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 June 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___
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
Statement of Financial Position
(Unaudited)
(in thousands)
June 30, 2000
ASSETS
Cash and cash equivalents $ 905
Accounts receivable 82
Prepaid insurance and tenant security deposits 102
Investments in and advances to Local Limited
Partnerships (Note 2) --
Land 3,650
Buildings and improvements - less accumulated
depreciation of $5,709 9,726
Deferred finance costs 1,088
$15,553
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Accounts payable and accrued expenses from rental
operations $ 694
Administrative and reporting fee payable to
General Partner (Note 3) 1,511
Due to General Partner (Note 3) 8,753
Accrued interest on partner loans (Note 3) 3,163
Other accrued expenses 4
Mortgage note payable 8,595
22,720
Partners' deficit:
General partner -- The National Housing
Partnership (NHP) (201)
Original limited partner -- 1133 Fifteenth
Street Four Associates (206)
Other limited partners -- 15,394 investment
units (6,760)
(7,167)
$15,553
See Accompanying Notes to Financial Statements
b)
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
Statements of Operations
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Rental Revenues $ 991 $ 943 $ 1,964 $ 1,867
Rental Expenses:
Interest 143 150 286 304
Renting and administrative 108 121 211 253
Operating and maintenance 167 132 316 275
Depreciation and amortization 148 129 303 250
Taxes and insurance 172 156 323 215
738 688 1,439 1,297
Profit From Rental Operations 253 255 525 570
Costs and Expenses:
Interest on due to General Partner
(Note 3) 142 269 431 500
Administrative and reporting fees to
General Partner (Note 3) 29 29 58 58
Other operating expenses 35 2 47 4
206 300 536 562
Other Revenues:
Distributions received in excess of
investment in Local Limited
Partnerships 15 40 15 40
Interest income 2 16 3 19
17 56 18 59
NET INCOME $ 64 $ 11 $ 7 $ 67
Net income assignable to limited
partners $ 63 $ 10 $ 7 $ 65
Net income per limited partnership
interest $ 4.09 $ .70 $ .45 $ 4.24
See Accompanying Notes to Financial Statements
</TABLE>
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>
Deficit at December 31, 1999 $ (201) $ (206) $ (6,767) $ (7,174)
Net income - six months ended
June 30, 2000 -- -- 7 7
Deficit at June 30, 2000 $ (201) $ (206) $ (6,760) $ (7,167)
Percentage interest at
June 30, 2000 1% 1% 98% 100%
(A) (B) (C)
(A) General Partner
(B) Original Limited Partner
(C) Consists of 15,394 investment units
See Accompanying Notes to Financial Statements
</TABLE>
d)
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
Statements of Cash FlowS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Rent collections $ 1,893 $ 1,733
Distributions received in excess of investment in
Local Limited Partnerships 15 40
Interest received 3 19
Other income 41 77
Interest paid on loan from General Partner (248) (210)
Operating expenses paid, including rental expenses (1,084) (1,498)
Mortgage interest paid (286) (305)
Net cash provided by (used in) operating
activities 334 (144)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (107) (108)
Net withdrawals from escrow funds 828 531
Net cash provided by investing activities 721 423
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan costs paid (7) --
Loans from General Partner 7 --
Payments of principal on mortgage note (219) (204)
Net cash used in financing activities (219) (204)
NET INCREASE IN CASH AND CASH EQUIVALENTS 836 75
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 69 24
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 905 $ 99
See Accompanying Notes to Financial Statements
</TABLE>
e)
NATIONAL HOUSING PARTNERSHIP REALTY FUND IV
Statements of Cash FlowS (continued)
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 7 $ 67
Adjustments to reconcile net income to net
cash provided by (used in) operating activities
Depreciation 234 198
Amortization 69 52
Decrease in accounts receivable (31) (57)
Decrease in prepaid insurance, utility,
and tenant security deposits (7) (18)
Decrease in accounts payable and accrued expenses
from rental operations (151) (833)
Increase in administrative and reporting fees payable
to General Partner 58 58
Increase in due to General Partner 3 133
Increase in accrued interest on Partner loans 183 291
Decrease in other accrued expenses (31) (35)
Total adjustments 327 (211)
Net cash provided by (used in) operating activities $ 334 $ (144)
See Accompanying Notes to Financial Statements
</TABLE>
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 June 30, 2000,
investments in all four Local Limited Partnerships had been reduced to zero. As
a result, the Partnership did not recognize approximately $1,225,000 and
$456,000 of losses from Local Limited Partnerships during the six months ended
June 30, 2000 and 1999, respectively. As of June 30, 2000, the Partnership had
not recognized approximately $20,755,000 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 June 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 six months ended June 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 six months ended June
30, 2000 and 1999. The combined amount carried as due to the Partnership by the
Local Limited Partnerships was $12,200 as of June 30, 2000.
The following are combined statements of operations for the three and six months
ended June 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 Six Months Ended
June 30, June 30,
2000 1999 2000 1999
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Rental income $ 1,035 $ 1,324 $ 2,129 $ 2,447
Other income 58 35 96 77
Total income 1,093 1,359 2,225 2,524
Operating expenses 958 724 1,738 1,434
Interest, taxes, and insurance 682 696 1,324 1,207
Depreciation 205 172 400 343
Total expense 1,845 1,592 3,462 2,984
Net loss $ (752) $ (233) $ (1,237) $ (460)
National Housing Partnership
Realty Fund IV share of losses $ (744) $ (231) $ (1,225) $ (456)
</TABLE>
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES OF THE GENERAL PARTNER
During the six month period ended June 30, 2000 and 1999, the Partnership
accrued administrative and reporting fees payable to the General Partner in the
amount of approximately $58,000 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 $1,511,000 at June 30, 2000.
During the six months ended June 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 six months ended June 30, 1999. No working
capital repayments were made during the six months ended June 30, 2000. The
amount owed to the General Partner at June 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 June 30, 2000). Accrued interest on this
loan amounted to approximately $3,163,000 at June 30, 2000.
Annual partnership administrative fees of $3,750 were accrued on behalf of
Trinity Apartments during the six months ended June 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 six months ended June
30, 2000 and 1999. The balance owed to the General Partner for these fees is
$41,250 at June 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.
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 $905,000 at June 30, 2000 as
compared to approximately $69,000 at December 31, 1999. The increase was due to
approximately $334,000 of cash provided by operating activities and
approximately $721,000 of cash provided by investing activities, partially
offset by approximately $219,000 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
June 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 June 30, 2000, the Partnership owed the General Partner approximately
$1,511,000 for administrative and reporting services performed. Working capital
advances of approximately $7,000 occurred between the Partnership and the
General Partner during the six months ended June 30, 2000. As of June 30, 2000,
the Partnership owed the General Partner approximately $8,753,000 plus accrued
interest of approximately $3,163,000. 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 six months ended June 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 six months ended June
30, 2000 and 1999. The combined amount carried as due to the Partnership by the
Local Limited Partnerships was $12,200 as of June 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 June 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 $15,000 and $40,000 was received from one of the
Local Limited Partnerships during the six months ended June 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 $8,595,000 encumbering Trinity Apartments at June
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 June 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 net income of approximately $7,000 for the six months
ended June 30, 2000 compared to net income of approximately $67,000 for the six
months ended June 30, 1999. The decrease in net income is due to a decrease in
profit from rental operations which was partially offset by a decrease in costs
and expenses. Rental operations decreased due to an increase in rental expenses
slightly offset by an increase in rental revenues. 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 decrease in non-rental costs was primarily
due to a decrease in interest due to the General Partner. Starting in April 2000
interest expense due to the General Partner was not accrued due to proceedings
to deed Trinity Apartments to an affiliate of the General Partner. It is
anticipated that this transaction will close during this year. The Partnership
did not recognize approximately $1,225,000 of its allocated share of losses from
the four Local Limited Partnerships for the six months ended June 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 $769,000 between the periods, primarily due to
increases in operating expenses, interest expense on deferred acquisition notes
and decreases in rental revenue.
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 June 30, 2000.
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: August 14, 2000
