<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, 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)
<TABLE>
<S> <C>
MARYLAND 52-1473440
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
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>
June 30,
1998 December 31,
(Unaudited) 1997
----------------- -----------------
<S> <C> <C>
ASSETS
------
Cash and cash equivalents $ 175,258 $ 45,275
Accounts receivable - 2,591
Prepaid insurance and tenant security deposits 97,006 121,534
Mortgage escrow deposits 632,817 962,616
Reserve for insurance premiums 109,700 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 $4,860,427 and $4,671,875 9,678,301 9,656,311
Deferred finance costs 895,066 925,930
----------- -----------
$15,238,148 $15,451,497
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Liabilities:
Accounts payable and accrued expenses from rental operations $ 444,818 $ 797,882
Administrative and reporting fee payable to General Partner (Note 3) 1,280,168 1,222,366
Due to General Partner (Note 3) 8,091,190 8,077,709
Accrued interest on partner loans (Note 3) 2,367,306 1,838,021
Other accrued expenses 59,130 40,030
Mortgage note payable 9,428,176 9,620,000
----------- -----------
21,670,788 21,596,008
----------- -----------
Partners' deficit:
General Partner -- The National Housing Partnership (NHP) (194,021) (191,139)
Original Limited Partner -- 1133 Fifteenth Street Four Associates (198,921) (196,039)
Other Limited Partners --15,414 investment units (6,039,698) (5,757,333)
----------- -----------
(6,432,640) (6,144,511)
----------- -----------
$15,238,148 $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 Six Months Ended
June 30, June 30,
---------------------- --------------------------
1998 1997 1998 1997
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
RENTAL REVENUES $ 896,840 $ 854,297 $1,771,717 $1,702,579
--------- --------- ---------- ----------
RENTAL EXPENSES:
Interest 156,131 295,189 312,789 582,540
Renting and administrative 109,258 111,599 208,186 211,922
Operating and maintenance 167,241 152,424 312,068 312,951
Depreciation and amortization 112,565 100,279 219,416 200,558
Taxes and insurance 196,083 196,181 383,690 391,599
--------- --------- ---------- ----------
741,278 855,672 1,436,149 1,699,570
--------- --------- ---------- ----------
PROFIT (LOSS) FROM RENTAL OPERATIONS 155,562 (1,375) 335,568 3,009
--------- --------- ---------- ----------
COSTS AND EXPENSES:
Interest on due to General Partner (Note 3) 254,000 92,833 529,285 180,170
Administrative and reporting fees to General
Partner (Note 3) 28,901 28,901 57,802 57,802
Other operating expenses 23,331 16,676 39,533 31,429
--------- --------- ---------- ----------
306,232 138,410 626,620 269,401
--------- --------- ---------- ----------
OTHER REVENUES:
Distributions received in excess of investment
in Local Limited Partnerships - 34,017 - 34,017
Interest income 2,125 554 2,923 1,688
--------- --------- ---------- ----------
2,125 34,571 2,923 35,705
--------- --------- ---------- ----------
NET LOSS $(148,545) $(105,214) $ (288,129) $ (230,687)
========= ========= ========== ==========
NET LOSS ASSIGNABLE TO
LIMITED PARTNERS $(145,573) $(103,110) $ (282,365) $ (226,073)
========= ========= ========== ==========
NET LOSS PER LIMITED
PARTNERSHIP INTEREST $ (9) $ (7) $ (18) $ (15)
========= ========= ========== ==========
</TABLE>
See notes to financial statements.
-2-
<PAGE> 4
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(A MARYLAND LIMITED PARTNERSHIP)
STATEMENT OF PARTNER'S DEFICIT
(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 -- six months ended
June 30, 1998 (2,882) (2,882) (282,365) (288,129)
--------- --------- ----------- -----------
Deficit at June 30, 1998 $(194,021) $(198,921) $(6,039,698) $(6,432,640)
========= ========= =========== ===========
Percentage interest at June 30, 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>
Six Months Ended
June 30,
-------------------------------------
1998 1997
----------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Rent collections $ 1,730,610 $ 1,649,056
Distributions received in excess of investment in
Local Limited Partnerships - 34,017
Interest received 2,923 1,688
Other income 38,625 41,299
Operating expenses paid, including rental expenses (1,234,359) (1,350,013)
Mortgage interest paid (312,789) (581,563)
----------- -----------
Net cash provided by (used in) operating activities 225,010 (205,516)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (210,542) (67,900)
Deposits to real estate tax escrow (329,817) (320,268)
Withdrawals from real estate tax escrow 659,616 606,930
Deposits to reserve for insurance premiums (22,460) (44,312)
Withdrawals from reserve for insurance premiums - 73,590
----------- -----------
Net cash provided by investing activities 96,797 248,040
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans from General Partner - 16,853
Payments of principal on mortgage note (191,824) (23,717)
----------- -----------
Net cash used in financial activities (191,824) (6,864)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 129,983 35,660
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 45,275 70,382
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 175,258 $ 106,042
=========== ===========
</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,
---------------------------------
1998 1997
---- ----
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net loss $(288,129) $(230,687)
--------- ---------
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities -
Depreciation 188,552 182,838
Amortization 30,864 17,720
Mortgagor entity expenses 9,731 -
Decrease in accounts receivable 2,591 25,148
Decrease (increase) in prepaid insurance, utility, and
tenant security deposits 24,528 (44,399)
Decrease in accounts payable and accrued expenses
from rental operations (353,064) (378,613)
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 529,285 180,170
Increase (decrease) in other accrued expenses 19,100 (19,245)
--------- ---------
Total adjustments 513,139 25,171
--------- ---------
Net cash provided by (used in) operating activities $ 225,010 $(205,516)
========= =========
</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 and the notes included in NHP Realty Fund IV's Annual
Report filed in Form 10-K for the year ended December 31, 1997.
-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, 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 $875,919 and $871,619 of losses from Local Limited
Partnerships during the six months ended June 30, 1998 and 1997,
respectively. As of June 30, 1998 and December 31, 1997, the
Partnership had not recognized $15,222,497 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 June 30,
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 six months
ended June 30, 1998 and 1997. The combined amount carried as payable
to the Partnership by the Local Limited Partnerships was $12,200 as of
June 30, 1998.
The following are combined statements of operations for the three and
six months ended June 30, 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.
-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,
----------------------------- --------------------------------
1998 1997 1998 1997
-------------- ------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Rental income $1,199,057 $1,119,804 $2,320,542 $2,336,207
Other income 41,030 34,830 72,081 62,358
---------- ---------- ---------- ----------
Total income 1,240,087 1,154,634 2,392,623 2,398,565
---------- ---------- ---------- ----------
Operating expenses 920,161 837,829 1,652,394 1,609,989
Interest, taxes and insurance 616,783 582,341 1,263,010 1,187,530
Depreciation 173,644 243,579 361,986 481,469
---------- ---------- ---------- ----------
Total expenses 1,710,588 1,663,749 3,277,390 3,278,988
---------- ---------- ---------- ----------
Net loss $ (470,501) $ (509,115) $ (884,767) $ (880,423)
========== ========== ========== ==========
National Housing Partnership
Realty Fund IV share of losses $ (465,796) $ (504,024) $ (875,919) $ (871,619)
========== ========== ========== ==========
</TABLE>
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES OF THE GENERAL
PARTNER
During the six month periods ended June 30, 1998 and 1997, 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, 1998 and
1997. The amount due the General Partner by the Partnership was
$1,280,168 and $1,222,366 at June 30, 1998 and December 31, 1997,
respectively.
During the six months ended June 30, 1998, the General
Partner paid entity expenses of $9,731 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 were made during the six months ended June 30, 1998 and
1997. The amount owed to the General Partner at June 30, 1998 and
December 31, 1997, was $8,064,940 and $8,055,209, respectively.
Interest is charged on borrowings at the Chase Manhattan Bank rate of
prime plus 2%. Chase Manhattan Bank prime was 8.5% at June 30, 1998.
Accrued interest on this loan amounted to $2,367,306 and $1,838,021 at
June 30, 1998 and December 31, 1997, respectively.
Annual partnership administrative fees of $3,750 were accrued on
behalf of Trinity Apartments during the six months ended June 30, 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 six months ended June 30, 1998 and 1997. The
balance owed to the General Partner for these fees was $26,250 and
$22,500 at June 30, 1998 and December 31, 1997, respectively, and is
included in Due to General Partner.
-8-
<PAGE> 10
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.
-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 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.
-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 six months ended June 30, 1998 was
$225,010 as compared to net cash used in operations of $205,516 for the six
months ended June 30, 1997. The increase to cash provided by operations
resulted primarily from an increase in rent collections and a decrease in
operating expenses and mortgage interest paid, as a result of the refinancing
that occurred in December 1997, partially offset by a decrease in distributions
received in excess of investment in 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, 1998 and
1997. The combined amount carried as due to the Partnership by the Local
Limited Partnerships was $12,200 as of June 30, 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 June 30, 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 six months ended June 30, 1998, while cash distributions of $34,017
were received from the Local Limited Partnerships during the six months ended
June 30, 1997. 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 $175,258 at June 30, 1998. The ability of
the Partnership to meet its on-going cash requirements, in excess of cash on
hand at June 30, 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 June 30, 1998, the
Partnership owes the General Partner $1,280,168 for administrative and
reporting services performed. In addition, as of June 30, 1998, the Partnership
owes the General Partner $8,091,190 plus accrued interest of $2,367,306. 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 $9,428,176 at June 30, 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
-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
no assurance that the General Partner will be successful in extending or
restructuring the deferred acquisition notes as they mature.
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 $288,129 for the six months ended June
30, 1998 from a net loss of $230,687 for the six months ended June 30, 1997.
Net loss per unit of limited partnership interest increased from $15 to $18 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
$875,919 of its allocated share of losses from the four Local Limited
Partnerships for the six months ended June 30, 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 $4,300
between periods, primarily due to a slight decrease in rental income.
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.
<TABLE>
<S> <C>
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 14, 1998 By: /s/
- --------------- ----------------------------------------------------
Troy D. Butts
As Senior Vice President and Chief Financial Officer
</TABLE>
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,014,781
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,014,781
<PP&E> 18,188,728
<DEPRECIATION> 4,860,427
<TOTAL-ASSETS> 15,238,148
<CURRENT-LIABILITIES> 12,242,612
<BONDS> 9,428,176
0
0
<COMMON> 0
<OTHER-SE> (6,432,640)
<TOTAL-LIABILITY-AND-EQUITY> 15,238,148
<SALES> 0
<TOTAL-REVENUES> 1,774,640
<CGS> 0
<TOTAL-COSTS> 1,123,360
<OTHER-EXPENSES> 97,335
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 842,074
<INCOME-PRETAX> (288,129)
<INCOME-TAX> 0
<INCOME-CONTINUING> (288,129)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (288,129)
<EPS-PRIMARY> (18)
<EPS-DILUTED> (18)
</TABLE>
