<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 MARCH 31, 1998
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.)
9200 KEYSTONE CROSSING, SUITE 500
INDIANAPOLIS, INDIANA 46240-7602
(Address of principal executive offices)
(Zip Code)
(317) 817-7500
(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>
March 31,
1998 December 31,
(Unaudited) 1997
----------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 138,032 $ 45,275
Accounts receivable -- 2,591
Prepaid insurance and tenant security deposits 111,116 121,534
Mortgage escrow deposits 467,904 962,616
Reserve for insurance premiums 98,118 87,240
Investments in and advances to Local Limited Partnerships (Note 2) -- --
Land 3,650,000 3,650,000
Building and improvements - less accumulated depreciation
of $4,763,294 and $4,671,875 9,625,402 9,656,311
Deferred finance costs 910,498 925,930
------------ ------------
$ 15,001,070 $ 15,451,497
============ ============
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Accounts payable and accrued expenses from rental operations $ 262,356 $ 797,882
Administrative and reporting fee payable to General Partner (Note 3) 1,251,267 1,222,366
Due to General Partner (Note 3) 8,079,584 8,077,709
Accrued interest on partner loans (Note 3) 2,113,306 1,838,021
Other accrued expenses 53,780 40,030
Mortgage note payable 9,524,872 9,620,000
------------ ------------
21,285,165 21,596,008
------------ ------------
Partners' deficit:
General Partner -- The National Housing Partnership (NHP) (192,535) (191,139)
Original Limited Partner -- 1133 Fifteenth Street Four Associates (197,435) (196,039)
Other Limited Partners --15,414 investment units (5,894,125) (5,757,333)
------------ ------------
(6,284,095) (6,144,511)
------------ ------------
$ 15,001,070 $ 15,451,497
============ ============
</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 March 31,
----------------------------
1998 1997
--------- ---------
<S> <C> <C>
RENTAL REVENUES $ 874,877 $ 848,282
--------- ---------
RENTAL EXPENSES:
Interest 156,658 287,351
Renting and administrative 98,928 100,323
Operating and maintenance 144,827 160,527
Depreciation and amortization 106,851 100,279
Taxes and insurance 187,607 195,418
--------- ---------
694,871 843,898
--------- ---------
PROFIT FROM RENTAL OPERATIONS 180,006 4,384
--------- ---------
COSTS AND EXPENSES:
Interest on due to General Partner (Note 3) 275,285 87,337
Administrative and reporting fees to General
Partner (Note 3) 28,901 28,901
Other operating expenses 16,202 14,753
--------- ---------
320,388 130,991
--------- ---------
OTHER REVENUES:
Interest income 798 1,134
--------- ---------
NET LOSS $(139,584) $(125,473)
========= =========
NET LOSS ASSIGNABLE TO
LIMITED PARTNERS $(136,792) $(122,963)
========= =========
NET LOSS PER LIMITED
PARTNERSHIP INTEREST $ (9) $ (8)
========= =========
</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, 1998 $(191,139) $(196,039) $(5,757,333) $(6,144,511)
--------- --------- ----------- -----------
Net loss -- three months ended
March 31, 1998 (1,396) (1,396) (136,792) (139,584)
--------- --------- ----------- -----------
Deficit at March 31, 1998 $(192,535) $(197,435) $(5,894,125) $(6,284,095)
--------- --------- ----------- -----------
Percentage interest at March 31, 1998 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 1,293
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>
Three Months Ended
March 31,
--------------------------------
1998 1997
----------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Rent collections $ 840,768 $ 825,991
Interest received 798 1,134
Other income 19,963 20,212
Operating expenses paid, including rental expenses (939,790) (1,041,090)
Mortgage interest paid (157,178) (287,908)
----------- -----------
Net cash used in operating activities (235,439) (481,661)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (60,510) (6,800)
Deposits to real estate tax escrow (164,904) (149,931)
Withdrawals from real estate tax escrow 659,616 606,930
Deposits to reserve for insurance premiums (10,878) (21,215)
Withdrawals from reserve for insurance premiums -- 73,590
----------- -----------
Net cash provided by investing activities 423,324 502,574
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of principal on mortgage note (95,128) (13,901)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 92,757 7,012
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 45,275 70,382
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 138,032 $ 77,394
=========== ===========
</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>
Three Months Ended
March 31,
-----------------------------
1998 1997
--------- ---------
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES
Net loss $(139,584) $(125,473)
--------- ---------
Adjustments to reconcile net loss to net cash provided by
operating activities -
Depreciation 91,419 91,419
Amortization 15,432 8,860
Decrease in accounts receivable 2,591 346
Decrease (increase) in prepaid insurance, utility, and
tenant security deposits 10,418 (62,784)
Decrease in accounts payable and accrued expenses
from rental operations (535,526) (524,142)
Increase in administrative and reporting fees payable
to General Partner 28,901 28,901
Increase in due to General Partner 1,875 1,875
Increase in accrued interest on partner loans 275,285 87,337
Increase in other accrued expenses 13,750 12,000
--------- ---------
Total adjustments (95,855) (356,188)
--------- ---------
Net cash used in operating activities $(235,439) $(481,661)
========= =========
</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 ("NHP"). Together, NCHP and NHP Partners
Two own all of the outstanding partnership interests in NHP. NHP 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.
The Original Limited Partner of the Partnership is 1133 Fifteenth
Street Four Associates, whose limited partners were key employees of
NCHP at the time the Partnership was formed and whose general partner
is NHP.
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
-6-
<PAGE> 8
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
NOTES TO 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, 1997.
-7-
<PAGE> 9
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 March 31, 1998 and December 31, 1997
investments in all four Local Limited Partnerships had been reduced to
zero. As a result, the Partnership did not recognize $410,123 and
$367,595 of losses from Local Limited Partnerships during the three
months ended March 31, 1998 and 1997, respectively. As of March 31,
1998 and December 31, 1997, the Partnership had not recognized
$14,756,701 and $14,346,578, 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 March 31,
1998 and December 31, 1997. 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 three months
ended March 31, 1998 and 1997. The combined amount carried as payable
to the Partnership by the Local Limited Partnerships was $12,200 as of
March 31, 1998.
The following are combined statements of operations for the three
months ended March 31, 1998 and 1997, 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.
-8-
<PAGE> 10
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------
1998 1997
----------- -----------
<S> <C> <C>
Rental income $ 1,121,485 $ 1,216,403
Other income 31,051 27,528
----------- -----------
Total income 1,152,536 1,243,931
----------- -----------
Operating expenses 732,233 772,160
Interest, taxes and insurance 646,227 605,189
Depreciation 188,342 237,890
----------- -----------
Total expenses 1,566,802 1,615,239
----------- -----------
Net loss $ (414,266) $ (371,308)
=========== ===========
National Housing Partnership Realty Fund IV
share of losses $ (410,123) $ (367,595)
=========== ===========
</TABLE>
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES OF THE GENERAL
PARTNER
During the three month periods ended March 31, 1998 and 1997, the
Partnership accrued administrative and reporting fees payable to the
General Partner in the amount of $28,901 for services provided to the
Partnership. The Partnership has not made any payments to the General
Partner for these fees during the three months ended March 31, 1998 and
1997. The amount due the General Partner by the Partnership was
$1,251,267 and $1,222,366 at March 31, 1998 and December 31, 1997,
respectively.
There were no working capital advances or repayments made during the
three months ended March 31, 1998 and 1997. The amount owed to the
General Partner at March 31, 1998 and December 31, 1997, was
$8,055,209. Interest is charged on borrowings at the Chase Manhattan
Bank rate of prime plus 2%. Chase Manhattan Bank prime was 8.5% at
March 31, 1998. Accrued interest on this loan amounted to $2,113,306
and $1,838,021 at March 31, 1998 and December 31, 1997, 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 $1,875 were accrued on behalf
of Trinity Apartments during the three months ended March 31, 1998 and
1997. These fees are payable to the General Partner without interest
from cash available for distribution to partners. No payments were made
during the three months ended March 31, 1998 and 1997. The balance owed
to the General Partner for these fees was $24,375 and $22,500 at March
31, 1998 and December 31, 1997, respectively, and is included in Due to
General Partner.
-9-
<PAGE> 11
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
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.
-10-
<PAGE> 12
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 adjusting subsidized rents
to market levels, thereby potentially 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.
-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
Net cash used in operations for the three months ended March 31, 1998 was
$235,439 as compared to $481,661 for the three months ended March 31, 1997. The
decrease to cash used in operations resulted primarily from a decrease in
operating expenses and mortgage interest paid, as a result of the refinancing
that occurred in December 1997.
No working capital advances or repayments occurred between the Partnership and
the Local Limited Partnerships during the three months ended March 31, 1998 and
1997. The combined amount carried as due to the Partnership by the Local Limited
Partnerships was $12,200 as of March 31, 1998. 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 March 31, 1998,
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
cash distributions received from the Local Limited Partnerships during the three
months ended March 31, 1998 and 1997, 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 $138,032 at March 31, 1998. The ability of
the Partnership to meet its on-going cash requirements, in excess of cash on
hand at March 31, 1998, 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 March 31, 1998, the
Partnership owes the General Partner $1,251,267 for administrative and reporting
services performed. In addition, as of March 31, 1998, the Partnership owes the
General Partner $8,079,584 plus accrued interest of $2,113,306. 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 December 29,1997, Trinity refinanced their mortgage note payable. The new
mortgage note payable of $9,524,872 at March 31, 1998, is held by Lehman Capital
and is secured by a deed of trust on the rental property and an assignment of
all right of title and interest in, leases with the tenants. The note bears
interest at the rate of 6.557% per annum. The principal and interest are payable
by Trinity in equal monthly installments of $84,102 to December 1, 2012.
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.
-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
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 and 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.
Royal Towers Limited Partnership has a significant amount of payables and only
limited resources with which to pay such items, which raises substantial doubt
about the Royal Towers Limited Partnership's ability to continue as a going
concern. Royal Towers continued existence as a going concern is dependent upon
maintaining positive cash flows from operations or obtaining additional fundings
from partners if positive cash flows are not maintained. The General Partner's
intentions are to continue managing the property prudently so that it can
maintain positive cash flows and decrease its debts.
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 $139,584 for the three months ended
March 31, 1998 from a net loss of $125,473 for the three months ended March 31,
1997. Net loss per unit of limited partnership interest increased from $8 to $9
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, partially offset by an increase in rental income and a decrease in
mortgage interest as a result of its refinancing. The Partnership did not
recognize $410,123 of its allocated share of losses from the four Local Limited
Partnerships for the three months ended March 31, 1998, 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 increased $42,528
between periods, primarily due to a decrease in rental income, partially offset
by a decrease in depreciation.
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No.
------------
27 Financial Data Schedule.
-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
May 14, 1998 By: /s/
- ------------ -----------------------------------------
Troy D. Butts
As Senior Vice President and Chief Financial Officer
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 704,054
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 815,170
<PP&E> 18,038,696
<DEPRECIATION> 4,763,294
<TOTAL-ASSETS> 15,001,070
<CURRENT-LIABILITIES> 11,760,293
<BONDS> 9,524,872
0
0
<COMMON> 0
<OTHER-SE> (6,284,095)
<TOTAL-LIABILITY-AND-EQUITY> 15,001,070
<SALES> 0
<TOTAL-REVENUES> 875,675
<CGS> 0
<TOTAL-COSTS> 538,213
<OTHER-EXPENSES> 45,103
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 431,943
<INCOME-PRETAX> (139,584)
<INCOME-TAX> 0
<INCOME-CONTINUING> (139,584)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (139,584)
<EPS-PRIMARY> (9)
<EPS-DILUTED> (9)
</TABLE>
