UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 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 its charter)
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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
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
------------ -----------
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by non-
affiliates of the registrant. N/A
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I.
ITEM 1. BUSINESS.
The Registrant, Dean Witter Realty Income Partnership IV, L.P. (the
"Partnership"), is a limited partnership formed in October 1986 under the
Uniform Limited Partnership Act of the State of Delaware for the purpose
of investing primarily in income-producing office, industrial and retail
properties.
The Managing General Partner of the Partnership is Dean Witter
Realty Fourth Income Properties Inc. (the "Managing General Partner"),
a Delaware corporation which is wholly owned by Dean Witter Realty Inc.
The Associate General Partner is Dean Witter Realty Income Associates IV,
L.P. (the "Associate General Partner"), a Delaware limited partnership,
the general partner of which is the Managing General Partner. The
Managing General Partner manages and controls all aspects of the business
of the Partnership. The terms of transactions between the Partnership
and its affiliates are set forth in Item 13 below.
The Partnership issued 304,437 units of limited partnership interest
(the "Units") for $152,218,500. The offering has been terminated and no
additional Units will be sold.
The proceeds from the offering were used to make equity investments
in four office properties which have been acquired without permanent
mortgage debt. The properties are described below in Item 2, the
Operations section of Item 7 and footnotes 4 and 5 to the consolidated
financial statements included in Item 8.
The Partnership considers its business to include one industry
segment, investment in real property. Financial information regarding
the Partnership is set forth in the Partnership's financial statements
set forth below.
The Partnership's real property investments are subject to
competition from similar types of properties in the vicinities in which
they are located. In recent years, an oversupply condition has persisted
nationally and many markets have experienced high vacancy rates.
Currently, many real estate markets are beginning to stabilize, primarily
due to the continued absence of significant construction activity;
however, the recovery is expected to be slow. Further information
regarding competition in the markets where the Partnership's properties
are located is set forth in Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
The Partnership has no employees.
All of the Partnership's business is conducted in the United States.
ITEM 2. PROPERTIES.
The Partnership's principal offices are located at Two World Trade
Center, New York, New York, 10048. The Partnership has no other offices.
The Partnership owns through partnership interests the following
four property interests, none of which is encumbered by indebtedness.
Generally, the leases pertaining to the properties provide for
pass-throughs to the tenants of their pro-rata share of certain operating
expenses.
<TABLE>
<CAPTION>
Year Acquisition Net Rentable Type of Ownership
Completed/ Cost Area of land and
Property and Location Acquired ($000) (000 sq. ft.) Improvements
<S> <C> <C> <C> <S>
Technology Park Reston,
Reston, VA 1983-1985/1987 $37,460 374 65.0% General Partner-
3 Office buildings ship interest1
Chesterbrook Corp. Center,
Valley Forge, PA 1982-1987/1987 $50,000 621 41.2% General Partner-
8 Office buildings ship interest2
Taxter Corporate Park,
Westchester, NY 1987-1988/ $21,002 345 40.6% General Partner-
2 Office buildings 1988 ship interest3
Pasadena Financial Center, 1983/1989 $17,055 147 56% General Partner-
Pasadena, CA ship interest4
Office building
<FN>
1. The remaining general partnership ("GP") interest is held by Dean Witter
Realty Income Partnership III, L.P. The total cost of the property was
$57.6 million.
2. The remaining GP interests are held by Dean Witter Realty Income
Partnership III, L.P. (26.7%) and an affiliate of the Managing General
Partner (32.1%). The total cost of the property was $121.3 million.
3. The remaining GP interests are held by Dean Witter Realty Income
Partnership II, L.P. (14.8%) and Dean Witter Realty Income Partnership
III, L.P. (44.6%). The total cost of the property was $51.8 million.
4. The Partnership owns a 56% GP interest in Pasadena Lake Associates
("PLA"); the remaining GP interest in PLA is held by an affiliate of the
Managing General Partner. PLA acquired, for $30.4 million, an 85%
interest in the partnership which owns the property; the remaining GP
interest in the partnership which owns the property is held by an
affiliate of the original seller of the property who, by agreement, does
not receive any cash flow from the property.
Each property has been built with on-site parking facilities.
</TABLE>
Affiliates of the Partnership are the property manager for Taxter
Corporate Park and Pasadena Financial Center and the co-property manager
of five buildings at the Chesterbrook Corporate Center.
Further information relating to the Partnership's properties is
included in Item 7 below and footnotes 4 and 5 to the consolidated
financial statements included in Item 8 below.
ITEM 3. LEGAL PROCEEDINGS.
Neither the Partnership nor any of its properties is subject to
any material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted during the fourth quarter of the fiscal year
to a vote of Unit holders.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
An established public trading market for the Units does not exist, and
it is not anticipated that such a market will develop in the future.
Accordingly, information as to the market value of a Unit at any given
date is not available. However, the Partnership does allow its limited
partners (the "Limited Partners") to transfer their Units.
As of December 31, 1994, there were 18,506 holders of limited
partnership interests.
The Partnership is a limited partnership and, accordingly, does not
pay dividends. It does, however, make quarterly distributions of cash
to its partners. Pursuant to the partnership agreement, distributable
cash, as defined, is paid 90% to the Limited Partners and 10% to the
general partners (the "General Partners").
During each of the years ended December 31, 1994 and 1993, the
Partnership paid cash distributions aggregating $6,765,268, with
$6,088,740 distributed to the Limited Partners and $676,528 to the
General Partners. The distributions aggregated $20.00 per Unit to the
Limited Partners.
On January 27, 1995, the Partnership paid the fourth 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.
The Partnership anticipates making regular distributions to its
partners in the future.
Sale or financing proceeds will be distributed, to the extent
available, first, to each Limited Partner, until there has been a return
of the Limited Partner's capital contribution plus cumulative
distributions of distributable cash and sale or refinancing proceeds in
an amount sufficient to provide a 9% cumulative annual return on the
Limited Partner's adjusted capital contribution. Thereafter, any
remaining sale or financing proceeds will be distributed 85% to the
Limited Partners and 15% to the General Partners after the Managing
General Partner receives a brokerage fee, if earned, of up to 3% of the
selling price of any equity investment. The Partnership did not
distribute any sale or financing fees in 1994 or 1993.
Taxable income generally will be allocated in the same proportions as
distributions of distributable cash or sale or financing proceeds. In
the event there is no distributable cash or sale or financing proceeds,
taxable income will be allocated 90% to the Limited Partners and 10% to
the General Partners. Any tax loss will be allocated 90% to the Limited
Partners and 10% to the General Partners.
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA.
The following sets forth a summary of the selected financial data for the
Partnership:
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
For the years ended December 31, 1994, 1993, 1992, 1991, and 1990
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Total revenues $11,219,617 $3,378,022 $11,967,169 $9,039,327 $9,754,921
Net income (loss) $4,588,878 $(2,932,582) $5,694,967 $5,588,914 $6,375,508
Net income (loss) per Unit of
limited partnership
interest $13.57 $(8.67) $16.84 $16.52 $18.85
Cash distributions paid
per Unit of limited
partnership interest $20.00 $20.00 $22.50 $30.00 $30.00
Total assets at December 31 $141,476,185 $144,340,130 $154,985,388 $144,245,371 $149,161,538
<FN>
Note: The above financial data should be read in conjunction with the
consolidated financial statements and the related notes appearing in Item
8.
</TABLE>
ITEM 7. 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, which
own interests in properties, 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 has been and may continue to be slow,
because tenant demand is weak, as a result of continued downsizing by
many major corporations.
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 depends in part upon cash flow from
operations of its properties, expenditures for tenant improvements and
leasing commissions in connection with the leasing of vacant space. In
1994, all of the Partnership's property investments generated positive
cash flow from operations, and it is anticipated that they will continue
to do so.
However, in 1994, cost of tenant improvements and leasing
commissions, additional investments in joint ventures and partner
distributions exceeded cash flow from operations and distributions from
joint ventures by approximately $998,000 . The shortfall was funded from
existing cash reserves. The Partnership had reduced its distribution
rate in 1992 in order to accumulate such reserves.
The Vanguard Group vacated its space in two of the buildings at
the Chesterbrook property in November 1993 and October 1994, and will
vacate its remaining space upon the expiration of its leases in November
1995. In September 1994, the partnership which owns the property signed
leases with two new tenants to fill a significant portion of the space
vacated to date. During 1994, the Partnership contributed approximately
$2,134,000 for its share of capital expenditures needed to re-lease this
space.
Countrywide Credit Industries, Inc., the largest tenant at
Pasadena Financial Center, is consolidating its operations in Pasadena,
and the partnership which owns the property has agreed to a restructuring
of its lease with Countrywide. Effective January 1, 1995, Countrywide
was allowed to give back approximately 35% of the space it leased, and
its base rent was slightly reduced on its remaining space (approximately
36% of the property) over the next six years, in exchange for an
extension of the lease term on the remaining space for ten years, to
September 2011. The Partnership completed this restructuring without
incurring any new tenant improvement obligations on the space, and at
below-market leasing commission rates. In 2005, rents will increase ten
percent for the remainder of the lease term. Considering the current
market and economic conditions in Pasadena, CA, as discussed below under
Operations, and the credit-worthiness of Countrywide, the Managing
General Partner considers the terms of the new agreement favorable. The
sixteen-year term for this major tenant will provide stability to the
long term cash flow from this property.
In 1994, the Partnership incurred approximately $893,000 of
tenant improvements and leasing commissions (net of capital contributions
from the minority interest) at Pasadena Financial Center, primarily
relating to new space occupied by Countrywide in 1994 and the year-end
restructuring of the Countrywide lease mentioned above.
Pasadena Financial Center has experienced damage to the exterior
walls. The Partnership's share of these costs is anticipated to exceed
$420,000. The Partnership which owns the property does not expect to
receive any insurance proceeds for this damage; however, it initiated a
lawsuit against the original building contractor and architect to seek
recovery of these costs.
The Partnership also invested approximately $446,000, its share
of capital expenditures, in the Taxter joint venture in 1994.
In 1995, the Partnership expects to fund significant capital
expenditures in order to attract new tenants to vacant space at the
Chesterbrook property and Pasadena Financial Center.
The Partnership expects that for 1995, capital expenditures and
cash distributions will be funded from operating cash flows,
distributions from joint ventures and existing cash reserves.
In 1993, the partnership that owns Taxter Corporate Park
concluded that there was a decline in the value of its property, and that
the decline was other-than-temporary. Accordingly, the general partners
of this partnership recorded a loss on impairment of its investment in
the property of approximately $21.3 million at December 31, 1993. The
Partnership's share of this loss, which was included in equity in
earnings (losses) of joint ventures was $8.6 million.
On January 27, 1995, the Partnership paid the fourth 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 year
ended December 31, 1994 compared to 1993 and for the year ended December
31, 1993 compared to 1992 are primarily attributable to the following:
The decrease in rental income in 1994 compared to 1993 is
primarily due to the above-mentioned restructuring of the lease with
Countrywide at Pasadena Financial Center, resulting from the write-off
of approximately $613,000 of tenant receivables related to the accrual
to recognize rental revenue on a straight-line basis.
The increase in equity in earnings (losses) of joint ventures in
1994 compared to 1993 and the decrease in 1993 compared to 1992 are
primarily attributable to the loss incurred in 1993 when the Partnership
recorded its share of the loss on impairment of the Taxter property.
Excluding the 1993 loss, the equity in earnings (losses) of joint
ventures decreased by approximately $425,000 in 1994 compared to 1993,
primarily because of lower rental income from the Chesterbrook joint
venture, partially offset by lower depreciation charges from the Taxter
joint venture (due to the writedown of the property in 1993).
The increase in interest and other income is primarily due to
1994 lease termination income of approximately $143,000 at Pasadena
Financial Center.
The increase in property operating expenses in 1994 compared to
1993 is due to increased costs incurred at Pasadena Financial Center.
The increase in depreciation and amortization expenses in 1994
compared to 1993 is primarily due to the write-off of approximately
$600,000 of tenant improvements and leasing commissions at Pasadena
Financial Center relating to the space which Countrywide gave back.
A summary of the 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%.
During 1994, average occupancy at the property was 85%, and at December
31, 1994, the property was 90% leased to 20 tenants (including one tenant
which moved into its space in 1995). Vanguard has been 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 PECO Energy, the
other major tenant at the property (occupying 25% of the space), expire
in 1998. Other leases totaling 20% of the space are scheduled to expire
in 1995 and 1996.
The office market in Westchester County, New York, the location
of Taxter Corporate Park, has experienced a significant decline. The
current vacancy level in the Westchester office market is approximately
25%. It is unlikely that this vacant space will be absorbed in the
market for several years. However, during 1994, and at December 31,
1994, average occupancy at the property was 99%. At December 31, 1994,
the property was leased to 24 tenants. One of the tenants, KLM Airlines,
owns a long-term leasehold interest in approximately 20% of the space at
the property. The leases of Fuji Photo Film, the other major tenant
(covering 21% of the property's space), expire in 1996.
The Reston market in Virginia, the location of Tech Park Reston,
has a vacancy rate of 16% due to the contraction of the high-tech and
defense firms which are the major tenants in the market. The leases with
Sprint Communications, which occupies 100% of the space, expire in 2003.
Sprint has the option to terminate its leases on two of the three
buildings beginning in 1997 and 1998.
In Pasadena, California, the location of Pasadena Financial
Center, the office market overall vacancy rate is approximately 15%, and
it is expected to deteriorate in the near term, primarily as a result of
downsizing by Countrywide and another large employer in the market.
However, during 1994, the property was 100% occupied by 10 tenants. No
significant leases are scheduled to expire in the near future.
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.
<PAGE>
<TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
INDEX
<S> <C>
(a) Financial Statements
Page
Independent Auditors' Report 11
Consolidated Balance Sheets at December 31, 1994 and 1993 12
Consolidated Statements of Operations for the years ended
December 31, 1994, 1993 and 1992 13
Consolidated Statements of Partners' Capital for the years ended
December 31, 1994, 1993 and 1992 14
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1993 and 1992 15
Notes to Consolidated Financial Statements 16-22
(b) Financial Statement Schedule Schedule
Real Estate and Accumulated Depreciation III 28-29
<FN>
All schedules other than those indicated above have been omitted because either
the required information is not applicable or the information is shown in the
consolidated financial statements or notes thereto.
</TABLE>
<PAGE>
Independent Auditors' Report
To The Partners of
Dean Witter Realty Income Partnership IV, L.P.:
We have audited the accompanying consolidated balance sheets of Dean
Witter Realty Income Partnership IV, L.P. and consolidated partnerships
(the "Partnership") as of December 31, 1994 and 1993, and the related
consolidated statements of operations, partners' capital, and cash flows
for each of the three years in the period ended December 31, 1994. Our
audits also included financial statement schedule III. These financial
statements and the financial statement schedule are the responsibility of the
Partnership's management. Our responsibility is to express an opinion
on the financial statements and the financial statement schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly in all material
respects, the financial position of Dean Witter Realty Income Partnership
IV, L.P. and consolidated partnerships as of December 31, 1994 and 1993,
and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994 in conformity with
generally accepted accounting principles. Also, in our opinion,
financial statement schedule III, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly
in all material respects, the information set forth therein.
DELOITTE & TOUCHE LLP
/s/Deloitte & Touche LLP
New York, New York
March 24, 1995
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED BALANCE SHEETS
December 31, 1994 and 1993
<CAPTION>
1994 1993
ASSETS
<S> <C> <C>
Cash and short-term investments, at cost,
which approximates market $ 6,168,565 $ 7,166,996
Real estate, at cost (note 4):
Land 8,984,865 8,984,865
Buildings and improvements 84,844,156 84,208,712
93,829,021 93,193,577
Accumulated depreciation 16,766,957 14,062,191
77,062,064 79,131,386
Investments in joint ventures (note 5) 55,074,536 54,549,929
Deferred expenses, net 1,364,966 1,378,415
Other assets 1,806,054 2,113,404
$141,476,185 $144,340,130
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities $ 443,389 $ 277,392
Minority interest in consolidated
joint ventures (note 4) 30,193,571 31,047,123
30,636,960 31,324,515
Partners' capital (deficiency) (note 3):
General partners (2,432,847) (2,215,207)
Limited partners ($500 per Unit,
304,437 Units issued) 113,272,072 115,230,822
110,839,225 113,015,615
$141,476,185 $144,340,130
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L .P.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 1994, 1993 and 1992
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Revenues:
Rental (note 6) $ 7,722,477 $ 8,271,049 $8,247,708
Equity in earnings (losses) of joint
ventures (note 5) 3,039,383 (5,180,123) 3,538,403
Interest and other 457,757 287,096 181,058
11,219,617 3,378,022 11,967,169
Expenses:
Property operating expenses 1,531,831 1,212,710 1,312,539
Depreciation 3,326,776 2,747,963 2,694,503
Amortization 349,853 186,920 204,794
General and administrative (note 7) 533,801 605,323 585,962
5,742,261 4,752,916 4,797,798
Income (loss) before minority
interests 5,477,356 (1,374,894) 7,169,371
Minority interests 888,478 1,557,689 1,474,404
Net income (loss) $ 4,588,878 $(2,932,582) $5,694,967
Net income (loss) per Unit of limited
partnership interest (notes 2 and 3) $ 13.57 $(8.67) $16.84
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
Years ended December 31, 1994, 1993 and 1992
<CAPTION>
Limited General
Partners Partners Total
<S> <C> <C> <C>
Partners' capital (deficiency)
at January 1, 1992 $125,683,249 $(1,053,826) $124,629,423
Net income 5,125,470 569,497 5,694,967
Cash distributions (6,849,833) (761,092) (7,610,925)
Partners' capital (deficiency)
at December 31, 1992 123,958,886 (1,245,421) 122,713,465
Net loss (2,639,324) (293,258) (2,932,582)
Cash distributions (6,088,740) (676,528) (6,765,268)
Partners' capital (deficiency)
at December 31, 1993 115,230,822 (2,215,207) 113,015,615
Net income 4,129,990 458,888 4,588,878
Cash distributions (6,088,740) (676,528) (6,765,268)
Partners' capital (deficiency)
at December 31, 1994 $113,272,072 $(2,432,847) $110,839,225
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1994, 1993 and 1992
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 4,588,878 $(2,932,582) $ 5,694,967
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 3,326,776 2,747,963 2,694,503
Amortization 349,853 186,920 204,794
Equity in (earnings) losses of joint ventures (3,039,383) 5,180,123 (3,538,403)
Minority interest in earnings of
consolidated joint ventures 888,478 1,557,689 1,474,404
Decrease (increase) in operating assets:
Deferred expenses (336,405) (158,622) (776,885)
Other assets 307,350 (336,920) (549,850)
Increase (decrease) in operating liabilities:
Accounts payable and accrued liabilities 165,997 (38,859) (760,029)
Net cash provided by operating activities 6,251,544 6,205,712 4,443,501
Cash flows from investing activities:
Additions to buildings and improvements (1,257,454) (115,645) (1,119,144)
Additional investment by minority interest 701,265 133,395 374,360
Investment in joint ventures (2,580,120) (927,018) (274,293)
Distributions from joint ventures 5,094,896 5,733,475 5,080,282
Minority interest in distributions
from consolidated joint ventures (2,443,294) (2,599,632) (1,747,658)
Cash effect of consolidation - - 454,303
Net cash (used in) provided by investing
activities (484,707) 2,224,575 2,767,850
Cash flows from financing activities:
Cash distributions (6,765,268) (6,765,268) (7,610,925)
(Decrease) increase in cash and short-term
investments (998,431) 1,665,019 (399,574)
Cash and short-term investments at beginning
of year 7,166,996 5,501,977 5,901,551
Cash and short-term investments at end of year $ 6,168,565 $ 7,166,996 $ 5,501,977
<FN>
See accompanying notes to consolidated financial statements.
</table
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
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 Partnership is managed by Dean
Witter Realty Fourth Income Properties Inc. (the "Managing General
Partner").
In 1987 and 1988, the Partnership issued 304,437 units of limited
partnership interest (the "Units") for $152,218,500. No additional
Units will be sold. The proceeds of the offering were used to make
investments in income-producing office properties which were not
encumbered by debt.
2. Summary of Significant Accounting Policies
The consolidated financial statements include the accounts of the
Partnership and its majority-controlled subsidiaries, Technology Park
Associates and, commencing January 1, 1992, Lake Colorado Associates,
the owner of Pasadena Financial Center.
The Partnership's 40.6% general partnership interest in Taxter
Corporate Park and 41.2% general partnership interest in 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.
The carrying value of real estate includes the purchase price paid
by the Partnership and acquisition fees and expenses. Costs of
improvements to the properties are capitalized, and repairs are
expensed. Depreciation is recorded on the straight-line method.
The Partnership periodically evaluates the recoverability of the net
carrying value of its real estate and investments in joint ventures.
The evaluation is based on a review of expected future cash flows,
determination of the Partnership's expected holding period of these
assets, and other factors.
Deferred expenses consist of leasing commissions which are amortized
over the applicable lease terms.
Rental income is recognized on a straight-line basis.
The Partnership considers short-term investments with original
maturities of three months or less to be cash equivalents.
Net income (loss) 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.
No provision for income taxes has been made in the financial
statements since the liability for such taxes is that of the partners
rather than the Partnership.
The accounting policies used for tax reporting purposes differ from
those used for financial reporting as follows: (a) depreciation is
calculated using accelerated methods; (b) rental income is recognized
based on the payment terms in the applicable leases; and (c)
writedowns for impairment of real estate are not deductible. In
addition, offering costs are treated differently for tax and
financial reporting purposes. The tax basis of the Partnership's
assets and liabilities is approximately $22.0 million higher than the
amounts reported for financial statement purposes.
3. Partnership Agreement
The Partnership Agreement provides that distributable cash, as
defined, will be paid 90% to the Limited Partners and 10% to the
General Partners.
Sale or financing proceeds will be distributed, to the extent
available, first, to each Limited Partner, until there has been a
return of the Limited Partner's capital contribution plus cumulative
distributions of distributable cash and sale or refinancing proceeds
in an amount sufficient to provide a 9% cumulative annual return on
the Limited Partner's adjusted capital contribution. Thereafter, any
remaining sale or financing proceeds will be distributed 85% to the
Limited Partners and 15% to the General Partners after the Managing
General Partner receives a brokerage fee of up to 3% of the selling
price of any equity investment.
Taxable income generally is allocated in the same proportions as
distributions of distributable cash or sale or financing proceeds.
In the event there is no distributable cash or sale or financing
proceeds, taxable income is allocated 90% to the Limited Partners and
10% to the General Partners. Any tax loss is allocated 90% to the
Limited Partners and 10% to the General Partners.
<PAGE>
</TABLE>
<TABLE>
4. Real Estate
The location, year of acquisition and net carrying values of the
property are as follows:
<CAPTION>
Year of December 31,
Property Acquisition 1994 1993
<S> <C> <C> <C>
Technology Park
Reston, VA 1987 $ 48,901,234 $ 50,477,334
Pasadena Financial Center
Pasadena, CA 1989 28,160,830 28,654,052
$77,062,064 $79,131,386
</TABLE>
The Partnership owns a 65% general partnership interest in Technology
Park Associates; the remaining general partnership interest is held
by an affiliate, Dean Witter Realty Income Partnership III, LP.
The Technology Park buildings are 100% leased to a single tenant,
which is responsible for all operating costs, including real estate
taxes. Accordingly, there are no property operating expenses for
this property in the consolidated statements of income.
The Partnership owns a 56% general partnership interest in Pasadena
Lake Associates ("PLA"); the remaining general partnership interest
in PLA is held by LS Lake Associates, an affiliate of the Managing
General Partner. PLA owns an 85% general partnership interest in
Lake Colorado Associates ("LCA"); the remaining general partnership
interest in LCA is held by an affiliate of the original seller of the
property ("PFC").
LCA's partnership agreement provides for PLA to receive all profits,
losses and cash flow from both operations and capital transactions
(except for a special allocation of taxable income to PFC in an
amount not to exceed $159,000 per year), until PLA has received a
return of its equity investment and a preferred return thereon as
defined in the partnership agreement. Any additional profits and
cash flow will be distributed 85% to PLA and 15% to PFC.
PFC has guaranteed to PLA the repayment of $4.5 million of PLA's
investment.
In 1994, the Partnership wrote-off approximately $457,000 of tenant
improvements and $143,000 of leasing commissions at Pasadena
Financial Center relating to space given back by the property's
largest tenant under a restructuring of its lease.
5. Investments in Joint Ventures
Chesterbrook Corporate Center, Valley Forge, Pennsylvania
The general partnership which owns the property is owned 41.2% by the
Partnership. Income Partnership III and affiliates of the Managing
General Partner own the remaining interests. The partners receive
cash flow and profits and losses according to their pro rata shares.
Summarized balance sheet information of the joint venture is as
follows:
<TABLE>
<CAPTION>
December 31,
1994 1993
<S> <C> <C>
Land and buildings, net $106,190,152 $105,724,845
Other 3,736,496 3,884,671
Total assets $109,926,648 $109,609,516
Liabilities $ 1,634,104 $ 2,044,779
Partners' capital 108,292,544 107,564,737
Total liabilities and capital $109,926,648 $109,609,516
</TABLE>
<TABLE>
Summarized results of operations of the joint venture are as follows:
<CAPTION>
Years ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Rental income $12,768,003 $14,615,384 $13,351,151
Other income (41,561) 180,671 1,121,159
12,726,442 14,796,055 14,472,310
Property operating expenses 4,021,494 4,187,715 3,875,555
Depreciation and amortization 3,929,509 3,727,652 3,554,393
7,951,003 7,915,367 7,429,948
Net income $ 4,775,439 $ 6,880,688 $ 7,042,362
</TABLE>
Taxter Corporate Park, Westchester County, New York
The general partnership which owns the property is owned 40.6% by the
Partnership. Affiliates of the Partnership, Dean Witter Realty
Income Partnership II, L.P., and Income Partnership III, purchased
the remaining interests. The partners receive cash flow and profits
and losses according to their pro rata shares.
Summarized balance sheet information of the joint venture is as
follows:
<TABLE>
<CAPTION>
December 31,
1994 1993
<S> <C> <C>
Land and building, net $18,510,985 $17,998,250
Other 1,810,505 1,810,728
Total assets $20,321,490 $19,808,978
Liabilities $ 333,273 $ 368,471
Partners' capital 19,988,217 19,440,507
Total liabilities and capital $20,321,490 $19,808,978
</TABLE>
<TABLE>
Summarized results of operations are as follows:
<CAPTION>
Years ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Rental income $6,120,192 $ 6,237,174 $5,616,608
Other income 78,764 95,916 191,336
6,198,956 6,333,090 5,807,944
Loss on impairment of real
estate - 21,292,185 -
Property operating expenses 2,542,248 2,953,161 3,001,787
Depreciation and
amortization 1,016,555 1,829,042 1,238,636
3,558,803 26,074,388 4,240,423
Net income $2,640,153 $(19,741,298) $1,567,521
</TABLE>
In fiscal 1993, the general partners of the partnership which owns
the property concluded that there was a decline in its value and that
the decline was other-than-temporary. Accordingly, the partnership
which owns the property recorded a loss on impairment of the property
of $21,292,185 at October 31, 1993. The Partnership's share of this
loss ($8,644,627) was included in equity in earnings (losses) of
joint ventures in 1993.
Activity in the Investments in Joint Ventures is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Investments at beginning
of year $54,549,929 $64,536,509 $84,031,795
Equity in earnings (losses) 3,039,383 (5,180,123) 3,538,403
Distributions (5,094,896) (5,733,475) (5,080,282)
Contributions 2,580,120 927,018 274,293
Consolidation of LCA - - (18,227,700)
Investments at end of year $55,074,536 $54,549,929 $64,536,509
</TABLE>
6. Leases
Minimum future rental income under noncancellable operating leases as of
December 31, 1994 is as follows:
<TABLE>
<CAPTION>
Year ending December 31:
<C> <C>
1995 $ 7,371,384
1996 7,391,367
1997 7,167,674
1998 7,465,291
1999 7,465,291
Thereafter 32,863,819
Total $69,724,826
</TABLE>
The Partnership has determined that all leases relating to its
properties are operating leases. The terms range from five to
seventeen years, and generally provide for fixed minimum rents with
rental escalation and/or expense reimbursement clauses.
7. Related Party Transactions
An affiliate of the Managing General Partner provided property
management services for two properties in 1994, 1993 and 1992 and for
five buildings at Chesterbrook Corporate Center in 1994 and 1993. The
Partnership paid the affiliate management fees of approximately
$178,000, $129,000 and $107,000 for the years ended December 31, 1994,
1993 and 1992, respectively.
Another affiliate of the Managing General Partner performs
administrative functions, processes investor transactions and prepares
tax information for the Partnership. For the years ended December 31,
1994, 1993 and 1992, the Partnership incurred approximately $439,000,
$439,000 and $416,000 respectively, for such services.
As of December 31, 1994, the affiliates were owed approximately
$82,000 in total for these services.
8. Subsequent Event
On January 27, 1995, 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 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Partnership is a limited partnership and has no directors
or executive officers.
The directors and executive officers of the Managing General
Partner are as follows:
Position with the
Name Managing General Partner
William B. Smith Chairman of the Board of Directors
E. Davisson Hardman, Jr. President and Director
Lawrence Volpe Controller, Assistant Secretary and
Director
Ronald T. Carman Secretary and Director
All of the directors have been elected to serve until the next
annual meeting of the shareholders of the Managing General Partner or
until their successors are elected and qualify. Each of the executive
officers has been elected to serve until his successor is elected and
qualifies.
William B. Smith, age 51, is a Managing Director of Dean Witter
Realty Inc. and has been with Dean Witter Realty Inc. since 1982.
E. Davisson Hardman, Jr,, age 45, is a Managing Director of
Dean Witter Realty Inc. and has been with Dean Witter Realty since
1982.
Lawrence Volpe, age 47, is a Director and the Controller of
Dean Witter Realty Inc. He is a Senior Vice President and Controller of
Dean Witter Reynolds Inc., which he joined in 1983.
Ronald T. Carman, age 43, is a Director and the Secretary of
Dean Witter Realty Inc. He is a Senior Vice President of Dean Witter,
Discover & Co. and of Dean Witter Reynolds Inc., which he joined in 1984.
There is no family relationship among any of the foregoing
persons.
ITEM 11. EXECUTIVE COMPENSATION
The General Partners are entitled to receive cash
distributions, when and as cash distributions are made to the limited
partners, and a share of taxable income or tax loss. Descriptions of
such distributions and allocations are contained in Item 5 above. The
General Partners received cash distributions of $676,528, $676,528 and
$761,092 during the years ended December 31, 1994, 1993 and 1992,
respectively.
The General Partners and their affiliates were paid certain
fees and reimbursed for certain expenses. Information concerning such
fees, commissions and reimbursements is contained in Note 7 to
Consolidated Financial Statements in Item 8 above.
The directors and executive officers of the Managing General
Partner received no renumeration from the Partnership.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) No person is known to the Partnership to be the beneficial
owner of more than five percent of the Units.
(b) The executive officers and directors of the Managing
General Partner own the following Units as of March 31, 1995:
<TABLE>
<CAPTION>
Amount and
Nature of
Title of Class Name of Beneficial Owner Beneficial Ownership
-------------- ------------------------ --------------------
<S> <S> <S>
Limited William B. Smith *
Partnership
Interests E. Davisson Hardman, Jr. *
All directors and executive *
officers of the Managing
General Partner, as a group
</TABLE>
*Owns, by virtue of ownership of limited partnership interests in the
Associate General Partner, less than 1% of the Units of the Partnership.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
As a result of their being partners of a limited partnership
which is the Limited Partner of the Associate General Partner, Dean
Witter Realty Inc. ("Realty"), a Delaware Corporation which is a wholly-
owned subsidiary of Dean Witter, Discover & Co., and certain current and
former executive officers and directors of the Managing General Partner
also own indirect general partnership interests in the Partnership. The
Partnership Agreement of the Partnership provides that cash distributions
and allocations of income and loss to the General Partners be distributed
or allocated 50% to the Managing General Partner and 50% to the Associate
General Partner. The General Partners' share of cash distributions and
income or loss is described in Item 5 above.
All of the outstanding shares of common stock of the Managing
General Partner are owned by Realty. The general partner of the
Associate General Partner is the Managing General Partner. The limited
partner of the Associate General Partner is LSA 86 L.P., a Delaware
limited partnership. Realty and certain current and former executive
officers and directors of the Managing General Partner are partners of
LSA 86 L.P. Additional information with respect to the directors and
executive officers and compensation of the Managing General Partner and
affiliates is contained in Items 10 and 11 above.
The General Partners and their affiliates were paid certain
fees and reimbursed for certain expenses. Information concerning such
fees and reimbursements is contained in Note 7 to the Consolidated
Financial Statements in Item 8 above.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K.
(a) The following documents are filed as part of this Annual Report:
1. Financial Statements (see Index to Financial Statements filed as
part of Item 8 of this Annual Report).
2. Financial Statement Schedules (see Index to Financial Statements
filed as part of Item 8 of this Annual Report).
3. Exhibits
(2) Not applicable
(3)a Certificate of Limited Partnership included in the
Registration Statement Number 33-16054 is incorporated by
reference.
(3)b Amended and Restated Agreement of Limited Partnership dated
as of October 22, 1987 set forth in Exhibit A to the
Prospectus in the Registration Statement Number 33-16054 is
incorporated herein by reference.
(4)a Certificate of Limited Partnership included in the
Registration Statement Number 33-16054 is incorporated by
reference.
(4)b Amended and Restated Agreement of Limited Partnership dated
as of October 22, 1987 set forth in Exhibit A to the
Prospectus included in the Registration Statement Number
33-16054 is incorporated herein by reference.
(9) Not applicable.
(10) Not applicable.
(11) Not applicable.
(12) Not applicable.
(13) Not applicable.
(16) Not applicable.
(18) Not applicable.
(21) Subsidiaries: Technology Park Associates, a Virginia
general partnership.
Lake Colorado Associates, a California general
partnership.
(22) Not applicable.
(23) Not applicable.
(24) Not applicable.
(27) Financial Data Schedule
(28) Not applicable.
(99) Not applicable.
(b) No Forms 8-K were filed by the Partnership during the last quarter
of the period covered by this report.
(d) Financial Statements Schedule
(1) Financial statements of DWR Chesterbrook Associates, the
joint venture which owns Chesterbrook Corporate Center.
<PAGE>
<TABLE>
SCHEDULE III
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
Real Estate and Accumulated Depreciation
December 31, 1994
Initial cost to Partnership (A)
------------------------------------------------------
<CAPTION>
Building and
Description Land Improvements Total
<S> <C> <C> <C>
Tech Park Reston
Reston, VA 6,004,189 54,037,697 60,041,886
Pasadena
Financial
Center
Pasadena, CA 2,980,676 27,369,324 30,350,000
8,984,865 81,407,021 90,391,886
</TABLE>
<TABLE>
Gross Amount at which
Carried at End of Period (B)
-------------------------------------------------
<CAPTION>
Cost
Capitalized
Subsequent to Buildings &
Description Acquisition Land Improvement Total
<S> <C> <C> <C> <C>
Tech Park Reston
Reston, VA - 6,004,189 54,037,697 60,041,886
Pasadena
Financial
Center
Pasadena, CA 3,437,135 2,980,676 30,806,459 33,787,135
3,437,135 8,984,865 84,844,156 93,829,021
</TABLE>
<TABLE>
<CAPTION>
Life on which
Depreciation
in Latest
Accumulated Income
Depreciation Date of Date Statement is
Description (c) Construction Acquired Computed
<S> <C> <C> <S> <C>
Tech Park Reston
Reston, VA 11,140,652 1983-1985 December 1987 15-40 Years
Pasadena
Financial
Center
Pasadena, CA 5,626,305 1983 December 1989 5-40 Years
16,766,957
<FN>
Notes:
(A) The initial cost includes the purchase price paid by the Partnership and
acquisition fees and expenses. The aggregate cost for Federal income tax purposes
was 86,505,439.
</TABLE>
<TABLE>
<CAPTION>
(B) Reconciliation of real estate owned
at December 31: 1992 1993 1994
<S> <C> <C> <C>
Balance at beginning of period 60,041,886 93,077,932 93,193,577
Additions during period:
Purchases 1,119,144 115,645 1,257,454
Effect of consolidation 31,916,902 - -
Write-off due to termination
of lease - - (622,010)
Balance at end of period 93,077,932 93,193,577 93,829,021
(C) Reconciliation of accumulated depreciation:
Balance at beginning of period 6,412,352 11,314,228 14,062,191
Depreciation expense 2,694,503 2,747,963 2,869,978
Effect of consolidation 2,207,373 - -
Write-off due to termination
of lease - - (165,212)
Balance at end of period 11,314,228 14,062,191 16,766,957
</table
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By: /s/E. Davisson Hardman, Jr. Date: March 30, 1995
E. Davisson Hardman, Jr.
President
By: /s/Lawrence Volpe Date: March 30, 1995
Lawrence Volpe
Controller
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
DEAN WITTER REALTY FOURTH INCOME PROPERTIES INC.
Managing General Partner
/s/William B. Smith Date: March 30, 1995
William B. Smith
Chairman of the Board of Directors
/s/E. Davisson Hardman, Jr. Date: March 30, 1995
E. Davisson Hardman, Jr.
Director
/s/Lawrence Volpe Date: March 30, 1995
Lawrence Volpe
Director
/s/Ronald T. Carman Date: March 30, 1995
Ronald T. Carman
Director
<PAGE>
Independent Auditors' Report
To The Partners of
DWR Chesterbrook Associates
We have audited the accompanying balance sheets of DWR Chesterbrook
Associates (the "Partnership") as of December 31, 1994 and 1993, and the
related statements of operations, partners' capital, and cash flows for
each of the three years in the period ended December 31, 1994. Our
audits also included financial statement schedule III. These financial
statements and financial statement schedule are the responsibility of the
Partnership's management. Our responsibility is to express an opinion
on the financial statements and financial statement schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly in all material
respects, the financial position of DWR Chesterbrook Associates as of
December 31, 1994 and 1993, and the results of its operations and its
cash flows for each of the three years in the period ended December 31,
1994 in conformity with generally accepted accounting principles. Also,
in our opinion, financial statement schedule III, when considered in
relation to the basic financial statements taken as a whole, presents
fairly in all material respects, the information set forth therein.
/s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
New York, New York
March 24, 1995
<PAGE>
</TABLE>
<TABLE>
DWR CHESTERBROOK ASSOCIATES
BALANCE SHEETS
December 31, 1994 and 1993
<CAPTION>
1994 1993
ASSETS
<S> <C> <C>
Cash and short-term investments, at cost,
which approximates market $ 529,976 $ 1,446,400
Real estate, at cost:
Land 14,436,604 14,436,604
Buildings 115,078,332 110,812,514
129,514,936 125,249,118
Accumulated depreciation 23,324,784 19,524,273
106,190,152 105,724,845
Deferred expenses, net 892,344 295,577
Tenant accounts receivable 295,038 147,695
Other assets 2,019,138 1,994,999
$109,926,648 $109,609,516
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities $ 186,160 $ 604,862
Due to affiliate 1,413,167 1,413,167
Tenant security deposits 34,777 26,756
1,634,104 2,044,785
Partners' capital 108,292,544 107,564,731
$109,926,648 $109,609,516
<FN>
See accompanying notes to financial statements.
<PAGE>
</TABLE>
<TABLE>
DWR CHESTERBROOK ASSOCIATES
STATEMENTS OF OPERATIONS
Years ended December 31, 1994, 1993 and 1992
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Revenue:
Rental $12,768,003 $14,615,384 $13,351,151
Interest (41,561) 180,671 1,121,159
12,726,442 14,796,055 14,472,310
Expenses:
Property operating 4,021,495 4,187,715 3,875,555
Depreciation 3,800,511 3,633,393 3,469,561
Amortization 128,997 94,259 84,832
7,951,003 7,915,367 7,429,948
Net income $ 4,775,439 $ 6,880,688 $ 7,042,362
<FN>
See accompanying notes to financial statements.
/TABLE
<PAGE>
<TABLE>
DWR CHESTERBROOK ASSOCIATES
STATEMENTS OF PARTNERS' CAPITAL
Years ended December 31, 1994, 1993 and 1992
<S> <C>
Partners' capital at January 1, 1992 $112,522,318
Net income 7,042,362
Cash distributions (8,725,040)
Partners' capital at December 31, 1992 110,839,640
Net income 6,880,688
Cash distributions (10,155,597)
Partners' capital at December 31, 1993 107,564,731
Net income 4,775,439
Distributions (4,047,626)
Partners' capital at December 31, 1994 $108,292,544
<FN>
See accompanying notes to financial statements.
<PAGE>
</TABLE>
<TABLE>
DWR CHESTERBROOK ASSOCIATES
STATEMENTS OF CASH FLOWS
Years ended December 31, 1994, 1993 and 1992
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 4,775,439 $ 6,880,688 $ 7,042,362
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 3,800,511 3,633,393 3,469,561
Amortization 128,997 94,259 84,832
(Increase) decrease in operating assets:
Tenant accounts receivable (147,343) 119,137 (52,305)
Deferred expenses (725,764) (76,132) (50,559)
Other assets (24,139) 145,865 (135,571)
Increase (decrease) in operating liabilities:
Accounts payable and accrued liabilities (418,702) 253,105 236,196
Tenant security deposits 8,021 11,420 (380,801)
Net cash provided by operating activities 7,397,020 11,061,735 10,213,715
Cash flows from investing activities:
Additions to real estate (4,265,818) (876,843) (665,598)
Cash flows from financing activities:
Cash distributions (4,047,626) (10,155,597) (8,725,040)
Increase (decrease) in cash and
short-term investments (916,424) 29,295 823,077
Cash and short-term investments at beginning
of year 1,446,400 1,417,105 594,028
Cash and short-term investments at end of year $ 529,976 $ 1,446,400 $ 1,417,105
<FN>
See accompanying notes to financial statements.
/TABLE
<PAGE>
DWR CHESTERBROOK ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
1. Organization
DWR Chesterbrook Associates (the "Partnership") was formed in 1987
under the laws of the Commonwealth of Pennsylvania, to purchase eight
of nine office buildings, a parking lot and 75 acres of underlying
land in the Chesterbrook Corporate Center in Valley Forge,
Pennsylvania. The buildings consist of 621,271 net rentable square
feet. The property is not encumbered by debt.
The general partners of the Partnership are Chesterbrook Investment
Partners, L.P. (67.9%) and Duportail Investment Partners, L.P.
(32.1%).
The Partnership Agreement provides that all cash flow, profits,
losses and credits of the Partnership shall be allocated in
proportion to the Partners' original capital contributions.
2. Summary of Significant Accounting Policies
The Partnership's records are maintained on the accrual basis of
accounting for financial reporting and tax purposes.
The carrying value of real estate includes the purchase price paid by
the Partnership and acquisition fees and expenses. Costs of
improvements to the properties are capitalized, and repairs are
expensed. Depreciation is recorded on the straight-line method.
Deferred expenses consist of leasing commissions which are amortized
over the applicable lease terms.
Rental income is recognized on a straight-line basis.
The Partnership considers short-term investments with original
maturities of three months or less to be cash equivalents.
No provision for income taxes has been made in the financial
statements since the liability for such taxes is that of the partners
rather than the Partnership.
The accounting policies used for tax reporting purposes differ from
those used for financial reporting as follows: (a) depreciation is
calculated using accelerated methods; (b) rental income is recognized
based on the payment terms in the applicable leases; and (c) payments
made by the seller of the property in prior years under a rental
income guaranty were accounted for as rental income. The tax basis
of the Partnership's assets and liabilities is approximately $2.1
million lower than the amounts reported for financial statement
purposes.
3. Lease Commitments
Minimum future rental income under noncancellable operating leases as
of December 31, 1994 is as follows:
<TABLE>
<CAPTION>
Year ending December 31:
<C> <C>
1995 $11,422,965
1996 10,261,526
1997 9,481,517
1998 6,023,701
1999 3,343,082
Thereafter 2,464,685
Total $42,997,476
</TABLE>
The Partnership has determined that all leases relating to the
Property are operating leases. The terms range from two to ten
years, and generally provide for fixed minimum rents with rental
escalation and/or expense reimbursement clauses.
4. Related Party Transactions
Beginning in 1993, an affiliate of the partners co-managed five
buildings at the property. The Partnership paid the affiliate
management fees of approximately $58,000 and $61,000 in 1994 and 1993,
respectively for such services.
Another affiliate of the general partners earned a fee in 1987 for the
acquisition of the properties in the amount of $4,258,703. Of this
amount, $1,413,167 remains unpaid.
<PAGE>
<TABLE>
SCHEDULE III
DWR CHESTERBROOK ASSOCIATES
Real Estate and Accumulated Depreciation
December 31, 1994
<CAPTION>
Initial cost to Partnership (A)
-------------------------------------------------------
Building and
Description Land Improvements Total
<S> <C> <C> <C>
Office Buildings
Valley Forge,
PA 14,436,604 108,221,744 122,658,348
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at which
Carried at End of Period (B)
---------------------------------------------
Cost
Capitalized
Subsequent to Buildings &
Description Acquisition Land Improvement Total
<S> <C> <C> <C> <C>
Office Buildings
Valley Forge,
PA 6,856,588 14,436,604 115,078,332 129,514,936
</TABLE>
<TABLE>
<CAPTION>
Life on which
Depreciation
Accumulated in Latest Income
Depreciation Date of Date Statement is
Description (c) Construction Acquired Computed
<S> <C> <C> <S> <C>
Office Buildings
Valley Forge December 1987-
PA 23,324,784 1982-1988 September 1988 3-40 Years
<FN>
Notes:
(A) The initial cost includes the purchase price paid by the Partnership and
acquisition fees and expenses less payments of $4,764,922 received from the
seller under its rental income guaranty. For Federal income tax purposes,
rental income guaranty payments are included in taxable income and do not
reduce the cost basis of the property.
</TABLE>
<TABLE>
<CAPTION>
(B) Reconciliation of real estate owned
at December 31: 1992 1993 1994
<S> <C> <C> <C>
Balance at beginning of period 123,706,677 124,372,275 125,249,118
Additions during period:
Purchases 665,598 876,843 4,265,818
Balance at end of period 124,372,275 125,249,118 129,514,936
(C) Reconciliation of accumulated depreciation:
Balance at beginning of period 12,421,319 15,890,880 19,524,273
Depreciation expense 3,469,561 3,633,393 3,800,511
Balance at end of period 15,890,880 19,524,273 23,324,784
</TABLE>
<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
audited financial statements.
</LEGEND>
<CIK> 0000819342
<NAME> DEAN WITTER REALTY INCOME PARTNERSHIP IV L.P.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 6,168,565
<SECURITIES> 0
<RECEIVABLES> 1,806,054
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 141,476,185<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 110,839,225<F2>
<TOTAL-LIABILITY-AND-EQUITY> 141,476,185<F3>
<SALES> 0
<TOTAL-REVENUES> 11,219,617<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,630,739
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,588,878
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,588,878
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,588,878
<EPS-PRIMARY> 13.57<F5>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include net investments
in real estate of $77,062,064, investments in joint ventures of $55,074,536
and net deferred expenses of $1,364,966.
<F2>Represents partners' capital.
<F3>Liabilities include accounts payable and accrued liabilities of $443,389
and minority interests in consolidated joint ventures of $30,193,571.
<F4>Total revenue includes rent of $7,722,477, equity in earnings of joint
ventures of $3,039,383 and interest and other revenue of $457,757.
<F5>Represents net income per Unit of limited partnership interest.
</FN>
</TABLE>
