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, 2000 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 12A
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 [ ]
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - IV
Form 10-Q
INDEX
PART I - FINANCIAL INFORMATION
Page
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Item 1. Financial Statements
Balance Sheets - March 31, 2000 and December 31, 1999 3
Statements of Operations - Three months ended March 31, 2000 and 1999 4
Statement of Partners' Deficiency - Three months ended March 31, 2000 5
Statements of Cash Flows - Three months ended March 31, 2000 and 1999 6
Notes to Financial Statements 7 - 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2 - 5. Not applicable 10
Item 6. Exhibits and Reports on Form 8-K 10
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PART I - Item 1. Financial Statements
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Balance Sheets
March 31, 2000 and December 31, 1999
(Unaudited)
March 31, December 31,
Assets 2000 1999
------ ---- ----
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Property and equipment:
Land $ 226,300 226,300
Buildings and improvements 4,357,209 4,354,553
Furniture and fixtures 537,500 537,500
----------- -----------
5,121,009 5,118,353
Less accumulated depreciation 2,365,276 2,365,276
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Net property and equipment 2,755,733 2,753,077
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Cash and cash equivalents 189,634 1,686,913
Due from minority interest in consolidated joint venture 28,524 28,524
Escrow deposits 20,862 76,876
Mortgage costs, less accumulated amortization
of $111,894 in 2000 and $95,909 in 1999 15,985 31,970
Other assets 5,225 5,225
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Total assets $ 3,015,963 4,582,585
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Liabilities and Partners' Deficiency
------------------------------------
Liabilities:
Mortgage loan payable 3,950,000 3,950,000
Accounts payable and accrued expenses 261,063 318,921
Accrued interest payable 31,065 32,917
Payables to affiliated parties 1,236,100 2,649,886
Security deposits and prepaid rents 64,506 68,228
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Total liabilities 5,542,734 7,019,952
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Partners' deficiency:
General partners (411,704) (409,022)
Limited partners (2,115,067) (2,028,345)
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Total partners' deficiency (2,526,771) (2,437,367)
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Contingency
----------- -----------
Total liabilities and partners' deficiency $ 3,015,963 4,582,585
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See accompanying notes to financial statements.
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Statements of Operations
Three months ended March 31, 2000 and 1999
(Unaudited)
Three months ended
------------------
March 31, March 31,
2000 1999
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Income:
Rental $ 255,354 450,639
Interest and other income 34,049 27,167
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Total income 289,403 477,806
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Expenses:
Property operations 157,392 339,099
Interest:
Affiliated parties 49,869 77,659
Other 110,003 150,132
Administrative:
Affiliated parties 28,483 81,288
Other 33,060 79,186
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Total expenses 378,807 727,364
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Net loss $ (89,404) (249,558)
========= =========
Net loss per limited partnership unit $ (3.71) (10.36)
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Weighted average number of limited partnership
units outstanding 23,366 23,366
========= =========
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See accompanying notes to financial statements.
4
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Statement of Partners' Deficiency
Three months ended March 31, 2000
(Unaudited)
Limited Partners
General ------------------
Partners Units Amount
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Balances at January 1, 2000 $ (409,022) 23,366 (2,028,345)
Net loss (2,682) -- (86,722)
---------- ---------- -----------
Balances at March 31, 2000 $ (411,704) 23,366 (2,115,067)
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See accompanying notes to financial statements.
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Statements of Cash Flows
Three months ended March 31, 2000 and 1999
(Unaudited)
Three months ended
------------------
March 31, March 31,
2000 1999
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Cash flows from operating activities:
Net loss $ (89,404) (249,558)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Amortization 15,985 3,106
Changes in:
Escrow deposits 56,014 64,188
Prepaid expenses -- 35,845
Other assets -- 1,528
Accounts payable and accrued expenses (57,858) 51,788
Accrued interest payable (1,852) --
Payables to affiliated parties (1,413,786) 164,242
Security deposits and prepaid rents (3,722) 1,362
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Net cash provided by (used in)
operating activities (1,494,623) 72,501
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Cash flows from investing activities - additions to property
and equipment (2,656) --
----------- -----------
Cash flows from financing activities:
Mortgage acquisition costs -- (101)
Principal payments on mortgage loan -- (7,874)
Repayment of notes -- (60,000)
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Net cash used in financing activities -- (67,975)
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Net increase (decrease) in cash and cash equivalents (1,497,279) 4,526
Cash and cash equivalents at beginning of period 1,686,913 29,981
----------- -----------
Cash and cash equivalents at end of period $ 189,634 34,507
=========== ===========
Supplemental disclosure of cash flow information -
cash paid during the period for interest $ 161,724 147,026
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See accompanying notes to financial statements.
6
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Notes to Financial Statements
Three months ended March 31, 2000 and 1999
(Unaudited)
(1) Basis of Presentation
--------------------------
The accompanying interim financial statements have been prepared in
accordance with generally accepted accounting principles and, in the
opinion of management, contain all necessary adjustments for a fair
presentation. The Partnership's significant accounting policies are set
forth in its December 31, 1999 Form 10-K. The interim financial
statements should be read in conjunction with the financial statements
included therein. The interim results should not be considered
indicative of the annual results. Certain reclassifications of prior
period numbers may have been made to conform to the current period
presentation.
(2) Organization
-----------------
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. The general partners are Realmark Properties, Inc. (the
corporate general partner) and Joseph M. Jayson (the individual general
partner). Joseph M. Jayson is the sole stockholder of J.M. Jayson &
Company Inc. Realmark Properties, Inc. is a wholly-owned subsidiary 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.
(3) Property and Equipment
---------------------------
In 1998, a plan was established to dispose of the Partnership's only
property, Andover Park. Management has determined that a sale of the
property is in the best interest of the limited partners and continues
to actively market the property for sale. Therefore, the assets are
carried at the lower of depreciated cost or fair value less costs to
sell and are not depreciated during the disposal period. Depreciation
expense not recorded for the three months ended March 31, 2000 and 1999
was approximately $44,000 in both periods.
(4) Going Concern Considerations
---------------------------------
The accompanying financial statements 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, raise substantial doubt about the
Partnership's ability to continue as a going concern.
Management is continuing its efforts to improve operating results 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 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.
7
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Notes to Financial Statements, Continued
(5) Sale of Property
---------------------
In August 1999, the Partnership sold Woodbridge Manor at a gain for
financial statement purposes of $1,131,370. This property had revenues
of $249,059 and expenses of $310,840 during the three months ended
March 31, 1999.
(6) Current Accounting Pronouncements
--------------------------------------
In June 2000, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 138 - "Accounting for Certain
Derivative Instruments and Certain Hedging Activities, an Amendment of
Statement No. 133" which amends certain provisions of Statement of
Financial Accounting Standards No. 133 - "Accounting for Derivative
Instruments and Hedging Activities." These statements establish
accounting and financial reporting standards for derivative instruments
and hedging activities. These statements become effective for the
Partnership on January 1, 2001. The effect, if any, that Statements No.
133 and 138 will have on the Partnership's operations and financial
position will not be material.
(7) 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.
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PART I - Item 2. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operations
-------------------------
Liquidity and Capital Resources
-------------------------------
The Partnership continues to incur operating cash flow deficits and losses. Due
to the operating shortfalls, the Partnership did not make any distributions in
the quarters ended March 31, 2000 and 1999. 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.
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. In the first
quarter of 2000, a portion of the sale proceeds was used to reduce the
Partnership's liability to affiliated parties.
Management continues its corrective action plan in response to the going concern
considerations discussed in the notes to the financial statements. More
attention has been centered on increasing revenues.
Results of Operations
---------------------
To properly compare the first quarters of 1999 and 2000, the 1999 numbers must
be reduced by Woodbridge Manor's results. The 1999 operating statement amounts
so adjusted and compared to the 2000 amounts are summarized as follows (in
thousands):
1999 2000
---- ----
Rental income $211 255
Other income 17 34
Expenses:
Property operations 135 157
Interest 159 160
Administrative 122 61
Net loss (188) (89)
This comparison shows an improvement in operations that primarily reflects those
of the Partnership's remaining property, Andover Park. Reduced vacancies and
improved collections led to the $44,000 increase in rental income. The increase
in other income is interest. More than half of the increase in property
operating expense was generated by repairs and maintenance, with the remainder
attributable to a variety of relatively small items. The $61,000 decrease in
administrative expense is the result of lower professional and portfolio
management fees.
9
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PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
The Partnership's cash equivalents are short-term, interest-bearing bank
accounts and its mortgage loans are fixed-rate. It has not entered
into any derivative contracts. Therefore, it has no market risk
exposure.
PART II - OTHER INFORMATION
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Item 1. Legal Proceedings
--------------------------
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.
Items 2, 3, 4 and 5
-------------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
The Partnership reported a change in independent accountants under item 4
of Form 8-K, filed on January 19, 2000 and amended on February 3, 2000,
April 17, 2000 and May 2, 2000.
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SIGNATURES
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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 PARTNERHIP IV
By: /s/ Joseph M. Jayson 11/15/2000
-------------------------------- ---------------
Joseph M. Jayson, Date
Individual General Partner and
Principal Financial Officer
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