FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________to _________
Commission file number 0-15731
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
(Exact name of small business issuer as specified in its charter)
Maryland 52-1473440
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29601
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
Statement of Financial Position
(Unaudited)
(in thousands)
September 30, 2000
ASSETS
Cash and cash equivalents $ 1,350
Accounts receivable 83
Prepaid insurance and tenant security deposits 47
Investments in and advances to Local Limited
Partnerships (Note 2) --
Land 3,650
Buildings and improvements - less accumulated
depreciation of $5,825 9,683
Deferred finance costs 1,058
$15,871
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Accounts payable and accrued expenses from rental
operations $ 888
Administrative and reporting fee payable to
General Partner (Note 3) 1,540
Due to General Partner (Note 3) 8,755
Accrued interest on partner loans (Note 3) 3,599
Other accrued expenses 29
Mortgage note payable 8,482
23,293
Partners' deficit:
General partner -- The National Housing
Partnership (NHP) (203)
Original limited partner -- 1133 Fifteenth
Street Four Associates (208)
Other limited partners -- 15,394 investment
units (7,011)
(7,422)
$15,871
See Accompanying Notes to Financial Statements
<PAGE>
b)
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
Statements of Operations
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
RENTAL REVENUES $ 1,032 $ 959 $ 2,996 $ 2,826
RENTAL EXPENSES:
Interest 134 146 420 450
Renting and administrative 140 125 351 378
Operating and maintenance 156 188 472 463
Depreciation and amortization 145 99 448 349
Taxes and insurance 221 218 544 433
796 776 2,235 2,073
PROFIT FROM RENTAL OPERATIONS 236 183 761 753
COSTS AND EXPEMSES:
Interest on due to General Partner
(Note 3) 436 280 867 780
Administrative and reporting fees to
General Partner (Note 3) 29 29 87 87
Other operating expenses 45 2 92 6
510 311 1,046 873
OTHER REVENUES:
Distributions received in excess of
investment in Local Limited
Partnerships 4 12 19 52
Interest income 15 1 18 20
19 13 37 72
NET LOSS $ (255) $ (115) $ (248) $ (48)
NET LOSS ASSIGNABLE TO LIMITED
PARTNERS $ (250) $ (113) $ (244) $ (47)
NET LOSS PER LIMITED PARTNERSHIP
INTEREST $(16.24) $ (7.31) $(15.85) $ (3.07)
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
c)
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
Statements of Partners' Deficit
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
The National 1133
Housing Fifteenth Other
Partnership Street Four Limited
(NHP) Associates Partners Total
<S> <C> <C> <C> <C> <C> <C>
Deficit at December 31, 1999 $ (201) $ (206) $(6,767) $(7,174)
Net loss - nine months
ended September 30, 2000 (2) (2) (244) (248)
Deficit at September 30, 2000 $ (203) $ (208) $(7,011) $(7,422)
Percentage interest at
September 30, 2000 1% 1% 98% 100%
(A) (B) (C)
</TABLE>
(A) General Partner
(B) Original Limited Partner
(C) Consists of 15,394 investment units
See Accompanying Notes to Financial Statements
<PAGE>
d)
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
Statements of Cash FlowS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Rent collections $ 2,887 $ 2,707
Distributions received in excess of investment in
Local Limited Partnerships 19 52
Interest received 18 20
Other income 77 63
Interest paid on loan from General Partner (248) (392)
Operating expenses paid, including rental expenses (1,363) (1,949)
Mortgage interest paid (425) (451)
Net cash provided by operating activities 965 50
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (180) (246)
Net withdrawals from escrow funds 828 377
Net cash provided by investing activities 648 131
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan costs paid (7) --
Loans from General Partner 7 130
Payments of principal on mortgage note (332) (310)
Net cash used in financing activities (332) (180)
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,281 1
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 69 24
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,350 $ 25
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
e)
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
Statements of Cash FlowS (continued)
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (248) $ (48)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation 350 267
Amortization 98 82
Increase in accounts receivable (32) (56)
Decrease (increase) in prepaid insurance, utility,
and tenant security deposits 48 (22)
Increase (decrease) in accounts payable and accrued
expenses from rental operations 44 (627)
Increase in administrative and reporting fees
payable to General Partner 87 87
Increase in due to General Partner 5 5
Increase in accrued interest on Partner loans 619 388
Decrease in other accrued expenses (6) (26)
Total adjustments 1,213 98
Net cash provided by operating activities $ 965 $ 50
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
f)
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
Notes to Financial Statements
(Unaudited)
(1) ACCOUNTING POLICIES
Organization
National Housing Partnership Realty Fund IV (the "Partnership" or the
"Registrant") is a limited partnership organized under the Maryland Revised
Uniform Limited Partnership Act on January 8, 1986. The Partnership was formed
for the purpose of raising capital by offering and selling limited partnership
interests, and then using that capital to acquire and operate (either directly
or through investment as a limited partner in Local Limited Partnerships)
multi-family rental apartments, some of which are financed and/or operated with
one or more forms of rental or financial assistance from the U.S. Department of
Housing and Urban Development (HUD). On February 21, 1986, the inception of
operations, the Partnership began raising capital and acquiring interests in
Local Limited Partnerships.
National Housing Partnership, a District of Columbia limited partnership ("NHP"
or the "General Partner"), was authorized to raise capital for the Partnership
by offering and selling to additional limited partners not more than 35,000
interests at a price of $1,000 per interest. During 1986, 15,414 interests were
sold to additional limited partners. The offering was terminated on October 14,
1986. Apartment Investment and Management Company ("AIMCO") and its affiliates
ultimately control the General Partner. The original Limited Partner of the
Partnership is 1133 Fifteenth Street Four Associates, whose limited partners
were key employees of the general partner of NHP at the time the Partnership was
formed. The general partner of 1133 Fifteenth Street Four Associates is NHP.
Basis of Presentation
The accompanying unaudited interim financial statements reflect all adjustments
which are, in the opinion of management, necessary to a fair statement of the
financial condition and results of operations for the interim periods presented.
All such adjustments are of a normal and 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 notes
included in the Partnership's Annual Report filed on Form 10-KSB for the year
ended December 31, 1999.
Reclassifications
Certain reclassifications have been made to the 1999 balances to conform to the
2000 presentation.
(2) INVESTMENTS IN REAL PROPERTY AND INVESTMENTS IN ADVANCES TO LOCAL LIMITED
PARTNERSHIPS
The Partnership owns one residential apartment complex (Trinity Apartments) and
a 99% limited partnership interest in Loring Towers Apartments Limited
Partnership, Kennedy Homes Limited Partnership, Capital Park Limited
Partnership, and Royal Towers Limited Partnership. The investments in Local
Limited Partnerships are accounted for using the equity method because, as a
limited partner, the liability of the Partnership is limited to its investment
in the Local Limited Partnerships. As a limited partner, the Partnership does
not exercise control over the activities of the Local Limited Partnerships in
accordance with the partnership agreements. Thus, the investments are carried at
cost less the Partnership's share of the Local Limited Partnerships' losses and
distributions. However, since the Partnership is neither legally liable for the
obligations of the Local Limited Partnerships, nor otherwise committed to
provide additional support to them, it does not recognize losses once its
investment in each of the individual Local Limited Partnerships, reduced for its
share of losses and cash distributions, reaches zero. As of September 30, 2000,
investments in all four Local Limited Partnerships had been reduced to zero. As
a result, the Partnership did not recognize approximately $2,143,000 and
$920,000 of losses from Local Limited Partnerships during the nine months ended
September 30, 2000 and 1999, respectively. As of September 30, 2000, the
Partnership had not recognized approximately $21,673,000 of its allocated share
of cumulative losses from the Local Limited Partnerships in which its investment
is zero.
Advances made by the Partnership to the individual Local Limited Partnerships
are considered part of the Partnership's investment in Local Limited
Partnerships. When advances are made they are charged to operations as a loss on
investment in the Local Limited Partnership using previously unrecognized
cumulative losses. As discussed above, due to the cumulative losses incurred by
the Local Limited Partnerships, the aggregate balance of investments in and
advances to the Local Limited Partnerships has been reduced to zero at September
30, 2000. 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.
During the nine months ended September 30, 2000, affiliates of the General
Partner advanced approximately $263,000 to Royal Towers Limited Partnership.
However, there were no working capital advances or repayments made between the
Partnership and the Local Limited Partnerships during the nine months ended
September 30, 2000 and 1999. The combined amount carried as due to the
Partnership by the Local Limited Partnerships was $12,200 as of September 30,
2000.
The following are combined statements of operations for the three and nine
months ended September 30, 2000 and 1999, 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 managing agents of the projects,
and are unaudited.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Rental income $ 998 $ 1,152 $ 3,127 $ 3,599
Other income 49 58 145 135
Total income 1,047 1,210 3,272 3,734
Operating expenses 1,095 918 2,833 2,352
Interest, taxes, and insurance 668 611 1,992 1,818
Depreciation 212 150 612 493
Total expense 1,975 1,679 5,437 4,663
Net loss $ (928) $ (469) $(2,165) $ (929)
National Housing Partnership
Realty Fund IV share of losses $ (919) $ (464) $(2,143) $ (920)
</TABLE>
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES OF THE GENERAL PARTNER
During the nine month period ended September 30, 2000 and 1999, the Partnership
accrued administrative and reporting fees payable to the General Partner in the
amount of approximately $87,000 for both periods for services provided to the
Partnership. The Partnership did not make any payments to the General Partner
for these fees during each of the respective periods. The amount due the General
Partner by the Partnership for administrative and reporting fees was
approximately $1,540,000 at September 30, 2000.
During the nine months ended September 30, 2000 and 1999, the General Partner
made working capital advances of approximately $7,000 and $349,000, respectively
to the Partnership. The Partnership repaid advances of approximately $219,000 to
the General Partner during the nine months ended September 30, 1999. No working
capital repayments were made during the nine months ended September 30, 2000.
The amount owed to the General Partner at September 30, 2000 was approximately
$8,712,000 and is payable on demand. The General Partner has begun proceedings
to deed Trinity Apartments to an affiliate of the General Partner, subject to
the first mortgagee's approval and other conditions, in full satisfaction of the
working capital advances owed. It is anticipated that this transaction will
close prior to December 31, 2000. Interest is charged on borrowings at the Chase
Manhattan Bank rate of prime plus 2% (11.50% at September 30, 2000). Accrued
interest on this loan amounted to approximately $3,599,000 at September 30,
2000.
Annual partnership administrative fees of $5,625 were accrued on behalf of
Trinity Apartments during the nine months ended September 30, 2000 and 1999.
These fees are payable to the General Partner without interest from cash
available for distribution to partners. No payments were made during the nine
months ended September 30, 2000 and 1999. The balance owed to the General
Partner for these fees is $43,125 at September 30, 2000 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.
(4) SEGMENT INFORMATION
The Partnership has only one reportable segment. Due to the very nature of the
Partnership's operations, the General Partner believes that segment-based
disclosures will not result in a more meaningful presentation than the financial
statements as currently presented.
(5) LEGAL PROCEEDINGS
In 1997, NHP received subpoenas from the HUD Inspector General ("IG") requesting
documents relating to arrangements whereby NHP or any of its affiliates provided
compensation to owners of HUD-assisted or HUD-insured multi-family projects in
exchange for or in connection with property management of a HUD project. In July
1999, NHP received a grand jury subpoena requesting documents relating to the
same subject matter as the HUD IG subpoenas and NHP's operation of a group
purchasing program created by NHP, known as Buyers Access. To date, neither the
HUD IG nor the grand jury has initiated any action against NHP or Apartment
Investment and Management Company ("AIMCO"), the ultimate controlling entity of
NHP or, to NHP's or AIMCO's knowledge, any owner of a HUD property managed by
NHP. AIMCO believes that NHP's operations and programs are in compliance, in all
material respects, with all laws, rules and regulations relating to HUD-assisted
or HUD-insured properties. NHP and AIMCO are cooperating with the investigations
and does not believe that the investigations will result in a material adverse
impact on its operations. However, as with any similar investigation, there can
be no assurance that these will not result in material fines, penalties or other
costs.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operations. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
This item should be read in conjunction with the financial statements and other
items contained elsewhere in this report.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership generates cash from the operations of its wholly-owned property
and from distributions from the Local Limited Partnerships. The Partnership's
only other source of liquidity is from the General Partner's loans. The General
Partner, however, is under no legal obligation to make such loans and will
evaluate lending the Partnership additional funds as needed. The Local Limited
Partnership's properties 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. The Partnership's Trinity Apartments property does not receive
government assistance.
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 904
apartment units, 97 percent of the total apartment units owned by the Local
Limited Partnerships 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. With
respect to Housing Assistance Payments Contracts ("HAP Contracts") expiring
before October 1, 1998, Congress 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.
Cash and cash equivalents amounted to approximately $1,350,000 at September 30,
2000 as compared to approximately $69,000 at December 31, 1999. The increase was
due to approximately $965,000 of cash provided by operating activities and
approximately $648,000 of cash provided by investing activities, partially
offset by approximately $332,000 of cash used in financing activities. Cash
provided by investing activities consisted of net withdrawals from escrow funds
maintained by the mortgage lender slightly offset by property improvements and
replacements. Cash used in financing activities consisted of principal payments
on the mortgage encumbering the Partnership's property and loan costs paid,
slightly offset by loans from the General Partner. The ability of the
Partnership to meet its on-going cash requirements, in excess of cash on hand at
September 30, 2000, is dependant on the operations of Trinity Apartments,
distributions received from the Local Limited Partnerships, and proceeds from
the sales or refinancing of the underlying Properties. However, 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
has begun proceedings to deed Trinity Apartments to an affiliate of the General
Partner, subject to the first mortgagee's approval and other conditions, in full
satisfaction of the working capital advances owed to the General Partner. It is
anticipated that this transaction will close prior to December 31, 2000.
As of September 30, 2000, the Partnership owed the General Partner approximately
$1,540,000 for administrative and reporting services performed. Working capital
advances of approximately $7,000 occurred between the Partnership and the
General Partner during the nine months ended September 30, 2000. As of September
30, 2000, the Partnership owed the General Partner approximately $8,755,000 plus
accrued interest of approximately $3,599,000. The working capital advances from
the General Partner to the Partnership are due on demand. The payment of the
unpaid administrative and reporting fees and advances from the Partnership and
the General Partner to the Local Limited Partnerships will most likely result
from the sale or refinancing of the Local Limited Partnerships' properties
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.
During the nine months ended September 30, 2000, affiliates of the General
Partner advanced approximately $263,000 to Royal Towers Limited Partnership.
However, there were no working capital advances or repayments made between the
Partnership and the Local Limited Partnerships during the nine months ended
September 30, 2000 and 1999. The combined amount carried as due to the
Partnership by the Local Limited Partnerships was $12,200 as of September 30,
2000. Future advances made will be charged to operations; likewise, future
repayments will be credited to operations.
Distributions received from Local Limited Partnerships represent the
Partnership's proportionate share of the excess cash available for distribution
from the Local Limited Partnerships. As a result of the use of the equity method
of accounting for the Partnership's investments, as of September 30, 2000,
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. A cash
distribution of approximately $19,000 and $52,000 was received from one of the
Local Limited Partnerships during the nine months ended September 30, 2000 and
1999, 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.
The mortgage note payable of approximately $8,482,000 encumbering Trinity
Apartments at September 30, 2000 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 Apartments, 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. If the properties are not able to be refinanced or sold
for sufficient amounts or the terms of the notes cannot be extended, the
Partnership could lose its interest in the applicable Local Limited Partnership.
Royal Towers Limited Partnership has experienced cash flow difficulties in
meeting its current obligations and has transferred control of all the property
used in the Royal Towers Apartments to HUD under a Mortgagee-In-Possession
Arrangement in January 2000. Royal Towers Limited Partnership is pursuing a sale
of the property to a third party.
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. The Partnership's results of
operations are significantly impacted by the rental operations of Trinity
Apartments. In prior years, results of operations were also affected by the
Partnership's share of losses from the Local Limited Partnerships in which it
has invested, to the extent the Partnership still had a carrying basis in a
respective Local Limited Partnership. As of September 30, 2000, the Partnership
had no carrying value in any of the Local Limited Partnerships and therefore,
reflected no share of losses from the four Local Limited Partnerships.
The Partnership recognized a net loss of approximately $(248,000) for the nine
months ended September 30, 2000 compared to a net loss of approximately $48,000
for the nine months ended September 30, 1999. The increase in net loss is due to
an increase in costs and expenses, partially offset by an increase in profit
from rental operations. Rental operations increased due to an increase in rental
revenues largely offset by an increase in rental expenses. Rental revenues
increased due to an increase in average rental rates at Trinity Apartments. The
increase in rental expenses is primarily due to increases in tax and insurance
expense and depreciation. Property tax expense increased due to the receipt of a
tax refund in 1999. The refund was the result of a reassessment of Trinity
Apartments at a lower rate. Depreciation expense increased due to increased
property improvements and replacements. The Partnership did not recognize
approximately $2,143,000 of its allocated share of losses from the four Local
Limited Partnerships for the nine months ended September 30, 2000, as the
Partnership's net carrying basis in these Local Limited Partnerships was reduced
to zero in prior years. The Partnership's share of losses from the Local Limited
Partnerships, if not limited to its investment account balance, would have
increased approximately $1,223,000 between the periods, primarily due to
increases in operating expenses, interest expense on deferred acquisition notes
and decreases in rental revenue.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In 1997, NHP received subpoenas from the HUD Inspector General ("IG") requesting
documents relating to arrangements whereby NHP or any of its affiliates provided
compensation to owners of HUD-assisted or HUD-insured multi-family projects in
exchange for or in connection with property management of a HUD project. In July
1999, NHP received a grand jury subpoena requesting documents relating to the
same subject matter as the HUD IG subpoenas and NHP's operation of a group
purchasing program created by NHP, known as Buyers Access. To date, neither the
HUD IG nor the grand jury has initiated any action against NHP or Apartment
Investment and Management Company ("AIMCO"), the ultimate controlling entity of
NHP or, to NHP's or AIMCO's knowledge, any owner of a HUD property managed by
NHP. AIMCO believes that NHP's operations and programs are in compliance, in all
material respects, with all laws, rules and regulations relating to HUD-assisted
or HUD-insured properties. NHP and AIMCO are cooperating with the investigations
and does not believe that the investigations will result in a material adverse
impact on its operations. However, as with any similar investigation, there can
be no assurance that these will not result in material fines, penalties or other
costs.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Exhibit 27, Financial Data Schedule
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 2000.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant 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
By: /s/Patrick J. Foye
Patrick J. Foye
President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date:
