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 June 30, 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>
June 30,
1994 December 31,
(Unaudited) 1993
ASSETS
<S> <C> <C>
Cash and short-term investments, at cost
which approximates market $ 7,116,894 $ 7,166,996
Real estate, at cost:
Land 8,984,865 8,984,8658,984,865
Buildings and improvements 85,444,004 84,208,712
94,428,869 93,193,577
Accumulated depreciation (15,496,319) (14,062,191)
78,932,550 79,131,386
Investments in joint ventures 53,676,034 54,549,929
Deferred expenses, net 1,327,786 1,378,415
Other assets 2,463,904 2,113,404
$143,517,168 $144,340,130
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities $ 285,691 $ 277,392
Minority interests in consolidated
joint ventures 31,121,835 31,047,123
31,407,526 31,324,515
Partners' capital (deficiency):
General partners (2,305,805) (2,215,207)
Limited partners ($500 per Unit,
304,437 Units issued) 114,415,447 115,230,822
112,109,642 113,015,615
$143,517,168 $144,340,130
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
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DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED STATEMENTS OF INCOME
Three and six months ended June 30, 1994 and 1993
(Unaudited)
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenues:
Rental $2,263,153 $2,277,835 $4,317,179 $4,321,921
Equity in earnings of joint ventures 729,969 700,473 1,394,838 1,456,629
Interest and other 15,196 60,094 118,462 118,552
3,008,318 3,038,402 5,830,479 5,897,102
Expenses:
Property operating 437,795 337,006 786,230 642,172
Depreciation 749,590 687,391 1,434,128 1,373,965
Amortization 51,819 46,808 102,412 92,890
General and administrative 151,331 152,529 302,662 319,485
1,390,535 1,223,734 2,625,432 2,428,512
Income before minority interests 1,617,783 1,814,668 3,205,047 3,468,590
Minority interests 355,096 460,246 728,386 825,606
Net income $1,262,687 $1,354,422 $2,476,661 $2,642,984
Net income per Unit of limited
partnership interest $3.73 $4.00 $7.32 $7.81
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
Six months ended June 30, 1994
(Unaudited)
<CAPTION>
Limited General
Partners Partners Total
<S> <C> <C>
Partners' capital (deficiency)
at January 1, 1994 $115,230,822 $(2,215,207) $113,015,615
Net income 2,228,995 247,666 2,476,661
Cash distributions (3,044,370) (338,264) (3,382,634)
Partners' capital (deficiency)
at June 30, 1994 $114,415,447 $(2,305,805) $112,109,642
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 1994 and 1993
(Unaudited)
<CAPTION>
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,476,661 $ 2,642,984
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,434,128 1,373,965
Amortization 102,412 92,890
Minority interest in joint ventures' operations 728,386 825,606
Equity in earnings of joint ventures (1,394,838) (1,456,629)
Increase in operating assets:
Other assets (350,500) (266,859)
Deferred expenses (51,783) (21,798)
Increase in operating liabilities:
Accounts payable and accrued liabilities 8,299 6,648
Net cash provided by operating activities 2,952,765 3,196,807
Cash flows from investing activities:
Additions to buildings & improvements (1,235,292) (114,645)
Additional investment by minority interest 566,312 72,753
Investment in joint ventures (515,806) (373,360)
Distributions from joint ventures 2,784,539 2,985,246
Minority interest in joint ventures' distributions (1,219,986) (1,315,457)
Net cash provided by investing activities 379,767 1,254,537
Cash flows from financing activities:
Cash distributions (3,382,634) (3,382,634)
Increase (decrease) in cash and short-term investments (50,102) 1,068,710
Cash and short-term investments at beginning of period 7,166,996 5,501,977
Cash and short-term investments at end of period $ 7,116,894 $ 6,570,687
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
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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 in 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 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 June 30, 1994 and 1993. The
Partnership paid the affiliate management fees of approximately
$84,000 and $65,000 for the six months ended June 30, 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 six months
ended June 30, 1994 and 1993, the Partnership incurred approximately
$203,000 and $201,000, respectively, for these services.
As of June 30, 1994, the affiliates were owed approximately $50,000
for these services.
3. Subsequent Event
On July 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.
Most real estate markets are stabilizing or gradually improving. No
dramatic turnarounds are forecast for the second half of 1994.
Continued absence of significant construction activity is the primary
reason for market improvement. Office properties are still not in
demand but the suburban office market appears to be strengthening as
prices are well below replacement costs; however, the Southern
California office market is still weak because the impact of defense
industry reductions has not been offset by growth in other industries.
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 six months ended June 30, 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 six months ended June 30, 1994, the Partnership's
distributions to investors and capital expenditures exceeded its cash
flow from operations and distributions received from joint ventures;
this shortfall was funded from existing cash reserves. The Partnership
had reduced its distribution rate in 1992 in order to accumulate such
cash reserves. For the remainder of 1994, the Partnership expects to
draw down cash reserves to fund a portion of distributions and capital
expenditures.
During the six months ended June 30, 1994, the Partnership incurred
approximately $721,000 of tenant improvements and leasing commissions
(net of capital contributions from the minority interest), primarily
relating to Pasadena Financial Center. The Partnership also invested
approximately $516,000, its share of capital expenditures, at the Taxter
and Chesterbrook joint ventures.
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.
The Partnership plans to fund its share of certain capital
improvements and security enhancements at the Taxter property in 1994
and 1995.
On July 28, 1994, the Partnership paid the second quarter
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.
Operations
Fluctuations in the Partnership's operating results for the six- and
three-month periods ended June 30, 1994 compared to the comparable
periods ended June 30, 1993 are primarily attributable to the following:
The increases in property operating expenses in the periods ended
June 30, 1994 are primarily due to increased costs incurred at Pasadena
Financial Center.
The increases in depreciation expense in the periods ended June 30,
1994 result from increased expenditures for tenant improvements at
Pasadena Financial Center in 1994.
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 approximately 14%.
Occupancy at the property remained at 84% during the second 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
(occupying 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 in this market 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 second quarter of 1994. No significant leases expire before
1996. One of the tenants had
purchased 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 2003. 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 is approximately 15% as of June 30, 1994. The
vacancy rate is expected to increase further during the remainder of
1994 due to the anticipated reduction of space requirements by three
large corporations headquartered in Pasadena. In the second 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. However, Countrywide is planning
to consolidate its operations in Pasadena, as well as across the
country, and has indicated it may seek to reduce the space it leases at
the property, either by sub-leasing its space or entering into a
financial settlement to terminate its leases. No other significant
leases at the property 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: August 15, 1994 By: /s/E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: August 15, 1994 By: /s/Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
