-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NiY0d8Q/pamZU681HLpHjdLALD8/CgUlf8PnkRh1hf68KzXY4dFsLxkOSkrBvKG6 9Zc16tkphqXMyX5rVUEyFg== 0000702174-97-000003.txt : 19970929 0000702174-97-000003.hdr.sgml : 19970929 ACCESSION NUMBER: 0000702174-97-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970731 FILED AS OF DATE: 19970911 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHELTER PROPERTIES IV LIMITED PARTNERSHIP CENTRAL INDEX KEY: 0000702174 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 570721760 STATE OF INCORPORATION: SC FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-10884 FILM NUMBER: 97679113 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O BOX 2347 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT U. S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 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 0-10884 SHELTER PROPERTIES IV LIMITED PARTNERSHIP (Exact name of small business issuer as specified in its charter) South Carolina 57-0721760 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 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 . PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) SHELTER PROPERTIES IV LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except per unit data) July 31, 1997 Assets Cash and cash equivalents: Unrestricted $ 1,901 Restricted--tenant security deposits 279 Accounts receivable 42 Escrows for taxes 678 Restricted escrows 1,732 Other assets 568 Investment properties: Land $ 3,442 Buildings and related personal property 56,257 59,699 Less accumulated depreciation (31,769) 27,930 $33,130 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 119 Tenant security deposits 279 Accrued property taxes 471 Other liabilities 232 Mortgage notes payable 24,202 Partners' Capital (Deficit) General partners' $ (6) Limited partners' (49,995 units issued and outstanding) 7,833 7,827 $33,130 See Accompanying Notes to Consolidated Financial Statements b) SHELTER PROPERTIES IV LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per unit data) Three Months Ended Nine Months Ended July 31, July 31, 1997 1996 1997 1996 Revenues: Rental income $2,684 $2,576 $7,900 $7,681 Other income 154 157 472 461 Total revenues 2,838 2,733 8,372 8,142 Expenses: Operating 853 887 2,557 2,547 General and administrative 53 83 215 264 Maintenance 487 479 1,637 1,367 Depreciation 486 464 1,431 1,368 Interest 553 564 1,670 1,698 Property taxes 202 188 602 559 Total expenses 2,634 2,665 8,112 7,803 Net income $ 204 $ 68 $ 260 $ 339 Net income allocated to general partners (1%) $ 2 $ 1 $ 3 $ 3 Net income allocated to limited partners (99%) 202 67 257 336 $ 204 $ 68 $ 260 $ 339 Net income per limited partnership unit $ 4.04 $ 1.34 $ 5.14 $ 6.72 See Accompanying Notes to Consolidated Financial Statements c) SHELTER PROPERTIES IV LIMITED PARTNERSHIP CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (Unaudited) (in thousands, except unit data) Limited Partnership General Limited Units Partners' Partners' Total Original capital contributions 50,000 $ 2 $50,000 $50,002 Partners' (deficit) capital at October 31, 1996 49,995 $ (4) $ 8,076 $ 8,072 Net income for the nine months ended July 31, 1997 -- 3 257 260 Partners' distributions -- (5) (500) (505) Partners' (deficit) capital at at July 31, 1997 49,995 $ (6) $ 7,833 $ 7,827 See Accompanying Notes to Consolidated Financial Statements d) SHELTER PROPERTIES IV LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended July 31, 1997 1996 Cash flows from operating activities: Net income $ 260 $ 339 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,431 1,368 Amortization of discounts and loan costs 207 200 Loss on disposal of property 39 5 Change in accounts: Restricted cash (6) (31) Accounts receivable 5 (4) Escrows for taxes 145 101 Other assets (68) (28) Accounts payable (155) (408) Tenant security deposit liabilities 4 31 Accrued property taxes (171) (163) Other liabilities (265) 41 Net cash provided by operating activities 1,426 1,451 Cash flows from investing activities: Property improvements and replacements (727) (734) Deposits to restricted escrows (54) (59) Receipts from restricted escrows -- 7 Net cash used in investing activities (781) (786) Cash flows from financing activities: Partners' distributions (505) (1,000) Payments on mortgage notes payable (530) (491) Net cash used in financing activities (1,035) (1,491) Net decrease in unrestricted cash and cash equivalents (390) (826) Unrestricted cash and cash equivalents at beginning of period 2,291 2,765 Unrestricted cash and cash equivalents at end of period $1,901 $ 1,939 Supplemental disclosure of cash flow information: Cash paid for interest $1,462 $ 1,501 See Accompanying Notes to Consolidated Financial Statements e) SHELTER PROPERTIES IV LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Shelter Properties IV Limited Partnership (the "Partnership") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Shelter Realty IV Corporation (the "Corporate General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended July 31, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending October 31, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the year ended October 31, 1996. Certain reclassifications have been made to the 1996 information to conform to the 1997 presentation. NOTE B - RECONCILIATION OF CASH FLOWS The following is a reconciliation of the subtotal on the accompanying consolidated statements of cash flows captioned "net cash provided by operating activities" to "net cash provided by operations", as defined in the partnership agreement. However, "net cash used in operations" should not be considered an alternative to net income as an indicator of the Partnership's operating performance or to cash flows as a measure of liquidity. For the Nine Months Ended July 31, 1997 1996 (in thousands) Net cash provided by operating activities $1,426 $1,451 Payments on mortgage notes payable (530) (491) Property improvements and replacements (727) (734) Change in restricted escrows, net (54) (52) Changes in reserves for net operating liabilities 511 456 Additional reserves (326) (630) Net cash provided by operations $ 300 $ -- The Corporate General Partner reserved approximately $326,000 and $630,000 on July 31, 1997 and 1996, respectively, to fund capital improvements and repairs at its properties. The Corporate General Partner is evaluating the feasibility of making a distribution of net cash provided by operations in October 1997. NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has no employees and is dependent on the Corporate General Partner and its affiliates for the management and administration of all partnership activities. The partnership agreement provides for payments to affiliates for property management services based on a percentage of revenue and for reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were made to affiliates of the Corporate General Partner during each of the nine month periods ended July 31, 1997 and 1996 (in thousands): For the Nine Months Ended July 31, 1997 1996 Property management fees (included in operating expenses) $414 $403 Reimbursement for services of affiliates, including $26,000 and $6,000 of construction services reimbursements in 1997 and 1996, respectively (included in general and administrative expenses, operating expenses and investment properties) 170 145 The Partnership insures its properties under a master policy through an agency and insurer unaffiliated with the Corporate General Partner. An affiliate of the Corporate General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the current year's master policy. The current agent assumed the financial obligations to the affiliate of the Corporate General Partner who receives payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Corporate General Partner by virtue of the agent's obligations is not significant. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of three apartment complexes. The following table sets forth the average occupancy of the properties for each of the nine months ended July 31, 1997 and 1996: Average Occupancy Property 1997 1996 Baymeadows Apartments Jacksonville, Florida 95% 97% Quail Run Apartments Columbia, South Carolina 92% 95% Countrywood Village Apartments Raleigh, North Carolina 95% 95% The Corporate General Partner attributes the decrease in average occupancy at Quail Run to military transfers resulting from a large number of troops at Fort Jackson being reassigned to other bases. Also, interest rates have made home ownership more attractive, and the property has lost tenants to first time home buying. In an effort to counteract these occupancy decreases, management is utilizing an aggressive marketing plan, and the property has undergone exterior renovations in order to attract quality residents. Occupancy at Quail Run at July 31, 1997, was 98%. The Partnership's net income for the nine months ended July 31, 1997, was approximately $260,000 compared to approximately $339,000 for the corresponding period in 1996. The Partnership realized net income of approximately $204,000 for the three months ended July 31, 1997, compared to net income of approximately $68,000 for the corresponding period of 1996. The decrease in net income for the nine months ended July 31, 1997, compared to the corresponding period of 1996 is primarily attributable to increased maintenance expense at Quail Run and Baymeadows Apartments. Included in maintenance expense for the nine months ended July 31, 1997 is approximately $606,000 of major repair and maintenance comprised primarily of the exterior painting and parking lot repairs. Included in maintenance expense for the nine months ended July 31, 1996 is approximately $266,000 of major repairs and maintenance comprised primarily of major landscaping, parking lot repairs and interior building improvements. Maintenance expense increased as a result of exterior painting and repair projects and parking lot repairs, which were incurred to improve the building exterior in order to attract new tenants and ultimately increase rental rates and occupancy at these properties. Offsetting the decrease in net income for the nine months ended July 31, 1997 compared to the corresponding period of 1996, is an increase in rental income and a decrease in general and administrative expenses. Rental income increased as a result of increased rental rates at Baymeadows and Countrywood. General and administrative expenses decreased due to a decrease in legal expenses related to a discrimination case at Baymeadows, which was settled in November 1996. The increase in net income for the three months ended July 31, 1997, compared to the corresponding period of 1996 is primarily attributable to rental rate increases at Baymeadows and Countrywood Village. Also contributing to the increase in net income for the three months ended July 31, 1997, compared to the corresponding period of 1996, is a decrease in general and administrative expenses due to a decrease in legal expenses as discussed above. As part of the ongoing business plan of the Partnership, the Corporate General Partner monitors the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increase in expense. As part of this plan, the Corporate General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Corporate General Partner will be able to sustain such a plan. At July 31, 1997, the Partnership had unrestricted cash of approximately $1,901,000 compared to approximately $1,939,000 at July 31, 1996. Net cash provided by operating activities decreased primarily due to the decrease in net income, as discussed above, and an increase in cash used for other liabilities, which was partially offset by a decrease in cash used for accounts payable. Net cash used in investing activities remained stable. Net cash used in financing activities decreased due to a decrease in distributions paid to the partners for the nine months ended July 31, 1997, compared to the corresponding period of 1996. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of approximately $24,202,000 net of discount, is amortized over 257 months with balloon payments of approximately $20,669,000 due on November 15, 2002, at which time the properties will either be refinanced or sold. Cash distributions of $505,000 were made during the nine months ended July 31, 1997. Cash distributions of $1,000,000 were made during the nine months ended July 31, 1996. These distributions were made from property operations. Future cash distributions will depend on the levels of net cash generated from operations, property sales and the availability of cash reserves. The Corporate General Partner is evaluating the feasibility of making a distribution of net cash provided by operations in October 1997. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended July 31, 1997. SIGNATURES In accordance with 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. SHELTER PROPERTIES IV LIMITED PARTNERSHIP By: Shelter Realty IV Corporation Corporate General Partner By: /s/ William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director By: /s/ Ronald Uretta Ronald Uretta Vice President and Treasurer Date: September 11, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Shelter Properties IV Limited Partnership 1997 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000702174 SHELTER PROPERTIES IV LIMITED PARTNERSHIP 1,000 9-MOS OCT-31-1997 JUL-31-1997 1,901 0 42 0 0 0 59,699 31,769 33,130 0 24,202 0 0 0 7,827 33,130 0 8,372 0 0 8,112 0 1,670 0 0 0 0 0 0 260 5.14 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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