-----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, Nn6k4QLO0rpwjSvnDC3CgzQu0MyTX/k1/a76vkUVNt/8SHYIWRgoco8bx8mDvHgK zZb+hBGv7RPXEG9p6YAhhg== 0000702174-98-000003.txt : 19980317 0000702174-98-000003.hdr.sgml : 19980317 ACCESSION NUMBER: 0000702174-98-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980131 FILED AS OF DATE: 19980316 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: 98566356 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 January 31, 1998 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period.........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 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 . PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) SHELTER PROPERTIES IV LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except per unit data) January 31, 1998 Assets Cash and cash equivalents $ 2,472 Receivables and deposits 691 Restricted escrows 1,769 Other assets 487 Investment properties: Land $ 3,442 Buildings and related personal property 56,670 60,112 Less accumulated depreciation (32,741) 27,371 $32,790 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 164 Tenant security deposit liabilities 269 Accrued property taxes 67 Distribution payable 812 Other liabilities 225 Mortgage notes payable 23,928 Partners' Capital General partners' $ (11) Limited partners' (49,995 units issued and outstanding) 7,336 7,325 $32,790 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 January 31, 1998 1997 Revenues: Rental income $2,750 $2,597 Other income 112 164 Total revenues 2,862 2,761 Expenses: Operating 1,209 1,272 General and administrative 76 64 Depreciation 472 468 Interest 546 559 Property taxes 201 200 Loss on disposal of property -- 39 Total expenses 2,504 2,602 Net income $ 358 $ 159 Net income allocated to general partners (1%) $ 4 $ 2 Net income allocated to limited partners (99%) 354 157 $ 358 $ 159 Net income per limited partnership unit $ 7.08 $ 3.16 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' capital (deficit) at October 31, 1997 49,995 $ (7) $ 7,786 $ 7,779 Net income for the three months ended January 31, 1998 -- 4 354 358 Distribution declared -- (8) (804) (812) Partners' capital (deficit) at January 31, 1998 49,995 $(11) $ 7,336 $ 7,325 See Accompanying Notes to Consolidated Financial Statements d) SHELTER PROPERTIES IV LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended January 31, 1998 1997 Cash flows from operating activities: Net income $ 358 $ 159 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 472 468 Amortization of discounts and loan costs 69 68 Loss on disposal of property -- 39 Change in accounts: Receivables and deposits 538 572 Other assets 24 10 Accounts payable 60 (82) Tenant security deposit liabilities (8) (5) Accrued property taxes (563) (574) Other liabilities (3) (255) Net cash provided by operating activities 947 400 Cash flows from investing activities: Property improvements and replacements (116) (261) Deposits to restricted escrows (19) (18) Net cash used in investing activities (135) (279) Cash flows from financing activities: Payments on mortgage notes payable (187) (173) Partners' distributions -- (505) Net cash used in financing activities (187) (678) Net increase (decrease) in cash and cash equivalents 625 (557) Cash and cash equivalents at beginning of period 1,847 2,291 Cash and cash equivalents at end of period $2,472 $ 1,734 Supplemental disclosure of cash flow information: Cash paid for interest $ 477 $ 491 Supplemental disclosure of non-cash activity: Distribution payable $ 812 $ -- See Accompanying Notes to Consolidated Financial Statements
e) SHELTER PROPERTIES IV LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Unaudited) January 31, 1998 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 month period ended January 31, 1998, are not necessarily indicative of the results that may be expected for the fiscal year ending October 31, 1998. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the year ended October 31, 1997. Certain reclassifications have been made to the 1997 information to conform to the 1998 presentation. NOTE B - RECONCILIATION OF CASH FLOWS The following is a reconciliation of the subtotal on the accompanying statements of cash flows captioned "net cash provided by operating activities" to "net cash used in 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 Three Months Ended January 31, 1998 1997 (in thousands) Net cash provided by operating activities $ 947 $ 400 Payments on mortgage notes payable (187) (173) Property improvements and replacements (116) (261) Change in restricted escrows, net (19) (18) Changes in reserves for net operating liabilities (48) 334 Additional reserves (577) (282) Net cash used in operations $ -- $ -- The Corporate General Partner reserved approximately $577,000 and $282,000 on January 31, 1998, and 1997, respectively, to fund capital improvements and repairs at its properties. 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 services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following transactions with Insignia Financial Group, Inc. and its affiliates were charged to expense in 1998 and 1997 (in thousands):
For the Three Months Ended January 31, 1998 1997 Property management fees (included in operating expenses) $143 $138 Reimbursement for services of affiliates (included in operating, general and administrative expenses, and investment properties) (1) 58 54 (1) Included in "reimbursements for services of affiliates" for the three months ended January 31, 1998 and 1997, is approximately $2,000 and $9,000, respectively, in reimbursements for construction oversight costs.
For the period November 1, 1996 to August 31, 1997, the Partnership insured its properties under a master policy through an agency affiliated with the Corporate General Partner with an 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 master policy. The agent assumed the financial obligations to the affiliate of the Corporate General Partner which 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. NOTE D - DISPOSAL OF PROPERTY The Partnership incurred a loss on disposal of property of approximately $39,000 due to a roof replacement project at Quail Run during the three months ended January 31, 1997. PART II - OTHER INFORMATION 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 three months ended January 31, 1998 and 1997: Average Occupancy Property 1998 1997 Baymeadows Apartments Jacksonville, Florida 93% 94% Quail Run Apartments Columbia, South Carolina 96% 92% Countrywood Village Apartments Raleigh, North Carolina 95% 95% The Corporate General Partner attributes the increase in average occupancy at Quail Run to an exterior painting project which was completed at the property during 1997 in an effort to enhance the curb appeal of the property. Results of Operations The Partnership's net income for the three months ended January 31, 1998, was approximately $358,000 compared to approximately $159,000 for the three months ended January 31, 1997. The increase in net income is primarily attributable to an increase in rental income as well as a decrease in operating expenses. The increase in rental income is attributable to the increase in average occupancy at Quail Run and an increase in average rental rates at Baymeadows which more than offset the property's slight decrease in average occupancy. The decrease in operating expenses is attributable to the completion of the exterior painting projects at Quail Run and Baymeadows during 1997. The decrease in operating expense was partially offset by an increase in major landscaping at Countrywood Village and Baymeadows during the three months ended January 31, 1998. These costs were incurred to attract new tenants and increase occupancy at the properties. Additionally, the Partnership incurred a loss on disposal of property due to a roof replacement project at Quail Run during the period ended January 31, 1997. Offsetting the increase in net income for the three months ended January 31, 1998 compared to the corresponding period of 1997 is a decrease in other income. Other income decreased primarily due to a decrease in recreational income at Baymeadows as a result of closing the racquet club at the property. This facility had been losing money and it was determined to be in the best interest of the Partnership to close it to outside users at the end of 1997. The facility continues to be maintained and is available for the residents' use and enjoyment. Included in operating expense for the three months ended January 31, 1998 is approximately $93,000 of major repairs and maintenance comprised primarily of major landscaping and window coverings. Included in operating expense for the three months ended January 31, 1997 is approximately $181,000 of major repairs and maintenance comprised primarily of exterior painting and major landscaping projects. 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 increases 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. Liquidity and Capital Resources At January 31, 1998 the Partnership had cash and cash equivalents of approximately $2,472,000 as compared to approximately $1,734,000 at January 31, 1997. The net increase in cash and cash equivalents for the three months ended January 31, 1998 was $625,000. The net decrease in cash and cash equivalents for the three months ended January 31, 1997 was $557,000. Net cash provided by operating activities increased primarily due to the increase in net income as discussed above. The increase is also attributable to the increase in other liabilities due to the timing of payments to creditors. Net cash used in investing activities decreased due to the decrease in purchases of property improvements and replacements. Net cash used in financing activities decreased due to the timing of payments of distributions to partners during the three months ended January 31, 1998. The Partnership has budgeted approximately $1,500,000 for capital improvements and major repairs and maintenance at the three properties in 1998. Budgeted capital improvements at Baymeadows include major carpet replacement, major landscaping, exterior painting, and gutter repairs. Budgeted capital improvements at Quail Run include roof replacement and major carpet replacement. Countrywood has budgeted major carpet replacement and landscaping in 1998. Of this work the major landscaping at Countrywood was completed during the first quarter. The additional capital expenditures will be incurred only if cash is available from operations or from partnership reserves mentioned previously. 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 property 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 $23,928,000 net of discount, is amortized over 257 months with a balloon payment of approximately $20,669,000 due on November 15, 2002, at which time the properties will either be refinanced or sold. A cash distribution of approximately $812,000 was declared during the three months ended January 31, 1998 and paid in February 1998. Cash distributions of approximately $505,000 were made in the first quarter of 1997. 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. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K filed in the quarter ended January 31, 1998: None. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant 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: March 16, 1998 EX-27 2
5 This schedule contains summary financial information extracted from Shelter Properties IV Limited Partnership 1998 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000702174 SHELTER PROPERTIES IV LIMITED PARTNERSHIP 1,000 3-MOS OCT-31-1998 JAN-31-1998 2,472 0 0 0 0 0 60,112 (32,741) 32,790 0 23,928 0 0 0 7,325 32,790 0 2,862 0 0 2,504 0 546 0 0 0 0 0 0 358 7.08 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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