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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2004

 

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number: 0-14207

 

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)

 

California   33-0016355

(State or other jurisdiction of

incorporation or organization)

  

(I.R.S. Employer

Identification No.)

400 South El Camino Real, Suite 1100

San Mateo, California

   94402-1708

(Address of principal

executive offices)

   (Zip Code)

 

(650) 343-9300

(Registrant’s telephone number, including area code)

 

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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No x

 

Total number of units outstanding as of November 15, 2004: 69,243

 

Table of Contents

INDEX

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

 

 

 

PART I

    FINANCIAL INFORMATION    Page No.

Item 1.

    Consolidated Financial Statements of Rancon Realty Fund IV (Unaudited):     
          Consolidated Balance Sheets at September 30, 2004 and December 31, 2003    3
          Consolidated Statements of Operations for the three and nine months ended September 30, 2004 and 2003    4
          Consolidated Statement of Partners’ Equity for the nine months ended September 30, 2004    5
          Consolidated Statements of Cash Flows for the nine months ended September 30, 2004 and 2003    6
          Notes to Consolidated Financial Statements    7-13

Item 2.

    Management’s Discussion and Analysis of Financial Condition and Results of Operations    14-21

Item 3.

    Qualitative and Quantitative Information About Market Risk    21-22

Item 4.

    Controls and Procedures    22

PART II

    OTHER INFORMATION     

Item 1.

    Legal Proceedings    23

Item 4.

    Submission of Matters to a Vote of Security Holders    23

Item 6.

    Exhibits and Reports on Form 8-K    23

SIGNATURES

   24

 

2

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PART I.            FINANCIAL INFORMATION

 

Item 1.            Financial Statements

 

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

 

Consolidated Balance Sheets

(in thousands, except units outstanding)

(Unaudited)

 

     September 30,
2004
     December 31,
2003
  

Assets

                 

Investments in real estate:

                 

Rental properties

    $ 47,752     $ 42,839  

Accumulated depreciation

      (10,598 )     (15,271 )
    
 

Rental properties, net

      37,154       27,568  

Construction in progress

      —       1,090  

Land held for development

      272       703  
    
 

Total real estate investments

      37,426       29,361  

Cash and cash equivalents

      3,889       3,312  

Accounts receivable

      5       66  

Deferred costs, net of accumulated amortization of $1,067 and $2,315
at September 30, 2004 and December 31, 2003, respectively

      987       827  

Prepaid expenses and other assets

      1,167       1,053  
    
 

Total assets

    $ 43,474     $ 34,619  
    
 

Liabilities and Partners’ Equity

                 

Liabilities:

                 

Notes payable and line of credit

    $ 14,585     $ 7,782  

Accounts payable and other liabilities

      669       241  

Construction costs payable

      712       146  

Prepaid rent

      123       58  
    
 

Total liabilities

      16,089       8,227  
    
 

Commitments and contingent liabilities (Note 5)

                 

Partners’ Equity :

                 

General partner

      (503 )     (571 )

Limited partners, 69,346 and 70,239 limited partnership
units outstanding at September 30, 2004 and December
31, 2003, respectively

      27,888       26,963  
    
 

Total partners’ equity

      27,385       26,392  
    
 

Total liabilities and partners’ equity

    $ 43,474     $ 34,619  
    
 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

 

Consolidated Statements of Operations

(in thousands, except per unit amounts and units outstanding)

(Unaudited)

 

     Three months ended
September 30,
     Nine months ended
September 30,
  
     2004
     2003
     2004
     2003
  

Operating Revenue – Rental income

    $ 1,776     $ 1,714     $ 5,189     $ 5,284  
    
 
 
 

Operating Expenses

                                 

Property operating

      655       695       1,839       1,952  

Depreciation and amortization

      407       362       1,166       1,040  

Expenses associated with undeveloped land

      37       66       174       220  

General and administrative

      312       297       926       858  
    
 
 
 

Total operating expenses

      1,411       1,420       4,105       4,070  
    
 
 
 

Operating income

      365       294       1,084       1,214  
    
 
 
 

Interest and other income

      3       16       12       44  

Interest expense

      (117 )     (196 )     (374 )     (596 )
    
 
 
 

Income before gain on sale of land

      251       114       722       662  
    
 
 
 

Gain on sale of land held for development

      —       —       1,347       —  
    
 
 
 

Net income

    $ 251     $ 114     $ 2,069     $ 662  
    
 
 
 

Basic and diluted net income per limited partnership
unit

    $ 3.24     $ 1.47     $ 27.66     $ 8.39  
    
 
 
 

Weighted average number of limited partnership
units outstanding during each period

      69,479       70,569       69,729       71,007  
    
 
 
 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

 

Consolidated Statement of Partners’ Equity

For the nine months ended September 30, 2004

(in thousands)

(Unaudited)

 

     General
Partners
     Limited
Partners
     Total
  

Balance (deficit) at December 31, 2003

    $ (571 )   $ 26,963     $ 26,392  

Redemption of limited partnership units

      —       (390 )     (390 )

Net income

      140       1,929       2,069  

Distributions ($8.82 per limited partnership unit)

      (72 )     (614 )     (686 )
    
 
 

Balance (deficit) at September 30, 2004

    $ (503 )   $ 27,888     $ 27,385  
    
 
 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

5

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RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

 

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

    

Nine months ended

September 30,

  
     2004
     2003
  

Cash flows from operating activities:

                 

Net income

    $ 2,069     $ 662  

Adjustments to reconcile net income to net cash
provided by operating activities:

                 

Gain on sale of land held for development

      (1,347 )     —  

Depreciation and amortization

      1,166       1,040  

Amortization of loan fees, included in interest expense

      79       77  

Changes in certain assets and liabilities:

                 

Accounts receivable

      61       213  

Deferred costs

      (149 )     (111 )

Prepaid expenses and other assets

      (114 )     (149 )

Accounts payable and other liabilities

      369       (38 )

Prepaid rent

      65       119  
    
 

Net cash provided by operating activities

      2,199       1,813  
    
 

Cash flows from investing activities:

                 

Net proceeds from sales of land held for development

      1,778       —  

Net additions to real estate investments

      (8,969 )     (592 )
    
 

Net cash used for investing activities

      (7,191 )     (592 )
    
 

Cash flows from financing activities:

                 

Line of credit draws

      6,950       —  

Notes payable principal payments

      (147 )     (139 )

Loan fees for line of credit

      (217 )     —  

Redemption of limited partnership units

      (331 )     (418 )

Distributions to limited partner

      (614 )     —  

Distributions to General Partner

      (72 )     —  
    
 

Net cash provided by (used for) financing activities

      5,569       (557 )
    
 

Net increase in cash and cash equivalents

      577       664  

Cash and cash equivalents at beginning of period

      3,312       3,764  
    
 

Cash and cash equivalents at end of period

    $ 3,889     $ 4,428  
    
 

Supplemental disclosure of cash flow information:

                 

Cash paid for interest

    $ 590     $ 539  
    
 

Interest capitalized

    $ 295     $ 3  
    
 

Supplemental disclosure of non-cash investing activities:

                 

Completed real estate investment transferred out of
construction in progress to rental property

    $ 10,136     $ —