5
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, 1997
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
Page 1 of 13
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, December
31,
1997 1996
ASSETS
<S> <C>
<C>
Cash and cash equivalents $ 4,984,764 $
56,199,072
Investments in joint ventures 36,152,539
36,899,178
Other assets 127,319
1,458,903
Real estate held for sale -
20,322,459
Deferred expenses, net -
567,184
$ 41,264,622
$115,446,796
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities $ 283,445 $
268,202
Minority interests in consolidated joint ventures -
26,649,540
283,445
26,917,742
Partners' capital (deficiency):
General partners (5,089,940)
(4,887,822)
Limited partners ($500 per Unit, 304,437 Units issued)
46,071,117 93,416,876
40,981,177
88,529,054
$ 41,264,622
$115,446,796
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED STATEMENTS OF INCOME
Three and six months ended June 30, 1997 and 1996
<CAPTION>
Three months ended Six
months ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C>
<C>
Revenues:
Rental $ 119,345 $2,185,558 $
996,972 $4,247,510
Gain on sale of real estate 4,184,529 -
4,184,529 -
Equity in earnings of joint
ventures 786,243 744,638
1,485,195 1,423,816
Interest and other 103,578 55,274
294,658 138,013
5,193,695 2,985,470
6,961,354 5,809,339
Expenses:
Property operating 30,965 355,948
392,993 703,476
Depreciation - 578,147 -
1,154,275
Amortization 550 32,713
6,279 65,426
General and administrative 95,657 145,658
228,296 299,344
127,172 1,112,466
627,568 2,222,521
Income before minority interests 5,066,523 1,873,004
6,333,786 3,586,818
Minority interests 2,664,030 453,062
2,891,075 866,191
Net income $2,402,493 $1,419,942
$3,442,711 $2,720,627
Net income allocated to:
Limited partners $2,318,385 $1,277,948
$3,254,581 $2,448,564
General partners 84,108 141,994
188,130 272,063
$2,402,493 $1,419,942
$3,442,711 $2,720,627
Net income per Unit of limited
partnership interest $ 7.62 $ 4.20 $
10.69 $ 8.04
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
Six months ended June 30, 1997
<CAPTION>
Limited General
Partners Partners Total
<S> <C> <C>
<C>
Partners' capital (deficiency)
at January 1, 1997 $ 93,416,876
$(4,887,822) $ 88,529,054
Net income 3,254,581
188,130 3,442,711
Cash distributions (50,600,340)
(390,248) (50,990,588)
Partners' capital (deficiency)
at June 30, 1997 $ 46,071,117
$(5,089,940) $ 40,981,177
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 1997 and 1996
<CAPTION>
1997 1996
<S> <C>
<C>
Cash flows from operating activities:
Net income $ 3,442,711 $
2,720,627
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation -
1,154,275
Amortization 6,279
65,426
Minority interests in joint venture 2,891,075
866,191
Gain on sale of real estate (4,184,529)
- -
Equity in earnings of joint ventures (1,485,195)
(1,423,816)
Increase in operating assets:
Other assets (8,891)
(84,893)
Increase in operating liabilities:
Accounts payable and accrued liabilities
51,513 95,779
Net cash provided by operating activities
712,963 3,393,589
Cash flows from investing activities:
Additions to buildings and improvements -
(395,800)
Proceeds from sale of real estate 26,372,099
- -
Investments in joint ventures (168,433)
(643,083)
Distributions from joint ventures 2,400,267
2,275,052
Net cash provided by investing activities
28,603,933 1,236,169
Cash flows from financing activities:
Cash distributions (50,990,588)
(3,382,634)
Additional investments by minority interests
263,494 174,156
Minority interests in joint ventures' distributions
(29,804,110) (1,241,375)
Net cash used in financing activities (80,531,204)
(4,449,853)
(Decrease) increase in cash and cash equivalents
(51,214,308) 179,905
Cash and cash equivalents at beginning of period
56,199,072 6,456,209
Cash and cash equivalents at end of period $ 4,984,764 $
6,636,114
See accompanying notes to consolidated financial
statements.
</TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
Notes to Consolidated Financial Statements
1. The Partnership
Dean Witter Realty Income Partnership IV, L.P. (the
"Partnership") is a limited partnership organized under
the laws of the State of Delaware on October 31, 1986.
The consolidated financial statements include the
accounts of the Partnership and its majority-controlled
subsidiaries, Technology Park Associates and Lake
Colorado Associates, the owner of Pasadena Financial
Center. The Partnership's interests in Taxter
Corporate Park and the partnership which owns an
interest 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 and tax reporting
purposes.
Net income per Unit amounts are calculated by dividing
net income allocated to Limited Partners, in accordance
with the Partnership Agreement, by the weighted average
number of Units outstanding.
In the opinion of management, the accompanying
financial statements, which have not been audited,
include all adjustments necessary to present fairly the
results for the interim period. Except for the gain on
sale of real estate in 1997, such adjustments consist
only of normal recurring accruals.
These financial statements should be read in
conjunction with the annual financial statements and
notes thereto included in the Partnership's annual
report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31,
1996. Operating results of interim periods may not be
indicative of the operating results for the entire
year.
The Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128,
"Earnings per Share" in February, 1997. This
pronouncement establishes standards for computing and
presenting earnings per share, and is effective for
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
Notes to Consolidated Financial Statements
the Partnership's 1997 year-end financial statements.
The Partnership's management has determined that this
standard will have no impact on the Partnership's
computation or presentation of net income per Unit of
limited partnership interest.
2. Real Estate
In April, 1997 Lake Colorado Associates sold the
Pasadena Financial Center property to Spieker
Properties, L.P., an unaffiliated party, for
$26,700,000. The purchase price was received in cash
at closing. The Partnership received approximately
$14.7 million of such cash, representing its 56% share
of the cash received by Lake Colorado Associates net of
closing costs.
On April 28, 1997, the Partnership distributed
$14,737,795 ($48.41 per Unit, representing a return of
capital) of the net proceeds from the sale of the
Pasadena Financial Center property. The distribution
was paid 100% to Limited Partners.
Summarized financial information of the Partnership's
investment in DWR Chesterbrook Associates, the general
partnership which owns the Chesterbrook Corporate
Center property, is as follows:
Three months ended June 30 Six
months ended June 30
1997 1996 1997 1996
Revenues $3,357,307 $3,331,043 $6,726,272
$6,558,048
Expenses 1,793,740 1,911,716 3,725,829
3,883,402
Net income $1,563,567 $1,419,327 $3,000,443
$2,674,646
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
Notes to Consolidated Financial Statements
3. Related Party Transactions
An affiliate of the Managing General Partner provided
property management services for two of the
Partnership's properties (one of which was sold in
1997) and for five buildings at the Chesterbrook
Corporate Center as of June 30, 1997 and 1996. The
Partnership paid the affiliate management fees of
approximately $76,000 and $86,000 for the six months
ended June 30, 1997 and 1996, respectively. These
amounts are included in property operating expenses.
Another affiliate of the Managing General Partner
performs administrative functions, processes investor
transactions and prepares tax information for the
Partnership. For the six-month periods ended June 30,
1997 and 1996, the Partnership incurred approximately
$149,000 and $203,000, respectively for these services.
These amounts are included in general and
administrative expenses.
As of June 30, 1997, the affiliates were owed
approximately $25,000 for these services.
4. Litigation
Various public partnerships sponsored by Dean Witter
Realty Inc. (including the Partnership and its Managing
General Partner) are defendants in purported class
action lawsuits pending in state and federal courts.
The complaints allege a number of claims, including
breach of fiduciary duty, fraud and misrepresentation,
and seek an unspecified amount, possible liquidation of
the Partnership under a receiver's supervision and
other equitable relief. The defendants are vigorously
defending these actions. It is impossible to predict
the effect, if any, the outcome of these actions might
have on the Partnership's financial statements.
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
Notes to Consolidated Financial Statements
5. Subsequent Distributions
On July 29, 1997, the Partnership paid a cash
distribution of $3.66 per Unit to the Limited Partners.
The total cash distribution amounted to $1,238,044,
with $1,114,240 distributed to the Limited Partners and
$123,804 to the General Partners.
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
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 made four investments in partnerships
which own interests in properties on an all-cash basis.
One of such partnerships sold its property interest in
1996, and another sold its real estate in April 1997.
The Partnership's acquisition program has been
completed. No additional investments are planned.
The economic expansion continues and real estate
markets continued to stabilize in the second quarter of
1997, primarily due to decreased new office
construction and continued strong leasing efforts
causing a reduction in oversupply in many office
markets. The steady demand and the limited amount of
speculative office construction have resulted in
falling vacancies, rising rents and increasing property
values in many markets. While vacancy in the office
market in Westchester County, New York (the location
Taxter Corporate Park) remained at approximately 24%,
the market slowly continues to improve as overall
demand increases. The suburban Philadelphia office
market (the location of the Chesterbrook Corporate
Center) also continues to improve with vacancy levels
less than 12%. Demand for quality space is expected to
increase in 1997.
The Partnership's liquidity depends upon cash flow from
operations of its investments in joint ventures and
required contributions for building improvements and
tenant improvements and leasing commissions in
connection with the leasing of vacant space. During
the six months ended June 30, 1997, all of the
Partnership's property investments generated positive
cash flow from operations, and it is anticipated that
they will continue to do so for the remainder of 1997.
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
In addition, the Partnership's liquidity has been and
will be affected by the sale of properties. The
Managing General Partner currently plans to market for
sale the Chesterbrook Corporate Center property in 1997
and the Taxter Corporate Park property in 1998, with
the objective of completing sales of these properties
by the end of 1998. There is no assurance the
Partnership will be able to achieve these objectives.
As the Partnership has fewer income-producing
investments, Partnership cash from operations will
decline, as will Partnership distributions. The
Partnership will also require less cash reserves to
fund future capital expenditures and leasing
commissions.
A special cash distribution of $6.25 per Unit will be
paid to Limited Partners on or about on August 27, 1997
from the Partnership's cash reserves. The Managing
General Partner projects that the remaining cash
reserves will be sufficient for the Partnership's
future needs.
During the six months ended June 30, 1997,
distributions to investors (excluding the distribution
of proceeds from the sales of the Technology Park
Reston office park and Pasadena Financial Center
properties), capital expenditures and contributions to
joint ventures exceeded cash flow from operations and
distributions from joint ventures. This shortfall was
funded from cash reserves.
During the six months ended June 30, 1997, the
Partnership contributed approximately $85,000 for its
share of tenant and building improvements at the Taxter
joint venture and approximately $84,000 for its share
of tenant improvements at the Chesterbrook joint
venture.
As of June 30, 1997, the Partnership also has
commitments to fund approximately $500,000 for its
share of capital expenditures, primarily at the
Chesterbrook joint venture. These expenditures will be
funded from cash from operations and cash reserves.
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
Except as discussed herein and in the consolidated
financial statements, the Managing General Partner is
not aware of any trends or events, commitments or
uncertainties that may have a material impact on
liquidity.
On April 28, 1997, the Partnership paid the first
quarter distribution of $4.66 per Unit to the Limited
Partners. The total cash distribution amounted to
$1,576,311, with $1,418,680 distributed to the Limited
Partners and $157,631 to the General Partners. On
April 28, 1997, the Partnership distributed $14,737,795
of the net proceeds from the sale of the Pasadena
Financial Center property ($48.41 per Unit). The
distribution was paid 100% to the Limited Partners.
On July 29, 1997, the Partnership paid a cash
distribution of $3.66 per Unit to the Limited Partners.
The total cash distribution amounted to $1,238,044,
with $1,114,240 distributed to the Limited Partners and
$123,804 to the General Partners.
Operations
Fluctuations in the Partnership's operating results for
the three- and six-month periods ended June 30, 1997
compared to 1996 were primarily attributable to the
following:
The decreases in rental income, property operating
expense and depreciation and amortization expenses are
due to the December 31, 1996 sale of the Technology
Park Reston office park and the April 10, 1997 sale of
the Pasadena Financial Center.
The $4,184,529 gain on sale of real estate is due to
the sale of the Pasadena Financial Center property.
Interest and other income increased primarily due to
the investment of the cash proceeds from the sales of
the Technology Park Reston office park and the Pasadena
Financial Center properties.
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
Minority interests increased due to the gains on the
sales of the Pasadena Financial Center and Technology
Park Reston office park properties.
A summary of the markets in which the Partnership's
office properties are located and the performance of
each property is as follows:
Current market conditions in Valley Forge,
Pennsylvania, where the Chesterbrook Corporate Center
is located, continue to improve with market vacancies
improving to less than 12%. Effective rental rates
have also held steady in the market. During the second
quarter 1997 occupancy at the property increased to
100%. No leases for a significant amount of space
expire before 1998.
The overall vacancy level in the office market in
Westchester County, New York, the location of Taxter
Corporate Park, remained at approximately 24%, and the
west Westchester market in which the building is
located also remained approximately 15% vacant. It is
unlikely that the vacant space will be absorbed in the
market for several years. During the second quarter of
1997, occupancy at the property increased to 100%. No
leases for a significant amount of space expire before
2001.
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.
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits.
An exhibit index has been filed as part of
this Report on Page E1.
b) Reports on Form 8-K.
- Report dated April 4, 1997 of the
valuation per Unit of Limited
Partnership interest at December
31, 1996.
- Report dated April 10, 1997 reporting the
Partnership's sale of its interest in the Pasadena
Financial Center property.
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
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 13, 1997 By: /s/E. Davisson
Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: August 13, 1997 By: /s/Lawrence
Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
Quarter Ended June 30, 1997
Exhibit Index
Exhibit
No. Description
27 Financial Data Schedule
E1
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 4,984,764
<SECURITIES> 0
<RECEIVABLES> 127,319
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 41,264,622<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 40,981,177<F2>
<TOTAL-LIABILITY-AND-EQUITY> 41,264,622<F3>
<SALES> 0
<TOTAL-REVENUES> 6,961,354<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,518,643
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,442,711
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,442,711
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,442,711
<EPS-PRIMARY> 10.69<F5>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include investments in
joint ventures of $36,152,539.
<F2>Represents partners' capital.
<F3>Liabilities include accounts payable and accrued liabilities of $283,445.
<F4>Total revenues include rent of $996,972, gain on sale of real estate of
$4,184,529, equity in losses of joint ventures of $1,485,195 and interest and
other revenue of $294,658.
<F5>Represents net income per Unit of limited partnership interest.
</FN>
</TABLE>
