<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
COMMISSION FILE NUMBER 0-15731
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
(Exact name of registrant as specified in its charter)
MARYLAND 52-1473440
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1225 EYE STREET, N.W.
WASHINGTON, D.C. 20005
(Address of principal executive offices)
(Zip Code)
(202) 347-6247
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by 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> 2
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
------------- --------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 6,527 $ 14,317
Prepaid insurance and tenant security deposits 126,342 76,341
Real estate tax escrow 327,783 629,137
Reserve for insurance premiums 25,679 78,643
Investments in and advances to Local Limited
Partnerships (Note 2) - -
Land 3,650,000 3,650,000
Building and improvements - less accumulated
depreciation of $3,724,921 and $3,567,996 10,289,025 10,380,209
Deferred finance costs 41,497 63,540
---------- ----------
$14,466,853 $14,892,187
========== ==========
LIABILITIES AND PARTNERS' DEFICIT
Liabilities -
Accounts payable and accrued expenses from rental
operations $ 695,033 $ 873,361
Administrative and reporting fees payable to General
Partner (Note 3) 933,356 875,554
Due to General Partner (Note 3) 1,247,464 1,209,494
Accrued interest on due to General Partner (Note 3) 1,054,126 933,098
Other accrued expenses 21,750 37,375
Mortgage note payable 13,700,000 13,700,000
---------- ----------
17,651,729 17,628,882
---------- ----------
Partners' deficit -
General Partner -- The National Housing
Partnership (NHP) (161,543) (157,061)
Original Limited Partner --
1133 Fifteenth Street Four Associates (166,443) (161,961)
Other Limited Partners -- 15,414 investment units (2,856,890) (2,417,673)
---------- ----------
(3,184,876) (2,736,695)
---------- ----------
$14,466,853 $14,892,187
========== ==========
</TABLE>
See notes to financial statements.
-1-
<PAGE> 3
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- ---------------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
RENTAL REVENUES $ 793,034 $ 797,217 $1,568,886 $1,590,704
-------- -------- --------- ---------
RENTAL EXPENSES:
Interest 339,848 236,971 650,624 391,114
Renting and administrative 93,616 136,677 192,367 264,219
Operating and maintenance 141,510 200,866 323,074 348,127
Depreciation and amortization 89,484 95,568 178,968 214,139
Taxes and insurance 207,336 206,979 465,343 451,372
-------- -------- --------- ---------
871,794 877,061 1,810,376 1,668,971
-------- -------- --------- ---------
LOSS FROM RENTAL OPERATIONS (78,760) (79,844) (241,490) (78,267)
-------- -------- --------- ---------
COSTS AND EXPENSES:
Interest on due to General Partner
(Note 3) 62,380 45,950 121,028 86,140
Administrative and reporting fees
to General Partner (Note 3) 28,901 28,901 57,802 57,802
Other operating expenses 15,120 14,173 28,634 53,007
-------- -------- --------- ---------
106,401 89,024 207,464 196,949
-------- -------- --------- ---------
OTHER REVENUES:
Distributions received in excess of
investment in and advances to
Local Limited Partnerships - 45,307 - 45,307
Interest income 350 845 773 1,631
-------- -------- --------- ---------
350 46,152 773 46,938
-------- -------- --------- ---------
NET LOSS $(184,811) $(122,716) $ (448,181) $ (228,278)
======== ======== ========= =========
NET LOSS ASSIGNABLE TO
LIMITED PARTNERS $(181,115) $(120,262) $ (439,217) $ (223,712)
======== ======== ========= =========
NET LOSS PER LIMITED
PARTNERSHIP INTEREST $ (12) $ (8) $ (28) $ (15)
======== ======== ========= =========
</TABLE>
See notes to financial statements.
-2-
<PAGE> 4
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
STATEMENT OF PARTNER'S DEFICIT
<TABLE>
<CAPTION>
The National 1133
Housing Fifteenth Other
Partnership Street Four Limited
(NHP) Associates Partners Total
--------------- ---------- -------- -----
<S> <C> <C> <C> <C>
Deficit at January 1, 1995 $(157,061) $(161,961) $(2,417,673) $(2,736,695)
Net loss -- six months ended
June 30, 1995 (4,482) (4,482) (439,217) (448,181)
-------- -------- ---------- ----------
Deficit at June 30, 1995 $(161,543) $(166,443) $(2,856,890) $(3,184,876)
======== ======== ========== ==========
Percentage interest at
June 30, 1995 1% 1% 98% 100%
========= ========= =========== ===========
(A) (B) (C)
</TABLE>
(A) General Partner
(B) Original Limited Partner
(C) Consists of 15,414 investments units of 0.006358% held by 1,282 investors
See notes to financial statements.
-3-
<PAGE> 5
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Rent collections $ 1,539,281 $ 1,498,974
Distributions received in excess of investment in Local
Limited Partnerships - 45,307
Interest received 773 1,631
Other income 38,008 62,065
Operating expenses paid, including rental expenses (1,265,552) (1,463,042)
Mortgage interest paid (643,097) (513,942)
Partnership administrative fees paid to General Partner - (58,125)
Interest paid to General Partner - (43,188)
---------- ----------
Net cash used in operating activities (330,587) (470,320)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (65,741) -
Deposits to real estate tax escrow (291,770) (333,877)
Withdrawals from real estate tax escrow 593,124 631,503
Deposits to reserve for insurance premiums (16,260) (31,887)
Withdrawals from reserve for insurance premiums 69,224 23,684
---------- ----------
Net cash used in investing activities 288,577 289,423
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans from General Partner 34,220 -
---------- ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (7,790) (180,897)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 14,317 215,595
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,527 $ 34,698
========== ==========
</TABLE>
See notes to financial statements.
-4-
<PAGE> 6
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(CONTINUED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------------
1995 1994
---- ----
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH USED IN
OPERATING ACTIVITIES:
Net loss $ (448,181) $ (228,278)
---------- ----------
Adjustments to reconcile net loss to net cash used in operating
activities -
Depreciation 156,925 191,137
Amortization of deferred finance costs 22,043 23,002
Decrease in accounts receivable - 9,420
Increase in prepaid insurance, utility and tenant security deposits (50,001) (37,194)
Decrease in accounts payable and accrued expenses from
rental operations (178,328) (460,286)
Increase in administrative and reporting fees payable to
General Partner 57,802 57,802
Increase (decrease) in due to General Partner 3,750 (54,375)
Increase in accrued interest on due to General Partner 121,028 42,952
Decrease in other accrued expenses (15,625) (14,500)
---------- ----------
Total adjustments 117,594 (242,042)
---------- ----------
Net cash used in operating activities $ (330,587) $ (470,320)
========== ==========
</TABLE>
See notes to financial statements.
-5-
<PAGE> 7
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(1) ACCOUNTING POLICIES
NATURE OF BUSINESS
National Housing Partnership Realty Fund IV (the "Partnership") is a
limited partnership organized on January 8, 1986 under the laws of the
State of Maryland under the Maryland Revised Uniform Limited
Partnership Act. The Partnership was formed for the purpose of raising
capital by offering and selling limited partnership interests and then
investing in limited partnerships ("Local Limited Partnerships"), each
of which owns and operates an existing rental housing project which is
financed and/or operated with one or more forms of rental assistance
or financial assistance from the U.S. Department of Housing and Urban
Development ("HUD").
The General Partner raised capital for the Partnership by offering and
selling to additional limited partners 15,414 investment units at a
price of $1,000 per unit. The Partnership acquired limited partnership
interests of 99% in four Local Limited Partnerships, each of which was
organized to acquire and operate an existing rental housing project.
In addition, the Partnership directly purchased Trinity Apartments, a
conventionally financed rental apartment project.
BASIS OF PRESENTATION
The accompanying unaudited interim financial statements reflect all
adjustments which are, in the opinion of management, necessary to
present a fair statement of the financial condition and results of
operations for the interim periods presented. All such adjustments are
of a normal recurring nature.
While the General Partner believes that the disclosures presented are
adequate to make the information not misleading, it is suggested that
these financial statements be read in conjunction with the financial
statements and the notes included in NHP Realty Fund IV's Annual
Report filed in Form 10-K, as amended, for the year ended December 31,
1994.
(2) INVESTMENTS IN AND ADVANCES TO LOCAL LIMITED PARTNERSHIPS
The Partnership owns a 99% limited partnership interest in four Local
Limited Partnerships. In addition, the Partnership directly owns
Trinity Apartments. Because the Partnership, as a limited partner,
does not exercise control over the activities of the four Local
Limited Partnerships in accordance with the partnership agreements,
the investments in the Local Limited Partnerships are accounted for
using the equity method. Thus, the investments (and the advances made
to the Local Limited Partnerships as discussed below) are carried at
cost
-6-
<PAGE> 8
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
less the Partnership's share of the Local Limited Partnerships' losses
and distributions. However, because the Partnership is not legally
liable for the obligations of the Local Limited Partnerships, and is
not otherwise committed to provide additional support to them, it does
not recognize losses once its investment, reduced for its share of
losses and cash distributions, reaches zero in each of the individual
Local Limited Partnerships. As of June 30, 1995 and December 31, 1994
investments in all four Local Limited Partnerships had been reduced to
zero. As a result, the Partnership did not recognize $709,156 and
$790,809 of losses from Local Limited Partnerships during the six
months ended June 30, 1995 and 1994, respectively. As of June 30, 1995
and December 31, 1994, the Partnership had not recognized $5,480,054
and $4,770,898, respectively, of its allocated share of cumulative
losses from the Local Limited Partnerships in which its investment is
zero.
Advances made by the Partnership to the individual Local Limited
Partnerships are considered part of the Partnership's investment in
Local Limited Partnerships. When advances are made, they are charged
to operations as a loss on investment in the Local Limited Partnership
using previously unrecognized cumulative losses. As discussed above,
due to the cumulative losses incurred by the Local Limited
Partnerships, the aggregate balance of investments in and advances to
the Local Limited Partnerships has been reduced to zero at June 30,
1995 and December 31, 1994. To the extent these advances are repaid by
the Local Limited Partnerships in the future, the repayments will be
credited as distributions and repayments received in excess of
investments in Local Limited Partnerships. These advances are carried
as a payable to the Partnership by the Local Limited Partnerships.
No working capital advances or repayments occurred between the
Partnership and the Local Limited Partnerships during the six months
ended June 30, 1995 and 1994. The combined amount carried as payable
to the Partnership by the Local Limited Partnerships was $12,400 as of
June 30, 1995.
The following are combined statements of operations for the three
months and six months ended June 30, 1995 and 1994, respectively, of
the Local Limited Partnerships in which the Partnership has invested.
The statements are compiled from financial statements of the Local
Limited Partnerships, prepared on the accrual basis of accounting, as
supplied by the management agents of the projects, and are unaudited.
-7-
<PAGE> 9
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Rental income $1,160,664 $ 1,081,158 $2,303,799 $2,237,674
Other income 102,336 175,364 119,373 230,717
--------- --------- --------- ---------
Total income 1,263,000 1,256,522 2,423,172 2,468,391
--------- --------- --------- ---------
Operating expenses 865,758 904,136 1,590,538 1,773,364
Interest, taxes and
insurance 536,762 523,324 1,122,666 1,076,251
Depreciation 213,817 210,415 426,287 417,573
--------- --------- --------- ---------
Total expenses 1,616,337 1,637,875 3,139,491 3,267,188
--------- --------- --------- ---------
Net loss $ (353,337) $ (381,353) $ (716,319) $ (798,797)
========= ========= ========= =========
National Housing
Partnership Realty
Fund IV share of
losses $ (349,804) $ (377,539) $ (709,156) $ (790,809)
========= ========= ========= =========
</TABLE>
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES OF THE
GENERAL PARTNER
During the six month periods ended June 30, 1995 and 1994, the
Partnership accrued administrative and reporting fees payable to the
General Partner in the amount of $57,802 for services provided to the
Partnership. The Partnership has not made any payments to the General
Partner for these fees during the six months ended June 30, 1995 and
1994. The amount due the General Partner by the Partnership was
$933,356 and $875,554 at June 30, 1995 and December 31, 1994,
respectively.
During the six months ended June 30, 1995, the General Partner made
working capital advances of $34,220 to the Partnership. No advances
were made during the six months ended June 30, 1994. No repayments of
working capital advances were made during the six months ended June
30, 1995 and 1994. The amount owed to the General Partner at June 30,
1995 and December 31, 1994, was $1,243,714 and $1,209,494,
respectively. Interest is charged on borrowings at the Chase Manhattan
Bank rate of prime plus 2%.
-8-
<PAGE> 10
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
During the six months ended June 30, 1994, interest of $43,188 was
paid to the General Partner. No payments were made during the six
months ended June 30, 1995. Accrued interest on this loan amounted to
$1,054,126 and $933,098 at June 30, 1995 and December 31, 1994,
respectively. The advances will be repaid as cash flow permits or from
the sale or refinancing of the Local Limited Partnerships.
Annual partnership administrative fees of $3,750 were accrued on
behalf of Trinity Apartments during the six months ended June 30, 1995
and 1994. These fees are payable to the General Partner without
interest from cash available for distribution to partners. During the
six months ended June 30, 1994, $58,125 of these fees were paid to the
General Partner. No payments were made during the six months ended
June 30, 1995. The balance owed to the General Partner at June 30,
1995, is included in Due to General Partner. No balance was owed to
the General Partner at December 31, 1994, for these fees.
The advances and accrued administrative and reporting fees payable to
the General Partner will be paid as cash flow permits or from proceeds
generated from the sale or refinancing of one or more of the
underlying properties of the Local Limited Partnerships.
-9-
<PAGE> 11
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
LIQUIDITY AND CAPITAL RESOURCES
The properties in which the Partnership has invested, through its investments
in the Local Limited Partnerships, receive one or more forms of assistance from
Federal, state or local governments or agencies. As a result, the Local Limited
Partnerships' ability to transfer funds either to the Partnership or among
themselves in the form of cash distributions, loans or advances is generally
restricted by these government-assistance programs. These restrictions,
however, are not expected to impact the Partnership's ability to meet its cash
obligations.
Net cash used in operations for the six months ended June 30, 1995 was $330,587
as compared to $470,320 for the six months ended June 30, 1994. The decrease to
cash used in operations resulted primarily from a decrease in operating
expenses paid and a decrease in Partnership administration and interest paid to
the General Partner, partially offset by an increase in mortgage note interest.
Interest on the mortgage note is charged at a variable rate equal to 3.10%
above General Electric Capital Corporation's short-term commercial paper rate.
The interest rate is not capped; therefore, operations of the Partnership are
susceptible to changes in interest rates. As of December 31, 1994, interest was
charged at 8.44%. As of June 30, 1995, interest was being charged at 9.36%. In
addition, the principal on Trinity's mortgage note payable is due June 30,
1995. The Partnership has not made the principal payment of $13,700,000 which
was due on June 30, 1995. The Partnership continues to make interest payments
and is currently working with GECC to extend or refinance the mortgage note. If
the mortgage is unable to be extended or refinanced, the Partnership may need
to repay the mortgage amount or sell the property which may result in a loss.
Alternatively, GECC could foreclose on the property.
During the six months ended June 30, 1995 and 1994, the Partnership did not
advance any funds to the Local Limited Partnerships for use as working capital.
At June 30, 1995, the combined amount carried by the Local Limited
Partnerships, as due to the Partnership, amounted to $12,400. Future advances
made will be charged to operations; likewise, future repayments will be
credited to operations.
Distributions received from Local Limited Partnerships represent the
Partnership's proportionate share of the excess cash available for distribution
from the Local Limited Partnerships. As a result of the use of the equity
method of accounting for the Partnership's investments, as of June 30, 1995,
investments in all four Local Limited Partnerships had been reduced to zero.
For these investments, cash distributions received are recorded as
distributions received in excess of investment in Local Limited Partnerships.
There were no distributions during the six months ended June 30, 1995. Cash
-10-
<PAGE> 12
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
distributions of $45,307 were received from the Local Limited Partnerships
during the six months ended June 30, 1994. The receipt of distributions in
future quarters is dependent upon the operations of the underlying properties
of the Local Limited Partnerships.
Cash and cash equivalents amounted to $6,527 at June 30, 1995. The ability of
the Partnership to meet its on-going cash requirements is dependent on
operations of Trinity Apartments and the future receipt of distributions from
the Local Limited Partnerships or the sale or refinancing of one or more of the
underlying properties of the Local Limited Partnerships. Cash on hand at June
30, 1995 plus any distributions from the underlying operations of the combined
Local Limited Partnerships is expected to adequately fund the operations of the
Partnership in the current year.
The Partnership currently owes the General Partner $933,356 for administrative
and reporting services performed. The payment of these unpaid administrative
and reporting fees will most likely be made only when sale or refinancing
proceeds of the underlying properties of the Local Limited Partnerships becomes
available to the partnership. Given the current nature of the real estate
market, any such sales or refinancing will likely not occur in the near future.
Any proceeds generated for sales or refinancing after payment of mortgage
obligations, will be distributed in accordance with the Partnership Agreement.
The Partnership also currently owes the General Partner $1,243,714 plus accrued
interest of $1,054,126 on advances made to support operations of Trinity
Apartments. Operations of Trinity Apartments have improved since the
refinancing in 1991 of the underlying mortgage note. However, ultimate payment
of amounts due to the General Partner will likely occur only from proceeds
generated from the sale of Trinity Apartments. Any proceeds generated from the
sale, after payment of the mortgage obligations, will be distributed in
accordance with the Partnership Agreement.
Some of the properties in which the Partnership has invested in may be eligible
to participate in the Low Income Housing Preservation and Resident
Homeownership Act of 1990 (LIHPRHA). LIHPRHA creates a procedure under which
properties assisted under the HUD Section 236 or 221(d)(3) programs may be
eligible to receive financial incentives in return for agreeing to extend their
property's use as low income housing. Trinity, a 100% conventional property,
and Loring Towers, because of a provision in its mortgage note payable, are not
eligible to participate in LIHPRHA. Congress and Administration are currently
considering various proposals to significantly reduce or eliminate funding for
the LIHPRHA program, and to restructure various federal housing programs under
the jurisdiction of the Department of Housing and Urban Development. NHP is
actively working to affect the policy decision being made and to limit any
detrimental effect on its portfolio. Depending on the final outcome of this
process, however,
-11-
<PAGE> 13
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
operations at the Properties and/or the ability to sell or refinance under
LIHPRHA could be affected.
Except for Trinity, all the properties in which the Partnership has invested
carry deferred acquisition notes due to the original owners of the properties.
In the event of a default on these notes, the noteholders would reassume NHP's
and the Partnership's interests in the Local Limited Partnerships. Due to the
rental market conditions where the properties are located, the General Partner
believes the amounts due on the acquisition notes may exceed the value to be
obtained by having the properties participate in LIHPRHA or other sale or
refinancing opportunities. The deferred acquisition notes mature in 2001.
In their audit report dated March 17, 1995, the Partnership's auditors added
two additional "emphasis" paragraphs to their report on the Partnership's 1994
and 1993 financial statements included in the Form 10-K. The comments made in
the "emphasis" paragraph generally repeat disclosures made by the Partnership
in the footnotes to the 1994 financial statements, primarily notes 4, 6 and 9.
In the first "emphasis" paragraph, the auditors stated that "These issues raise
substantial doubt about Royal Towers Limited Partnership's ability to continue
as a going concern." Should the Partnership lose its interest in a Local
Limited Partnership, partners in the Partnership may incur adverse tax
consequences. The impact of the tax consequences is dependent upon each
partner's individual tax situation. Royal Towers had a high vacancy rate during
1993 and 1994, although decreased from 1992, and has a significant amount of
payables and only limited resources to pay such items. NHP's intentions are to
continue managing the property prudently so that it can maintain positive cash
flow.
In the second "emphasis" paragraph, the auditors stated that "the Partnership's
mortgage note payable related to the Trinity Apartments in the amount of
$13,700,000 matures on June 30, 1995," and that "Trinity also has a significant
balance of accounts payable and accrued expenses from rental operations at
December 31, 1994" The auditors concluded that "These issues raise substantial
doubt about the Partnership's ability to continue as a going concern unless it
is able to generate sufficient cash flows to meet its obligations, sustain its
rental operations and refinance or renegotiate its mortgage note or obtain
sufficient proceeds from the sale of the property to repay its debts."
In prior years, Trinity Apartments, a rental property wholly-owned by the
Partnership, has generated substantial losses from operations which have
resulted in the accumulation of significant accounts payable and accrued
expenses at December 31, 1994 and has also necessitated significant funding
from the General Partner in prior years. In addition, the Partnership was in
default on its mortgage note on Trinity Apartments during 1990. The mortgage
note was subsequently refinanced, and operations at Trinity have stabilized.
However, the principal on Trinity's mortgage
-12-
<PAGE> 14
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
note payable was due June 30, 1995. The Partnership has not made the principal
payment of $13,700,000 which was due on June 30, 1995. The Partnership
continues to make interest payments and is currently working with GECC to
extend or refinance the mortgage note. If the mortgage is unable to be extended
or refinanced, the Partnership may need to repay the mortgage amount or sell
the property which may result in a loss. Alternatively, GECC could foreclose on
the property. The General Partner's intentions are to continue to manage
Trinity prudently so that the property can maintain positive cash flows and pay
its general obligations.
RESULTS OF OPERATIONS
The Partnership has invested as a limited partner in four Local Limited
Partnerships which operate four rental housing properties. In addition, the
Partnership directly owns Trinity Apartments. Results of operations are
significantly impacted by the losses on rental operations of Trinity
Apartments, and in prior years, by the Partnership's share of the losses of the
Local Limited Partnerships. These losses included depreciation and accrued
deferred acquisition note interest expense which are noncash in nature.
Because the investments in and advances to Local Limited Partnerships have been
reduced to zero, the Partnership's share of the operations of the Local Limited
Partnerships is no longer being recorded.
The Partnership's net loss increased to $448,181 for the six months ended June
30, 1995 from a net loss of $228,278 for the six months ended June 30, 1994.
Net loss per unit of limited partnership interest increased from $15 to $28 for
the 15,414 units outstanding throughout both periods. The primary reasons for
the increase in net loss is the increase in loss from rental operations at
Trinity Apartments, which was primarily due to an increase in interest expense,
due to overall higher interest rates. The Partnership did not recognize
$709,156 of its allocated share of losses from the four Local Limited
Partnerships for the six months ended June 30, 1995, as the Partnership's net
carrying basis in these Local Limited Partnerships was reduced to zero prior
years. The Partnership's share of losses from the Local Limited Partnerships,
if not limited to its investment account balance, would have decreased $81,653
between periods, primarily due to a decrease in operating expenses.
-13-
<PAGE> 15
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.
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
-------------------------------------------
(Registrant)
By: The National Housing Partnership,
its sole General Partner
By: National Corporation for Housing
Partnerships, its sole General Partner
August 11, 1995 By: /s/
--------------- ------------------------------------------------
John M. Novack
As Senior Vice President, Finance and Accounting,
and Chief Accounting Officer
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 486,331
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 486,331
<PP&E> 17,663,946
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0
0
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</TABLE>
