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 September 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 15
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30,
December 31,
1997 1996
<S> <C>
<C>
ASSETS
Cash and cash equivalents $ 2,594,521 $
56,199,072
Investments in joint ventures 35,989,506
36,899,178
Other assets 118,428
1,458,903
Real estate held for sale -
20,322,459
Deferred expenses, net -
567,184
$38,702,455
$115,446,796
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities $ 445,009 $
268,202
Minority interests in consolidated joint ventures -
26,649,540
445,009
26,917,742
Partners' capital (deficiency):
General partners (5,353,649)
(4,887,822)
Limited partners ($500 per Unit, 304,437 Units issued)
43,611,095 93,416,876
38,257,446
88,529,054
$ 38,702,455
$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 nine months ended September 30, 1997 and 1996
<CAPTION>
Three months ended Nine
months ended
September 30,
September 30,
1997 1996 1997 1996
<S> <C> <C> <C>
<C>
Revenues:
Rental $ - $2,217,027 $1,019,935
$6,464,537
Gains on sales of real estate - 161,883
4,184,529 161,883
Equity in earnings of joint
ventures 694,061 753,812 2,267,356
2,177,628
Interest and other 50,382 101,656 349,417
239,669
744,443 3,234,378 7,821,237
9,043,717
Expenses:
Property operating - 338,937 420,333
1,042,413
Depreciation - 580,186 -
1,734,461
Amortization - 32,714 6,279
98,140
General and administrative 115,501 147,567
343,797 446,911
115,501 1,099,404 770,409
3,321,925
Income before minority interests 628,942 2,134,974
7,050,828 5,721,792
Minority interests - 549,874 2,979,175
1,416,065
Net income $628,942 $1,585,100 $4,071,653
$4,305,727
Net income allocated to:
Limited partners $557,433 $1,426,590 $3,812,014
$3,875,154
General partners 71,509 158,510 259,639
430,573
$628,942 $1,585,100 $4,071,653
$4,305,727
Net income per Unit of limited
partnership interest $ 1.83 $ 4.69 $ 12.52
$ 12.73
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
Nine months ended September 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 3,812,014
259,639 4,071,653
Cash distributions (53,617,795)
(725,466) (54,343,261)
Partners' capital (deficiency)
at September 30, 1997 $ 43,611,095
$(5,353,649) $ 38,257,446
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 1997 and 1996
<CAPTION>
1997 1996
<S> <C>
<C>
Cash flows from operating activities:
Net income $ 4,071,653 $
4,305,727
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation -
1,734,461
Amortization 6,279
98,140
Gains on sales of real estate (4,184,529)
(161,883)
Minority interests in joint ventures' operations
2,979,175 1,416,065
Equity in earnings of joint ventures (2,267,356)
(2,177,628)
Increase in operating assets:
Other assets -
(213,514)
Increase in operating liabilities:
Accounts payable and accrued liabilities
213,075 30,686
Net cash provided by operating activities
818,297 5,032,054
Cash flows from investing activities:
Additions to buildings and improvements -
(907,269)
Proceeds from sale of real estate 26,372,099
355,000
Investments in joint ventures (292,647)
(831,500)
Distributions from joint ventures 3,469,675
3,112,258
Net cash provided by investing activities
29,549,127 1,728,489
Cash flows from financing activities:
Cash distributions (54,343,261)
(5,708,194)
Additional investments by minority interests
263,494 399,198
Minority interests in joint ventures' distributions
(29,892,208) (2,090,342)
Net cash used in financing activities (83,971,975)
(7,399,338)
Decrease in cash and cash equivalents (53,604,551)
(638,795)
Cash and cash equivalents at beginning of period
56,199,072 6,456,209
Cash and cash equivalents at end of period $ 2,594,521 $
5,817,414
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
sales of real estate in 1996 and 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 has recently
issued several new accounting pronouncements.
Statement No. 128, "Earnings per Share" establishes
standards for computing and presenting earnings per
share, and Statement No. 129, "Disclosure
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
Notes to Consolidated Financial Statements
of Information about Capital Structure" establishes
standards for disclosing information about an entity's
capital structure. These two standards will be
effective for the Partnership's 1997 year-end financial
statements. Statement No. 130, "Reporting
Comprehensive Income" establishes standards for
reporting and display of comprehensive income and its
components. Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information"
establishes standards for the way that public business
enterprises report information about operating segments
in annual financial statements and requires that those
enterprises report selected information about operating
segments in interim financial reports issued to
shareholders. It also establishes standards for
related disclosure about products and services,
geographic areas, and major customers. These two
standards are effective for the Partnership's 1998
financial statements.
Management of the Partnership does not believe that
these new standards will have any effect on the
Partnership's computation or presentation of net income
or net income per unit of limited partnership interest,
or its disclosures of capital structure, or other
disclosures.
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.
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
Notes to Consolidated Financial Statements
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 September 30 Nine
months ended September 30
1997 1996 1997 1996
Revenues $3,465,216 $3,387,805 $10,191,488
$9,945,853
Expenses 1,934,638 1,918,289 5,660,467
5,801,691
Net income $1,530,578 $1,469,516 $ 4,531,021
$4,144,162
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 September 30, 1997 and 1996.
The Partnership paid the affiliate management fees of
approximately $106,000 and $127,000 for the nine months
ended September 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 nine-month periods ended
September 30, 1997 and 1996, the Partnership incurred
approximately $223,000 and $302,000, respectively for
these services. These amounts are included in general
and administrative expenses.
As of September 30, 1997, the affiliates were owed
approximately $25,000 for these services.
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
Notes to Consolidated Financial Statements
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.
5. Distributions
On August 28, 1997, the Partnership paid a special
distribution from cash reserves of $6.25 per Unit to
the Limited Partners. The total cash distribution
amounted to $2,114,145, with $1,902,731 distributed to
the Limited Partners and $211,414 to the General
Partners.
On October 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.
Strong job growth, especially in the business services
and technology industries, has resulted in strong
performance in the office sector. Vacancies in many
office markets are in the single digits and rents have
risen to levels that support new construction, and
favorable market fundamentals are leading to value
appreciation as investors bid for office properties.
Taxter Corporate Park and the Chesterbrook Corporate
Center are located in improved office markets. The
Managing General Partner is currently marketing for
sale the Chesterbrook Corporate Center property and
plans to market the Taxter Corporate Park property for
sale 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.
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 three- and nine-months ended September 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. 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.
During the nine-months ended September 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 nine-months ended September 30, 1997, the
Partnership contributed approximately $183,000 for its
share of capital expenditures at the Taxter joint
venture and approximately $110,000 for its share of
capital expenditures at the Chesterbrook joint venture.
As of September 30, 1997, the Partnership has
commitments to fund approximately $415,000 for its
share of capital expenditures, primarily at the
Chesterbrook joint venture. These expenditures will be
funded from cash from operations and cash reserves.
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 July 29, 1997, the Partnership paid the second
quarter 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.
On August 28, 1997, the Partnership paid a special
distribution from cash reserves of $6.25 per Unit to
the Limited Partners. The total cash distribution
amounted to $2,114,145, with $1,902,731 distributed to
the Limited Partners and $211,414 to the General
Partners.
The Managing General Partner projects that the
remaining cash reserves will be sufficient for the
Partnership's future needs.
Real estate held for sale and deferred expenses were
eliminated as a result of the sale of Pasadena
Financial Center.
Operations
Fluctuations in the Partnership's operating results for
the three- and nine-month periods ended September 30,
1997 compared to 1996 were primarily attributable to
the following:
The decreases in rental income, property operating
expenses 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 1997 gain on sale of real estate is due to the sale
of the Pasadena Financial Center property.
Interest and other income increased for the nine-month
period primarily due to the interest received on the
investment of the cash proceeds from the sales of the
Technology Park Reston office park and the Pasadena
Financial Center properties until such proceeds were
distributed to Limited Partners on January 31 and April
28, 1997, respectively.
Minority interests decreased for the three-month period
and increased for the nine-month period due to the
sales of the Pasadena Financial Center and Technology
Park Reston office park properties.
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
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, continued to improve with market vacancies
improving to less than 11%. Effective rental rates
continue to increase in the market. Occupancy at the
property remained at 100% during the third quarter, and
leases for approximately 13% of total space are
scheduled to expire during 1998. The Partnership is
currently marketing the property for sale.
Due to continued strong growth in the market, the
overall vacancy level in the office market in
Westchester County, New York, the location of Taxter
Corporate Park, decreased from 24% to 19% during the
third quarter, and the vacancy rate in the west
Westchester market in which the building is located,
also decreased from 15% to 11% during the third quarter
of 1997. It is unlikely that the vacant space will be
absorbed in the market for several years. During the
third quarter of 1997, occupancy at the property
remained at to 100%. No leases for a significant
amount of space expire before 2001. The Partnership
plans to market the property for sale during 1998.
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.
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: November 13, 1997 By: /s/E. Davisson
Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: November 13, 1997 By: /s/Lawrence
Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
Quarter Ended September 30, 1997
Exhibit Index
Exhibit
No. Description
27 Financial Data Schedule
E1
[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.
<TABLE>
<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] DEC-31-1997
[PERIOD-END] SEP-30-1997
[CASH] 2,594,521
[SECURITIES] 0
[RECEIVABLES] 118,428
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 0
[DEPRECIATION] 0
[TOTAL-ASSETS] 38,702,455<F1>
[CURRENT-LIABILITIES] 0
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 0
[OTHER-SE] 38,257,446<F2>
[TOTAL-LIABILITY-AND-EQUITY] 38,702,455<F3>
[SALES] 0
[TOTAL-REVENUES] 7,821,237<F4>
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 3,749,584
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] 4,071,653
[INCOME-TAX] 0
[INCOME-CONTINUING] 4,071,653
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 4,071,653
[EPS-PRIMARY] 12.52<F5>
[EPS-DILUTED] 0
<FN>
<F1>In addition to cash and receivables, total assets include investments in
joint ventures of $35,989,506.
<F2>Represents partners' capital.
<F3>Liabilities include accounts payable and accrued liabilities of $445,009.
<F4>Total revenues include rent of $1,019,935, gain on sale of real estate of
$4,184,529, equity in losses of joint ventures of $2,267,356 and interest and
other revenue of $349,417.
<F5>Represents net income per Unit of limited partnership interest.
</FN>
</TABLE>
