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 September 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>
September 30,
1994 December 31,
(Unaudited) 1993
ASSETS
<S> <C> <C>
Cash and short-term investments, at cost
which approximates market $ 7,215,368 $ 7,166,996
Real estate, at cost:
Land 8,984,865 8,984,8658,984,865
Buildings and improvements 85,464,373 84,208,712
94,449,238 93,193,577
Accumulated depreciation (16,214,618) (14,062,191)
78,234,620 79,131,386
Investments in joint ventures 53,833,506 54,549,929
Deferred expenses, net 1,276,245 1,378,415
Other assets 2,587,869 2,113,404
$143,147,608 $144,340,130
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities $ 286,295 $ 277,392
Minority interests in consolidated
joint ventures 30,859,840 31,047,123
31,146,135 31,324,515
Partners' capital (deficiency):
General partners (2,316,622) (2,215,207)
Limited partners ($500 per Unit,
304,437 Units issued) 114,318,095 115,230,822
112,001,473 113,015,615
$143,147,608 $144,340,130
See accompanying notes to consolidated financial statements.
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[FN]
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<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED STATEMENTS OF INCOME
Three and nine months ended September 30, 1994 and 1993
(Unaudited)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenues:
Rental $2,174,827 $2,091,639 $6,492,006 $6,413,560
Equity in earnings of joint ventures 948,066 895,074 2,342,904 2,351,703
Interest and other 76,258 88,597 194,720 207,149
3,199,151 3,075,310 9,029,630 8,972,412
Expenses:
Property operating 393,112 371,718 1,179,342 1,013,890
Depreciation 718,299 687,008 2,152,427 2,060,973
Amortization 51,541 46,445 153,953 139,335
General and administrative 82,309 157,563 384,971 477,048
1,245,261 1,262,734 3,870,693 3,691,246
Income before minority interests 1,953,890 1,812,576 5,158,937 5,281,166
Minority interests 370,742 383,158 1,099,128 1,208,764
Net income $1,583,148 $1,429,418 $4,059,809 $4,072,402
Net income per Unit of limited
partnership interest $4.68 $4.23 $12.00 $ 12.04
See accompanying notes to consolidated financial statements.
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[FN]
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<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
Nine months ended September 30, 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 3,653,828 405,981 4,059,809
Cash distributions (4,566,555) (507,396) (5,073,951)
Partners' capital (deficiency)
at September 30, 1994 $114,318,095 $(2,316,622) $112,001,473
See accompanying notes to consolidated financial statements.
</TABLE>
[FN]
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<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 1994 and 1993
(Unaudited)
<CAPTION>
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,059,809 $ 4,072,402
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,152,427 2,060,973
Amortization 153,953 139,335
Minority interest in joint ventures' operations 1,099,128 1,208,764
Equity in earnings of joint ventures (2,342,904) (2,351,703)
Increase in operating assets:
Other assets (474,465) (404,099)
Deferred expenses (51,783) (21,798)
Increase in operating liabilities:
Accounts payable and accrued liabilities 8,903 170,157
Net cash provided by operating activities 4,605,068 4,874,031
Cash flows from investing activities:
Additions to buildings and improvements (1,255,661) (115,645)
Additional investment by minority interests 575,275 73,193
Investment in joint ventures (769,855) (618,567)
Distributions from joint ventures 3,829,182 4,110,147
Minority interest in joint ventures' distributions (1,861,686) (2,014,517)
Net cash provided by investing activities 517,255 1,434,611
Cash flows from financing activities:
Cash distributions (5,073,951) (5,073,951)
Increase in cash and short-term investments 48,372 1,234,691
Cash and short-term investments at beginning of period 7,166,996 5,501,977
Cash and short-term investments at end of period $ 7,215,368 $ 6,736,668
See accompanying notes to consolidated financial statements.
</TABLE>
[FN]<PAGE>
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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 September 30, 1994 and 1993. The
Partnership paid the affiliate management fees of approximately $130,000
and $113,000 for the nine months ended September 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 nine months ended
September 30, 1994 and 1993, the Partnership incurred approximately
$302,000 for these services.
As of September 30, 1994, the affiliates were owed approximately $79,000
for these services.
3. Subsequent Event
On October 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.
<PAGE>
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.
Many real estate markets are stabilizing primarily due to the continued
absence of significant construction activity. However, the recovery of the
office market will be slow because tenant demand is weak as a result of
continued downsizing by many major corporations. In addition, 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 depends upon its properties' cash flows from
operations and expenditures for tenant improvements and leasing commissions
in connection with the leasing of vacant space. During the nine months
ended September 30, 1994, all of the Partnership's properties and joint
venture interests have generated positive cash flow from operations, and it
is anticipated that they will continue to do so.
During the nine months ended September 30, 1994, the Partnership's cash
flow from operations and 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 from operating cash flows, distributions from
joint ventures and exisiting cash reserves. The Partnership had reduced its
distribution rate in 1992 in order to accumulate such cash reserves.
During the nine months ended September 30, 1994, the Partnership
incurred approximately $732,000 of tenant improvements and leasing
commissions (net of capital contributions from the minority interest),
relating to Pasadena Financial Center. The Partnership also invested
approximately $770,000, its share of capital expenditures, in the Taxter and
Chesterbrook joint ventures.
The Vanguard Group, the largest tenant in the Chesterbrook joint
venture, 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. In September 1994, the Partnership has
signed leases with new tenants to fill a significant portion of the space
vacated by Vanguard between November 1993 and November 1994. The
Partnership's share of capital expenditures which will result from these new
leases is approximately $1,725,000. In addition, the Partnership expects
to continue to fund significant capital expenditures in order to attract new
tenants to the remaining space to be vacated by Vanguard.
Pasadena Financial Center has experienced damage to the exterior walls
of the building due to water seepage during heavy rains. The Partnership
is determining the cost of required repairs, and has initiated a lawsuit
against the original building contractor and architect to seek recovery of
a portion of these costs.
Also, Countrywide Credit Corp., which rents approximately 55% of the
space at Pasadena Financial Center, is planning to consolidate its
operations in Pasadena, and has indicated it may seek to vacate
approximately half the space it leases at the property, either by sub-
leasing its space or entering into a financial settlement to terminate
certain of its leases. If Countrywide Credit Corp. terminates certain of
its leases in a financial settlement, the Partnership expects to fund
significant capital expenditures in order to attract new tenants to this
property.
The Partnership plans to fund its share of certain capital improvements
and security enhancements at the Taxter property in 1994 and 1995.
On October 28, 1994, the Partnership paid the third 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
The only significant fluctuation in the Partnership's operating results
is the increase in property operating expenses for the nine months ended
September 30, 1994 compared to 1993. This increase is due to increased
costs incurred at Pasadena Financial Center.
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 third quarter of 1994. The remaining
Vanguard leases, for 22% of the property's space, expire between November
1994 and November 1995. In September 1994, the joint venturers signed a
five-year lease with a new tenant to fill approximately 12% of the
property's space and a seven-year lease with a new tenant to fill
approximately 9.5% of the property's space; it is expected that both new
tenants will begin to occupy their space no later than January 1, 1995.
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 25%. It is unlikely that this
vacant space will be absorbed in this market for several years. Occupancy
at the property remained at 99% during the third 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 16% as of September 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 third quarter of 1994,
occupancy at the property remained at 100%. The majority of the leases with
Countrywide Credit, which rents approximately 55% of the space at the
property, expire in 2001. However, as discussed above, Countrywide Credit
has indicated it may seek to reduce the space it leases at the property.
No other significant leases at the property expire before 1997. The
property was not adversely affected by the Los Angeles earthquake in 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: November 14, 1994 By: /s/E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: November 14, 1994 By: /s/Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Registrant is a limited partnership which invests in real estate and real
estate joint ventures. In accordance with industry practice, its balance
sheet is unclassified. For full information, refer to the accompanying
unaudited financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 7,215,368
<SECURITIES> 0
<RECEIVABLES> 2,581,160
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 143,147,608<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 112,001,473<F2>
<TOTAL-LIABILITY-AND-EQUITY> 143,147,608<F3>
<SALES> 0
<TOTAL-REVENUES> 9,029,630<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,969,821
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,059,809
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,059,809
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,059,809
<EPS-PRIMARY> 12.00<F5>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include net investments
in real estate of $78,234,620, investments in joint ventures of $53,833,506,
net deferred expenses of $1,276,245 and other assets of $6,709.
<F2>Represents partners' capital.
<F3>Liabilities include accounts payable and accrued liabilities of $286,295
and minority interests in consolidated joint ventures of $30,859,840.
<F4>Total revenue includes rent of $6,492,006, equity in earnings of joint
ventures of $2,342,904 and interest and other revenue of $194,720.
<F5>Represents net income per Unit of limited partnership interest.
</FN>
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