FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
June 30, 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 [ ]
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Form 10-Q
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
Page
----
<S> <C> <C>
Item 1. Financial Statements
Balance Sheets - June 30, 2000 and December 31, 1999 3
Statements of Operations - Three and six months ended
June 30, 2000 and 1999 4
Statement of Partners' Deficiency - Six months ended June 30, 2000 5
Statements of Cash Flows - Six months ended June 30, 2000 and 1999 6
Notes to Financial Statements 7 - 9
Item 2. Management's Discussion and Analysis of Financial Condition and 9 - 10
Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2 - 5. Not applicable 11
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
2
<PAGE>
PART I - Item 1. Financial Statements
--------------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Balance Sheets
June 30, 2000 and December 31, 1999
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
Assets 2000 1999
------ ---- ----
<S> <C> <C>
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 2,419,358 2,365,276
----------- -----------
Net property and equipment 2,701,651 2,753,077
----------- -----------
Cash and cash equivalents 142,154 1,686,913
Due from minority interest in consolidated joint venture 28,524 28,524
Escrow deposits 39,718 76,876
Deferred mortgage costs, less accumulated amortization
of $95,909 in 1999 25,000 31,970
Other assets 5,225 5,225
----------- -----------
Total assets $ 2,942,272 4,582,585
=========== ===========
Liabilities and Partners' Deficiency
------------------------------------
Liabilities:
Mortgage loan payable 3,950,000 3,950,000
Accounts payable and accrued expenses 287,778 318,921
Accrued interest payable 33,328 32,917
Payables to affiliated parties 1,301,909 2,649,886
Security deposits and prepaid rents 71,275 68,228
----------- -----------
Total liabilities 5,644,290 7,019,952
----------- -----------
Partners' deficiency:
General partners (416,962) (409,022)
Limited partners (2,285,056) (2,028,345)
----------- -----------
Total partners' deficiency (2,702,018) (2,437,367)
----------- -----------
Contingency ----------- -----------
Total liabilities and partners' deficiency $ 2,942,272 4,582,585
=========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Statements of Operations
Three and six month periods ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
Three months ended Six months ended
------------------ ----------------
(As restated) (As restated)
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Rental $ 263,682 509,802 519,036 960,441
Interest and other income 10,379 33,425 44,428 60,592
---------- ---------- ---------- ----------
Total income 274,061 543,227 563,464 1,021,033
---------- ---------- ---------- ----------
Expenses:
Property operations 173,576 283,934 330,968 623,033
Interest:
Affiliated parties 31,115 96,581 80,984 174,240
Other 108,769 153,616 218,772 303,748
Depreciation 54,082 -- 54,082 --
Administrative:
Affiliated parties 32,094 83,238 60,577 164,526
Other 49,672 18,283 82,732 97,469
---------- ---------- ---------- ----------
Total expenses 449,308 635,652 828,115 1,363,016
---------- ---------- ---------- ----------
Net loss $ (175,247) (92,425) (264,651) (341,983)
========== ========== ========== ==========
Net loss per limited partnership unit $ (7.28) (3.83) (10.99) (14.19)
========== ========== ========== ==========
Weighted average number of limited
partnership units outstanding 23,366 23,366 23,366 23,366
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Statement of Partners' Deficiency
Six months ended June 30, 2000
<TABLE>
<CAPTION>
General Limited Partners
Partners Units Amount
-------- ----- ------
<S> <C> <C> <C>
Balances at January 1, 2000 $ (409,022) 23,366 (2,028,345)
Net loss (7,940) -- (256,711)
---------- ---------- ----------
Balances at June 30, 2000 $ (416,962) 23,366 (2,285,056)
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Statements of Cash Flows
Six months ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
Six months ended
----------------
(As restated)
June 30, June 30,
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (264,651) (341,983)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization 86,052 6,213
Changes in:
Escrow deposits 37,158 7,431
Prepaid expenses -- 63,021
Other assets -- (31,968)
Accounts payable and accrued expenses (31,143) (28,736)
Accrued interest payable 411 --
Payables to affiliated parties (1,347,977) 417,138
Security deposits and prepaid rents 3,047 27,864
----------- -----------
Net cash provided by (used in)
operating activities (1,517,103) 118,980
----------- -----------
Cash flows from investing activities - additions to property
and equipment (2,656) --
----------- -----------
Cash flows from financing activities:
Mortgage acquisition costs (25,000) (101)
Principal payments on mortgage loan -- (18,847)
Repayment of notes -- (90,000)
----------- -----------
Net cash used in financing activities (25,000) (108,948)
----------- -----------
Net increase (decrease) in cash and cash equivalents (1,544,759) 10,032
Cash and cash equivalents at beginning of period 1,686,913 29,981
----------- -----------
Cash and cash equivalents at end of period $ 142,154 40,013
=========== ===========
Supplemental disclosure of cash flow information -
cash paid during the period for interest $ 267,375 297,535
=========== ===========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Notes to Financial Statements
Six months ended June 30, 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) Disposition of Rental Property
-----------------------------------
During the first three months of 2000 (through March 31, 2000), management
continued its plan, originated in 1998, to sell the assets the
Partnership's only property, Andover Park. Effective April 1, 2000,
management discontinued the plan. The assets are carried at the lower
of depreciated cost or fair value less costs to sell and were not
depreciated during the disposal period. Depreciation expense not
recorded for the six months ended June 30, 2000 and 1999 was
approximately $44,000 and $88,000, respectively and $44,000 for the
three months ended June 30, 1999.
(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 operations results by
closely monitoring expenditures, increasing rents, decreasing vacancies
and improving collections. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
7
<PAGE>
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 $507,268 and expenses of $597,872 during the six months ended June
30, 1999.
(6) Prior Period Adjustments
-----------------------------
The net losses for the three and six month periods ended June 30, 1999 have
been corrected to give effect to year-end 1999 adjustments as follows:
<TABLE>
<CAPTION>
Three months Six months
ended June 30, ended June 30,
1999 1999
---- ----
<S> <C> <C>
As previously reported $ (310,474) (560,032)
Elimination of depreciation expense on Andover
Park held for disposal during the period 88,049 88,049
Correction of interest expense on affiliated party debt 130,000 130,000
------------- ----------
As restated $ (92,425) (341,983)
============= ==========
</TABLE>
The net loss per limited partnership unit decreased $9.06 to $3.83 for the
three months ended June 30, 1999 and $9.06 to $14.19 for the six months
ended June 30, 1999.
(7) 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.
8
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-IV
Notes to Financial Statements, Continued
(8) 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.
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 six months ended June 30, 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.
In August 1999, Woodbridge Manor Apartments, located in Lansing, Michigan was
sold $6,400,000, resulting in a $1,131,370 gain for financial statement
purposes. 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.
9
<PAGE>
Results of Operations
---------------------
To properly compare 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):
<TABLE>
<CAPTION>
Three months Six months
ended June 30 ended June 30
------------- -------------
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Rental income $ 211 264 478 519
Other income 17 10 35 44
Expenses:
Property operations 135 173 249 331
Interest 159 140 320 300
Depreciation -- 54 -- 54
Administrative 122 82 194 143
Net loss (188) (175) (250) (265)
</TABLE>
This comparison shows an improvement (before depreciation) in operations that
primarily reflects those of the Partnership's remaining property, Andover Park.
Reduced vacancies and improved collections led to the increases in rental
income. 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 decreases in administrative expense are
the result of lower professional and portfolio management fees.
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.
10
<PAGE>
PART II - OTHER INFORMATION
-----------------
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.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
REALMARK PROPERTY INVESTORS LIMITED PARTNERHIP IV
By: /s/ Joseph M. Jayson 12/01/00
----------------------------------- ----------------
Joseph M. Jayson, Date
Individual General Partner and
Principal Financial Officer
11
