<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, 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>
June 30,
1997 December 31,
(Unaudited) 1996
----------- -----------
<S> <C> <C>
ASSETS
------
Cash and cash equivalents $ 106,042 $ 70,382
Accounts receivable - 25,148
Prepaid insurance and tenant security deposits 131,819 87,420
Real estate tax escrow 296,603 583,265
Reserve for insurance premiums 40,765 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 $4,477,606 and $4,294,768 9,769,050 9,883,988
Deferred finance costs 60,542 78,262
----------- -----------
$14,054,821 $14,448,508
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Liabilities:
Accounts payable and accrued expenses from rental operations $ 542,428 $ 921,041
Administrative and reporting fee payable to General Partner (Note 3) 1,164,564 1,106,762
Due to General Partner (Note 3) 1,948,121 1,927,518
Accrued interest on partner loans (Note 3) 1,641,504 1,461,334
Other accrued expenses 19,500 38,745
Mortgage note payable 13,116,283 13,140,000
----------- -----------
18,432,400 18,595,400
----------- -----------
Partners' deficit:
General Partner -- The National Housing Partnership (NHP) (173,470) (171,163)
Original Limited Partner -- 1133 Fifteenth Street Four Associates (178,370) (176,063)
Other Limited Partners --15,414 investment units (4,025,739) (3,799,666)
----------- -----------
(4,377,579) (4,146,892)
----------- -----------
$14,054,821 $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 Six Months Ended
June 30, June 30,
---------------------- -------------------------
1997 1996 1997 1996
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
RENTAL REVENUES $ 854,297 $ 831,846 $1,702,579 $1,658,748
--------- --------- ---------- ----------
RENTAL EXPENSES:
Interest 295,189 286,732 582,540 590,884
Renting and administrative 111,599 110,950 211,922 210,219
Operating and maintenance 152,424 151,134 312,951 330,552
Depreciation and amortization 100,279 109,258 200,558 190,968
Taxes and insurance 196,181 27,972 391,599 250,473
--------- --------- ---------- ----------
855,672 686,046 1,699,570 1,573,096
--------- --------- ---------- ----------
(LOSS) PROFIT FROM RENTAL OPERATIONS (1,375) 145,800 3,009 85,652
--------- --------- ---------- ----------
COSTS AND EXPENSES:
Interest on due to General Partner (Note 3) 92,833 82,791 180,170 149,896
Administrative and reporting fees to General
Partner (Note 3) 28,901 28,901 57,802 57,802
Other operating expenses 16,676 12,277 31,429 32,163
--------- --------- ---------- ----------
138,410 123,969 269,401 239,861
--------- --------- ---------- ----------
OTHER REVENUES:
Distributions received in excess of investment
in Local Limited Partnerships 34,017 63,756 34,017 63,756
Interest income 554 812 1,688 1,749
--------- --------- ---------- ----------
34,571 64,568 35,705 65,505
--------- --------- ---------- ----------
NET (LOSS) PROFIT $(105,214) $ 86,399 $ (230,687) $ (88,704)
========= ========= ========== ==========
NET (LOSS) PROFIT ASSIGNABLE TO
LIMITED PARTNERS $(103,110) $ 84,671 $ (226,073) $ (86,930)
========= ========= ========== ==========
NET (LOSS) PROFIT PER LIMITED
PARTNERSHIP INTEREST $ (7) $ 5 $ (15) $ (6)
========= ========= ========== ==========
</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 -- six months ended
June 30, 1997 (2,307) (2,307) (226,073) (230,687)
--------- --------- ----------- -----------
Deficit at June 30, 1997 $(173,470) $(178,370) $(4,025,739) $(4,377,579)
========= ========= =========== ===========
Percentage interest at June 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>
Six Months Ended
June 30,
------------------------------
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Rent collections $ 1,649,056 $ 1,598,523
Distributions received in excess of investment in Local
Limited Partnerships 34,017 63,756
Interest received 1,688 1,749
Other income 41,299 56,327
Operating expenses paid, including rental expenses (1,350,013) (1,213,031)
Mortgage interest paid (581,563) (601,516)
----------- -----------
Net cash used in operating activities (205,516) (94,192)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (67,900) (100,200)
Deposits to real estate tax escrow (320,268) (434,100)
Withdrawals from real estate tax escrow 606,930 625,081
Deposits to reserve for insurance premiums (44,312) (18,855)
Withdrawals from reserve for insurance premiums 73,590 34,224
----------- -----------
Net cash provided by investing activities 248,040 106,150
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans from General Partner 16,853 -
Payments of principal on mortgage note (23,717) -
----------- -----------
Net cash used in financial activities (6,864) -
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 35,660 11,958
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 70,382 35,568
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 106,042 $ 47,526
=========== ===========
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>
Six Months Ended
June 30,
----------------------------
1997 1996
--------- ---------
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES
Net loss $(230,687) $ (88,704)
--------- ---------
Adjustments to reconcile net loss to net cash used in
operating activities -
Depreciation 182,838 180,545
Amortization 17,720 10,423
Mortgagor entity expenses - 2,625
Decrease in accounts receivable 25,148 -
Increase in prepaid insurance, utility, and tenant
security deposits (44,399) (44,752)
Decrease in accounts payable and accrued expenses
from rental operations (378,613) (346,067)
Increase in administrative and reporting fees payable
to General Partner 57,802 57,802
Increase in due to General Partner 3,750 3,750
Increase in accrued interest on partner loans 180,170 149,896
Decrease in other accrued expenses (19,245) (19,710)
--------- ---------
Total adjustments 25,171 (5,488)
--------- ---------
Net cash used in operating activities $(205,516) $ (94,192)
========= =========
</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 June 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 $871,619 and $879,344 of losses from Local Limited
Partnerships during the six months ended June 30, 1997 and 1996,
respectively. As of June 30, 1997 and December 31, 1996, the
Partnership had not recognized $13,502,003 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 June 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 six months
ended June 30, 1997 and 1996. The combined amount carried as payable
to the Partnership by the Local Limited Partnerships was $12,400 as of
June 30, 1997.
The following are combined statements of operations for the three and
six months ended June 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 Six Months Ended
June 30, June 30,
--------------------------- ------------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Rental income $1,119,804 $1,187,139 $2,336,207 $2,319,953
Other income 34,830 30,152 62,358 53,357
---------- ---------- ---------- ----------
Total income 1,154,634 1,217,291 2,398,565 2,373,310
---------- ---------- ---------- ----------
Operating expenses 837,829 800,009 1,609,989 1,619,314
Interest, taxes and insurance 582,341 571,333 1,187,530 1,146,955
Depreciation 243,579 270,816 481,469 495,267
---------- ---------- ---------- ----------
Total expenses 1,663,749 1,642,158 3,278,988 3,261,536
---------- ---------- ---------- ----------
Net loss $ (509,115) $ (424,867) $ (880,423) $ (888,226)
========== ========== ========== ==========
National Housing Partnership
Realty Fund IV share of losses $ (504,024) $ (420,619) $ (871,619) $ (879,344)
========== ========== ========== ==========
</TABLE>
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES OF THE GENERAL
PARTNER
During the six month periods ended June 30, 1997 and 1996, 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, 1997 and
1996. The amount due the General Partner by the Partnership was
$1,164,564 and $1,106,762 at June 30, 1997 and December 31, 1996,
respectively.
During the six months ended June 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. In addition, the
General Partner paid entity expenses of $2,625 on behalf of Trinity
Apartments. During the six months ended June 30, 1997, the General
Partner made working capital advances of $16,853 to the Partnership.
No repayments of working capital advances were made during the six
months ended June 30, 1997 and 1996. The amount owed to the General
Partner at June 30, 1997 and December 31, 1996, was $1,929,371 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 $1,641,504 and $1,461,334 at June 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 $3,750 were accrued on
behalf of Trinity Apartments during the six months ended June 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 six months ended June 30 1997
-8-
<PAGE> 10
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
and 1996. The balance owed to the General Partner for these fees was
$18,750 and $15,000 at June 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,
97 percent of the total units owned by the properties in which the Partnership
has invested, receive rental subsidies. One such proposal has recently been
introduced in the U.S. Senate, and two such proposals have recently been
introduced in the U.S. House of Representatives. Three such proposals are now
pending before Congress. These proposals generally seek to lower subsidized
rents to market levels, thereby reducing rent subsidies, and to lower required
debt service costs as needed to ensure financial viability at the reduced rents
and rent subsidies, but vary greatly as to how that result is to be achieved.
Some proposals include a phase-out of project-based subsidies on a
property-by-property basis upon expiration of a property's Housing Assistance
Payments Contract ("HAP Contract"), with a conversion 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 a property of their choice,
provided the tenant has the financial ability to pay the difference between the
selected property's monthly rent and the value of the vouchers, which would be
established based on HUD's regulated fair market rent for that geographical
area. Congress has not yet accepted any of these restructuring proposals. With
respect to HAP Contracts expiring on or before September 30, 1997, Congress has
elected to renew expiring HAP Contracts for one year terms, generally at
existing rents. Congress is now considering what action to take with respect to
HAP Contracts expiring October 1, 1997 through September 30, 1998. While the
Partnership does not believe that the proposed changes would result in a
significant number of tenants relocating from properties owned by the Local
Limited Partnerships, there can be no assurance that the proposed changes would
not significantly affect the operations of the properties of the Local Limited
Partnerships. Furthermore, there can be no assurance that changes in federal
subsidies will not be more restrictive than those currently proposed or that
other changes in policy will not occur. Any such changes could have an adverse
effect on the operation of the Partnership.
Net cash used in operations for the six months ended June 30, 1997 was $205,516
as compared to $94,192 for the six months ended June 30, 1996. The increase to
cash used in operations resulted primarily from an increase in operating
-10-
<PAGE> 12
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
MANAGMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
expenses paid and a decrease in distributions received in excess of investment
in Local Limited Partnerships, partially offset by an increase in rent
collections, and a decrease in mortgage interest paid.
No working capital advances or repayments occurred between the Partnership and
the Local Limited Partnerships during the six months ended June 30, 1997 and
1996. The combined amount carried as due to the Partnership by the Local
Limited Partnerships was $12,400 as of June 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 June 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 six months ended June 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.
Cash and cash equivalents amounted to $106,042 at June 30, 1997. The ability of
the Partnership to meet its on-going cash requirements, in excess of cash on
hand at June 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 June 30, 1997, the
Partnership owes the General Partner $1,164,564 for administrative and
reporting services performed. In addition, as of June 30, 1997, the Partnership
owes the General Partner $1,948,121 plus accrued interest of $1,641,504. 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 six months ended June 30, 1997, Trinity paid $23,717
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 NHP's interests in the
Local Limited Partnerships. In the event of a default on the notes, the
noteholders would be able to assume NHP'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.
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.
-11-
<PAGE> 13
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
MANAGMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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 $230,687 for the six months ended June
30, 1997 from a net loss of $88,704 for the six months ended June 30, 1996. Net
loss per unit of limited partnership interest increased from $6 to $15 for the
15,414 units outstanding throughout both periods. The primary reasons for the
increase in net loss is the decrease in profit from rental operations at
Trinity Apartments, which was primarily due to an increase in real estate tax
and interest on due to General Partner, along with a decrease in distributions
received in excess of investment in and advances to Local Limited Partnerships.
The Partnership did not recognize $871,619 of its allocated share of losses
from the four Local Limited Partnerships for the six months ended June 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 $7,725 between periods, primarily due to
an increase in rental income, partially offset by an increase in operating
expenses.
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No.
2.1 Real Estate Agreement, dated as of May 22, 1997, by
and among Apartment Investment and Management
Company, AIMCO Properties, L.P., Demeter Holdings
Corporation, Phemus Corporation, Capricorn Investors,
L.P., J. Roderick Heller, III and NHP Partners Two
LLC (Exhibit 2.1 to the Partnership's report on Form
8-K, dated June 3, 1997, is incorporated herein by
reference).
(b) Report on Form 8-K
The Partnership filed a report on Form 8-K, dated June 3,
1997, filed with the commission on June 17, 1997, reporting
events under Item 1, Changes in Control of the Registrant. The
Partnership reported that 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
-12-
<PAGE> 14
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
MANAGMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
("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.
-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 12, 1997 By: /s/
- --------------- ----------------------------------------------
Jeffrey J. Ochs
As Vice President and Chief Accounting Officer
-14-
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