10QSB 1 bref4.txt BRAUVIN REAL ESTATE FUND LP 4 9-30-07 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2007 or [ ]Transition Report Pursuant to Section 13 or 15(d) of the Se curities Exchange Act of 1934 For the transition period from _________ to ____________ Commission File Number __________ 0-13402_______________ _____________Brauvin Real Estate Fund L.P. 4_______________ (Name of small business issuer as specified in its charter) Delaware 36-3304339 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 30 North LaSalle Street, Chicago, Illinois 60602 (Address of principal executive offices) (Zip Code) (312)759-7660 (Issuer's telephone number) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None None Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Interests (Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the issuer 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 whether registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]. Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes No X. INDEX PART I Page Item 1. Financial Statements 3 Consolidated Statement of Net Assets in Liquidation as of September 30, 2007(Liquidation Basis) 4 Consolidated Statement of Changes in Net Assets in Liquidation for the period January 1, 2007 to September 30, 2007 (Liquidation Basis) 5 Consolidated Statement of Changes in Net Assets in Liquidation for the period January 1, 2006 to September 30, 2006 (Liquidation Basis) 6 Consolidated Statement of Operations for the nine months ended September 30, 2007 and 2006 (Liquidation Basis) 7 Consolidated Statements of Operations for the three months ended September 30, 2007 and 2006 (Liquidation Basis) 8 Notes to Consolidated Financial Statements 9 Item 2. Management's Discussion and Analysis or Plan of Operation 17 Item 3. Controls and Procedures 22 PART II Item 1. Legal Proceedings 23 Item 2. Changes in Securities 23 Item 3. Defaults Upon Senior Securities 23 Item 4. Submission of Matters to a Vote of Security Holders 23 Item 5. Other Information 23 Item 6. Exhibits, and Reports on Form 8-K 23 Signatures 24 BRAUVIN REAL ESTATE FUND L.P. 4 (a Delaware limited partnership) PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements The following Consolidated Statement of Net Assets in Liquidation as of September 30, 2007 (Liquidation Basis), Consolidated Statement of Changes in Net Assets in Liquidation for the period January 1, 2007 to September 30, 2007 (Liquidation Basis), Consolidated Statement of Changes in Net Assets in Liquidation for the period January 1, 2006 to September 30, 2006 (Liquidation Basis, Consolidated Statements of Operations for the nine months ended September 30, 2007 and 2006 (Liquidation Basis) and Consolidated Statements of Operations for the three months ended September 30, 2007 and 2006 (Liquidation Basis) for Brauvin Real Estate Fund L.P. 4 (the "Partnership") are unaudited but reflect, in the opinion of the management, all adjustments necessary to present fairly the information required. All such adjustments are of a normal recurring nature. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Partnership's 2006 Annual Report on Form 10-KSB. BRAUVIN REAL ESTATE FUND L.P. 4 (a Delaware limited partnership) CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION AS OF SEPTEMBER 30, 2007 (LIQUIDATION BASIS) (Unaudited) ASSETS Real estate held for sale $6,026,500 Cash and cash equivalents 391,904 Tenant receivables 8,619 Escrow deposits 200,962 Other assets 38,102 ---------- Total Assets 6,666,087 ---------- LIABILITIES Mortgage notes payable (Note 4) 4,400,000 Accounts payable and accrued expenses 95,755 Reserve for estimated costs during the period of liquidation 129,450 Tenant security deposits 13,090 Due to affiliates 4,049 ---------- Total Liabilities 4,642,344 ---------- Net Assets in Liquidation $2,023,743 ========== See accompanying notes to consolidated financial statements. BRAUVIN REAL ESTATE FUND L.P. 4 (a Delaware limited partnership) CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION FOR THE PERIOD JANUARY 1, 2007 TO SEPTEMBER 30, 2007 (LIQUIDATION BASIS) (Unaudited) Net assets in liquidation at January 1, 2007 $1,970,445 Adjustment to estimated liquidation costs 29,475 Excess revenue over expenses from operations 23,823 ---------- Net assets in liquidation at September 30, 2007 $2,023,743 ========== Net assets available to: General Partners $ -- ========== Limited Partners $2,023,743 ========== See accompanying notes to consolidated financial statements. BRAUVIN REAL ESTATE FUND L.P. 4 (a Delaware limited partnership) CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION FOR THE PERIOD JANUARY 1, 2006 TO SEPTEMBER 30, 2006 (LIQUIDATION BASIS) (Unaudited) Net assets in liquidation at January 1, 2006 as previously reported $2,092,903 Restatement to eliminate deferred gain 464,312 ---------- Net assets in liquidation at January 1, 2006 as restated 2,557,215 Adjustment to estimated liquidation costs (50,325) Excess (expenses) over revenue from operations (519,948) ---------- Net assets in liquidation at September 30, 2006 $1,986,942 ========== Net assets available to General Partners $ -- ========== Limited Partners $1,986,942 ========== See accompanying notes to consolidated financial statements. BRAUVIN REAL ESTATE FUND L.P. 4 (a Delaware limited partnership) CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 and 2006 (LIQUIDATION BASIS) (Unaudited) 2007 2006 -------- --------- INCOME Rental $562,367 $ 532,044 Interest 4,732 16,336 Other, primarily tenant expense reimbursements 94,629 120,348 -------- ---------- Total income 661,728 668,728 -------- ---------- EXPENSES Interest 255,463 240,356 Real estate taxes 88,363 83,367 Repairs and maintenance 36,512 20,309 Management fees (Note 5) 39,356 37,676 Other property operating 40,893 30,164 General and administrative 177,318 765,479 -------- ---------- Total expenses 637,905 1,177,351 -------- ---------- Excess revenue over (expenses) before equity interests 23,823 (508,623) Equity interest in Sabal Palm Joint Venture's excess (expenses) over revenue -- (11,325) -------- ---------- Excess revenue over (expenses) from operations $ 23,823 $(519,948) ======== ========= See accompanying notes to consolidated financial statements. BRAUVIN REAL ESTATE FUND L.P. 4 (a Delaware limited partnership) CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007 and 2006 (LIQUIDATION BASIS) (Unaudited) 2007 2006 -------- -------- INCOME Rental $187,970 $173,704 Interest 1,183 6,079 Other, primarily tenant expense reimbursements 29,689 32,111 -------- -------- Total income 218,842 211,894 -------- -------- EXPENSES Interest 87,019 84,244 Real estate taxes 29,440 25,984 Repairs and maintenance 4,861 12,343 Management fees (Note 5) 12,741 11,211 Other property operating 16,444 9,065 General and administrative 50,174 247,462 -------- -------- Total expenses 200,679 390,309 -------- -------- Excess expenses over revenue from operations $ 18,163 $(178,415) ======== ========= See accompanying notes to consolidated financial statements. BRAUVIN REAL ESTATE FUND L.P. 4 (a Delaware limited partnership) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements consolidate the accounts of Brauvin Real Estate Fund L.P. 4 (the "Partnership") and Brauvin Raleigh, LLC in addition to a 47% interest in another joint venture, which is accounted for using the equity method of accounting. The Partnership is a Delaware limited partnership organized for the purpose of acquiring, operating, holding for investment and disposing of existing office buildings, medical office centers, shopping centers and industrial and retail commercial buildings of a general purpose nature, all in metropolitan areas. The General Partners of the Partnership are Brauvin Ventures, Inc. and Jerome J. Brault. Mr. Cezar M. Froelich resigned as a director of the corporate general partner in December 1994, and resigned as an Individual General Partner effective 90 days from August 14, 1997. Brauvin Ventures, Inc. is owned by A.G.E. Realty Corporation Inc.(50%), and by Messrs. Brault (beneficially) (25%) and Froelich (25%). A. G. Edwards & Sons, Inc. and Brauvin Securities, Inc., affiliates of the General Partners, were the selling agents of the Partnership. The Partnership is managed by an affiliate of the General Partners. The General Partners of the Partnership filed a Registration Statement on Form S-11 with the Securities and Exchange Commission which became effective on February 16, 1984. The sale of the minimum of $1,200,000 of limited partnership interests of the Partnership (the "Units") necessary for the Partnership to commence operations was achieved on April 30, 1984 and the Partnership was formed. The Partnership's offering closed on December 31, 1984. A total of $9,550,000 of Units were subscribed and issued between February 16, 1984 and December 31, 1984 pursuant to the Partnership's public offering. Properties acquired by the Partnership either directly or indirectly through affiliated joint ventures were: (a) Fortune Professional Building (which was sold February 2003); (b) Raleigh Springs Marketplace; (c) Strawberry Fields Shopping Center(which was sold in July 2001) and (d) Sabal Palm Shopping Center(which was sold in December 2005). SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Management's 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates significant to the financial statements include the value used for real estate held for sale, and the reserve for estimated costs during the period of liquidation. Management has estimated that the remaining property will be sold and the Partnership will liquidate by the end of 2007. Actual results could differ from those estimates. Basis of Presentation As a result of the July 12, 1999 authorization by a majority of the Limited Partners to sell the Partnership's properties, the Partnership has begun the liquidation process and, in accordance with generally accepted accounting principles, the Partnership's financial statements for periods subsequent to July 12, 1999 have been prepared on the liquidation basis of accounting. Accordingly, the carrying values of assets are presented at their net realizable amounts and liabilities are presented at estimated settlement amounts, including estimated costs associated with carrying out the liquidation. Preparation of the financial statements on a liquidation basis requires significant assumptions by management, including the estimate of liquidation costs and the resolution of any contingent liabilities. There may be differences between the assumptions and the actual results because events and circumstances frequently do not occur as expected. Those differences, if any, could result in a change in the net assets recorded in the statement of net assets in liquidation as of September 30, 2007. Estimated Liquidation Costs Estimated costs expected to be incurred during the remaining liquidation period through December 31, 2007 include legal fees, insurance costs and other administrative items. Such costs do not include costs associated with leasing available space at Raleigh Springs. Actual results could differ materially from these estimates. On a regular basis an evaluation is made of the assumptions, judgments and estimates and changes are recorded, as appropriate. Accounting Method The accompanying consolidated financial statements have been prepared in accordance with the liquidation basis of accounting. Tenant Receivables Tenant receivables are comprised of (a) billed but uncollected amounts due for monthly rents and other charges and (b) estimated unbilled amounts due for tenant reimbursement of common area maintenance charges and property taxes. Receivables are recorded at net realizable value. An allowance for doubtful accounts of $46,389 is based on specific identification of uncollectible accounts and the Partnership's historical collection experience. Federal Income Taxes Under the provisions of the Internal Revenue Code, the Partnership's income and losses are reportable by the partners on their respective income tax returns. Accordingly, no provision is made for Federal income taxes in the financial statements. Principles of Consolidation The Partnership has one affiliate, Brauvin Raleigh, L.L.C. which is owned 100% by the Partnership. The accounts of the Partnership have been consolidated with its wholly owned subsidiary in the accompanying financial statements. All significant intercompany balances and transactions have been eliminated upon consolidation. Investment in Joint Venture Partnership The Partnership owned a 47% equity interest in Sabal Palm Joint Venture (see Note 6). Sabal Palm was reported as an investment in an affiliated joint venture. The Partnership recorded its proportionate share of income and loss from joint venture operations. On December 7, 2005 the joint venture sold the Sabal Palm property for a gross sales price of $4,350,000. The joint venture received net sales proceeds, after repayment of the first mortgage, of approximately $1,601,000 and recognized a gain on the sale of $1,189,925. In 2006, the joint venture distributed all of its cash to its partners and liquidated. Investment in Real Estate Prior to the preparation of the financial statements on the liquidation basis of accounting, the operating properties acquired by the Partnership were stated at cost including acquisition costs, leasing commissions, tenant improvements and net of impairment. Depreciation and amortization expense were computed on a straight-line basis over approximately 31.5 years and the term of the applicable leases, respectively. The Partnership's remaining property is subject to a lien under a first mortgage (see Note 4). Subsequent to the adoption of the liquidation basis of accounting, the Partnership adjusted its investment in real estate to estimated net realizable value, which is recorded as real estate held for sale. Additionally, the Partnership suspended recording any further depreciation expense. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid debt instruments with an original maturity within three months from date of purchase. The Partnership maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Partnership has not experienced any losses in such accounts. Management believes the Partnership is not exposed to any significant credit risk related to cash or cash equivalents. Estimated Fair Value of Financial Instruments In connection with the adoption of the liquidation basis of accounting assets were adjusted to net realizable value, and liabilities were adjusted to estimated settlement amounts. Derivatives and Hedging Instruments The Partnership has a derivative which is valued at fair market value. The fair market value of the derivative, the interest rate cap in Note 4, is not material. Restatement Under liquidation basis of accounting, there is no basis for retaining the deferral for gain recognition which was required under the going concern accounting principle. Net assets available for liquidation at January 1, 2006 have been restated to increase the net assets available for liquidation by $464,312, the amount of the previously recorded deferred gain. (2) PARTNERSHIP AGREEMENT The Partnership Agreement (the "Agreement") provides that 99% of the net profits and losses from operations of the Partnership for each fiscal year shall be allocated to the Limited Partners and 1% of net profits and losses from operations shall be allocated to the General Partners. The net profit of the Partnership from the sale or other disposition of a Partnership property shall be allocated as follows: first, there shall be allocated to the General Partners the greater of: (i) 1% of such net profits; or (ii) the amount distributable to the General Partners as Net Sale Proceeds from such sale or other disposition in accordance with paragraph 2, section K of the Agreement; and second, all remaining profits shall be allocated to the Limited Partners. The net loss of the Partnership from any sale or other disposition of a Partnership property shall be allocated as follows: 99% of such net loss shall be allocated to the Limited Partners and 1% of such net loss shall be allocated to the General Partners. The Agreement provides that distributions of Operating Cash Flow, as defined in the Agreement, shall be distributed 99% to the Limited Partners and 1% to the General Partners. The receipt by the General Partners of such 1% of Operating Cash Flow shall be subordinated to the receipt by the Limited Partners of Operating Cash Flow equal to a 10% per annum, cumulative, non-compounded return on their Adjusted Investment (the "Preferential Distribution"), as such term is defined in the Agreement. In the event the full Preferential Distribution is not made in any year (herein referred to as a "Preferential Distribution Deficiency") and Operating Cash Flow is available in following years in excess of the Preferential Distribution for said year, then the Limited Partners shall be paid such excess Operating Cash Flow until they have been paid any unpaid Preferential Distribution Deficiency from prior years. Net Sale Proceeds, as defined in the Agreement, received by the Partnership shall be distributed as follows: (a) first, to the Limited Partners until such time as the Limited Partners have been paid an amount equal to the amount of their Adjusted Investment; (b) second, to the Limited Partners until such time as the Limited Partners have been paid an amount equal to any unpaid Preferential Distribution Deficiency; and (c) third, 85% of any remaining Net Sale Proceeds to the Limited Partners, and the remaining 15% of the Net Sale Proceeds to the General Partners. At September 30, 2007, the Preferential Distribution Deficiency exceeded the potential liquidation value of the remaining Partnership assets. (3) REAL ESTATE HELD FOR SALE As a result of the adoption of the liquidation basis of accounting (Note 1) the Partnership adjusted its real estate holdings to net realizable value. At September 30, 2007, the amount in real estate held for sale represents the Partnership's estimated value (net of closing costs) for the Raleigh Springs Market Place. (4) MORTGAGE NOTE PAYABLE On March 11, 2002, the Partnership accepted a proposal to modify the Raleigh Springs Marketplace mortgage loan. Under the terms of the proposal, the maturity date was extended to April 1, 2007. The loan, which continued to bear interest at 10% per annum, required monthly installments of principal and interest of $46,839 (based upon a 25 year amortization schedule) with a final payment of unpaid interest and principal on April 1, 2007. On November 17, 2005, the Partnership paid off the prior loan (in the amount of $3,910,423) from the proceeds from a new first mortgage loan ("First Mortgage") in the amount of $4,400,000. This loan requires payments of interest only and has a twelve- month maturity. In addition, the Partnership had the ability to extend this loan for an additional twelve-month period (with the payment of an additional fee of $11,000). Interest is payable based on the LIBOR rate plus 2.25%. On September 30, 2007 and September 30, 2006 the interest rate was approximately 8.00% and 7.58%, respectively. The Partnership has requested an extension of the facility through March 9, 2008. The lender is currently considering the proposal and there can be no assurance that the loan will be extended. The Partnership was also required to purchase interest rate caps with one year maturity at a cost of $5,000 and $2,000 at December 15, 2006 and 2005, respectively. The interest rate caps fixed the LIBOR rate at 6.45%. The notional amount of the interest rate cap agreements are identical to the notional amount of the mortgage loan. The fair market value of the interest rate cap agreements at September 30, 2007 and December 31, 2006 is $0. The First Mortgage also required the establishment of a $300,000 escrow that can be used for the payment of tenant improvements and leasing commissions. The Partnership has been reimbursed approximately $229,000 from the escrow account for improvements related to the Marty's buildout. The First Mortgage lender also required the Partnership to create a special purpose entity, Brauvin Raleigh LLC, which is fully owned by the Partnership. The Partnership transferred its ownership interest in the Raleigh Springs Marketplace to the special purpose entity. The Partnership was also required to enter into a limited guaranty agreement. Primarily, under the terms of the guaranty agreement the Partnership will not be personally liable unless the Partnership or Brauvin Raleigh LLC commit fraud by misapplication or misappropriation of cash receipts. Raleigh Springs Marketplace serves as collateral under the respective non recourse debt obligation. (5) TRANSACTIONS WITH AFFILIATES Fees and other expenses incurred or payable to the General Partners or their affiliates for the nine months ended September 30, 2007 and 2006 were as follows: 2007 2006 ------- ------- Management fees $39,356 $37,676 Reimbursable office expenses 88,425 71,050 As of September 30, 2007, the Partnership had made all payments to affiliates except for $4,049 for management fees. (6) EQUITY INVESTMENT The Partnership owned a 47% interest in Sabal Palm Joint Venture ("Sabal Palm") and accounted for its investment under the equity method. On December 7, 2005, the joint venture sold the Sabal Palm property for a gross sales price of $4,350,000. The joint venture received net sales proceeds, after repayment of the first mortgage, of approximately $1,601,000 and recognized a gain on the sale of $1,189,925. Under the terms of the transaction, the joint venture was able to bill and retain the 2005 common area maintenance reimbursements. Accordingly, in late December 2005, the joint venture billed the Sabal Palm tenants approximately $75,000 for its common area reimbursement. In 2006, the joint venture distributed all of its cash to its partners and liquidated. ITEM 2. Management's Discussion and Analysis or Plan of Operation. General Certain statements in this Quarterly Report that are not historical fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Without limiting the foregoing, words such as "anticipates," "expects," "intends," "plans" and similar expressions are intended to identify forward-looking statements. These statements are subject to a number of risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. The Partnership undertakes no obligation to update these forward-looking statements to reflect future events or circumstances. Liquidity and Capital Resources The Partnership intends to satisfy its short-term liquidity needs through cash flow from its remaining property. Mortgage notes payable are expected to be satisfied through a property sale. The General Partners determined to pursue the disposition of the Partnership's assets. In 1999, the Partnership solicited and received the votes of the Limited Partners to approve a sale of all the Partnership's properties, either on an individual or group basis, and to subsequently liquidate the Partnership. The solicitation, which was approved by the Limited Partners in the third quarter of 1999, stated that the Partnership's properties may be sold individually or in any combination provided that the total sales price for the properties included in the transaction equals or exceeds 70% of the aggregate appraised value for such properties, which valuation was conducted by an independent third party appraisal firm. The Partnership intends to sell Raleigh Springs late in 2007 or early 2008 under a closed bid process which will include identification of target buyers with proven financing ability and performance of certain evaluations of the properties, such as environmental testing. Potential buyers will be requested to sign confidentiality agreements to safeguard the Partnership's confidential proprietary information. The General Partners have determined that each bid must be all cash, completely unconditional and accompanied by a substantial deposit. Subsequent to the end of the second quarter, the property was listed for sale with a national broker that has experience in the Memphis Market. The initial marketing has generated significant interest in the property. The Partnership has negotiated a contract for the sale of the property with an unaffiliated third party. The buyer is currently in its due diligence investigation period. If the buyer deems the property to be satisfactory, the contract calls for the sale to be completed by year end 2007. However, there is no assurance that this sale will be completed under the terms or timing currently anticipated. The Partnership has requested an extension of the Raleigh facility through March 9, 2008. The lender is currently considering the proposal and there can be no assurance that the loan will be extended. Property Status Raleigh Springs Marketplace In the fourth quarter of 2001, the Partnership leased 13,400 square feet of space to Sav A Lot, a national grocery chain. In the third quarter of 2004, Sav A Lot exercised its first option and extended the lease maturity through 2008. In the first quarter of 2004, the Partnership reached an agreement in principle with AJ Wright, a national clothing retailer, to take approximately 25,000 square feet of the space then leased to Toys "R" Us. The Partnership negotiated a lease with the tenant that required substantial reconfiguration to the existing space and tenant improvements. This lease was subject to a successful termination and buyout of the existing Toys "R" Us lease. The Partnership reached an agreement with Toys "R" Us for the termination and a substantial buyout payment by Toys "R" Us to the Partnership (such payment in the amount of $1,400,000 having been received in September 2004). The Partnership anticipated the payment would cover all of the conversion and tenant build out costs required by the new tenant. The buyout of the lease was subject to the approval of the property's lender and the lender agreed to the transaction. In addition in 2004, the Partnership leased approximately 10,000 square feet to the Veterans Administration (the "VA"). The VA lease also required a significant build out. The Partnership has incurred the cost of the build out and funded the expense through a portion of the Toys "R" Us lease buyout. In addition, the VA will make additional lease payments to the Partnership in an amount that will amortize the cost of the improvements over a five-year period. AJ Wright and the VA took occupancy in the fourth quarter of 2004. In the first quarter of 2006, the Partnership received an expression of interest in leasing the remaining space that was the former Toys "R" Us (approximately 11,000 square feet). In the second quarter of 2006, the Partnership and Marty's, LLC (a regional retailer of mens fashion clothing) executed a lease agreement. The tenant required significant improvements to be made to the space prior to its occupancy. The Partnership primarily paid for these improvements through the use of the escrow funds held by the First Mortgage lender (as detailed above) and available cash on hand. Marty's began its occupancy in mid November 2006 and has begun paying rent in April 2007. A tenant that had occupied approximately 4,800 square feet (or 4.2% of the center) filed for bankruptcy and has terminated its lease. During the fourth quarter, the Partnership expanded the expanded the lease space with the VA by 600 square feet. In addition, the Partnership has a verbal indication from Sav A Lot that it intends to exercise its five year renewal option. The Partnership has made a number of cosmetic repairs and improvements to Raleigh Springs to improve its marketability for sale. These improvements included painting and repair of the sign band as well as minor parking lot repairs and a full parking lot reseal and restriping. In addition, Sav A Lot has recently requested permission to upgrade its signage at the property. The Partnership has negotiated a contract for the sale of the property with an unaffiliated third party. The buyer is currently in its due diligence investigation period. If the buyer deems the property to be satisfactory, the contract calls for the sale to be completed by year end 2007. However, there is no assurance that this sale will be completed under the terms or timing currently anticipated. Sabal Palm Shopping Center On December 7, 2005, the joint venture sold the Sabal Palm property for a gross sales price of $4,350,000. The joint venture received net sales proceeds, after repayment of the first mortgage, of approximately $1,601,000 and recognized a gain on the sale of $1,189,925. Under the terms of the transaction, the joint venture was able to bill and retain the 2005 common area maintenance reimbursements. Accordingly, in late December 2005, the joint venture billed the Sabal Palm tenants approximately $75,000 for its common area reimbursement. In 2006, the joint venture distributed all of its cash to its partners and liquidated. Results of Operations The Partnership's revenue and expenses are affected primarily by the operations of its last remaining property. Property operations, and in particular the components of income, demand for space and rental rates are, to a large extent, determined by local and national market conditions. These conditions have generally adversely impacted the Partnership's property economics. The General Partners conduct an in-depth assessment of the property's physical condition as well as a demographic analysis to assess opportunities for increasing occupancy and rental rates and decreasing operating costs. In all instances, decisions concerning restructuring of loan terms, reversions and subsequent operation of the property are made with the intent of maximizing the potential proceeds to the Partnership and, therefore, return of investment and income to Limited Partners. In certain instances and under limited circumstances, management of the Partnership entered into negotiations with lenders for the purpose of restructuring the terms of loans to provide for debt service levels that could be supported by operations of the properties. When negotiations are unsuccessful, management of the Partnership considers the possibility of reverting the properties to the first mortgage lender. Foreclosure proceedings may require 6 to 24 months to conclude. Results of Operations - Nine months ended September 30, 2007 and 2006 (Liquidation Basis) As a result of the Partnership's adoption of the liquidation basis of accounting, and in accordance with generally accepted accounting principles, the Partnership's financial statements for periods subsequent to July 12, 1999 have been prepared on a liquidation basis. The Partnership generated an excess of revenue over expenses of $24,000 for the period ended September 30, 2007 as compared to an excess of expenses over revenue of $520,000 for the same period in 2006. The $544,000 increase in excess of revenue over expenses is primarily a result of a decrease in total expenses of $539,000 reduced by a decrease in total income of $7,000. The Partnership's share of Sabal Palms net loss decreased $11,000. Total income for the period ended September 30, 2007 was $662,000 as compared to $669,000 for the same period in 2006. The $7,000 decrease in total revenue was primarily a result of decreases in other primarily tenant expense reimbursements and interest income of approximately $26,000 and $11,000, respectively. Other primarily tenant expense reimbursements decreased $26,000 from 2006 to 2007 as a result of certain tenants at Raleigh Springs Marketplace reimbursing the Partnership for tenant improvement items completed in 2006, while no such work was done in 2007. Offsetting the decrease in other primarily tenant expense reimbursements was an increase in rental income of $30,000, which was the result of increased occupancy at the Raleigh in 2007. Total expenses for the period ended September 30, 2007 were $638,000 as compared to $1,177,000 for the same period in 2006. The $539,000 decrease in total expense was due to a decrease in general and administrative expense of $588,000 relating to the Marty's buildout at Raleigh Springs Marketplace, offset by an increase in repairs and maintenance of $16,000 relating to the parking lot repairs and resurfacing at Raleigh Springs. Additionally, interest expense increased $15,000 which relates to higher interest rates in 2007 when compared to 2006. Results of Operations - Three months ended September 30, 2007 and 2006 (Liquidation Basis) The Partnership generated excess expenses over revenues of $18,000 for the period ended September 30, 2007 as compared to excess of expenses over revenue of $178,000 for the same period in 2006. The $196,000 decrease in excess expenses over revenues is primarily a result of a decrease in total expenses of $189,000 and increase in total income of $7,000. Total income for the period ended September 30, 2007 was $219,000 as compared to $212,000 for the same period in 2006. The increase in total income is primarily a result of an increase in rental income of $14,000, which was relates to an increased occupancy at the Raleigh in 2007. Partially offsetting the increase in rental revenue was a decrease in interest income of $5,000 and a decrease in other primarily tenant expense reimbursements of $2,000 from 2006 to 2007. Total expenses for the period ended September 30, 2007 were $201,000 as compared to $390,000 for the same period in 2006. The $189,000 decrease in total expense was due to a decrease in general and administrative expense of $197,000 and a decrease in repairs and maintenance of $7,000, partially offset by increases in operating expense of $7,000, real estate tax expense of $3,000 and interest expense of $3,000. The decrease in general and administrative expense relates to the costs of the Marty's buildout at Raleigh Springs Marketplace in 2006. Repairs and maintenance expense increased as a result of the parking lot repairs and resurfacing at Raleigh Springs Marketplace. ITEM 3. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our Chief Executive Officer and Chief Financial Officer, of the corporate general partner, have reviewed and evaluated the effectiveness of the Partnership's disclosure controls and procedures (as defined in Exchange Act Rules 240.13a-14(c) and 15d-14(c)) as of the date of this Quarterly Report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Partnership's current disclosure controls and procedures are effective and timely, providing all material information relating to the Partnership required to be disclosed in reports filed or submitted under the Exchange Act. Changes in Internal Controls There have not been any significant changes in the Partnership's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. We are not aware of any significant deficiencies or material weaknesses, therefore no corrective actions were taken. BRAUVIN REAL ESTATE FUND L.P. 4 (a Delaware limited partnership) PART II - OTHER INFORMATION ITEM 1. Legal Proceedings. None. ITEM 2. Changes in Securities. None. ITEM 3. Defaults Upon Senior Securities. None. ITEM 4. Submission of Matters to a Vote of Security Holders. None. ITEM 5. Other Information. None. ITEM 6. Exhibits and Reports On Form 8-K. Exhibit 99. Certification of Officers 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. BY: Brauvin Ventures, Inc. Corporate General Partner of Brauvin Real Estate Fund L.P. 4 BY: /s/ Jerome J. Brault Jerome J. Brault Chairman of the Board of Directors and President DATE: November 14, 2007 BY: /s/ Thomas E. Murphy Thomas E. Murphy Chief Financial Officer and Treasurer DATE: November 14, 2007 CERTIFICATION FOR SARBANES-OXLEY SECTION 302(A) CERTIFICATE OF THE CHIEF EXECUTIVE OFFICER I, Jerome J. Brault, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Brauvin Real Estate Fund L.P. 4; 2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the consolidated financial condition, results of operations and statement of changes in net assets in liquidation of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)for the small business issue and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to aversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal controls over financial reporting. BY: Brauvin Ventures, Inc. Corporate General Partner of Brauvin Real Estate Fund L.P. 4 BY: /s/ Jerome J. Brault Jerome J. Brault Chairman of the Board of Directors and President DATE: November 14, 2007 CERTIFICATION FOR SARBANES-OXLEY SECTION 302(A) CERTIFICATE OF THE CHIEF FINANCIAL OFFICER I, Thomas E. Murphy, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Brauvin Real Estate Fund L.P 4.; 2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the consolidated financial condition, results of operations and statement of changes in net assets in liquidation of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)for the small business issue and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to aversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal controls over financial reporting. BY: Brauvin Ventures, Inc. Corporate General Partner of Brauvin Real Estate Fund L.P. 4 BY: /s/ Thomas E. Murphy Thomas E. Murphy Chief Financial Officer and Treasurer DATE: November 14, 2007 Exhibit 99 SECTION 906 CERTIFICATION The following statement is provided by the undersigned to accompany the Quarterly Report on Form 10-QSB for the quarter ended September 30, 2007, pursuant to Section 906 of the Sarbanes- Oxley Act of 2002 and shall not be deemed filed pursuant to any provisions of the Securities Exchange Act of 1934 or any other securities law: Each of the undersigned certifies that the foregoing Report on Form 10-QSB fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m) and that the information contained in the Form 10-QSB fairly presents, in all material respects, the financial condition and results of operations of Brauvin Real Estate Fund L.P. 4. BY: Brauvin Ventures, Inc. Corporate General Partner of Brauvin Real Estate Fund L.P. 4 BY: /s/ Jerome J. Brault Jerome J. Brault Chairman of the Board of Directors and President DATE: November 14, 2007 BY: /s/ Thomas E. Murphy Thomas E. Murphy Chief Financial Officer and Treasurer DATE: November 14, 2007