-----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, JZByrLM5TpBuPvChcw+S5aQLVYRQzvFOcZ6xkzPuVFy5SE6lsXdq52fD9U/fnE6K duiq9T7xbhSWwn7WPnpwdg== 0000928790-96-000052.txt : 19960401 0000928790-96-000052.hdr.sgml : 19960401 ACCESSION NUMBER: 0000928790-96-000052 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960329 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HUTTON CONAM REALTY INVESTORS 4 CENTRAL INDEX KEY: 0000722745 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 112685746 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13329 FILM NUMBER: 96540968 BUSINESS ADDRESS: STREET 1: 3 WORLD FINANCIAL CENTER, 29TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10285 BUSINESS PHONE: 2125263237 MAIL ADDRESS: STREET 1: 3 WORLD FINANCIAL CENTER STREET 2: 29TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10285 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required] For the fiscal year ended December 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the transition period from _____ to _____ Commission file number: 0-13329 HUTTON/CONAM REALTY INVESTORS 4 Exact name of Registrant as specified in its charter California 11-2685746 State or other jurisdiction of incorporation or organization I.R.S. Employer Identification No. Attention: Andre Anderson 3 World Financial Center, 29th Floor, New York, New York 10285 Address of principal executive offices zip code Registrant's telephone number, including area code: (212) 526-3237 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: UNITS OF LIMITED PARTNERSHIP INTEREST Title of Class 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (X) Documents Incorporated by Reference: Portions of Prospectus of the Registrant dated January 13, 1984 (included in Amendment No. 1 to Registration Statement No. 2-84863, filed January 13, 1984) are incorporated by reference into Part III of this report. Portions of Parts I, II, III and IV are incorporated by reference to the Partnership's Annual Report to Unitholders for the year ended December 31, 1995. PART I Item 1. Business General Development of Business - ------------------------------- Hutton/ConAm Realty Investors 4 (the "Registrant" or the "Partnership") is a California limited partnership of which RI 3-4 Real Estate Services Inc. ("RI 3-4 Services," formerly Hutton Real Estate Services VIII, Inc.), a Delaware corporation, and ConAm Property Services IV, Ltd., a California limited partnership ("ConAm Services"), are the general partners (together, the "General Partners"). Commencing January 13, 1984, the Registrant began offering through E.F. Hutton & Company Inc., an affiliate of the Registrant ("Hutton"), up to a maximum of 130,000 units of limited partnership interest (the "Units") at $500 per Unit. Investors who purchased the Units (the "Limited Partners") are not required to make any additional capital contributions. The Units were registered under the Securities Act of 1933, as amended (the "Act"), under Registration Statement No. 2-84863, which Registration Statement was declared effective on January 13, 1984. The offering of Units was terminated on October 11, 1984. Upon termination of the offering, the Registrant had accepted subscriptions for 128,110 Units for an aggregate of $64,055,000. Narrative Description of Business - --------------------------------- The Registrant is engaged in the business of acquiring, operating and holding for investment multifamily residential properties which by virtue of their location and design and the nature of the local real estate market have the potential for long-term capital appreciation and generation of current income. All of the proceeds available for investment in real estate were originally invested in three residential apartment properties and three limited partnerships, each of which owns a specified property. Funds held as a working capital reserve are invested in bank certificates of deposit, unaffiliated money market funds or other highly liquid short-term investments where there is appropriate safety of principal in accordance with the Registrant's investment objectives and policies. The Registrant's principal investment objectives with respect to its interests in real property are: (1) capital appreciation; (2) distributions of net cash from operations attributable to rental income; and (3) preservation and protection of capital. Distributions of net cash from operations will be the Registrant's objective during its operational phase, while preservation and appreciation of capital continues to be the Registrant's longer term objectives. The attainment of the Registrant's objectives will depend on many factors, including future economic conditions in the United States as a whole and, in particular, in the localities in which the Registrant's properties are located, especially with regard to achievement of capital appreciation. From time to time the Registrant expects to sell its real property interests taking into consideration such factors as the amount of appreciation in value, if any, to be realized and the possible risks of continued ownership. In consideration of these factors and improving market conditions the General Partners have commenced marketing certain of the properties for sale. See Item 7. No property will be sold, financed or refinanced by the Registrant without the agreement of both General Partners. Proceeds from any future sale, financing or refinancing of properties will not be reinvested and may be distributed to the General Partners and Limited Partners (sometimes referred to together herein as the "Partners"), so that the Registrant will, in effect, be self-liquidating. If deemed necessary, the Registrant may retain a portion of the proceeds from any sale, financing or refinancing as capital reserves. As partial payment for properties sold, the Registrant may receive purchase mo ney obligations secured by mortgages or deeds of trust. In such cases, the amount of such obligations will not be included in Net Proceeds From Sale or Refinancing (distributable to the Partners) until and only to the extent the obligations are realized in cash, sold or otherwise liquidated. Originally, the Registrant acquired six residential apartment complexes (collectively, the "Properties"), either directly or through investments in limited partnerships or joint ventures. Two of these, Trails at Meadowlakes Apartments and Cypress Lakes Apartments were sold on July 20, 1995. As of December 31, 1995, the Registrant had interests in the Properties as follows: (1) Pelican Landing, a 204-unit apartment complex located in Clearwater, Florida; (2) Village at the Foothills II, a 120-unit apartment complex located in Tucson, Arizona; (3) River Hill Apartments, a 192-unit apartment complex located in the Las Colinas area of Irving, Texas; (4) Shadowood Village, a 110-unit apartment complex located in Jacksonville, Florida. For further information on each of the Properties, see Item 2 of this report and Note 4 to the Consolidated Financial Statements incorporated herein by reference to the Partnership's Annual Report to Unitholders for the year ended December 31, 1995, which i s included as an exhibit under Item 14. Reference is made to Item 7 of this report for a more detailed discussion of the Trails at Meadowlakes and Cypress Lakes sales. Competition - ----------- The Registrant's real property investments are subject to competition from similar types of properties in the vicinities in which they are located and such competition has increased since the Registrant's investment in the Properties due principally to the addition of newly-constructed apartment complexes offering increased residential and recreational amenities. The Properties have also been subject to competition from condominiums and single-family properties, especially during periods of low mortgage interest rates. The Registrant competes with other real estate owners and developers in the rental and leasing of its Properties by offering competitive rental rates and, if necessary, leasing incentives. Such competition may affect the occupancy levels and revenues of the Properties. The occupancy levels at the Properties in Arizona and Florida reflect some seasonality, which is also reflected in the markets. In some cases, the Registrant may compete with other partnerships affili ated with either General Partner of the Registrant. For a discussion of current market conditions in each of the areas where the Partnership's Properties are located, see Item 2 below. Employees - --------- The Registrant has no employees. General services are performed by RI 3-4 Services, ConAm Services, ConAm Management Corporation ("ConAm Management"), an affiliate of ConAm Services, as well as Service Data Corporation and First Data Investor Services Group, both unaffiliated companies. The Registrant has entered into management agreements pursuant to which ConAm Management provides management services with respect to the Properties. First Data Investor Services Group has been retained by the Registrant to provide all accounting and investor communication functions, while Service Data Corporation provides transfer agent services. See Item 13 for a further description of the service and management agreements between the Registrant and affiliated entities. Item 2. Properties Below is a description of the Properties and a discussion of current market conditions in each of the areas where the Properties are located. For information on the purchase of the Properties, reference is made to Note 4 to the Consolidated Financial Statements in the Partnership's Annual Report to Unitholders for the year ended December 31, 1995, which is filed as an exhibit under Item 14. Average occupancy rates and appraised values of the Partnership's real estate investments are incorporated by reference to the Partnership's Annual Report to Unitholders. River Hill Apartments - Irving, Texas Situated approximately 15 miles northwest of Dallas, this 192-unit apartment complex is located in the Las Colinas area of Irving. Limited new construction and continuing population growth have allowed a general recovery in the multifamily housing market in this area during the past few years. The Las Colinas submarket reported average occupancy of 97% as of the third quarter of 1995, compared to 96% a year earlier, and area apartment complexes averaged rental rate increases of 5% during 1995. These favorable market conditions have resulted in an increase in the pace of new construction of multifamily properties. Approximately 3,900 units have been approved for construction in the Las Colinas submarket with approximately 1,200 units currently under construction. While absorption in the market remains strong, demand for units is not expected to keep pace with the new construction. As a result, the property is expected to experience increasingly competitive market conditions. Howe ver, a two-year building moratorium instituted in the market during 1995 should limit construction once the permitted projects are completed. Given favorable market conditions, particularly in the Irving, Texas area, the General Partners intend to begin marketing River Hill Apartments for sale. There can be no assurances that a sale will be completed or that any particular price for the property can be obtained. One factor which could hinder the Partnership's ability to sell River Hill and the ultimate sales value of the property are defects related to the original design and construction of the property. The Partnership favorably settled claims against several parties related to the defects in April 1991 and used the settlement proceeds to correct the defective work, as previously disclosed. Nevertheless, the presence of these original structural problems may have an adverse impact on the Partnership's sales efforts. Shadowood Village - Jacksonville, Florida This 110-unit apartment complex is situated in southeast Jacksonville, in the Baymeadows/Deerwood community. Market conditions in the Southeast submarket of Jacksonville remain competitive, reflecting the lingering effects of prior overbuilding, much of which was concentrated in this area. The use of rental concessions has diminished in recent years, and average rental rates in the Southeast submarket increased 1.7% from the second quarter of 1994 to the second quarter of 1995. Average occupancy increased from 93.3% to 94.3% during the same period. Construction of new units, relatively dormant in 1992 and 1993, has picked up since 1994, with 373 units permitted in 1994 and 593 units permitted as of June 30, 1995. The area's strong population and job growth, however, are expected to absorb the new supply. Village at the Foothills II - Tucson, Arizona This 120-unit apartment community is situated in the prestigious "foothills" section of Tucson. Village at the Foothills II competes with a number of apartment complexes and condominium developments within the Tucson area. Tucson's economy began to weaken as population and job growth slowed during 1995. Despite the economic slowdown, construction of multifamily properties has increased significantly. As of the third quarter of 1995, 1,123 units were under construction in the Catalina Foothills submarket with an additional 656 units not yet begun. These units are being added to the 7,226 completed units in the market. There are an additional seven projects planned for the Catalina Foothills market although all of these projects may not proceed to constructions. In addition, the multifamily market has been unfavorably impacted by a decline in interest rates which has made home ownership a viable alternative for renters. As a result, vacancy rates are beginning to rise and increas es in rental rates are moderating. A local survey of metropolitan Tucson conducted in the fourth quarter of fiscal 1995 showed an average occupancy rate of 92% among multifamily properties with five or more units, down from 96% at the same period in 1994. Pelican Landing - Clearwater, Florida This 204-unit apartment complex is situated in southeast Clearwater in the Tampa Bay Area. Overall occupancy in the Clearwater market was 97% in the third quarter of 1995, compared with 96% in the third quarter of 1994. While rental rates in the overall market declined by approximately 3% from 1994 to 1995, rates in the submarket where the Partnership's property is located increased by approximately 3% from 1994 to 1995. It is not expected that there will be much new construction in the market as most areas are built-up. The minimal new construction coupled with continuing population growth are expected to result in sustained strength in market conditions. Item 3. Legal Proceedings The Registrant is not subject to, nor is any of the Properties the subject of, any material pending legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders During the fourth quarter of the year ended December 31, 1995, no matter was submitted to a vote of security holders through the solicitation of proxies or otherwise. PART II Item 5. Market for the Partnership's Limited Partnership Units and Related Security Holder Matters As of December 31, 1995, the number of Unitholders of record was 7,116. No established public trading market has developed for the Units, and it is not anticipated that such a market will develop in the future. Distributions of Net Cash Flow From Operations, when made, are paid on a quarterly basis, with distributions generally occurring approximately 45 days after the end of each quarter. Such distributions have been made primarily from net operating income with respect to the Registrant's investment in the Properties and from interest on short-term investments, and partially from excess cash reserves. Information on cash distributions paid by the Partnership for the past two years is incorporated by reference to the Partnership's Annual Report to Unitholders for the year ended December 31, 1995, which is filed as an exhibit under Item 14. The level of future distributions will be evaluated on a quarterly basis and will depend on the Partnership's operating results and future cash needs. Reference is made to Item 7 for a discussion of the General Partners' expectations for future cash distributions. Item 6. Selected Financial Data Incorporated by reference to the Partnership's Annual Report to Unitholders for the year ended December 31, 1995, which is filed as an exhibit under Item 14. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources - ------------------------------- At December 31, 1995, the Partnership had cash and cash equivalents of $2,436,356, which were invested in unaffiliated money market funds, compared to cash of $3,234,383 at December 31, 1994. The decrease is primarily attributable to cash flow used for mortgage principal payments and distributions exceeding the cash provided by operating activities and net sale proceeds. The Partnership expects sufficient cash flow to be generated from operations to meet its current operating expenses. On July 20, 1995, the Partnership sold Trails at Meadowlakes and Cypress Lakes for $8,940,000 and $8,825,000, respectively, to an institutional buyer. The Partnership received net proceeds of $17,551,351 from the transaction of which $5,057,952, representing outstanding principal and interest, was used to fully satisfy the Partnership's mortgage obligation on Trails at Meadowlakes. On August 22, 1995, the Partnership paid a special cash distribution of $14,252,238 or $111.25 per Unit to the limited partners. The special distribution was comprised of net proceeds from the sale of Trails at Meadowlakes and Cypress Lakes and Partnership cash reserves. These sales were primarily the reason behind decreases in investments in real estate, mortgage payable and security deposits from December 31, 1994 to December 31, 1995. Also contributing to the decline in investments in real estate was a reduction in the carrying value of River Hill Apartments based upon management's assessment of the estimated fair market value of the property. The determination of the estimated fair market value of the property was based upon the most recent appraisal of the property, which is conducted annually. The General Partners reinstated quarterly cash distributions beginning with the 1995 second quarter distribution, paid in August. The fourth quarter distribution, in the amount of $480,412 or $3.75 per Unit, was paid to limited partners on February 7, 1996. Future cash distributions, if any, will be determined on a quarterly basis and will be based on cash flow generated by the Partnership. During the remainder of 1996, the General Partners intend to implement an extensive improvement program at Pelican Landing and Shadowood to upgrade the properties. This program is intended to maintain the properties' position within their respective markets, which are growing increasingly competitive with the addition of new apartment properties. This is particularly true in the Tucson and Jacksonville markets where Village at the Foothills II and Shadowood Village, respectively, are located. It is also hoped that these improvements will allow for greater increases in rental rates, thereby improving each property's revenue and value, and making them better positioned for eventual sale. It is possible that cash from reserves may be required to fund a portion of distributions during 1996 as a result of the capital expenditures required. Given favorable market conditions, particularly in the Irving, Texas area, the General Partners intend to begin marketing River Hill Apartments for sale. There can be no assurances that a sale will be completed or that any particular price for the property can be obtained. On March 15, 1996, based upon, among other things, the advice of Partnership counsel, Skadden, Arps, Slate, Meagher & Flom, the General Partners adopted a resolution that states, among other things, if a Change of Control (as defined below) occurs, the General Partners may distribute the Partnership's cash balances not required for its ordinary course day-to-day operations. "Change of Control" means any purchase or offer to purchase more than 10% of the Units that is not approved in advance by the General Partners. In determining the amount of the distribution, the General Partners may take into account all material factors. In addition, the Partnership will not be obligated to make any distribution to any partner and no partner will be entitled to receive any distribution until the General Partners have declared the distribution and established a record date and distribution date for the distribution. The Partnership filed a Form 8-K disclosing this resolution on March 21, 1996. Results of Operations - --------------------- 1995 versus 1994 Partnership operations for the year ended December 31, 1995 resulted in net income of $3,259,624, compared with net income of $984,628 for the year ended December 31, 1994. The increase in net income is attributable to the $2,854,884 gain recognized on the sale of Trails at Meadowlakes and Cypress Lakes, partially offset by a decrease in rental income and the $477,170 loss recognized on the write-down of River Hill Apartments. Excluding the gain recognized on the sale of the properties, income from operations was down for 1995 compared to 1994, primarily as a result of the sale of Trails at Meadowlakes and Cypress Lakes, write-down of River Hill Apartments, and, to a lesser extent, from an increase in repairs and maintenance expenses at three of the remaining properties and higher insurance expense. Rental income for the year ended December 31, 1995 was $6,351,434, compared with $7,552,784 for the year ended December 31, 1994. The decrease in 1995 reflects lower revenues primarily due to the sale of Trails at Meadowlakes and Cypress Lakes, partially offset by increased rental income at the four remaining properties. Interest income for the year ended December 31, 1995 was $245,330, compared with $79,860 in 1994. The increase in 1995 is due primarily to increased available cash balances resulting from the suspension of cash distributions beginning in the third quarter of 1994, and higher interest rates in 1995. Total expenses for the year ended December 31, 1995 were $6,192,024, compared with $6,648,016 for 1994. The decrease in 1995 reflects a decrease in interest expense, depreciation and property operating expenses. All three expense categories declined primarily as a result of the sale of Trails at Meadowlakes and Cypress Lakes. Partially offsetting the reduction in property operating expenses due to the sales, was the $477,170 loss on the write-down of River Hill Apartments and an increase in repairs and maintenance at three of the remaining properties and insurance expense. General and administrative expenses for 1995 increased from 1994 as a result of increases in audit and other partnership administration expenses. 1994 versus 1993 Partnership operations for the year ended December 31, 1994 resulted in net income of $984,628, compared with net income of $723,510 for the year ended December 31, 1993. The increase in net income is primarily attributable to an increase in rental income. Rental income for the year ended December 31, 1994 was $7,552,784, compared with $7,249,001 for the year ended December 31, 1993. The 4% increase in 1994 reflects higher revenues at all six properties due to rental rate increases instituted during the past year. Interest income for the year ended December 31, 1994 was $79,860, compared with $50,212 in 1993. The increase in 1994 is due primarily to higher Partnership cash balances and higher interest rates. Property operating expenses for the year ended December 31, 1994 were $3,927,435, compared with $3,860,345 in 1993. The increase is primarily attributable to expenditures related to utilities and general repairs at the properties. Total expenses for the year ended December 31, 1994 were $6,648,016, compared with $6,575,703 for 1993. All components of total expenses remained relatively in line with 1993 levels. The average occupancy levels at each of the properties for the years ended December 31, 1995, 1994 and 1993 were as follows: Twelve Months Ended December 31, Property 1995 1994 1993 Pelican Landing 97% 97% 96% Village at the Foothills II 95% 95% 95% River Hill Apartments 96% 96% 96% Shadowood Village 95% 96% 96% Item 8. Financial Statements and Supplementary Data The financial statements are incorporated by reference to the Partnership's Annual Report to Unitholders for the year ended December 31, 1995, which is filed as an exhibit under Item 14. Supplementary Data is incorporated by reference to pages F-1 to F-4 of this report. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. PART III Item 10. Directors and Executive Officers of the Registrant The Registrant has no officers or directors. RI 3-4 Services and ConAm Services, the co-General Partners of the Registrant, jointly manage and control the affairs of the Registrant and have general responsibility and authority in all matters affecting its business. RI 3-4 Services - --------------- RI 3-4 Services (formerly Hutton Real Estate Services VIII, Inc.) is a Delaware corporation formed on October 29, 1982, and is an affiliate of Lehman Brothers Inc. See the section captioned "Certain Matters Involving Affiliates of RI 3-4 Services" for a description of the Hutton Group's acquisition by Shearson Lehman Brothers, Inc. ("Shearson") and the subsequent sale of certain of Shearson's domestic retail brokerage and asset management businesses to Smith Barney, Harris Upham & Co. Incorporated ("Smith Barney"), which was followed by a change in name to RI 3-4 Services. Certain officers and directors of RI 3-4 Services are now serving (or in the past have served) as officers or directors of entities which act as general partners of a number of real estate limited partnerships which have sought protection under the provisions of the Federal Bankruptcy Code. The partnerships which have filed bankruptcy petitions own real estate which has been adversely affected by the economic conditions in the markets in which the real estate is located and, consequently, the partnerships sought the protection of the bankruptcy laws to protect the partnerships' assets from loss through foreclosure. The names and ages of, as well as the positions held by, the directors and executive officers of RI 3-4 Services are set forth below. There are no family relationships between any executive officers or directors. Name Office Paul L. Abbott Director, President, Chief Financial Officer and Chief Executive Officer Donald E. Petrow Vice President Kate D. Hobson Vice President Paul L. Abbott, 50, is a Managing Director of Lehman Brothers. Mr. Abbott joined Lehman Brothers in August 1988, and is responsible for investment management of residential, commercial and retail real estate. Prior to joining Lehman Brothers, Mr. Abbott was a real estate consultant and a senior officer of a privately held company specializing in the syndication of private real estate limited partnerships. From 1974 through 1983, Mr. Abbott was an officer of two life insurance companies and a director of an insurance agency subsidiary. Mr. Abbott received his formal education in the undergraduate and graduate schools of Washington University in St. Louis. Donald E. Petrow, 39, is a First Vice President of Lehman Brothers Inc. Since March 1989, he has been responsible for the investment management and restructuring of various investment portfolios, including but not limited to, federal insured mortgages, tax exempt bonds, multifamily and commercial real estate. From November 1981 to February 1989, Mr. Petrow, as Vice President of Lehman, was involved in investment banking activities relating to partnership finance and acquisitions. Prior to joining Lehman, Mr. Petrow was employed in accounting and equipment leasing firms. Mr. Petrow holds a B.S. Degree in accounting from Saint Peters College and an M.B.A in Finance from Pace University. Kate D. Hobson, 29, is an Assistant Vice President of Lehman Brothers and has been a member of the Diversified Asset Group since 1992. Prior to joining Lehman Brothers, Ms. Hobson was associated with Cushman & Wakefield serving as a real estate accountant from 1990 to 1992. Prior to that, Ms. Hobson was employed by Cambridge Systematics, Inc. as a junior land planner. Ms. Hobson received a B.A. degree in sociology from Boston University in 1988. ConAm Services - -------------- ConAm Services is a California limited partnership organized on August 30, 1982. The sole general partner of ConAm Services is Continental American Development, Inc. ("ConAm Development"). The names and ages of, as well as the positions held by, the directors and executive officers of ConAm Development are set forth below. There are no family relationships between any executive officers or directors. Name Office Daniel J. Epstein President and Director E. Scott Dupree Vice President/Director Robert J. Svatos Vice President/Director Ralph W. Tilley Vice President J. Bradley Forrester Vice President Daniel J. Epstein, 56, has been the President and a Director of ConAm Development and ConAm Management (or its predecessor firm) and a general partner of Continental American Properties, Ltd. ("ConAm"), an affiliate of ConAm Services, since their inception. Prior to that time Mr. Epstein was Vice President and a Director of American Housing Guild, which he joined in 1969. At American Housing Guild, he was responsible for the formation of the Multi-Family Division and directed its development and property management activities. Mr. Epstein holds a Bachelor of Science degree in Engineering from the University of Southern California. E. Scott Dupree, 45, is a Vice President and general counsel of ConAm Management responsible for negotiation, documentation, review and closing of acquisition, sale and financing proposals. Mr. Dupree also acts as principal legal advisor on general legal matters ranging from issues and contracts involving the management company to supervision of litigation and employment issues. Prior to joining ConAm Management in 1985, he was corporate counsel to Trusthouse Forte, Inc., a major international hotel and restaurant corporation. Mr. Dupree holds a B.A. from United States International University and a Juris Doctorate degree from the University of San Diego. Robert J. Svatos, 37, is a Vice President and Chief Financial Officer of ConAm Management, and has been with the company since 1988. His responsibilities include the accounting, treasury and data processing functions of the organization. Mr. Svatos is part of the firm's due diligence team, analyzing a broad range of projects for ConAm Management's fee client base. Prior to joining ConAm Management, he was the Chief Financial Officer for AmeriStar Financial Corporation, a nationwide mortgage banking firm. Mr. Svatos holds an M.B.A. in Finance from the University of San Diego and a Bachelor of Science degree in Accounting from the University of Illinois. Mr. Svatos is a Certified Public Accountant. Ralph W. Tilley, 41, is a Vice President and Treasurer of ConAm Management. He is responsible for the financial aspects of syndications and acquisitions, and ConAm Management's asset management portfolio and risk management activities. Prior to joining ConAm Management in 1980, he was a senior accountant with KPMG Peat Marwick, specializing in real estate. He holds a Bachelor of Science degree in Accounting from San Diego State University and is a Certified Public Accountant. J. Bradley Forrester, 38, currently serves as a Senior Vice President of ConAm Management Corporation. He is responsible for property acquisition and disposition on a nationwide basis. Additionally, he is involved with the company's real estate development activities. Prior to joining ConAm, Mr. Forrester served as Senior Vice President - Commercial Real Estate for First Nationwide Bank in San Francisco, where he was responsible for a $2 billion problem asset portfolio including bank-owned real estate and non-performing commercial real estate loans. His past experience includes significant involvement in real estate development and finance, property acquisitions and dispositions and owner's representation matters. Prior to entering the real estate profession, he worked for KPMG Peat Marwick in Dallas, Texas. Mr. Forrester holds a Bachelor of Science degree in Accounting from Louisiana State University. He received his CPA certification in the State of Texas. Certain Matters Involving Affiliates of RI 3-4 Services - ------------------------------------------------------- On July 31, 1993, Shearson sold certain of its domestic retail brokerage and asset management businesses to Smith Barney. Subsequent to this sale, Shearson changed its name to "Lehman Brothers Inc." The transaction did not affect the ownership of the Partnership's General Partners. However, the assets acquired by Smith Barney included the name "Hutton." Consequently, the Hutton Real Estate Services general partner changed its name to "RI 3-4 Real Estate Services, Inc." and the Hutton Group changed its name to "LB I Group Inc." to delete any references to "Hutton." Item 11. Executive Compensation Neither of the General Partners nor any of their directors or executive officers received any compensation from the Registrant. See Item 13 of this report for a description of certain transactions of the General Partners and their affiliates with the Registrant. Item 12. Security Ownership of Certain Beneficial Owners and Management As of December 31, 1995, no person was known by the Registrant to be the beneficial owner of more than five percent of the Units of the Registrant. Daniel J. Epstein, President and Director of ConAm Services, owned twenty Units as of December 31, 1995. No other directors or executive officers of the General Partners own any Units. Item 13. Certain Relationships and Related Transactions RI 3-4 Services and ConAm Services each received $202,840 as its allocable share of Net Cash From Operations with respect to the year ended December 31, 1995, pursuant to the Amended and Restated Certificate and Agreement of Limited Partnership of the Registrant. Pursuant to the Amended and Restated Certificate and Agreement of Limited Partnership of the Registrant, for the year ended December 31, 1995, $405,680 of the Registrant's net income was allocated to the General Partners ($243,765 to RI 3-4 Services and $161,915 to ConAm Services). For a description of the share of Net Cash From Operations and the allocation of income and loss to which the General Partners are entitled, reference is made to the material contained on pages 48 through 51 of the Prospectus of the Registrant dated January 13, 1984 (the "Prospectus"), contained in Amendment No. 1 to Registrant's Registration Statement No. 2-84863, filed January 13, 1984, under the section captioned "Distributions and Allocations, which section is incorporated herein by reference thereto. Pursuant to property management agreements with the Registrant, ConAm Management has assumed direct responsibility for day-to-day management of the Properties. It is the responsibility of ConAm Management to select resident managers and monitor their performance. ConAm Management's services also include the supervision of leasing, rent collection, maintenance, budgeting, employment of personnel, payment of operating expenses, and related services. For such services, ConAm Management is entitled to receive a management fee as described on pages 32 and 33 of the Prospectus under the caption "Investment Objectives and Policies - Management of Properties," which description is herein incorporated by reference. A summary of property management fees earned by ConAm Management during the past three fiscal years is incorporated by reference to Note 6 to the Consolidated Financial Statements included in the Partnership's Annual Report to Unitholders for the year ended December 31, 1995, which is filed as an exhibit under Item 14. Pursuant to Section 12(g) of Registrant's Amended and Restated Certificate and Agreement of Limited Partnership, the General Partners and their affiliates may be reimbursed by the Registrant for certain of their costs as described on page 16 of the Prospectus, which description is incorporated herein by reference. First Data Investor Services Group provides partnership accounting and investor relations services for the Registrant. Prior to May 1993, these services were provided by an affiliate of a general partner. The Registrant's transfer agent and certain tax reporting services are provided by Service Data Corporation. Both First Data Investor Services Group and Service Data Corporation are unaffiliated companies. A summary of amounts paid to the General Partners or their affiliates during the past three years is incorporated by reference to Note 6 to the Consolidated Financial Statements, included in the Partnership's Annual Report to Unitholders for the year ended December 31, 1995, which is filed as an exhibit under Item 14. PART IV Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K (a)(1) Financial Statements: Page Consolidated Balance Sheets - December 31, 1995 and 1994 (1) Consolidated Statements of Partners' Capital (Deficit) - For the years ended December 31, 1995,1994 and 1993 (1) Consolidated Statements of Operations - For the years ended December 31, 1995, 1994 and 1993 (1) Consolidated Statements of Cash Flows - For the years ended December 31, 1995, 1994 and 1993 (1) Notes to the Consolidated Financial Statements (1) Report of Independent Accountants (1) (a)(2) Financial Statement Schedule: Schedule III - Real Estate and Accumulated Depreciation F-1 Report of Independent Accountants F-4 (1) Incorporated by reference to the Partnership's Annual Report to Unitholders for the year ended December 31, 1995, filed as an exhibit under Item 14. (a)(3) Exhibits: (4)(A) Certificate and Agreement of Limited Partnership (included as, and incorporated herein by reference to, Exhibit A to the Prospectus of Registrant dated January 13, 1984 (the "Prospectus"), contained in Amendment No. 1 to Registration Statement No. 2-84863 of Registrant, filed January 13, 1984 (the "1984 Registration Statement")). (B) Subscription Agreement and Signature Page (included as, and incorporated herein by reference to, Exhibit 3.1 to the Prospectus). (10)(A) Purchase Agreement relating to Pelican Landing (formerly Feather Sound Apartments), between the Registrant and Feather Sound, Inc., and the exhibits thereto (included as, and incorporated herein by reference to, Exhibit (10)(B) to the 1984 Annual Report). (B) Purchase Agreement relating to River Hill Apartments (formerly Oxbow Ridge I), between the Registrant and Tres Titan Investors, and the exhibits thereto (included as, and incorporated herein by reference to, Exhibit (10)(D) to the 1984 Annual Report). (C) Purchase Agreement relating to Village at the Foothills II (formerly Ina Village Apartments), between the Registrant and Epoch Properties, Inc. and the exhibits thereto (included as, and incorporated herein by reference to, Exhibit (10)(E) to the 1984 Annual Report). (D) Documents relating to Shadowood Village (included as, and incorporated herein by reference to, Exhibit (10)(A) to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1985 (the "1985 Quarterly Report" (Commission File No. 0-13329)). (E) Settlement Agreement by and among the Managing Joint Venturers and the Epoch Joint Venturers dated July 1, 1992 (included as, and incorporated herein by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1992 (Commission File No. 0-13329)). (F) Amended and Restated Agreement of Limited Partnership of Village at the Foothills II Joint Venture Limited Partnership dated as of July 1, 1992 (included as, and incorporated herein by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1992 (Commission File No. 0-13329)). (G) Certificate and Agreement of Limited Partnership of River Hill Apartments, Ltd (included as, and incorporated herein by reference to Exhibit 10(I) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991 (Commission File No. 0-13329)). (H) Amended and Restated Agreement of Limited Partnership of Shadowood Village, Ltd., dated as of July 1, 1992 (included as, and incorporated herein by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1992 (Commission File No. 0-13329)). (I) Property Management Agreement between Hutton/ConAm Realty Investors 4 and ConAm Management Corporation for the Pelican Landing property (included as, and incorporated herein by reference to Exhibit 10-M to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 (Commission File No. 0-13329)). (J) Property Management Agreement between Hutton/ConAm Realty Investors 4 and ConAm Management Corporation for the River Hill property (included as, and incorporated herein by reference to Exhibit 10-N to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 (Commission File No. 0-13329)). (K) Property Management Agreements between Hutton/ConAm Realty Investors 4 and ConAm Management Corporation for the Shadowood Village property (included as, and incorporated herein by reference to Exhibit 10-O to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 (Commission File No. 0-13329)). (L) Property Management Agreement between Hutton/ConAm Realty Investors 4 and ConAm Management Corporation for the Village at the Foothills II property (included as, and incorporated herein by reference to Exhibit 10-Q to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 (Commission File No. 0-13329)). (13) Annual Report to Unitholders for the year ended December 31, 1995. (21) List of Subsidiaries, Joint Ventures or Limited Partnerships (included as, and incorporated herein by reference to Exhibit 22 of the Registrant's Annual Report on Form 10-K filed March 27, 1992 (Commission File No. 0-13329)). (27) Financial Data Schedule. (99) Portions of the Prospectus of Registrant dated January 13, 1984 (included as, and incorporated herein by reference to Exhibit 28 to the Registrant's 1988 Annual Report on Form 10-K for the fiscal year ended December 31, 1988 (Commission File No. 0-13329)). (b) Reports on Form 8-K: No reports on Form 8-K were filed in the fourth quarter of 1995. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Dated: March 27, 1996 HUTTON/CONAM REALTY INVESTORS 4 BY: RI 3-4 Real Estate Services Inc. General Partner BY: /S/ Paul L. Abbott Name: Paul L. Abbott Title: Director, President, Chief Executive Officer and Chief Financial Officer BY: ConAm Property Services IV, Ltd. General Partner BY: Continental American Development, Inc. General Partner BY: /S/ Daniel J. Epstein Name: Daniel J. Epstein Title: President, Director and Principal Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capabilities and on the dates indicated. RI 3-4 REAL ESTATE SERVICES INC. A General Partner Date: March 27, 1996 BY: /S/ Paul L. Abbott Paul L. Abbott Director, President, Chief Executive Officer and Chief Financial Officer Date: March 27, 1996 BY: /S/ Donald E. Petrow Donald E. Petrow Vice President Date: March 27, 1996 BY: /S/ Kate Hobson Kate Hobson Vice President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. CONAM PROPERTY SERVICES IV, LTD. A General Partner By: Continental American Development, Inc. General Partner Date: March 27, 1996 BY: /S/ Daniel J. Epstein Daniel J. Epstein Director and President Date: March 27, 1996 BY: /S/ E. Scott Dupree E. Scott Dupree Vice President/Director Date: March 27, 1996 BY: /S/ Robert J. Svatos Robert J. Svatos Vice President/Director Date: March 27, 1996 BY: /S/ Ralph W. Tilley Ralph W. Tilley Vice President Date: March 27, 1996 BY: /S/ J. Bradley Forrester J. Bradley Forrester Vice President EX-13 2 RI4 EXHIBIT 13 - 1995 ANNUAL REPORT Exhibit 13 Hutton/ConAm Realty Investors 4 1995 Annual Report 1995 Hutton/ConAm Realty Investors 4 is a California limited partnership formed in 1984 to acquire, operate and hold for investment multifamily housing properties. At December 31, 1995, the Partnership's portfolio consisted of four apartment properties located in Arizona, Florida and Texas. Provided below is a comparison of average occupancy levels for the years ended December 31, 1995 and 1994. Average Occupancy Property Location 1995 1994 ____________________________________________________________________ Pelican Landing Clearwater, Florida 97% 97% River Hill Apartments Irving, Texas 96% 96% Shadowood Village Jacksonville, Florida 95% 96% Village at the Foothills II Tucson, Arizona 95% 95% ____________________________________________________________________ Administrative Inquiries Performance Inquiries/Form 10-Ks Address Changes/Transfers First Data Investor Services Group Service Data Corporation P.O. Box 1527 2424 South 130th Circle Boston, Massachusetts 02104-1527 Omaha, Nebraska 68144-2596 Attn: Financial Communications 800-223-3464 (select option 1) 800-223-3464 (select option 2) Contents 1 Message to Investors 2 Performance Summary 3 Financial Highlights 4 Consolidated Financial Statements 7 Notes to the Consolidated Financial Statements 13 Report of Independent Accountants 14 Net Asset Valuation MESSAGE TO INVESTORS Presented for your review is the 1995 Annual Report for Hutton/ConAm Realty Investors 4. In this report, we review Partnership operations and discuss market conditions affecting the Partnership's properties. We have also included a performance summary which addresses operating results at each of the properties and financial highlights for the year. Trails at Meadowlakes and Cypress Lakes Sales - --------------------------------------------- The most significant event during 1995 was the sale of Trails at Meadowlakes and Cypress Lakes on July 20, 1995 to an unaffiliated institutional buyer. The Partnership received net sales proceeds of $17,551,351 and recorded a gain of $2,854,884 on the sale. The Partnership utilized $5,057,952 of the sales proceeds to repay the outstanding principal and interest balance on the mortgage secured by Trails at Meadowlakes. Cash Distributions - ------------------ The Partnership paid cash distributions totaling $122.50 per Unit for the year ended December 31, 1995, including the fourth quarter distribution of $3.75 per Unit, which was credited to your brokerage account or sent directly to you on February 7, 1996. This amount also includes the special distribution of $111.25 per Unit which was paid on August 22, 1995 and resulted primarily from the sale of Trails at Meadowlakes and Cypress Lakes. Since inception, the Partnership has paid cumulative cash distributions totaling $318.01 per original $500 Unit including $94 per Unit in return of capital payments. The level of future distributions will be evaluated on a quarterly basis and will depend on the Partnership's operating results and future cash needs. It is anticipated that cash from reserves may be required to fund a portion of distributions during 1996 as a result of the expenditures for improvements required at two of the Partnership's properties which are discussed in this report. Operations Overview - ------------------- The solid recovery of multifamily housing in most regions of the country began to level off during 1995. New construction intensified competition in many areas with building permits for multifamily units up almost 22% in 1995 compared to 1994 levels. In addition, falling interest rates induced many renters to purchase homes. Despite these trends, strong population and job growth in the areas where the Partnership's properties are located helped strengthen the demand for multifamily housing, and brought about improved performance at the Partnership's properties. All four properties sustained average occupancy rates for the year at or above 95% and recorded higher average rental income from the prior year. During 1996, we intend to implement an extensive improvement program to upgrade the properties. This program, which includes exterior painting and landscaping at Pelican Landing and interior improvements at Pelican Landing and Shadowood Village, is intended to maintain each property's position within their respective markets, which are growing increasingly competitive with the addition of new apartment properties. This is particularly true in the Tucson and Jacksonville markets where Village at the Foothills II and Shadowood Village, respectively, are located. It is also hoped that these improvements will allow for greater increases in rental rates, thereby improving each property's revenue and ultimately their sales value. Updates on the improvements at each property will be included in future correspondence. Summary - ------- Given favorable market conditions, particularly in Irving, Texas, the General Partners will begin marketing River Hill Apartments during the next several months. There can be no assurances that a sale will be completed or that any particular price for the property can be obtained. In addition, we will continue to seek to maintain high occupancy levels, implement rental rate increases as conditions permit, and make property improvements to upgrade the properties. We will keep you apprised of significant developments affecting your investment in future reports. Very truly yours, Paul L. Abbott Daniel J. Epstein President President RI 3-4 Real Estate Services, Inc. Continental American Development Inc. General Partner of ConAm Property Services IV, Ltd. March 27, 1996 PERFORMANCE SUMMARY Pelican Landing, Clearwater, Florida - ------------------------------------ This 204-unit complex, located in southeast Clearwater, achieved average occupancy of 97% in 1995, unchanged from 1994. The stable occupancy coupled with increases in rental rates on renewal units resulted in the property's rental income increasing approximately 5% from 1994. Conditions in the market remain strong despite the addition of several new apartment properties over the past several years. Overall occupancy in the Clearwater market was 97% in the third quarter of 1995, compared with 96% in the third quarter of 1994. Aggressive marketing has minimized the effect the new construction has had on the Partnership's property. During 1995, improvements at the property included the replacement of carpeting and vinyl flooring in several units. River Hill Apartments, Irving, Texas - ------------------------------------ Located in the Las Colinas area of Irving, Texas, this 192-unit apartment complex reported stable occupancy of 96% during 1995. The property's average occupancy rate has remained consistent at 96% for the past three years. The property's rental income increased approximately 5% from 1994 to 1995 as a result of rental rate increases instituted on renewal units during the year. Property improvements during 1995 included carpet, tile and wallpaper replacement in several units. Repairs on a retaining wall at the property are currently underway. The Las Colinas submarket, where River Hill is located, had an average occupancy rate of 97% as of the third quarter of 1995, compared to 96% a year earlier. Strong local market conditions have resulted in an increase in the pace of new construction of multifamily properties with several expected to compete directly with the Partnership's property. Given favorable market conditions, the General Partners will begin marketing River Hill Apartments during the next several months. There can be no assurances that a sale will be completed or that any particular price for the property can be obtained. Shadowood Village, Jacksonville, Florida - ---------------------------------------- Shadowood Village, a 110-unit apartment community, is situated in the Baymeadows-Deerwood neighborhood of southeast Jacksonville. The average occupancy level at Shadowood Village was 95% in 1995 compared with 96% during 1994. The slight decline in occupancy was offset by rate increases instituted during the year, and rental income remained in line with 1994. Minimal property improvements were performed during 1995, largely consisting of carpet replacement. Market conditions in the Baymeadows-Deerwood area remain competitive, with a number of newer apartment properties offering greater amenities and commanding higher rents. Additionally, two new properties are scheduled to open in the area during 1996. Although the use of rental concessions diminished considerably in the last two years, asking rental rates increased only 2% in 1995 in this submarket. Average occupancy in the market increased from 93% in the second quarter of 1994 to 94% in the second quarter of 1995. Village at the Foothills II, Tucson, Arizona - -------------------------------------------- Village at the Foothills II is a 120-unit apartment and townhouse community, located in the Catalina Foothills, overlooking Tucson. Occupancy at this property averaged 95% in 1995 unchanged from 1994. Rental income increased 5% from 1994, reflecting rental rate increases on renewals and turnover during the year. Property improvements during 1995 were minimal and consisted primarily of carpet replacement in selected units and sealing of the parking lot. The property continued to perform well despite intensifying competition in the metro Tucson area brought on by new construction. Competition for tenants is also increasing as renters take advantage of low interest rates on mortgages and opt to purchase homes. Evidence of the intensifying competition can be seen in the area's vacancy rate which has reached 8%, its highest level since 1990. FINANCIAL HIGHLIGHTS Selected Financial Data - ----------------------- For the periods ended December 31, (dollars in thousands, except per Unit data) 1995 1994 1993 1992 1991 - --------------------------------------------------------------------------- Total Revenue $ 6,597 $ 7,633 $ 7,299 $ 7,020 $ 6,821 Gain on Sale of Properties 2,855 0 0 0 0 Net Income 3,260 985 724 719 456 Net Cash Provided by Operating Activities 2,363 3,034 2,778 2,706 2,187 Long-term Obligations at Year End 0 5,051 5,091 5,127 5,159 Total Assets at Year End 27,247 44,686 45,646 47,463 49,387 Net Income per Limited Partnership Unit* 22.28 2.12 2.30 1.31 1.78 Distributions per Limited Partnership Unit* 11.25 9.00 18.00 17.00 21.20 Special Distributions per Limited Partnership Unit* 111.25 0 0 0 0 - ---------------------------------------------------------------------------- *128,110 Units outstanding * Total revenue decreased from 1994 to 1995, primarily due to the July 1995 sale of Trails at Meadowlakes and Cypress Lakes. This was offset partially by increased rental income at the four remaining properties and higher interest income. * The increase in net income from 1994 to 1995 is primarily attributable to the gain recognized on the sale of Trails at Meadowlakes and Cypress Lakes. The sales also resulted in decreases in nearly all major expense categories. Cash Distributions Per Limited Partnership Unit 1995 1994 - ---------------------------------------------------------------------- Special Distributions* $ 111.25 $ 0 First Quarter 0 4.50 Second Quarter 3.75 4.50 Third Quarter 3.75 0 Fourth Quarter 3.75 0 ------- ---- Total $ 122.50 $ 9.00 * On August 22, 1995, the Partnership paid a special cash distribution totaling $111.25 per Unit, reflecting net proceeds received from the sale of Trails and Meadowlakes and Cypress Lakes of $94 per Unit and excess cash reserves of $17.25 per Unit which the General Partners determined could be distributed since the loan secured by Trails at Meadowlakes was paid off. Consolidated Balance Sheets December 31, 1995 and 1994 Assets 1995 1994 - -------------------------------------------------------------------------- Investments in real estate: Land $ 7,526,126 $ 12,088,984 Buildings and improvements 26,226,602 48,236,772 ------------------------------ 33,752,728 60,325,756 Less accumulated depreciation (8,958,549) (18,896,846) ------------------------------ 24,794,179 41,428,910 Cash and cash equivalents 2,436,356 3,234,383 Other assets 16,206 22,527 ------------------------------ Total Assets $ 27,246,741 $ 44,685,820 ============================== Liabilities and Partners' Capital Liabilities: Mortgage payable $ 0 $ 5,051,086 Distribution payable 587,171 0 Accounts payable and accrued expenses 168,831 137,009 Security deposits 143,040 288,335 Due to general partners and affiliates 32,209 54,369 ------------------------------ Total Liabilities 931,251 5,530,799 ------------------------------ Partners' Capital General Partners 0 0 Limited Partners 26,315,490 39,155,021 ------------------------------ Total Partners' Capital 26,315,490 39,155,021 ------------------------------ Total Liabilities and Partners' Capital $ 27,246,741 $ 44,685,820 ============================== Consolidated Statements of Partners' Capital For the years ended December 31, 1995, 1994 and 1993 General Limited Partners Partners Total - ----------------------------------------------------------------------------- Balance at January 1, 1993 $ (757,472) $ 42,047,655 $ 41,290,183 Net income 429,056 294,454 723,510 Cash distributions (256,220) (2,305,980) (2,562,200) ------------------------------------------ Balance at December 31, 1993 (584,636) 40,036,129 39,451,493 Net income 712,746 271,882 984,628 Cash distributions (128,110) (1,152,990) (1,281,100) ------------------------------------------ Balance at December 31, 1994 0 39,155,021 39,155,021 Net income 405,680 2,853,944 3,259,624 Cash distributions (405,680) (15,693,475) (16,099,155) ------------------------------------------- Balance at December 31, 1995 $ 0 $ 26,315,490 $ 26,315,490 =========================================== Consolidated Statements of Operations For the years ended December 31, 1995, 1994 and 1993 Income 1995 1994 1993 - ------------------------------------------------------------------------------ Rental $ 6,351,434 $ 7,552,784 $ 7,249,001 Interest 245,330 79,860 50,212 ------------------------------------------ Total Income 6,596,764 7,632,644 7,299,213 ------------------------------------------ Expenses Property operating 3,630,788 3,927,435 3,860,345 Loss on write-down of real estate 477,170 0 0 Depreciation 1,610,725 2,034,770 2,031,845 Interest 283,556 513,636 517,447 General and administrative 189,785 172,175 166,066 ------------------------------------------ Total Expenses 6,192,024 6,648,016 6,575,703 ------------------------------------------ Income from operations 404,740 984,628 723,510 Gain on sale of properties 2,854,884 0 0 Net Income $ 3,259,624 $ 984,628 $ 723,510 ========================================== Net Income Allocated: To the General Partners $ 405,680 $ 712,746 $ 429,056 To the Limited Partners 2,853,944 271,882 294,454 ------------------------------------------ Net Income $ 3,259,624 $ 984,628 $ 723,510 ========================================== Per limited partnership unit (128,110 outstanding) Income from operations $ 2.00 $ 2.12 $ 2.30 Gain on sale of property 20.28 0 0 ------------------------------------------ Net Income $ 22.28 $ 2.12 $ 2.30 ========================================== Consolidated Statements of Cash Flows For the years ended December 31, 1995, 1994 and 1993 Cash Flows from Operating Activities: 1995 1994 1993 - ------------------------------------------------------------------------------ Net income $ 3,259,624 $ 984,628 $ 723,510 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,610,725 2,034,770 2,031,845 Loss on write-down of real estate 477,170 0 0 Gain on sale of properties (2,854,884) 0 0 Increase (decrease) in cash arising from changes in operating assets and liabilities: Other assets 6,321 (2,205) 0 Accounts payable and accrued expenses 31,822 (1,600) (18,919) Security deposits (145,295) 15,144 43,524 Due to general partners and affiliates (22,160) 2,849 (2,323) ----------------------------------- Net cash provided by operating activities 2,363,323 3,033,586 2,777,637 ----------------------------------- Cash Flows from Investing Activities: Net proceeds from sale of properties 17,551,351 0 0 Additions to real estate (149,631) (39,087) (63,188) ----------------------------------- Net cash provided by (used for) investing activities 17,401,720 (39,087) (63,188) ----------------------------------- Cash Flows from Financing Activities: Mortgage principal payments (5,051,086) (39,742) (35,930) Distributions (15,511,984) (1,921,650) (2,526,614) ----------------------------------- Net cash used for financing activities (20,563,070) (1,961,392) (2,562,544) ----------------------------------- Net increase (decrease) in cash and cash equivalents (798,027) 1,033,107 151,905 Cash and cash equivalents at beginning of year 3,234,383 2,201,276 2,049,371 ----------------------------------- Cash and cash equivalents at end of year $ 2,436,356 $3,234,383 $2,201,276 =================================== Supplemental Disclosure of Cash Flow Information: Cash paid during the year for interest $ 283,556 $ 513,636 $ 517,447 ----------------------------------- Notes to the Consolidated Financial Statements For the years ended December 31, 1995, 1994 and 1993 1. Organization Hutton/ConAm Realty Investors 4 (the "Partnership") was organized as a limited partnership under the laws of the State of California pursuant to a Certificate and Agreement of Limited Partnership (the "Partnership Agreement") dated May 10, 1984. The Partnership was formed for the purpose of acquiring and operating certain types of residential real estate. The general partners of the Partnership are RI 3-4 Real Estate Services, Inc., an affiliate of Lehman Brothers (see below), and ConAm Property Services IV, Ltd. ("ConAm"), an affiliate of Continental American Properties, Ltd (the "General Partners"). The Partnership will continue until December 31, 2010 unless sooner terminated pursuant to the terms of the Partnership Agreement. On July 31, 1993, Shearson Lehman Brothers Inc. sold certain of its domestic retail brokerage and asset management business to Smith Barney, Harris Upham & Co. Incorporated ("Smith Barney"). Subsequent to the sale, Shearson Lehman Brothers Inc. changed its name to Lehman Brothers Inc. ("Lehman Brothers"). The transaction did not affect the ownership of the General Partners. However, the assets acquired by Smith Barney included the name "Hutton". Consequently, effective October 8, 1993, the Hutton Real Estate Services VIII, Inc. General Partner changed its name to RI 3-4 Real Estate Services, Inc. On March 15, 1996, based upon, among other things, the advice of Partnership counsel, Skadden, Arps, Slate, Meagher & Flom, the General Partners adopted a resolution that states, among other things, if a Change of Control (as defined below) occurs, the General Partners may distribute the Partnership's cash balances not required for its ordinary course day-to-day operations. "Change of Control" means any purchase or offer to purchase more than 10% of the Units that is not approved in advance by the General Partners. In determining the amount of the distribution, the General Partners may take into account all material factors. In addition, the Partnership will not be obligated to make any distribution to any partner and no partner will be entitled to receive any distribution until the General Partners have declared the distribution and established a record date and distribution date for the distribution. The Partnership filed a Form 8-K disclosing this resolution on March 21, 1996. 2. Significant Accounting Policies Financial Statements. The consolidated financial statements include the accounts of the Partnership and its affiliated ventures. The effect of transactions between the Partnership and its ventures have been eliminated in consolidation. Real Estate Investments. Real estate investments are recorded at the lower of cost, less accumulated depreciation or fair value and includes the initial purchase price of the property, legal fees, acquisition and closing costs. Leases are accounted for under the operating method. Under this method, revenue is recognized as rentals are earned and expenses (including depreciation) are charged to operations when incurred. Leases are generally for terms of one year or less. Depreciation is computed using the straight-line method based upon the estimated useful lives of the properties. Maintenance and repairs are charged to operations as incurred. Significant betterments and improvements are capitalized and depreciated over their estimated useful lives. For assets sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in income for the period. Accounting for Impairment. In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("FAS 121"), which requires impairment losses to be recorded on long-lived assets in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. FAS 121 also addresses the accounting for long-lived assets that are expected to be disposed of. The Partnership has adopted FAS 121 in the fourth quarter of 1995. Offering Costs. Costs relating to the sale of limited partnership units were deferred during the offering period and charged to the limited partners' capital accounts upon the consummation of the public offering. Income Taxes. No provision for income taxes has been made in the financial statements since income, losses and tax credits are passed through to the individual partners. Cash and Cash Equivalents. Cash equivalents consist of short-term highly liquid investments which have maturities of three months or less from the date of issuance. The carrying amount approximates fair value because of the short maturity of these instruments. Cash and cash equivalents include security deposits of $87,579 and $232,692 at December 31, 1995 and 1994 respectively, restricted under certain state statutes. Concentration of Credit Risk. Financial instruments which potentially subject the Partnership to a concentration of credit risk principally consist of cash and cash equivalents in excess of the financial institutions' insurance limits. The Partnership invests available cash with high credit quality financial institutions. Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. The Partnership Agreement The Partnership Agreement provides that net cash from operations, as defined, will be distributed quarterly, 90% to the limited partners and 10% to the General Partners. Net loss and all depreciation for any fiscal year will be allocated 99% to the limited partners and 1% to the General Partners. Net income before depreciation will be allocated as follows: (a) To the extent that net income from operations before depreciation does not exceed the amount of net cash from operations distributable to the partners with respect to such fiscal year, net income from operations before depreciation shall be allocated among the partners, pro rata in accordance with the amount of net cash from operations distributable to each partner with respect to such fiscal year to the extent thereof; and (b) To the extent that net income from operations before depreciation exceeds the amount of net cash from operations distributable to the partners with respect to such fiscal year, such excess shall be allocated (1) first, 100% to the General Partners, pro rata, in an amount equal to the excess, if any, of the General Partners' deficits, if any, in their capital accounts, over an amount equal to 1% of the aggregate capital contributions to the Partnership as reduced by the amount of the General Partners' capital contributions, and (2) second, 99% to the limited partners and 1% to the General Partners. For the years ended December 31, 1995 and 1994, net income from operations before depreciation exceeded net cash from operations distributable to the partners by $414,090 and $1,738,298 respectively. Pursuant to the Partnership Agreement and (b)(1) above, $4,141 and $597,962 of this excess was allocated to the General Partners for the years ended December 31, 1995 and 1994, respectively. Net proceeds from sales or refinancing will be distributed 100% to the limited partners until each limited partner has received an amount equal to his adjusted capital value (as defined) and an annual, cumulative 7% return thereon. The balance, if any, will be distributed 85% to the limited partners and 15% to the General Partners. 4. Real Estate Investments Real estate investments consist of four residential apartment complexes acquired either directly or through investments in joint ventures and limited partnerships as follows: Apartment Date Purchase Property Name Units Location Acquired Price - --------------------------------------------------------------------- Pelican Landing 204 Clearwater, FL 3/28/85 $ 12,179,329 Village at the Foothills II 120 Tucson, AZ 5/30/85 7,216,400 River Hill Apartments 192 Irving, TX 6/12/85 11,488,015 Shadowood Village 110 Jacksonville, FL 7/3/86 5,400,000 - --------------------------------------------------------------------- Pelican Landing Apartments was acquired directly by the Partnership. Village at the Foothills II was acquired through a joint venture with an unaffiliated developer and River Hill Apartments and Shadowood Village were acquired through limited partnerships with unaffiliated developers. To each limited partnership and joint venture, the Partnership assigned its rights to acquire the above properties and contributed cash equal to the purchase price of the properties. The Partnership's partners did not make initial capital contributions to these limited partnerships and joint ventures. On July 20, 1995, the Partnership sold Trails at Meadowlakes and Cypress Lakes (the "Properties"). Trails at Meadowlakes and Cypress Lakes sold for $8,940,000 and $8,825,000, respectively, to an institutional buyer (the "Buyer"), which is unaffiliated with the Partnership. The selling price was determined by arm's length negotiations between the Partnership and the Buyer. The Partnership received net proceeds of $17,551,351 from the transaction of which $5,057,952, representing outstanding principal and interest, was used to fully satisfy the Partnership's mortgage obligation on Trails at Meadowlakes. The transaction resulted in a gain on sale of $2,854,884 for financial statement purposes. On August 22, 1995, the Partnership paid a special distribution of $14,252,238 to the limited partners. The special distribution was comprised of net proceeds from the sale of the Properties and from Partnership cash reserves. Based on the adoption of FAS 121, the Partnership recorded a write-down of $477,170 to reduce the carrying value of River Hill Apartments to its estimated fair value. The impairment was caused by the need for necessary property improvements and changing market conditions. The initial joint venture and limited partnership agreements of Village at the Foothills II, River Hill Apartments and Shadowood Village substantially provide that: a. Net cash from operations of Village at the Foothills II and River Hill Apartments will be distributed 100% to the Partnership until it has received an annual, noncumulative return of 10% and 12%, respectively, on its adjusted capital contribution. Any remaining balance will be distributed 60% to the Partnership and 40% to the co-venturer. Net cash from operations of Shadowood Village will be distributed 100% to the Partnership. b. Net income of the joint ventures and limited partnerships will be allocated to the Partnership and the co-venturers basically in accordance with the distribution of net cash from operations. All net losses and depreciation will be allocated to the Partnership. c. Net proceeds from a sale or refinancing of Village at Foothills II will be distributed 100% to the Partnership, until it has received an amount equal to 120% of its adjusted capital contribution. Distributions will then be made 75% to the Partnership and 25% to the co-venturer, until the Partnership has received an additional 120% of the Partnership's adjusted capital contribution. Any remaining balance will be distributed 50% to the Partnership and 50% to the co-venturer. Net proceeds from a sale or refinancing of River Hill Apartments will be distributed 100% to the Partnership, until it has received an amount equal to 110% of its adjusted capital contribution. Distributions will then be made 75% to the Partnership and 25% to the co-venturer, until the Partnership has received an additional 110% of the Partnership's adjusted capital contribution. Any remaining balance will be distributed 50% to the Partnership and 50% to the co-venturer. Net proceeds from a sale or refinancing of Shadowood Village will be distributed 100% to the Partnership, until it has received an amount equal to 120% of its adjusted capital contribution. Any remaining balance will be distributed 50% to the Partnership and 50% to the co-venturer. The amended joint venture and limited partnership agreements of Village at the Foothills II and Shadowood Village substantially provide that: a. Available cash from operations will be distributed 100% to the Partnership until it has received its annual, noncumulative preferred return, as defined. Any remaining balance will be distributed 99% to the Partnership and 1% to the corporate General Partners. b. Net income will be allocated first, proportionately to partners with negative capital accounts, as defined, until such capital accounts, as defined, have been increased to zero; then, to the Partnership up to the amount of any payments made on account of its preferred return; thereafter, 99% to the Partnership and 1% to the corporate General Partners. All losses will be allocated first to the partners with positive capital accounts, as defined, until such accounts have been reduced to zero and, then, 99% to the Partnership and 1% to the corporate General Partners. c. Income from a sale will be allocated to the Partnership until the Partnership's capital accounts, as defined, are equal to the fair market value of the venture's assets at the date of the amendments; then, any remaining balance will be allocated 99% to the Partnership and 1% to the corporate General Partners. Net proceeds from a sale or refinancing will be distributed first to the partners with a positive capital account balance, as defined; thereafter, 99% to the Partnership and 1% to the corporate General Partners. 5. Mortgage Payable On July 19, 1985, the Partnership obtained financing of $5,200,000, collateralized by a first mortgage encumbering Trails at MeadowLakes. The loan had an initial term of five years bearing interest at an annual rate of 12.50% with monthly payments of interest only. The loan was extended in 1990 for an additional five years bearing interest at a rate of 10.125% with monthly principal and interest payments. On July 20, 1995 the partnership closed on the sale of Trails at Meadowlakes and used a portion of the sales proceeds to satisfy the Partnership's outstanding mortgage obligation of $5,029,661. 6. Transactions with Related Parties The following is a summary of fees earned and reimbursable expenses paid for the years ended December 31, 1995 1994 and 1993, and the unpaid portion at December 31, 1995: Unpaid at December 31, Earned 1995 1995 1994 1993 - ---------------------------------------------------------------------------- Reimbursement of: Out-of-pocket expenses $ 0 $ 3,541 $ 2,227 $ 2,465 Administrative salaries and expenses 12,607 54,959 41,693 33,019 Property operating salaries 0 411,731 610,064 581,922 Property management fees 19,602 322,934 378,727 363,258 ------------------------------------------ $ 32,209 $793,165 $1,032,711 $ 980,664 ========================================== The above amounts have been paid and/or accrued to the General Partners and affiliates as follows: Unpaid at December 31, Earned 1995 1995 1994 1993 - ------------------------------------------------------------------------------ RI 3-4 Real Estate Services, Inc. $ 12,607 $ 58,500 $ 43,920 $ 35,484 ConAm and affiliates 19,602 734,665 988,791 945,180 -------------------------------------------- $ 32,209 $ 793,165 $1,032,711 $ 980,664 ============================================ 7. Reconciliation of Financial Statement and Tax Information The following is a reconciliation of the net income for financial statement purposes to net income for federal income tax purposes for the years ended December 31, 1995, 1994 and 1993: 1995 1994 1993 - ----------------------------------------------------------------------------- Net income per financial statements $ 3,259,624 $ 984,628 $ 723,510 Depreciation deducted for tax purposes in excess of depreciation expense per financial statements (105,426) (159,133) (386,409) Tax basis joint venture net loss in excess of GAAP basis joint venture net income (103,451) (106,637) (105,138) Financial statement loss on write-down of real estate over tax basis loss on write-down of real estate 477,170 0 0 Gain on sale of properties for tax purposes in excess of gain per financial statements 5,305,729 0 0 Other 470 (25,567) 34,227 ------------------------------------ Taxable net income $ 8,834,116 $ 693,291 $ 266,190 ==================================== The following is a reconciliation of partners' capital for financial statement purposes to partners' capital for federal income tax purposes as of December 31, 1995, 1994 and 1993: 1995 1994 1993 - ------------------------------------------------------------------------------ Partners' capital per financial statements $ 26,315,490 $ 39,155,021 $ 39,451,493 Adjustment for cumulative difference between tax basis net income and net income per financial statements (1,635,149) (7,209,641) (6,918,304) ---------------------------------------- Partners' capital per tax return $ 24,680,341 $ 31,945,380 $ 32,533,189 ======================================== 8. Distributions Paid Cash distributions, per the consolidated statements of partners' capital, are recorded on the accrual basis, which recognizes specific record dates for payments within each calendar year. The consolidated statements of cash flows recognize actual cash distributions paid during the calendar year. The following table discloses the annual amounts as presented on the consolidated financial statements: Distributions Distributions Payable Distributions Distributions Payable Beginning of Year Declared Paid December 31, - ------------------------------------------------------------------------------ 1995 $ 0 $ 16,099,155 $ 15,511,984 $ 587,171 1994 640,550 1,281,100 1,921,650 0 1993 604,964 2,562,200 2,526,614 640,550 - ------------------------------------------------------------------------------ REPORT OF INDEPENDENT ACCOUNTANTS To the Partners of Hutton/ConAm Realty Investors 4: We have audited the consolidated balance sheets of Hutton/ConAm Realty Investors 4, a California limited partnership, and Consolidated Ventures as of December 31, 1995 and 1994, and the related consolidated statements of operations, partners' capital (deficit) and cash flows for each of the three years in the period ended December 31, 1995. These consolidated financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Hutton/ConAm Realty Investors 4, a California limited partnership, and Consolidated Ventures as of December 31, 1995 and 1994, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. As discussed in Note 2 to the financial statements, the Partnership adopted the provisions of Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," in 1995. COOPERS & LYBRAND L.L.P. Hartford, Connecticut February 1, 1996 Comparison of Acquisition Costs to Appraised Value and Determination of Net Asset Value Per $406 Unit at December 31, 1995 (Unaudited) Acquisition Cost (Purchase Price Partnership's Plus General Share of Partners' December 31, Acquisition 1995 Appraised Property Date of Acquisition Fees) Value (1) - ---------------------------------------------------------------------------- Pelican Landing 03-28-85 $ 12,700,000 $ 11,300,000 Village at the Foothills II 05-30-85 7,376,000 4,700,000 River Hill Apartments 06-12-85 12,016,575 7,700,000 Shadowood Village 07-03-86 5,649,540 4,350,000 -------------------------- $ 37,742,115 $ 28,050,000 -------------------------- Cash and cash equivalents 2,436,356 Other assets 16,206 ---------- 30,502,562 Less: Total liabilities (931,251) ---------- Partnership Net Asset Value (2) $ 29,571,311 ---------- Net Asset Value Allocated: Limited Partners $ 29,571,311 General Partners 0 ---------- $ 29,571,311 ---------- Net Asset Value Per Unit (128,110 units outstanding) $230.83 ======= (1) This represents the Partnership's share of the December 31, 1995 Appraised Values which were determined by an independent property appraisal firm. (2) The Net Asset Value assumes a hypothetical sale at December 31, 1995 of all the Partnership's properties at a price based upon their value as a rental property as determined by an independent property appraisal firm, and the distribution of the proceeds of such sale, combined with the Partnership's cash after liquidation of the Partnership's liabilities, to the Partners. Limited Partners should note that appraisals are only estimates of current value and actual values realizable upon sale may be significantly different. A significant factor in establishing an appraised value is the actual selling price for properties which the appraiser believes are comparable. In addition, the appraised value does not reflect the actual costs which would be incurred in selling the properties. As a result of these factors and the illiquid nature of an investment in Units of the Partnership, the variation between the appraised value of the Partnership's properties and the price at which Units of the Partnership could be sold is likely to be significant. Fiduciaries of Limited Partners which are subject to ERISA or other provisions of law requiring valuations of Units should consider all relevant factors, including, but not limited to Net Asset Value per Unit, in determining the fair market value of the investment in the Partnership for such purposes. HUTTON/CONAM REALTY INVESTORS 4 Schedule III - Real Estate and Accumulated Depreciation December 31, 1995 Cost Capitalized Subsequent Initial Cost to Partnership To Acquisition --------------------------- ------------- Land Buildings and Buildings and Description Encumbrances Land Improvements Improvements - ----------------------------------------------------------------------------- Residential Property: Partnership Owned: Pelican Landing Clearwater, FL $ 0 $ 3,484,946 $ 9,422,260 $ (23,595) Consolidated Ventures: River Hill Apts. Irving, TX 0 3,059,866 9,060,195 78,572 Provision for loss Village at Foothills II Tucson, AZ 0 1,584,049 5,838,595 11,134 Shadowood Village Jacksonville, FL 0 566,000 5,125,065 44,274 ----------------------------------------------------- $ 0 $ 8,694,861 $29,446,115 $ 110,385 ===================================================== Gross Amount at Which Carried at Close of Period --------------------------------- Buildings and Accumulated Description Land Improvements Total Depreciation - ------------------------------------------------------------------------------ Residential Property: Partnership Owned: Pelican Landing Clearwater, FL $ 3,474,525 $ 9,409,086 $ 12,883,611 $ 4,262,993 Consolidated Ventures: River Hill Apts. Irving, TX 3,060,810 9,137,823 12,198,633 4,021,463 Provision for loss (1,162,447) (3,336,186) (4,498,633) 0 Village at Foothills II Tucson, AZ 1,583,964 5,849,814 7,433,778 2,602,082 Shadowood Village Jacksonville, FL 569,274 5,166,065 5,735,339 2,093,474 -------------------------------------------------------- $7,526,126 $ 26,226,602 $ 33,752,728 $ 8,958,549 ======================================================== (1) (2) Life on which Depreciation in Latest Date of Date Income Statements Description Construction Acquired is Computed - ----------------------------------------------------------------------------- Residential Property: Partnership Owned: Pelican Landing Clearwater, FL 1984 - 1985 3/11/87 (3) Consolidated Ventures: River Hill Apts. Irving, TX 1984 - 1985 6/12/85 (3) Village at Foothills II Tucson, AZ 1984 - 1985 5/30/85 (3) Shadowood Village Jacksonville, FL 1985 - 1986 7/3/86 (3) (1) Represents aggregate cost for both financial reporting and Federal income tax purposes. (2) The amount of accumulated depreciation for Federal income tax purposes is $21,724,496. (3) Buildings and improvements - 25 years; personal property - 10 years. A reconciliation of the carrying amount of real estate and accumulated depreciation for the years ended December 31, 1995, 1994 and 1993: Real Estate investments: 1995 1994 1993 - ----------------------------------------------------------------------------- Beginning of year $ 60,325,756 $ 60,286,669 $ 60,223,481 Additions 149,631 39,087 63,188 Write-down (4,498,633) 0 0 Dispositions (22,224,026) 0 0 ------------------------------------------ End of year $ 33,752,728 $ 60,325,756 $ 60,286,669 ========================================== Accumulated Depreciation: Beginning of year $ 18,896,846 $ 16,862,076 $ 14,830,231 Dispositions (7,527,559) 0 0 Write-down (4,021,463) 0 0 Depreciation expense 1,610,725 2,034,770 2,031,845 ------------------------------------------ End of year $ 8,958,549 $ 18,896,846 $ 16,862,076 ========================================== Report of Independent Accountants Our report on the consolidated financial statements of Hutton/ConAm Realty Investors 4, a California limited partnership, and Consolidated Ventures has been incorporated by reference in this Form 10-K from the Annual Report to unitholders of Hutton/ConAm Realty Investors 4 for the year ended December 31, 1995. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed in the index of this Form 10-K. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND L.L.P. Hartford, Connecticut February 1, 1996 EX-27 3 RI4 FINANCIAL DATA SCHEDULE FOR 1995 FORM 10-K
5 12-MOS DEC-31-1995 DEC-31-1995 2,436,356 000 000 000 000 000 33,752,728 8,958,549 27,246,741 000 000 000 000 000 000 27,246,741 000 6,596,764 000 3,630,788 1,800,510 477,170 283,556 000 000 000 000 000 000 3,259,624 22.28 22.28
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