<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 SEPTEMBER 30, 1997
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.)
8065 LEESBURG PIKE, SUITE 400
VIENNA, VIRGINIA 22182
(Address of principal executive offices)
(Zip Code)
(703) 394-2400
(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>
September 30,
1997 December 31,
(Unaudited) 1996
------------ -----------
ASSETS
------
<S> <C> <C>
Cash and cash equivalents 69,559 $ 70,382
Accounts receivable - 25,148
Prepaid insurance and tenant security deposits 160,139 87,420
Real estate tax escrow 466,939 583,265
Reserve for insurance premiums 63,859 70,043
Investments in and advances to Local Limited Partnerships (Note 2) - -
Land 3,650,000 3,650,000
Building and improvements - less accumulated depreciation
of $4,569,025 and $4,294,768 9,731,867 9,883,988
Deferred finance costs 51,682 78,262
----------- -----------
$14,194,045 $14,448,508
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Liabilities:
Accounts payable and accrued expenses from rental operations $ 720,049 $ 921,041
Administrative and reporting fee payable to General Partner (Note 3) 1,193,465 1,106,762
Due to General Partner (Note 3) 1,954,355 1,927,518
Accrued interest on partner loans (Note 3) 1,738,499 1,461,334
Other accrued expenses 28,500 38,745
Mortgage note payable 13,093,546 13,140,000
----------- -----------
18,728,414 18,595,400
----------- -----------
Partners' deficit:
General Partner -- The National Housing Partnership (NHP) (175,038) (171,163)
Original Limited Partner -- 1133 Fifteenth Street Four Associates (179,938) (176,063)
Other Limited Partners --15,414 investment units (4,179,393) (3,799,666)
----------- -----------
(4,534,369) (4,146,892)
----------- -----------
$14,194,045 $14,448,508
=========== ===========
</TABLE>
See notes to financial statements.
-1-
<PAGE> 3
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ----------------------------
1997 1996 1997 1996
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
RENTAL REVENUES $ 874,714 $ 840,970 $2,577,293 $2,499,718
--------- --------- ---------- ----------
RENTAL EXPENSES:
Interest 299,533 293,267 882,073 884,151
Renting and administrative 130,914 116,850 342,836 327,069
Operating and maintenance 168,060 161,353 481,011 491,905
Depreciation and amortization 100,279 99,207 300,837 290,175
Taxes and insurance 192,883 284,045 584,482 534,518
--------- --------- ---------- ----------
891,669 954,722 2,591,239 2,527,818
--------- --------- ---------- ----------
LOSS FROM RENTAL OPERATIONS (16,955) (113,752) (13,946) (28,100)
--------- --------- ---------- ----------
COSTS AND EXPENSES:
Interest on due to General Partner (Note 3) 96,995 85,389 277,165 235,285
Administrative and reporting fees to General
Partner (Note 3) 28,901 28,901 86,703 86,703
Other operating expenses 17,086 9,489 48,515 41,652
--------- --------- ---------- ----------
142,982 123,779 412,383 363,640
--------- --------- ---------- ----------
OTHER REVENUES:
Distributions received in excess of investment
in Local Limited Partnerships - - 34,017 63,756
Interest income 3,147 1,295 4,835 3,044
--------- --------- ---------- ----------
3,147 1,295 38,852 66,800
--------- --------- ---------- ----------
NET LOSS $(156,790) $(236,236) $ (387,477) $ (324,940)
========= ========= ========== ==========
NET LOSS ASSIGNABLE TO
LIMITED PARTNERS $(153,654) $(231,510) $ (379,727) $ (318,440)
========= ========= ========== ==========
NET LOSS PER LIMITED
PARTNERSHIP INTEREST $ (10) $ (15) $ (25) $ (21)
========= ========= ========== ==========
</TABLE>
See notes to financial statements.
-2-
<PAGE> 4
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
STATEMENT OF PARTNER'S DEFICIT
(UNAUDITED)
<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, 1997 $(171,163) $(176,063) $(3,799,666) $(4,146,892)
Net loss -- nine months ended
September 30, 1997 (3,875) (3,875) (379,727) (387,477)
--------- --------- ----------- -----------
Deficit at September 30, 1997 $(175,038) $(179,938) $(4,179,393) $(4,534,369)
========= ========= =========== ===========
Percentage interest at September 30, 1997 1% 1% 98% 100%
========= ========= =========== ===========
(A) (B) (C)
</TABLE>
(A) General Partner
(B) Original Limited Partner
(C) Consists of 15,414 investment units of 0.006358% held by 1,289 investors
See notes to financial statements.
-3-
<PAGE> 5
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Rent collections $ 2,499,241 $ 2,404,052
Distributions received in excess of investment in Local
Limited Partnerships 34,017 63,756
Interest received 4,835 3,044
Other income 66,385 81,856
Operating expenses paid, including rental expenses (1,695,246) (1,545,683)
Mortgage interest paid (880,828) (893,907)
----------- -----------
Net cash provided by operating activities 28,404 113,118
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (122,136) (136,600)
Deposits to real estate tax escrow (490,604) (586,953)
Withdrawals from real estate tax escrow 606,930 625,081
Deposits to reserve for insurance premiums (67,406) (40,212)
Withdrawals from reserve for insurance premiums 73,590 34,224
----------- -----------
Net cash provided by (used in) investing activities 374 (104,460)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans from General Partner 16,853 -
Payments of principal on mortgage note (46,454) -
----------- -----------
Net cash used in financial activities (29,601) -
----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (823) 8,658
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 70,382 35,568
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 69,559 $ 44,226
=========== ===========
SUPPLEMENTAL INFORMATION
Loan from General Partner for reduction of mortgage
principal and refinancing costs $ - $ 667,201
=========== ===========
</TABLE>
See notes to financial statements.
-4-
<PAGE> 6
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------------
1997 1996
---- ----
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net loss $(387,477) $(324,940)
--------- ---------
Adjustments to reconcile net loss to net cash provided by
operating activities -
Depreciation 274,257 270,818
Amortization 26,580 19,357
Mortgagor entity expenses 4,359 -
Decrease in accounts receivable 25,148 -
Increase in prepaid insurance, utility, and tenant
security deposits (72,719) (21,353)
Decrease in accounts payable and accrued expenses
from rental operations (200,992) (146,667)
Increase in administrative and reporting fees payable
to General Partner 86,703 86,703
Increase in due to General Partner 5,625 5,625
Increase in accrued interest on partner loans 277,165 235,285
Decrease in other accrued expenses (10,245) (11,710)
--------- ---------
Total adjustments 415,881 438,058
--------- ---------
Net cash provided by operating activities $ 28,404 $ 113,118
========= =========
</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.
On June 3, 1997, Apartment Investment and Management Company, a
Maryland corporation ("AIMCO" and, together with its subsidiaries and
other controlled entities, the "AIMCO Group"), acquired all of the
issued and outstanding capital stock of NHP Partners, Inc., a
Delaware corporation ("NHP Partners"), and the AIMCO Group acquired
all of the outstanding interests in NHP Partners Two Limited
Partnership, a Delaware limited partnership ("NHP Partners Two"). The
Acquisition was made pursuant to a Real Estate Acquisition Agreement,
dated as of May 22, 1997 (the "Agreement"), by and among AIMCO, AIMCO
Properties, L.P., a Delaware limited partnership (the "Operating
Partnership"), Demeter Holdings Corporation, a Massachusetts
corporation ("Demeter"), Phemus Corporation, a Massachusetts
corporation ("Phemus"), Capricorn Investors, L.P., a Delaware limited
partnership ("Capricorn"), J. Roderick Heller, III and NHP Partners
Two LLC, a Delaware limited liability company ("NHP Partners Two
LLC"). NHP Partners owns all of the outstanding capital stock of the
National Corporation for Housing Partnerships, a District of Columbia
corporation ("NCHP"), which is the general partner of The National
Housing Partnership, a District of Columbia limited partnership (the
"NHP Partnership"). Together, NCHP and NHP Partners Two own all of
the outstanding partnership interests in the NHP Partnership. The NHP
Partnership is the general partner of National Housing Partnership
Realty Fund IV (a Maryland Limited Partnership) (the "Registrant").
As a result of these transactions, the AIMCO Group has acquired
control of the general partner of the Registrant and, therefore, may
be deemed to have acquired control of the Registrant.
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 for the year ended December 31, 1996.
-6-
<PAGE> 8
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(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 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 September 30, 1997 and
December 31, 1996 investments in all four Local Limited Partnerships
had been reduced to zero. As a result, the Partnership did not
recognize $1,285,448 and $1,369,487 of losses from Local Limited
Partnerships during the nine months ended September 30, 1997 and
1996, respectively. As of September 30, 1997 and December 31, 1996,
the Partnership had not recognized $13,915,832 and $12,630,384,
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 September 30, 1997 and December 31, 1996. 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 nine months
ended September 30, 1997 and 1996. The combined amount carried as
payable to the Partnership by the Local Limited Partnerships was
$12,400 as of September 30, 1997.
The following are combined statements of operations for the three and
nine months ended September 30, 1997 and 1996, 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 Nine Months Ended
September 30, September 30,
------------------------------- ----------------------------------
1997 1996 1997 1996
---------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
Rental income $1,297,593 $1,110,400 $ 3,633,800 $ 3,430,353
Other income 48,363 28,678 110,721 82,035
---------- ---------- ----------- -----------
Total income 1,345,956 1,139,078 3,744,521 3,512,388
---------- ---------- ----------- -----------
Operating expenses 813,343 785,747 2,423,332 2,405,061
Interest, taxes and insurance 706,101 600,791 1,893,631 1,747,746
Depreciation 244,521 247,634 725,990 742,901
---------- ---------- ----------- -----------
Total expenses 1,763,965 1,634,172 5,042,953 4,895,708
---------- ---------- ----------- -----------
Net loss $ (418,009) $ (495,094) $(1,298,432) $(1,383,320)
========== ========== =========== ===========
National Housing Partnership
Realty Fund IV share of losses $ (413,829) $ (490,143) $(1,285,448) $(1,369,487)
========== ========== =========== ===========
</TABLE>
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES OF THE GENERAL
PARTNER
During the nine month periods ended September 30, 1997 and 1996, the
Partnership accrued administrative and reporting fees payable to the
General Partner in the amount of $86,703 for services provided to the
Partnership. The Partnership has not made any payments to the General
Partner for these fees during the nine months ended September 30,
1997 and 1996. The amount due the General Partner by the Partnership
was $1,193,465 and $1,106,762 at September 30, 1997 and December 31,
1996, respectively.
During the nine months ended September 30, 1996, the General Partner
made a payment on behalf of Trinity Apartments to General Electric
Capital Corporation (GECC) of $667,201 as a condition of a new
mortgage modification agreement, effective March 15, 1996. During the
nine months ended September 30, 1997, the General Partner made
working capital advances of $16,853 to the Partnership. In addition,
the General Partner paid entity expenses of $4,359 on behalf of
Trinity Apartments. No repayments of working capital advances were
made during the nine months ended September 30, 1997 and 1996. The
amount owed to the General Partner at September 30, 1997 and December
31, 1996, was $1,933,730 and $1,912,518, respectively. Interest is
charged on borrowings at the Chase Manhattan Bank rate of prime plus
2%. Accrued interest on this loan amounted to $1,738,499 and
$1,461,334 at September 30, 1997 and December 31, 1996, 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 $5,625 were accrued on
behalf of Trinity Apartments during the nine months ended
September 30, 1997 and 1996. These fees are payable to the General
Partner without interest from cash available for distribution to
partners. No payments were made during the nine months ended
-8-
<PAGE> 10
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 and 1996. The balance owed to the General Partner
for these fees was $20,625 and $15,000 at September 30, 1997 and
December 31, 1996, respectively, and is included in Due to General
Partner.
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)
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements in certain circumstances. Certain information
included in this Report and other Partnership filings (collectively "SEC
Filings") under the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended (as well as information communicated orally or
in writing between the dates of such SEC Filings) contains or may contain
information that is forward looking, including statements regarding the effect
of government regulations. Actual results may differ materially from those
described in the forward-looking statements and will be affected by a variety of
factors including national and local economic conditions, the general level of
interest rates, terms of governmental regulations that affect the Partnership
and interpretations of those regulations, the competitive environment in which
the properties owned by the Local Limited Partnerships operate, the availability
of working capital and dispositions of properties owned by the 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.
For the past several years, various proposals have been advanced by the United
States Department of Housing and Urban Development ("HUD"), Congress and others
proposing the restructuring of HUD's rental assistance programs under Section 8
of the United States Housing Act of 1937 ("Section 8"), under which 896 units,
63 percent of the total units owned by the properties in which the Partnership
has invested, receive rental subsidies. On October 27, 1997, the President
signed into law the Multifamily Assisted Housing Reform and Affordability Act of
1997 (the "1997 Housing Act"). Under the 1997 Housing Act, certain properties
assisted under Section 8, with rents above market levels and financed with
HUD-insured mortgage loans, will be restructured by reducing subsidized rents to
market levels, thereby reducing rent subsidies, and lowering required debt
service costs as needed to ensure financial viability at the reduced rents and
rent subsidies. The 1997 Housing Act retains project-based subsidies for most
properties (properties in rental markets with limited supply, properties serving
the elderly, and certain other properties). The 1997 Housing Act phases out
project-based subsidies on selected properties servicing families not located in
rental markets with limited supply, converting such subsidies to a tenant-based
subsidy. Under a tenant-based system, rent vouchers would be issued to qualified
tenants who then could elect to reside at properties of their choice, provided
such tenants have the financial ability to pay the difference between the
selected properties' monthly rent and the value of the vouchers, which would be
established based on HUD's regulated fair market rent for the relevant
geographical areas. The 1997 Housing Act provides that properties will begin the
restructuring process in federal fiscal year 1999 (beginning October 1, 1998),
and that HUD will issue final regulations implementing 1997 Housing Act on or
before October 27, 1998. With respect to Housing Assistance Payments Contracts
("HAP Contracts") expiring before October 1, 1998, Congress has elected to renew
them for one-year terms, generally at existing rents, so long as the properties
remain in compliance with the HAP Contracts. While the Partnership does not
expect the provisions of the 1997 Housing Act to result in a significant number
of tenants relocating from properties owned by the Local Limited Partnerships,
there can be no assurance that the provisions will not significantly affect the
operations of the properties of the Local Limited Partnerships. Furthermore,
there can be no assurance that other changes in Federal housing subsidy policy
will not occur. Any such changes could have an adverse effect on the operation
of the Partnership.
-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
Net cash provided by operations for the nine months ended September 30, 1997 was
$28,404 as compared to $113,118 for the nine months ended September 30, 1996.
The decrease to cash provided by operations resulted primarily from an increase
in operating expenses paid and a decrease in distributions received in excess of
investment in Local Limited Partnerships, partially offset by an increase in
rent collections.
No working capital advances or repayments occurred between the Partnership and
the Local Limited Partnerships during the nine months ended September 30, 1997
and 1996. The combined amount carried as due to the Partnership by the Local
Limited Partnerships was $12,400 as of September 30, 1997. 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 September 30, 1997,
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. Cash
distributions of $34,017 and $63,756 were received from the Local Limited
Partnerships during the nine months ended September 30, 1997 and 1996,
respectively. The receipt of distributions in future quarters is dependent upon
the operations of the underlying properties of the Local Limited Partnerships to
generate sufficient cash for distribution in accordance with applicable HUD
regulations.
Cash and cash equivalents amounted to $69,559 at September 30, 1997. The ability
of the Partnership to meet its on-going cash requirements, in excess of cash on
hand at September 30, 1997, is dependent on operations of Trinity Apartments,
distributions received from the Local Limited Partnerships, and proceeds from
the sales or refinancing of the underlying Properties. As of September 30, 1997,
the Partnership owes the General Partner $1,193,465 for administrative and
reporting services performed. In addition, as of September 30, 1997, the
Partnership owes the General Partner $1,954,355 plus accrued interest of
$1,738,499. The payment of the unpaid administrative and reporting fees and
advances from the Partnership and NHP to the Local Limited Partnerships will
most likely result from the sale or refinancing of the underlying Properties of
the Local Limited Partnerships rather than through recurring operations. The
General Partner will continue to manage the Partnership's assets prudently in an
effort to achieve positive cash flow and will evaluate lending the Partnership
additional funds as such funds are needed, but is in no way legally obligated to
make such loans.
On March 15, 1996, a modification to the original loan agreement became
effective which extended the due date of Trinity's mortgage note to March 15,
1999. Under the revised agreement, interest is payable monthly at a variable
rate equal to 3.25% above the lender's commercial paper rate. Principal is
payable quarterly in an amount equal to 100% of Trinity's net cash flow, as
defined in the agreement, with the remaining principal balance due and payable
March 15, 1999. During the nine months ended September 30, 1997, Trinity paid
$46,454 of mortgage principal from net cash flow.
Except for Trinity, all the properties in which the Partnership has invested
carry deferred acquisition notes due to the original owners of the properties.
These notes are secured by both the Partnership's and the General Partner's
interests in the Local Limited Partnerships. In the event of a default on the
notes, the note holders would be able to assume the General Partner's and the
Partnership's interests in the Local Limited Partnerships. Due to weak 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
a sale or refinancing of the Properties. The deferred acquisition notes mature
in 2001. There can be no assurance that the General Partner will be successful
in extending or restructuring the deferred acquisition notes as they mature.
-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
In prior years, Trinity Apartments, a rental property wholly-owned by the
Partnership, has generated substantial losses from operations which has
necessitated significant funding from the General Partner in prior years. 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 non-cash 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 $387,477 for the nine months ended
September 30, 1997 from a net loss of $324,940 for the nine months ended
September 30, 1996. Net loss per unit of limited partnership interest increased
from $21 to $25 for the 15,414 units outstanding throughout both periods. The
primary reasons for the increase in net loss is the increase in interest on due
to General Partner and a decrease in distributions received in excess of
investment in and advances to Local Limited Partnerships. The Partnership did
not recognize $1,285,448 of its allocated share of losses from the four Local
Limited Partnerships for the nine months ended September 30, 1997, 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 $84,039 between periods, primarily due to an increase in rental
income, partially offset by an increase in interest on deferred acquisition
notes.
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No.
27 Financial Data Schedule.
-12-
<PAGE> 14
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
November 10, 1997 By: /s/
- ----------------- ----------------------------------------------
Jeffrey J. Ochs
As Vice President and Chief Accounting Officer
-13-
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
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0
0
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<INCOME-PRETAX> (387,477)
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