-----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, Pei258jDZuFpUqdHUuLGGkF3KdHyq5+9xaQ/cCmx58M9pj5ee/ke0AJMjdq7VygL Vq5SNhOVRzH0djsXlouApw== 0000711642-01-500034.txt : 20010514 0000711642-01-500034.hdr.sgml : 20010514 ACCESSION NUMBER: 0000711642-01-500034 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010511 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: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-10884 FILM NUMBER: 1630386 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PL STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: 55 BEATTIE PL STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 sp4.txt SP4 FORM 10-QSB--QUARTERLY OR TRANSITIONAL 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 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 [ ] 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 (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.) 55 Beattie Place, 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 CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) March 31, 2001
Assets Cash and cash equivalents $ 874 Receivables and deposits 106 Restricted escrows 861 Other assets 494 Investment properties: Land $ 2,759 Buildings and related personal property 50,597 53,356 Less accumulated depreciation (30,093) 23,263 $ 25,598 Liabilities and Partners' Capital Liabilities Accounts payable $ 184 Tenant security deposit liabilities 216 Accrued property taxes 171 Other liabilities 767 Mortgage notes payable 17,838 Partners' Capital General partners $ 100 Limited partners (49,995 units issued and outstanding) 6,322 6,422 $ 25,598 See Accompanying Notes to Consolidated Financial Statements
b) SHELTER PROPERTIES IV CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per unit data)
Three Months Ended March 31, 2001 2000 Revenues: Rental income $2,305 $2,840 Other income 162 152 Total revenues 2,467 2,992 Expenses: Operating 1,119 1,268 General and administrative 118 86 Depreciation 518 505 Interest 378 515 Property taxes 172 207 Total expenses 2,305 2,581 Net income $ 162 $ 411 Net income allocated to general partners (1%) $ 2 $ 4 Net income allocated to limited partners (99%) 160 407 $ 162 $ 411 Net income per limited partnership unit $3.21 $8.14 Distributions per limited partnership unit $6.30 $ -- See Accompanying Notes to Consolidated Financial Statements
c) SHELTER PROPERTIES IV CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (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 at December 31, 2000 49,995 $ 98 $ 6,477 $ 6,575 Net income for the three months ended March 31, 2001 -- 2 160 162 Distributions to partners -- -- (315) (315) Partners' capital at March 31, 2001 49,995 $ 100 $ 6,322 $ 6,422 See Accompanying Notes to Consolidated Financial Statements
d) SHELTER PROPERTIES IV CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 2001 2000 Cash flows from operating activities: Net income $ 162 $ 411 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 518 505 Amortization of discounts and loan costs 45 71 Change in accounts: Receivables and deposits 19 288 Other assets (279) (130) Accounts payable (23) (126) Tenant security deposit liabilities 13 20 Accrued property taxes (22) (97) Other liabilities 63 89 Net cash provided by operating activities 496 1,031 Cash flows from investing activities: Property improvements and replacements (992) (207) Net deposits to restricted escrows (147) (442) Net cash used in investing activities (1,139) (649) Cash flows from financing activities: Partners' distributions (315) (1,000) Payments on mortgage notes payable (210) (221) Net cash used in financing activities (525) (1,221) Net decrease in cash and cash equivalents (1,168) (839) Cash and cash equivalents at beginning of period 2,042 3,630 Cash and cash equivalents at end of period $ 874 $ 2,791 Supplemental disclosure of cash flow information: Cash paid for interest $ 332 $ 444 Supplemental disclosure of non-cash information: Property improvements and replacements included in accounts payable $ 56 $ -- Included in property improvements and replacements for the three months ended March 31, 2001 are approximately $927,000 of improvements which were included in accounts payable at December 31, 2000. See Accompanying Notes to Consolidated Financial Statements
e) SHELTER PROPERTIES IV NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements of Shelter Properties IV (the "Partnership" or "Registrant") 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 March 31, 2001, are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. 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 fiscal year ended December 31, 2000. Organization: Shelter Properties IV (the "Partnership" or "Registrant") was organized as a limited partnership under the laws of the State of South Carolina on August 21, 1981. The Corporate General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"). The Partnership commenced operations on July 22, 1982, and completed its acquisition of apartment properties on March 31, 1983. The Partnership Agreement provides that the Partnership is to terminate on December 31, 2022 unless terminated prior to such date. The Partnership operates two apartment properties located in the Southeast. Principles of Consolidation: The financial statements include all the accounts of the Partnership and its 99.99% owned partnership. The general partner of the consolidated partnership is the Corporate General Partner. The Corporate General Partner may be removed as the general partner of the consolidated partnership by the Registrant; therefore, the consolidated partnership is controlled and consolidated by the Registrant. All significant interpartnership balances have been eliminated. Segment Reporting: Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosure about Segments of an Enterprise and Related Information" established 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. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. As defined in SFAS No. 131, the Partnership has only one reportable segment. The Corporate General Partner believes that segment-based disclosures will not result in a more meaningful presentation than the consolidated financial statements as currently presented. 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 used in operations", as defined in the partnership agreement of the Partnership (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 March 31, 2001 2000 (in thousands) Net cash provided by operating activities $ 496 $ 1,031 Payments on mortgage notes payable (210) (221) Property improvements and replacements (992) (207) Change in restricted escrows, net (147) (442) Changes in reserves for net operating liabilities 229 (44) Release of (additional) reserves 624 (117) Net cash from operations $ -- $ -- The Corporate General Partner released previously reserved cash of approximately $624,000 during the quarter ended March 31, 2001. The Corporate General Partner believed it to be in the best interest of the Partnership to reserve net cash from operations of approximately $117,000 at March 31, 2000, to fund continuing capital improvements and repairs at the Partnership's three investment properties. Note C - Distributions During the three months ended March 31, 2001, the Partnership declared and paid distributions from undistributed sales proceeds from the sale of Countrywood Village in August 2000 of approximately $315,000 to the limited partners ($6.30 per limited partnership unit). At March 31, 2001, approximately $1,038,000 of proceeds from the sale of Countrywood Village remained to be distributed. During the three months ended March 31, 2000, the Partnership paid a distribution from operations of approximately $1,000,000 (approximately $990,000 paid to limited partners or $19.80 per limited partnership unit) relating to a distribution payable as of December 31, 1999. Note D - 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 (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were made to the Corporate General Partner and its affiliates during the three months ended March 31, 2001 and 2000: 2001 2000 (in thousands) Property management fees (included in operating expenses) $125 $152 Reimbursement for services of affiliates (included in general and administrative expenses) 85 50 Affiliates of the Corporate General Partner are entitled to receive 5% of gross receipts from all of the Registrant's properties as compensation for providing property management services. During the three months ended March 31, 2001 and 2000, the Registrant paid to such affiliates approximately $125,000 and $152,000, respectively. Affiliates of the Corporate General Partner received reimbursement of accountable administrative expenses amounting to approximately $85,000 and $50,000 for the three months ended March 31, 2001 and 2000, respectively. Pursuant to the Partnership Agreement and in connection with the sale of Countrywood Village in August 2000, the Corporate General Partner is entitled to a commission of up to 1% for its assistance in the sale. Payment of such commission is subordinate to the limited partners receiving a cumulative 7% return on their investment. This return has not yet been met, and accordingly, the $178,000 was accrued and is included in other liabilities in the accompanying consolidated balance sheet at March 31, 2001. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 32,668 limited partnership units (the "Units") in the Partnership representing 65.34% of the outstanding units at March 31, 2001. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO either through private purchases or tender offers. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the Corporate General Partner. As a result of its ownership of 65.34% of the outstanding Units, AIMCO is in a position to influence all voting decisions with respect to the Registrant. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the Corporate General Partner because of its affiliation with the Corporate General Partner. Note E - Legal Proceedings In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its Corporate General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging, among other things, the acquisition of interests in certain general partner entities by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs filed an amended complaint. The Corporate General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the Corporate General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case and an appeal was taken from the order on October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the putative class. Plaintiffs filed a third amended complaint on January 19, 2001. On March 2, 2001, the Corporate General Partner and its affiliates filed a demurrer to the third amended complaint. The demurrer is scheduled to be heard on May 14, 2001. The Court has also scheduled a hearing on a motion for class certification for August 27, 2001. Plaintiffs must file their motion for class certification no later than June 15, 2001. The Corporate General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. Item 2. Management's Discussion and Analysis or Plan of Operation The matters discussed in this Form 10-QSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-QSB and the other filings with the Securities and Exchange Commission made by the Registrant from time to time. The discussion of the Registrant's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Registrant's business and results of operations. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. The Partnership's investment properties consist of two apartment complexes. The following table sets forth the average occupancy of the properties for each of the three months ended March 31, 2001 and 2000: Average Occupancy Property 2001 2000 Baymeadows Apartments Jacksonville, Florida 95% 94% Quail Run Apartments Columbia, South Carolina 95% 88% The Corporate General Partner attributes the increase in average occupancy at Quail Run to an increase in the leasing of corporate units by area businesses. Results of Operations The Partnership's net income for the three months ended March 31, 2001 was approximately $162,000 compared to approximately $411,000 for the corresponding period in 2000. The decrease in net income for the comparable three months periods is primarily due to the sale of Countrywood Village. On August 1, 2000, the Partnership sold Countrywood Village to an unrelated third party, for net proceeds of approximately $17,385,000 after payment of closing costs. During the third quarter of 2000, the Partnership realized a gain of approximately $12,451,000 as a result of the sale. In addition, the Partnership recorded an extraordinary loss on early extinguishment of debt of approximately $246,000 as a result of unamortized loan costs and debt discount being written off and a prepayment penalty of approximately $116,000 relating to the prepayment of the mortgage encumbering the property. Excluding the operations of Countrywood Village, net income for the three months ended March 31, 2001 and 2000 was approximately $162,000 and $196,000, respectively. The decrease in net income for the three months ended March 31, 2001 compared to the three months ended March 31, 2000 is due to an increase in total expenses, partially offset by an increase in total revenues. Total expenses increased due to increases in depreciation and general and administrative expenses partially offset by a decrease in interest expense. Depreciation expense increased at both investment properties due to extensive capital improvements completed during the past year which are now being depreciated, especially at Baymeadows. Interest expense decreased due to scheduled principal payments made on the first mortgages encumbering both properties. General and administrative expenses increased for the three months ended March 31, 2001 compared to the three months ended March 31, 2000 as a result of an increase in the cost of services provided by the Corporate General Partner and its affiliates as allowed by the Partnership Agreement. In addition, cost associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit and appraisals required by the Partnership Agreement are also included in general and administrative expenses. The increase in total revenues is due to increases in both rental and other income. Rental income increased due to increases in average rental rates at both properties and an increase in occupancy at Quail Run. Other income increased due to increases in local telephone income, utility reimbursement from tenants and interest income at both properties. Interest income increased as a result of larger average cash balances invested in interest bearing accounts. 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 expenses. 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 March 31, 2001, the Partnership had cash and cash equivalents of approximately $874,000 as compared to approximately $2,791,000 at March 31, 2000. Cash and cash equivalents decreased approximately $1,168,000 for the three months ended March 31, 2001 from the Registrant's year end of December 31, 2000. The decrease was due to approximately $525,000 of cash used in financing activities and approximately $1,139,000 of cash used in investing activities partially offset by approximately $496,000 of cash provided by operating activities. Cash used in financing activities consisted of distributions to partners and principal payments made on the mortgages encumbering the Registrant's properties. Cash used in investing activities consisted of property improvements and replacements and net deposits to restricted escrows maintained by the mortgage lender. The Registrant invests its working capital reserves in interest bearing accounts. 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 investment properties to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state, local, legal, and regulatory requirements. Capital improvements planned for each of the Registrant's properties are detailed below. Baymeadows Apartments: The Partnership has budgeted, but is not limited to, approximately $248,600 in capital improvements at Baymeadows Apartments for 2001 consisting primarily of carpet and vinyl replacements, new appliances, major landscaping, air conditioning upgrades and other building improvements. As of March 31, 2001 the Partnership has spent approximately $79,000 consisting primarily of carpet and vinyl replacements, appliances, major landscaping and plumbing upgrades. These improvements were funded from operating cash flow. Quail Run Apartments: The Partnership has budgeted, but is not limited to, approximately $91,300 in capital improvements at Quail Run Apartments for 2001 consisting primarily of new appliances and carpet and vinyl replacements. As of March 31, 2001 the Partnership has spent approximately $42,000 consisting primarily of carpet and vinyl replacements and new appliances. These improvements were funded from operating cash flow. The additional capital expenditures will be incurred only if cash is available from operations and Partnership reserves. To the extent that such budgeted capital improvements are completed, the Registrant's distributable cash flow, if any, may be adversely affected at least in the short term. The Registrant's current assets are thought to be sufficient for any near term needs (exclusive of capital improvements) of the Registrant. The mortgage indebtedness of approximately $17,838,000, net of discount, is amortized over 257 months with a balloon payment of approximately $16,907,000 due on November 15, 2002. The Corporate General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity date. If the properties cannot be refinanced or sold for a sufficient amount, the Registrant will risk losing such properties through foreclosure. During the three months ended March 31, 2001, the Partnership declared and paid distributions from undistributed sales proceeds from the sale of Countrywood Village in August 2000 of approximately $315,000 to the limited partners ($6.30 per limited partnership unit). At March 31, 2001, approximately $1,038,000 of proceeds from the sale of Countrywood Village remained to be distributed. During the three months ended March 31, 2000, the Partnership paid a distribution from operations of approximately $1,000,000 (approximately $990,000 paid to limited partners or $19.80 per limited partnership unit) relating to a distribution payable as of December 31, 1999. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves and the timing of debt maturities, refinancings, and/or property sales. The Partnership's distribution policy is reviewed on a quarterly basis. There can be no assurance that the Partnership will generate sufficient funds from operations, after required capital expenditures, to permit any additional distributions to its partners for the remainder of 2001 or subsequent periods. In addition, the Partnership may be restricted from making distributions if the amount in the reserve account for each property is less than $400 per apartment unit at such property or a total of approximately $494,000. As of March 31, 2001, the reserve account was fully funded with approximately $848,000 on deposit with the mortgage lender. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 32,668 limited partnership units (the "Units") in the Partnership representing 65.34% of the outstanding units at March 31, 2001. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO either through private purchases or tender offers. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the Corporate General Partner. As a result of its ownership of 65.34% of the outstanding Units, AIMCO is in a position to influence all voting decisions with respect to the Registrant. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the Corporate General Partner because of its affiliation with the Corporate General Partner. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its Corporate General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging, among other things, the acquisition of interests in certain general partner entities by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs filed an amended complaint. The Corporate General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the Corporate General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case and an appeal was taken from the order on October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the putative class. Plaintiffs filed a third amended complaint on January 19, 2001. On March 2, 2001, the Corporate General Partner and its affiliates filed a demurrer to the third amended complaint. The demurrer is scheduled to be heard on May 14, 2001. The Court has also scheduled a hearing on a motion for class certification for August 27, 2001. Plaintiffs must file their motion for class certification no later than June 15, 2001. The Corporate General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: None. b) Reports on Form 8-K filed during the three months ended March 31, 2001: 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 By: Shelter Realty IV Corporation Corporate General Partner By: /s/Patrick J. Foye Patrick J. Foye Executive Vice President By: /s/Martha L. Long Martha L. Long Senior Vice President and Controller Date: May 11, 2001 -----END PRIVACY-ENHANCED MESSAGE-----