either the statements of operations or as a component
of other comprehensive income, based upon the resulting
designation. As issued, SFAS No. 133 was effective for fiscal
years beginning after June 15, 1999. In June 1999, the FASB issued
SFAS No. 137 - "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB Statement No.
133." SFAS No. 137 defers the effective date of SFAS No. 133 for
one year to fiscal years beginning after June 15, 2000. Since the
Partnership does not currently have any derivative instruments or
hedging activities, management does not believe that SFAS No. 133
will have a material effect on the Partnership financial
statements, taken as a whole.
(o) Reclassifications
---------------------
Reclassifications have been made to certain 1998 and 1997 balances in
order to conform them to the 1999 presentation.
F-9
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Notes to Financial Statements, Continued
(3) Acquisition and Disposition of Rental Property
---------------------------------------------------
In November 1985, the Partnership acquired a 168 unit apartment complex
(Lakeview Village Apartments) 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
(Woodbridge Manor Apartments, formerly Sutton Park Apartments) located
in Lansing, Michigan for a purchase price of $7,252,858, which included
$588,716 in acquisition fees
In August 1986, the Partnership acquired two office/warehouse buildings of
62,598 square feet (Airlane 1) 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 a 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 Apts., 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
(Andover Park Apartments, formerly Willow Creek Apartments) 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 $1,711,093, which included $314,379 in acquisition fees.
In May 1987, the Partnership acquired a 56 unit apartment complex
(Chapelwood Estates, formerly Cedar Court Apartments) 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. The net assets acquired were equivalent to the carrying
value of the Partnership's investment in the joint venture at the time
of the dissolution. Since the date of the acquisition, the Partnership
had capitalized additional construction costs of $5,059,296, which
includes 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 loss on 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.
In July 1997, the mortgage holder on Chapelwood Estates foreclosed on the
property resulting in an extraordinary gain of $150,771 (note 7).
F-10
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Notes to Financial Statements, Continued
(3) Acquisition and Disposition of Rental Property, Continued
---------------------------------------------------------------
In February 1998, the Partnership sold the Airlane Office Warehouse for
$4,700,000 which generated a gain of $755,306 for financial statement
purposes.
In March 1998, the Partnership sold The Creekside Apartments for
$5,075,000 which generated a gain of $1,902,850 for financial statement
purposes.
In November 1998, the mortgage holder on Evergreen Terrace Apartments
foreclosed on the property resulting in an extraordinary gain of
$224,712 (note 7).
In December 1998, the Partnership sold the Lakeview Village Apartment
Complex for $3,400,000 which generated a gain of $851,317 for financial
statement purposes.
In August 1999, the Partnership sold Woodbridge Manor (formerly Sutton
Park) for $6,400,000 which generated a gain of $1,131,370 for financial
statement purposes.
In 1998, management entered into a plan to dispose of the property of
Andover Park (formally Willow Creek) with a carrying amount of
$2,753,077 at December 31, 1999 and 1998. Andover Park incurred net
losses of approximately $304,246 and $99,549 for the years ended
December 31, 1999 and 1998, respectively.
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 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. Fair
value is determined based on estimated future cash flows. Depreciation
expense, not recorded during the disposal period, for the years ended
December 31, 1999, 1998 and 1997 totaled approximately $340,000,
$753,000 and $265,000, respectively.
(4) Mortgages Payable
----------------------
A summary of the Partnership's mortgages payable follows:
Woodbridge Manor Apartments (Formerly Sutton Park Apartments)
-------------------------------------------------------------
A mortgage with a balance of $3,291,726 at December 31, 1998 was
satisfied when the property was sold in August 1999 (note 3).
Andover Park Apartments (Formerly Willow Creek Apartments)
----------------------------------------------------------
A mortgage with a balance of $3,950,000 at December 31, 1999 and 1998
provides for interest only payments bearing interest at 300 basis
points above the LIBOR rate. The mortgage principal balance of
$3,950,000 is due and payable in July 2000.
F-11
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Notes to Financial Statements, Continued
(4) Mortgages Payable, Continued
---------------------------------
The mortgages described above are secured by the Partnership properties to
which they relate.
<TABLE>
<CAPTION>
The maturity of the mortgage payable at December 31, 1999 is as follows:
Year Amount
---- ------
<S> <C> <C>
2000 $ 3,950,000
============
</TABLE>
(5) Minority Interest of Related Party in Lakeview 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 of 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.
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Balances at beginning of year $ (36,954) (28,677) 18,477
Allocated income (loss) 8,430 (8,277) (47,154)
--------- ------- -------
Balances at end of year $ (28,524) (36,954) (28,677)
========= ======= =======
</TABLE>
The Partnership sold the Lakeview Village Apartments in December 1998. Now
that the Lakeview Joint Venture no longer operates the property, it is
expected that the joint venture will be dissolved in 2000.
(6) Property Management Fees and 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
residential complexes and 6% of gross monthly receipts for commercial
properties to be paid as fees for administering the operations of the
properties. These fees totaled $83,345, $129,086 and $264,396 for the
years ended December 31, 1999, 1998 and 1997, respectively.
F-12
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Notes to Financial Statements, Continued
(6) Property Management Fees and Related Party Transactions, Continued
-----------------------------------------------------------------------
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. The results of operations include $47,772
of such fees in 1997. No such fees were incurred in 1999 and 1998 since
the property was sold in February 1998.
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 years ended December 31, 1999, 1998 and 1997.
Accounts payable to affiliates amounted to $2,649,886 and $2,780,685 at
December 31, 1999 and 1998, respectively. The payables represent fees
due and advances from the corporate general partner or an affiliate of
the general partners. Interest on accounts payable to affiliates,
charged at a rate of 11% on the average outstanding balance, totaled
$324,016, $268,880 and $306,514 for the years ended December 31, 1999,
1998, and 1997, respectively. All amounts payable to affiliates are due
upon demand.
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 in 1990, the Airlane Office Warehouse, Creekside
Apartments and Lakeview Village Apartments in 1998 and the Woodbridge
Manor Apartments in 1999.
Computer service charges for the partnership are paid or accrued to an
affiliate of the general partners. The fee is based, in part, upon the
number of apartment units and complexes. The fee totaled $7,338, $9,942
and $20,394 for each of the years ended December 31, 1999, 1998 and
1997, 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, acquisition
and disposition of properties and for other direct Partnership
expenses. These charges were for the Partnership's allocated share of
costs and expenses such as payroll, travel and communication costs
related to partnership accounting, partner communications and relations
and acquisition and disposition of properties and are included in
property operations. Certain expenses are allocated based on total
assets, number of partners and number of units, respectively. These
costs totaled $141,167, $175,385 and $249,667 in 1999, 1998 and 1997,
respectively.
F-13
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Notes to Financial Statements, Continued
(7) Extraordinary Gains and Supplemental Disclosure of Cash Flow Information
-----------------------------------------------------------------------------
The mortgage holder on Evergreen Terrace Apartments foreclosed on the
property in November 1998. The mortgage holder seized fixed assets with
a carrying value of $907,854, that had served as collateral on the
mortgage. The mortgage holder retained approximately $28,343 of escrow
balances and $23,923 of cash and other deposits and forgave the
mortgage balance and accrued interest of $1,144,244 and other
liabilities of $40,588. This transaction resulted in an extraordinary
gain on foreclosure of $224,712 in 1998.
The Partnership sold the Lakeview Village Apartments in December 1998. The
Partnership satisfied the majority of its mortgage liability using the
proceeds from the sale of the property. The remaining obligation was
forgiven by the lender, resulting in an extraordinary gain of $253,159
in 1998.
The mortgage holder on Chapelwood Estates foreclosed on the property in
July 1997. The mortgage holder seized fixed assets with a carrying
value of $806,437, that had served as collateral on the mortgage. The
mortgage holder retained $67,949 of escrow balances and forgave the
mortgage balance and accrued interest of $983,916 and other liabilities
of $41,240. This transaction resulted in an extraordinary gain on
foreclosure of $150,771 in 1997.
(8) Income Taxes
-----------------
The tax returns of the Partnership are subject to examination by 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 partners' deficit as of December 31, 1999, 1998 and
1997, as reported in the balance sheet and as reported for tax return
purposes, is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Partners' deficit - balance sheet $ (2,437,367) (2,653,806) (4,587,643)
Add to (deduct from):
Accumulated difference in depreciation (6,325,600) (6,281,518) (5,815,850)
Accumulated amortization of discounts on
mortgages payable 382,695 382,695 382,695
Syndication fees 2,734,297 2,734,297 2,734,297
Difference in book and tax basis in
partnership investments (635,737) (635,737) (635,737)
Gain from sale of properties 4,945,889 1,453,577 --
Gain from fire loss (706,158) (706,158) (706,158)
Gain on foreclosure 693,879 693,879 212,573
Other, primarily allowance for doubtful
accounts and joint venture adjustment(s) 1,449,099 1,285,871 1,640,291
------------ ---------- -----------
Partners' capital (deficit) -
tax return purposes $ 100,997 (3,726,900) (6,775,532)
============ ========== ===========
</TABLE>
F-14
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Notes to Financial Statements, Continued
(8) Income Taxes, Continued
----------------------------
The reconciliation of net income (loss) for the years ended December 31,
1999, 1998 and 1997, as reported in the statement of operations, and as
would be reported for tax return purposes is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net income (loss) - statement of operations $ 216,439 1,933,837 (1,380,178)
Add to (deduct from):
Difference in depreciation (44,082) (465,668) (267,715)
Gain on sale of property 3,492,312 1,453,577 --
Gain on foreclosure -- 481,306 212,573
Other, primarily increase in allowance for
doubtful accounts and joint venture
adjustment(s) 163,228 (354,420) 307,482
----------- ---------- ----------
Net income (loss) - tax return purposes $ 3,827,897 3,048,632 (1,127,838)
=========== ========== ==========
</TABLE>
(9) Leases
-----------
Airlanes, the Partnership's only commercial property, was sold in February
1998. Therefore, there are no minimum future rentals to be received
under noncancelable operating leases at December 31, 1999.
(10) Fair Value of Financial Instruments
-----------------------------------------
Statement of Financial Accounting Standards No. 107 requires disclosure
about fair value of certain financial instruments. The fair values of
cash, accounts receivable, other assets, notes payable - other,
accounts payable, accounts payable - affiliates, accrued expenses and
deposit liabilities approximate the carrying value due to the
short-term nature of these instruments.
The fair value of the mortgage payable on Andover Park (formerly Willow
Creek) approximates its carrying value of $3,950,000 due to the
mortgage's recent nature and variable interest rate.
See note 4 for a description of the terms of the mortgages payable.
(11) Going Concern Considerations
----------------------------------
The accompanying financial statements and financial statement schedule
have been prepared assuming that the Partnership will continue as a
going concern.
The Partnership has sustained recurring losses from operations and has
experienced operating cash flow difficulties. These factors, combined
with significant partners' deficits and the current nature of its
mortgage payable, raise substantial doubt about the Partnership's
ability to continue as a going concern.
F-15
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Notes to Financial Statements, Continued
(11) Going Concern Considerations, Continued
---------------------------------------------
Management is continuing its efforts to reduce expenses by closely
monitoring expenditures, increasing rents, decreasing vacancies and
improving collections. Management has committed to a plan to sell the
Partnership's remaining property, Andover Park. Marketing efforts to
sell this property will intensify and will include advertising in
national newspapers, mailing of sales packages to brokers and
follow-up telephone calls to brokers.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
(12) Proforma Financial Information
------------------------------------
In 1998, the Partnership sold the Creekside Apartments, Airlane Office
Warehouse and Lakeview Village Apartments. The sales resulted in a
total gain for financial statement purposes of $3,509,473. In
addition, the Evergreen Terrace Apartments was foreclosed on in 1998
which resulted in an extraordinary gain of $224,712 for financial
statement purposes. These properties contributed revenues of
$1,731,713 and incurred expenses totaling $4,314,342 during the year
ended December 31, 1998.
In 1999, the Partnership sold Woodbridge Manor. The sale resulted in a
total gain for financial statement purposes of $1,131,370. This
property contributed revenues of $684,153 and incurred expenses
totaling $985,811 during the year ended December 31, 1999.
(13) Subsequent Event - Contingency
------------------------------------
The Partnership, as a nominal defendant, the General Partners of the
Partnership and the three individuals constituting the officers and
directors of the Corporate General Partner, as defendants, were served
with a Summons and Complaint on April 19, 2000 in a class and
derivative action instituted by Ira Gaines and on August 21, 2000 in a
class and derivative action instituted by Sean O'Reilly and Louise
Homburger, each in Supreme Court, County of Erie, State of New York.
The actions allege breaches of contract and breaches of fiduciary duty
and seek, among other things, an accounting, the removal of the
General Partners, the liquidation of the Partnership and the
appointment of a receiver to supervise the liquidation, and damages.
The General Partners and the officers and directors of the Corporate
General Partner have filed a motion to dismiss the first complaint and
are presently reviewing the second complaint and intend to vigorously
pursue their defense.
F-16
<PAGE>
<TABLE>
<CAPTION>
Schedule III
------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - IV
Real Estate and Accumulated Depreciation
December 31, 1999
Initial Cost to Gross amounts at which
Partnership Carried at Close of Period
----------- Cost --------------------------
Capitalized
Subsequent to
Property Description Encumbrances Land Buildings Acquisition Ritirements Land Buildings Total
-------------------- ------------ ------------ ------------ ----------- ----------- ----------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Woodbridge Manor
Apts. (formerly
Sutton Park Apts)
Lansing, MI $ -- 400,000 6,139,298 891,545 (7,430,843) -- -- --
Andover Park Apts.
(formerly Willow
Creek Apts.)
Greenville, SC 3,950,000 226,300 4,276,760 77,793 -- 226,300 4,354,553 4,580,853
----------- ------- ---------- ------- ---------- ------- --------- ---------
$ 3,950,000 626,300 10,416,058 969,338 (7,430,843) 226,300 4,354,553 4,580,853
=========== ======= ========== ======= ========== ======= ========= =========
(RESTUBBED TABLE)
Life on which
Depreciation
in Latest
Statement
Accumulated Date of Operations
Depreciation of Construction Is Computed
------------ ---------------- -----------
<C> <C> <C>
Woodbridge Manor
Apts. (formerly
Sutton Park Apts)
Lansing, MI $ -- Dec. 85 25 yrs. *
Andover Park Apts.
(formerly Willow
Creek Apts.)
Greenville, SC 1,827,776 Dec. 86 5-25 yrs.*
------------
$ 1,827,776
============
</TABLE>
* In accordance with Statement of Financial Accounting Standards No. 121, no
depreciation was recorded during the disposal period.
F-17
<PAGE>
<TABLE>
<CAPTION>
Schedule III, Cont.
-------------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Real Estate and Accumulated Depreciation
December 31, 1999
(1) Cost for Federal income tax purposes is $4,580,853.
(2) A reconciliation of the carrying amount of land and buildings as of
December 31, 1999, 1998 and 1997 follows:
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of period $ 12,011,696 29,172,676 29,671,979
Additions -- 3,545 823,425
Dispositions (7,430,843) (17,164,525) (1,322,728)
------------ ----------- ----------
Balance at end of period $ 4,580,853 12,011,696 29,172,676
============ =========== ==========
</TABLE>
(3) A reconciliation of accumulated depreciation for the years ended December
31, 1999, 1998 and 1997 follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of period $ 4,360,575 11,384,428 11,049,042
Additions charged to cost and expenses
during the period -- -- 851,676
Dispositions (2,532,799) (7,023,853) (516,290)
------------ ----------- -----------
Balance at end of period (4) $ 1,827,776 4,360,575 11,384,428
============ =========== ===========
</TABLE>
(4) Balance applies entirely to buildings.
F-18
