UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the period ended March 31, 1994
OR
[ ] 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: 0-18147
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
(Exact name of registrant as specified in governing instrument)
Delaware 13-3378315
(State of organization) (IRS Employer Identification No.)
2 World Trade Center, New York, NY 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 392-1054
Former name, former address and former fiscal year, if changed since last
report: not applicable
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
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31,
1994 December 31,
(Unaudited) 1993
ASSETS
<S> <C> <C>
Cash and short-term investments, at cost
which approximates market $ 7,303,611 $ 7,166,996
Real estate, at cost:
Land 8,984,865 8,984,865
Buildings and improvements 84,229,679 84,208,712
93,214,544 93,193,577
Accumulated depreciation (14,746,729) (14,062,191)
78,467,815 79,131,386
Investments in joint ventures 54,293,459 54,549,929
Deferred expenses, net 1,366,753 1,378,415
Other assets 2,317,849 2,113,404
$143,749,487 $144,340,130
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities $ 387,200 $ 277,392
Minority interest in consolidated
joint ventures 30,824,015 31,047,123
31,211,215 31,324,515
Partners' capital (deficiency):
General partners (2,262,942) (2,215,207)
Limited partners ($500 per Unit,
304,437 Units issued) 114,801,214 115,230,822
112,538,272 113,015,615
$143,749,487 $144,340,130
<FN>
See accompanying notes to consolidated financial statements.
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DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED STATEMENTS OF INCOME
Three months ended March 31, 1994 and 1993
(Unaudited)
<CAPTION>
1994 1993
<S> <C> <C>
Revenues:
Rental $2,054,026 $2,044,086
Equity in earnings of joint ventures 664,869 756,156
Interest and other 103,266 58,458
2,822,161 2,858,700
Expenses:
Property operating 348,435 305,166
Depreciation 684,538 686,574
Amortization 50,593 46,082
General and administrative 151,331 166,956
1,234,897 1,204,778
Income before minority interests 1,587,264 1,653,922
Minority interests 373,290 365,360
Net income $1,213,974 $1,288,562
Net income per Unit of limited
partnership interest $ 3.59 $ 3.81
<FN>
See accompanying notes to consolidated financial statements.
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DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
Three months ended March 31, 1994
(Unaudited)
<CAPTION>
Limited General
Partners Partners Total
<S> <C> <C> <C>
Partners' capital (deficiency)
at January 1, 1994 $115,230,822 $(2,215,207) $113,015,615
Net income 1,092,577 121,397 1,213,974
Cash distributions (1,522,185) (169,132) (1,691,317)
Partners' capital (deficiency)
at March 31, 1994 $114,801,214 $(2,262,942) $112,538,272
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
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DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 1994 and 1993
(Unaudited)
<CAPTION>
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,213,974 $ 1,288,562
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 684,538 686,574
Amortization 50,593 46,082
Minority interest in joint ventures' operations 373,290 365,360
Equity in earnings of joint ventures (664,869) (756,156)
Increase in operating assets:
Other assets (204,445) (101,570)
Deferred expenses (38,931)
Increase in operating liabilities:
Accounts payable and accrued liabilities 109,808 297,335
Net cash provided by operating activities 1,523,958 1,826,187
Cash flows from investing activities:
Additions to buildings & improvements (20,967) (92,345)
Additional investment by minority interest 26,352 53,350
Investment in joint ventures (208,506) (54,672)
Distributions from joint ventures 1,129,845 1,595,802
Minority interest in joint ventures' distributions (622,750) (565,979)
Net cash provided by investing activities 303,974 936,156
Cash flows from financing activities:
Cash distributions (1,691,317) (1,691,317)
Increase in cash and short-term investments 136,615 1,071,026
Cash and short-term investments at beginning of period 7,166,996 5,501,977
Cash and short-term investments at end of period $ 7,303,611 $ 6,573,003
<FN>
See accompanying notes to consolidated financial statements.
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DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
Notes to Consolidated Financial Statements
(Unaudited)
1. The Partnership
Dean Witter Realty Income Partnership IV, L.P. (the "Partnership") is
a limited partnership organized under the laws of the State of Delaware
on October 31, 1986.
The consolidated financial statements include the accounts of the
Partnership and its majority-controlled subsidiaries, Technology Park
Associates and Lake Colorado Associates, the owner of Pasadena Financial
Center. The Partnership's interests in Taxter Corporate Park and the
partnership which owns interests in Chesterbrook Corporate Center are
accounted for on the equity method.
The Partnership's records are maintained on the accrual basis of
accounting for financial reporting and tax reporting purposes.
Net income per Unit amounts are calculated by dividing net income
allocated to Limited Partners in accordance with the Partnership
Agreement, by the weighted average number of Units outstanding.
In the opinion of management, the accompanying unaudited financial
statements reflect all adjustments necessary to present fairly the
results for the interim periods.
2. Related Party Transactions
An affiliate of the Managing General Partner provided property
management services for two properties and for five buildings at the
Chesterbrook Corporate Center as of March 31, 1994 and 1993. The
Partnership paid the affiliate management fees of approximately $42,000
and $28,000 for the months ended March 31, 1994 and 1993, respectively.
Another affiliate of the Managing General Partner performs
administrative functions, processes investor transactions and prepares
tax information for the Partnership. For the three months ended March
31, 1994 and 1993, the Partnership incurred approximately $106,000 and
$101,000, respectively, for these services.
As of March 31, 1994, the affiliates were owed approximately $50,000 for
these services.
3. Subsequent Event
On April 28, 1994, the Partnership paid a cash distribution of $5.00 per
Unit to the Limited Partners. The total cash distribution amounted to
$1,691,317, with $1,522,185 distributed to the Limited Partners and
$169,132 to the General Partners.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Partnership raised $152,218,500 in a public offering of 304,437
units which was terminated in 1988. The Partnership has no plans to raise
additional capital.
The Partnership has made four investments in partnerships on an all-cash
basis. The Partnership's acquisition program has been completed. No
additional investments are planned.
Real estate, in general, has been negatively affected by a major
cyclical downturn. The downturn has been caused by a variety of factors
including an oversupply of office properties, continued downsizing by many
major corporations and lack of credit availability for real estate
financings and purchases.
These factors have contributed to a general decrease in market rental
rates, an increase in vacancy rates and an increase in concessions such as
free rent and tenant improvement expenditures for both new and existing
tenants. As a result, there has been an overall decline in the liquidity
and market values of real estate investments.
Real estate markets are generally divided into sub-markets by geographic
location and property type. Not all sub-markets have been affected equally
by the above factors.
The Partnership's liquidity also depends upon the operating cash flows
of its properties, expenditures for tenant improvements and leasing
commissions in connection with the leasing of vacant space. During the
first quarter 1994, all of the Partnership's properties generated positive
cash flow from operations, and it is anticipated that they will continue to
do so.
During the first three months of 1994, Partnership cash flow from
operations and its share of distributions received from joint ventures
exceeded distributions to investors and capital expenditures. The
Partnership expects that, for the remainder of 1994, capital expenditures
and cash distributions will be funded by operating cash flows, distributions
from joint ventures and existing cash reserves. The Partnership had reduced
its distribution rate in 1992 in order to accumulate such cash reserves.
The Vanguard Group, the largest tenant in Chesterbrook Corporate Center,
vacated its space at one of the buildings in November 1993 and will vacate
its remaining space upon the expiration of its leases between November 1994
and November 1995. The Partnership expects to fund significant capital
expenditures in order to attract replacement tenants at this property.
Pasadena Financial Center has experienced damage to the top floor and
other areas of the building due to water seepage during heavy rains. The
Partnership is analyzing the problem to determine the extent of required
repairs.
In addition, the Partnership plans to fund its share of certain capital
improvements and security enhancements at the Taxter property in 1994.
On April 28, 1994, the Partnership paid the first quarter distribution
of $5.00 per Unit to the Limited Partners. The total cash distribution
amounted to $1,619,317, with $1,522,185 distributed to the Limited Partners
and $169,132 to the General Partners.
Operations
Fluctuations in the Partnership's operating results for the three month
period ended March 31, 1994 compared to the comparable period in 1993 are
primarily attributable to the following:.
The decrease in equity in earnings of joint ventures is primarily due
to lower income from the Chesterbrook joint venture caused by the above-
mentioned vacancy of Vanguard.
A summary of markets in which the Partnership's office properties are
located and the performance of each property is as follows:
Chesterbrook Corporate Center is located in Valley Forge, Pennsylvania,
a market in which the vacancy rate is currently 15%. Occupancy at the
property remained at 84% during the first quarter of 1994. The remaining
Vanguard leases, for 22% of the property's space, expire between November
1994 and November 1995 and are not expected to be renewed. Vanguard is
vacating its space to move into its own newly-constructed space in this
market. This, and other new construction in the Valley Forge area will
cause the office market to deteriorate further. The leases of the other
major tenant at the property (for 25% of the space) expire in 1998.
The office market in Westchester County, New York, the location of
Taxter Corporate Park, has experienced a significant decline. The current
vacancy level is approximately 27%, as many major tenants in the market are
consolidating their operations. It is unlikely that this vacant space will
be absorbed in this market for several years. Occupancy at the property
increased from 97% to 99% during the first quarter of 1994. No significant
leases expire before 1996. One of the tenants owns a long-term leasehold
interest in approximately 20% of the space at the property; this tenant does
not pay rent, but is responsible for its share of real estate taxes and
certain operating expenses.
The Reston market in Virginia, the location of Tech Park Reston, has a
vacancy rate of 12% due to the contraction of the high-tech and defense
firms which are the major tenants in the market. The leases with Sprint
Communications, the sole tenant, expire in 2002. Sprint has the option to
terminate its leases on two of the three buildings beginning in 1997.
In Pasadena, California, the location of Pasadena Financial Center, the
overall vacancy rate decreased from 14% to 13% during the first quarter of
1994. However, the vacancy rate is expected to increase during the
remainder of 1994 due to anticipated downsizing by two large corporations
headquartered in Pasadena. In the first quarter of 1994, occupancy at the
property remained at 100%. The majority of the leases with Countrywide
Credit, which rents approximately 53% of the space at the property, expire
in 2001. No other significant leases expire before 1997. The property was
not adversely affected by the Los Angeles earthquake of January 1994.
Inflation
Inflation has been consistently low during the periods presented in the
financial statements and, as a result, has not had a significant effect on
the operations of the Partnership or its properties.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings - not applicable.
Item 2. Changes in Securities - not applicable.
Item 3. Defaults upon Senior Securities - not applicable.
Item 4. Submission of Matters to a Vote of Security Holders - not
applicable.
Item 5. Other Information - not applicable.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - not applicable.
b) Reports on Form 8-K - not applicable
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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.
DEAN WITTER REALTY INCOME
PARTNERSHIP IV, L.P.
By: Dean Witter Realty Fourth Income
Properties Inc.
Managing General Partner
Date: May 13, 1994 By: /s/E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: May 13, 1994 By: /s/Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and Accounting
Officer)
