5
<PAGE>
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,
1999
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>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
<CAPTION>
BALANCE SHEETS
September 30, December 31,
1999
1998 <S>
<C>
<C>
ASSETS
Cash and cash equivalents $
1,823,592 $
1,531,647
Investment in joint venture
8,334,195
8,552,095
Other assets
217,282
20,726
$10,375,069 $10,104,468
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities $
93,913 $
143,877
Partners' capital (deficiency):
General partners
(5,437,969)
(5,460,525)
Limited partners ($500 per Unit, 304,437 Units
issued) 15,719,125 15,421,116
10,281,156 9,960,591
$10,375,069 $10,104,468
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
INCOME STATEMENTS
Three and Nine months ended September 30, 1999 and
1998
<CAPTION>
Three months ended Nine
months ended
September 30, September 30,
1999 1998
1999 1998
<S> <C> <C> <C> <C>
Revenues:
Equity in earnings of
joint $ $ $ $
ventures 174,790 366,284
407,881 26,339,4
Interest and other 72
20,754 13,218 53,600
261,969
195,544 379,502
461,481 26,601,4
41
Expenses:
General and
administrative 47,305 81,280
140,916 271,454
Net income $ $ $ $
148,239 298,222
320,565 26,329,9
87
Net income allocated to:
Limited partners $ $ $ $
General partners 142,916 268,400
298,009 26,170,7
00
5,323 29,822 22,556
159,287
$ $ $ $
148,239 298,222
320,565 26,329,9
87
Net income per Unit of
limited $ $ $ $
partnership interest 0.47 0.88 0.98 85.96
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
STATEMENT OF PARTNERS' CAPITAL
Nine months ended September 30, 1999
<CAPTION>
Limited
General
Partners
Partners
Total
<S>
<C> <C>
<C>
Partners' capital (deficiency)
at January 1, 1999 $15,421,116
$(5,460,525) $ 9,960,591
Net income 298,009
22,556 320,565
Partners' capital (deficiency)
at September 30, 1999 $15,719,125
$(5,437,969) $10,281,156
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P.
STATEMENTS OF CASH FLOWS
Nine months ended September 30, 1999 and 1998
<CAPTION>
1999 1998 <S>
<C>
<C>
Cash flows from operating activities:
Net income $
320,565 $
26,329,987
Adjustments to reconcile net income to net cash
used in operating activities:
Equity in earnings of joint ventures
(407,881)
(26,339,472)
(Increase) decrease in other assets
(196,556)
142,810
Decrease in accounts payable and accrued
liabilities (49,964)
(191,840)
Net cash used in operating activities
(333,836) (58,515)
Cash flows from investing activities:
Distributions from joint ventures
734,710
53,531,776
Additional investments in joint ventures
(108,929)
(572,982)
Net cash provided by investing
activities
625,781
52,958,794
Cash flows used in financing activities:
Cash distributions
(53,596,472)
Increase (decrease) in cash and cash
equivalents
291,945
(696,193)
Cash and cash equivalents at beginning of
period
1,531,647
1,868,422
Cash and cash equivalents at end of period $
1,823,592 $ 1,172,229
See accompanying notes to financial
statements. </TABLE>
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV,
L.P.
Notes to 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 Partnership's interests in Taxter Park
Associates ("Associates") and DWR
Chesterbrook Associates, the partnership
which owned an interest in Chesterbrook
Corporate Center (sold April 1998), 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 the sale of the Chesterbrook property
included in equity in earnings of joint
ventures in the second quarter of
1998, 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, 1998. Operating results of
interim periods may not be indicative of
the operating results for the entire
year.
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV,
L.P.
Notes to Financial Statements
2. Investments in Joint Ventures
During the third quarter of 1999, the
Partnership received $95,000, its share
of the balance of the escrow deposit
(plus interest) returned to DWR
Chesterbrook Associates by the
buyer of the
Chesterbrook property. The joint
venture did not
include the amount of the sale proceeds
deposited in escrow in its calculation of
the gain on the sale of the property
allocated to the Partnership because of
the uncertainty of the recoverability of
the escrow deposit. As a result, the
Partnership recognized the amount of the
third quarter cash receipt as an increase
to its share of the gain on the sale of
the property, and recorded such gain, along
with $51,000 received in settlement of
various property operating matters, as a
component of its equity in earnings of
joint ventures.
In 1987, Associates sold a leasehold
interest in approximately 20% of the space
at Taxter Corporate Park to KLM. In 1998,
KLM accepted a $6.75 million purchase offer
for the leasehold interest,
which Associates had the right to match.
The partners of Associates believe that
inclusion of the KLM space improves the
value and salability of the property;
however, the partners did not have
sufficient cash to fund the purchase.
Therefore, an affiliate of the Managing
General Partner (the "Affiliate"), as
an accommodation, purchased the
leasehold interest on February 8, 1999
for $6.75 million and assumed the rights
and obligations of KLM thereunder.
On February 4, 1999, Associates and KLM
entered into a new lease which allows KLM
to continue to occupy 50% of the space
subject to the leasehold interest. On
February 8, 1999, the Affiliate also
assumed the rights and obligations of
Associates under this new lease. <PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV,
L.P.
Notes to Financial Statements
As part of the purchase of the
leasehold interest, Associates received an
option to purchase the leasehold interest
and assume the new lease from the
Affiliate for a purchase price of $6.75
million plus the cost of any tenant
improvements, leasing commissions and
capital expenditures incurred by the
Affiliate in
connection with the leasehold interest
(collectively, the "Resale Price").
Associates also granted the Affiliate
an option to require Associates to
purchase the leasehold interest and assume
the new lease for the Resale Price. When
the property is sold, Associates will be
obligated to purchase the leasehold
interest and assume the new lease from the
Affiliate for the new Resale Price.
Summarized financial information of
Associates is as follows:
<CAPTION>
Quarter ended September 30, Nine
months ended September30,
1999 1998
1999 1998
<S> <C> <C> <C> <C>
Revenues $1,473,52 $1,531,34 $4,290,84 $4,243,71
6 9 2 8
Expenses
1,402,881 625,090 3,646,080 2,781,994
Net $ $ $ $1,461,72
income 70,645 906,259 644,762 4
3. Related Party Transactions
An affiliate of the Managing General
Partner performs administrative
functions, processes investor
transactions and prepares tax
information for the Partnership.
Effective January 1, 1999, the affiliate
reduced its fees for these services
because of the greatly decreased level
of partnership activity. For the nine-
month periods ended September 30, 1999
and 1998, the Partnership incurred
approximately $56,000 and $154,000 for
these services, respectively. These
amounts are included in general and
administrative expenses.
</TABLE>
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV,
L.P.
Notes to Financial Statements
In 1998, another affiliate of the
Managing General Partner provided
property management services for
Taxter Corporate Park and five
buildings at the
Chesterbrook Corporate Center (until the
buildings were sold in April 1998).
The Partnership paid the
affiliate management fees of approximately
$62,000 in 1998. These fees were
recorded as expenses of the joint
ventures. In 1999, property management
services for Taxter Corporate Park
are provided by an
unaffiliated party.
<PAGE>
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's interest in the Taxter
property is the Partnership's sole
property interest. The
partnership which owns the Taxter
Corporate Park property (the "Taxter
Partnership") has accepted a bid from an
unaffiliated third party to purchase
the property, and the parties are currently
negotiating the terms of a purchase and
sale agreement. However, there can be no
assurance that the Taxter property will be
sold.
On February 8, 1999, an affiliate of
the Managing General Partner, as an
accommodation to the Taxter Partnership,
purchased the leasehold interest of KLM in
approximately 20% of the property's space.
See Note 2 to the financial statements.
Currently, the overall vacancy levels in
the office market in Westchester County,
New York and the west Westchester sub-
market in which Taxter Corporate Park is
located are approximately 18% and 14%,
respectively. During the three months
ended September 30, 1999, occupancy at
the property decreased from 76% to 72%.
Leases aggregating approximately 39% of
the property's space expire in 2001.
During the nine months ended September 30,
1999, the Taxter property generated
positive cash flow from operations, and
it is anticipated that it will continue to
do so during the period the Partnership
continues to own its interest in the
property.
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV,
L.P.
The Taxter Partnership expects to buy the
former KLM leasehold interest at the time
that the property is sold, using a
portion of the proceeds from the sale of
the Taxter property. As of September 30,
1999, the Partnership had commitments
to fund approximately $84,000 for its
share of tenant improvements and
leasing commissions at the Taxter property.
During the nine-months ended September
30, 1999, distributions received from
the Taxter Partnership exceeded cash
used in operations and contributions to
the Taxter Partnership.
The Partnership did not pay any
distributions during the nine months
ended September 30, 1999. Generally,
future cash distributions will be paid
from proceeds
received from the sale of the Taxter
property, the final Chesterbrook sale
proceeds (see note 2 to the financial
statements) and cash reserves.
Except as discussed above and in
the 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.
Operations
Fluctuations in the Partnership's operating
results for the three- and nine-month
periods ended September 30, 1999 compared
to 1998 are primarily attributable to the
following:
Equity in earnings of joint ventures and
general and administrative expenses
decreased in 1999 compared to 1998
primarily due to the sale of the
Chesterbrook Corporate Center in April
1998.
During the three- and nine-month
periods ended September 30, 1999, the
Partnership's equity in the earnings of
the Taxter Partnership was approximately
$29,000 and $262,000 respectively.
During the same periods in 1998, the
Partnership's equity in the earnings of
the Taxter partnership was approximately
$366,000 and $593,000,
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV,
L.P.
respectively. In the third quarter of 1998,
the Taxter Partnership received a refund
of prior years real estate taxes of
approximately
$530,000 (the Partnership's share of
which was
approximately $217,000). Also, the
Partnership's share of 1999 bad debt
expense was approximately $100,000 and
$171,000 during the three and nine month
periods in 1999, respectively; there
were no bad debt expenses for the
comparable periods in 1998.
During the nine months ended
September 30,1999, interest and other
revenues decreased due to interest earned
in 1998 on the proceeds from the sale of
the Chesterbrook property before such
proceeds were distributed to the Limited
Partners.
There were no other individually
significant factors which caused changes
in revenues or expenses.
Year 2000 Readiness
Many of the world's computer systems
(including those in non-information
technology equipment and systems)
currently record years in a two-digit
format. If not addressed, such
computer systems may be unable to
properly interpret dates beyond the year
1999, which could lead to business
disruptions in the U.S. and
internationally (the "Year 2000" issue).
The potential costs and uncertainties
associated with the Year 2000 issue may
depend on a number of factors, including
software, hardware and the nature of the
industry in which a company operates.
Additionally, companies must coordinate
with other entities with which they
electronically interact. The Partnership
and the
Managing General Partner recognize the
importance of insuring that its business
operations are not disrupted as a result
of the Year 2000 issue and have taken a
number of steps to insure that Year 2000
issues are identified and remediated.
The Managing General Partner has assessed
its internal computer information systems
and is taking steps to remediate its
mission-critical systems (at no cost to
the Partnership). The Managing General
Partner is also surveying and
communicating with vendors (primarily
property managers and banks) with whom it
has important financial and operating
relationships, to determine the extent
to which they are vulnerable to Year 2000
issues, in order either to insure
compliance or develop contingency plans to
mitigate the risk associated with a non-
compliant vendor. This process is expected
to be completed during the fourth quarter
of 1999.
In addition, the Managing General Partner
and these vendors are currently
evaluating and assessing those
mission-critical computer systems in the
Partnership's properties not related to
information technology. These systems,
which generally operate in a building
include, without limitation,
telecommunication, security (such as card-
access door lock systems), energy
management and elevator systems. As a
result of the technology used in this
type of equipment, it is possible that
this equipment may not be repairable
and accordingly may require complete
replacement by the Partnership.
Because this
assessment is ongoing, the total cost of
bringing all systems and equipment into
Year 2000 compliance has not been fully
quantified. Based upon available
information, the General Partner does not
believe that these costs will have a
material adverse effect on the
Partnership's business, financial condition
or results. However, it is possible that
there could be adverse consequences to
the Partnership as a result of Year 2000
issues that are outside the Partnership's
control. The General Partner is
evaluating these issues and developing
contingency plans where appropriate.
There are many risks associated with the
Year 2000 issue, including the
possibility of a failure of computer
and non-information technology systems. Such
failures could cause system malfunctions
which may have a material adverse effect
on the Partnership or its properties. In
addition, even if the General Partner
successfully remediates its Year 2000
issues, the Partnership can be materially
and adversely affected by failures of
third parties to remediate their own Year
2000 issues. The Partnership
recognizes the
uncertainty of such external dependencies
since it can not directly control the
remediation efforts of third parties.
The failure of third parties with which
the Partnership has financial or
operational relationships such as
<PAGE>
banks, tenants, vendors, property
managers and
utilities, to remediate their computer
and non-
information technology systems issues
in a timely manner could result in a
material financial risk to the Partnership.
If the above mentioned risks are not
remedied, the Partnership may experience
business interruption or shutdown,
financial loss, or regulatory actions.
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>
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.
None.
<PAGE>
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 15 , 1999 By:
/s/E.Davisson Hardman, Jr.
E. Davisson
Hardman, Jr.
President
Date: November 15 , 1999 By:
/s/Charles M.
Charrow
Charles M.
Charrow
Controller
(Principal
Financial and Accounting Officer)
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP IV,
L.P.
Quarter Ended September 30, 1999
Exhibit Index
Exhibit
No.
Description
27 Financial
Data Schedule
E1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Registrant is a limited partnership which invests in a real estate joint
ventures. In accordance with industry practice, its balance sheet is
unclassified. For full information, refer to the accompanying unaudited
financial statments.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,823,592
<SECURITIES> 0
<RECEIVABLES> 217,282
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,375,069<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 10,281,156<F2>
<TOTAL-LIABILITY-AND-EQUITY> 10,375,069<F3>
<SALES> 0
<TOTAL-REVENUES> 461,481<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 140,916
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 320,565
<INCOME-TAX> 0
<INCOME-CONTINUING> 320,565
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 320,565
<EPS-BASIC> 0.98<F5>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivable, total assets include an
investment in joint venture of $8,334,195.
<F2>Represents partners' capital.
<F3>Liabilities include account payable and accrued liabilities of $93,913.
<F4>Total revenue include equity in earnings of joint venture of $407,881 and
interest and other revenue of $53,600.
<F5>Represents net income per Unit of limited partnership interest.
</FN>
</TABLE>
