Attached files
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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, 2009
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period From to
COMMISSION FILE NUMBER 0-13523
---------------------------
CAPITAL REALTY INVESTORS-IV
LIMITED PARTNERSHIP
Maryland 52-1328767
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11200 Rockville Pike, Rockville, Maryland 20852
(Address of principal executive offices) (Zip Code)
(301) 468-9200
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year,
if changed since last report)
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 a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See definition of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer |_| Accelerated filer |_|
Non-accelerated filer |_| Smaller reporting company |X|
Indicate by check mark whether the Registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes |_| No |X|
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CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2009
Page
----
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
- September 30, 2009 and December 31, 2008..................... 1
Consolidated Statements of Operations and Accumulated Losses
- for the three and nine months ended September 30, 2009
and 2008...................................................... 2
Consolidated Statements of Cash Flows
- for the nine months ended September 30, 2009 and 2008........ 3
Notes to Consolidated Financial Statements
- September 30, 2009 and 2008.................................. 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 14
Item 4. Controls and Procedures.......................................... 18
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities.................................. 19
Item 5. Other Information................................................ 19
Item 6. Exhibits......................................................... 19
Signature................................................................. 20
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
2009 2008
------------- -------------
(Unaudited)
Investments in partnerships ....................................................... $ 2,812,533 $ 2,743,115
Investment in partnerships held for sale or transfer .............................. 27,554 3,163,336
Cash and cash equivalents ......................................................... 5,839,082 7,975,361
Acquisition fees, principally paid to related parties,
net of accumulated amortization of $62,586 and $58,242, respectively ............ 38,459 38,570
Property purchase costs,
net of accumulated amortization of $82,586 and $67,597, respectively ............ 35,778 37,267
Other assets ...................................................................... -- 8,313
------------ ------------
Total assets ................................................................ $ 8,753,406 $ 13,965,962
============ ============
LIABILITIES AND PARTNERS' DEFICIT
Due on investments in partnerships ................................................ $ 2,790,000 $ 5,885,000
Accrued interest payable .......................................................... 11,065,979 19,565,411
Accounts payable and accrued expenses ............................................. 77,829 115,752
------------ ------------
Total liabilities ........................................................... 13,933,808 25,566,163
------------ ------------
Commitments and contingencies
Partners' deficit:
Capital paid in:
General Partners .............................................................. 2,000 2,000
Limited Partners .............................................................. 73,501,500 73,501,500
------------ ------------
73,503,500 73,503,500
Less:
Accumulated distributions to partners ......................................... (21,019,700) (19,161,217)
Offering costs ................................................................ (7,562,894) (7,562,894)
Accumulated losses ............................................................ (50,101,308) (58,379,590)
------------ ------------
Total partners' deficit ..................................................... (5,180,402) (11,600,201)
------------ ------------
Total liabilities and partners' deficit ..................................... $ 8,753,406 $ 13,965,962
============ ============
The accompanying notes are an integral part
of these consolidated financial statements.
-1-
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
AND ACCUMULATED LOSSES
(Unaudited)
For the three months ended For the nine months ended
September 30, September 30,
------------------------------ ------------------------------
2009 2008 2009 2008
------------- ------------- ------------- -------------
Share of income (loss) from partnerships $ 242,073 $ (109,244) $ 739,251 $ 503,875
------------- ------------- ------------- -------------
Other revenue and expenses:
Revenue:
Interest ........................... 1,302 51,095 22,427 183,754
Gain from extinguishment of debt ... -- 28,168,263 8,957,777 28,168,263
------------- ------------- ------------- -------------
1,302 28,219,358 8,980,204 28,352,017
------------- ------------- ------------- -------------
Expenses:
General and administrative ......... 80,652 62,068 558,781 238,492
Interest ........................... 159,351 433,472 479,210 1,501,764
Management fee ..................... 93,750 93,750 281,250 281,250
Professional fees .................. 30,863 11,766 100,416 116,601
Amortization of deferred costs ..... 6,374 1,990 21,516 6,192
------------- ------------- ------------- -------------
370,990 603,046 1,441,173 2,144,299
------------- ------------- ------------- -------------
Total other revenue and expenses . (369,688) 27,616,312 7,539,031 26,207,718
------------- ------------- ------------- -------------
Net (loss) income ...................... (127,615) 27,507,068 8,278,282 26,711,593
Accumulated losses, beginning of period (49,973,693) (85,659,774) (58,379,590) (84,864,299)
------------- ------------- ------------- -------------
Accumulated losses, end of period ...... $ (50,101,308) $ (58,152,706) $ (50,101,308) $ (58,152,706)
============= ============= ============= =============
Net (loss) income allocated
to General Partners (1.51%) .......... $ (1,927) $ 415,357 $ 125,002 $ 403,345
============= ============= ============= =============
Net (loss) income allocated
to Initial and Special
Limited Partners (1.49%) ............. $ (1,901) $ 409,855 $ 123,346 $ 398,003
============= ============= ============= =============
Net (loss) income allocated
to Additional Limited Partners (97%) . $ (123,787) $ 26,681,856 $ 8,029,934 $ 25,910,245
============= ============= ============= =============
Net (loss) income per unit of
Additional Limited Partner Interest,
based on 73,337 units outstanding .. $ (1.69) $ 363.83 $ 109.49 $ 353.30
============= ============= ============= =============
The accompanying notes are an integral part
of these consolidated financial statements.
-2-
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the nine months ended
September 30,
----------------------------
2009 2008
------------ ------------
Cash flows from operating activities:
Net income .................................................................. $ 8,278,282 $ 26,711,593
Adjustments to reconcile net income to net cash used in operating activities:
Share of income from partnerships ......................................... (739,251) (503,875)
Gain from extinguishment of debt .......................................... (8,957,777) (28,168,263)
Amortization of deferred costs ............................................ 21,516 6,192
Changes in assets and liabilities:
Decrease in other assets ................................................ 8,313 15,895
Increase in accrued interest payable .................................... 479,210 1,501,764
Decrease in accounts payable and accrued expenses ....................... (37,923) (49,289)
------------ ------------
Net cash used in operating activities ................................. (947,630) (485,983)
------------ ------------
Cash flows from investing activities:
Receipt of distributions from partnerships ................................ 669,834 492,013
------------ ------------
Net cash provided by investing activities ............................. 669,834 492,013
------------ ------------
Cash flows from financing activities:
Distribution to Limited Partners .......................................... (1,268,386) --
Tax distribution on behalf of Limited Partners ............................ (590,097) --
------------ ------------
Net cash used in financing activities ................................. (1,858,483) --
------------ ------------
Net (decrease) increase in cash and cash equivalents .......................... (2,136,279) 6,030
Cash and cash equivalents, beginning of period ................................ 7,975,361 8,046,599
------------ ------------
Cash and cash equivalents, end of period ...................................... $ 5,839,082 $ 8,052,629
============ ============
The accompanying notes are an integral part
of these consolidated financial statements.
-3-
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009 and 2008
(Unaudited)
1. BASIS OF PRESENTATION
In the opinion of C.R.I., Inc. (CRI), the Managing General Partner, the
accompanying unaudited consolidated financial statements reflect all
adjustments, consisting of normal recurring accruals, necessary for a fair
presentation of the financial position of Capital Realty Investors-IV Limited
Partnership (the Partnership) as of September 30, 2009, and the results of its
operations for the three and nine month periods ended September 30, 2009 and
2008, and its cash flows for the nine month periods ended September 30, 2009 and
2008. The results of operations for the interim periods ended September 30,
2009, are not necessarily indicative of the results to be expected for the full
year.
The accompanying unaudited consolidated financial statements have been
prepared in conformity with accounting principles generally accepted in the
United States of America (US GAAP) and with the instructions to Form 10-Q.
Certain information and accounting policies and footnote disclosures normally
included in financial statements prepared in conformity with US GAAP have been
condensed or omitted pursuant to such instructions. These condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Partnership's annual
report on Form 10-K at December 31, 2008.
2. NEW ACCOUNTING PRONOUNCEMENTS
On July 1, 2009, the Partnership adopted Financial Accounting Standards
Board Accounting Standards Codification ("ASC"), which establishes the ASC as
the source of authoritative accounting principles to be applied in preparation
of financial statements in conformity with US GAAP. The adoption of this
standard did not have a material impact on the financial position, results of
operations or cash flows.
On January 1, 2009, the Partnership adopted the new accounting standard
which requires adoption of the fair value standards in the ASC for nonfinancial
assets and nonfinancial liabilities. The adoption did not have a material impact
on the financial position, results of operations or cash flows.
During the quarter ended June 30, 2009, the Partnership adopted the new
accounting standard which requires disclosure regarding the fair value of
financial instruments for interim reporting periods as well as in annual
financial statements.
The ASC establishes a hierarchy for inputs used in measuring fair value
as follows:
1. Level 1 Inputs -- quoted prices in active markets for identical assets
of liabilities.
2. Level 2 Inputs -- observable inputs other than quoted prices in active
markets for identical assets and liabilities.
3. Level 3 Inputs -- unobservable inputs.
In certain cases, the inputs used to measure fair value may fall into
different levels of the fair value hierarchy. In such cases, for disclosure
purposes, the level within which the fair value measurement is categorized is
based on the lowest level input that is significant to the fair value
measurement.
-4-
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009 and 2008
(Unaudited)
2. NEW ACCOUNTING PRONOUNCEMENTS - Continued
The Partnership has determined that the fair value of the purchase money
notes is de minimus, as the notes are secured by limited partnership interests
only, are non-recourse to the Partnership and of which two are in default.
The balance sheet carrying amount for cash and cash equivalents
approximates their fair value.
The ASC establishes general standards of accounting and disclosure of
events that occur after the balance sheet date but before the Partnership issues
financial statements or has them available to issue. The ASC defines (i) the
period after the balance sheet date during which a reporting entity's management
should evaluate events or transactions that may occur for potential recognition
or disclosure in the financial statements, (ii) the circumstances under which an
entity should recognize events or transactions occurring after the balance sheet
date in its financial statements, and (iii) the disclosures an entity should
make about events or transactions that occurred after the balance sheet date.
The guidance became effective for periods ending after June 15, 2009. Subsequent
events have been evaluated through November 12, 2009, which is the issue date of
the financial statements. The adoption of the guidance did not have a material
impact on the financial position, results of operations or cash flows.
3. INVESTMENTS IN PARTNERSHIPS
a. Due on investments in partnerships and accrued interest payable
---------------------------------------------------------------
Purchase money notes
--------------------
The Partnership's obligations with respect to its investments in Local
Partnerships, in the form of nonrecourse purchase money notes having an
aggregate principal balance of $2,790,000 plus aggregate accrued interest of
$11,065,979 as of September 30, 2009, are payable in full upon the earliest of:
(i) sale or refinancing of the respective Local Partnership's rental property;
(ii) payment in full of the respective Local Partnership's permanent loan; or
(iii) maturity.
Asbury Towers was paid off at a discount from proceeds of the sale of the
property owned by the Local Partnership in 2008. Effective January 1, 2009, the
Partnership's interest in Cedar Point and Thornwood House were transferred to
the purchase money noteholders and or their affiliates or assignees.
Property Principal Date Disposition
-------- ----------- ------------ ------------
Asbury Towers $3,432,081 August 2008 Sale
Cedar Point 1,320,000 January 2009 Transfer
Thornwood House 1,775,000 January 2009 Transfer
-5-
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009 and 2008
(Unaudited)
3. INVESTMENTS IN PARTNERSHIPS - Continued
The purchase money notes related to the following properties have matured
and have not been paid or extended as of November 12, 2009.
Accrued Interest
as of
Property Principal September 30, 2009 Maturity
-------- ----------- ------------------ --------
Westport Village $ 840,000 $2,788,325 09/01/99
Pilgrim Tower East 1,450,000 (1) 4,857,544 11/30/03
(1) Remaining principal, after a partial payment.
The remaining purchase money note related to Northridge Park matures in
2025. As of September 30, 2009, principal and accrued interest balances were
$500,000 and $3,420,110, respectively.
The purchase money notes, which are nonrecourse to the Partnership, are
generally secured by the Partnership's interest in the respective Local
Partnerships. There is no assurance that the underlying properties will have
sufficient appreciation and equity to enable the Partnership to pay the purchase
money notes' principal and accrued interest when due. If a purchase money note
is not paid in accordance with its terms, the Partnership will either have to
renegotiate the terms of repayment or risk losing its partnership interest in
the respective Local Partnership. In the event that a purchase money note
remains unpaid upon maturity, the noteholder may have the right to foreclose on
the Partnership's interest in the related Local Partnership.
The Partnership's inability to pay certain of the purchase money notes
principal and accrued interest balances when due, and the resulting uncertainty
regarding the Partnership's continued ownership interest in the related Local
Partnerships, does not adversely impact the Partnership's financial condition
because the purchase money notes are nonrecourse and secured solely by the
Partnership's interest in the related Local Partnerships. Therefore, should the
investment in any of the Local Partnerships with matured or maturing purchase
money notes not produce sufficient value to satisfy the related purchase money
notes, the Partnership's exposure to loss is limited because the amount of the
nonrecourse indebtedness of each of the matured or maturing purchase money notes
exceeds the carrying amount of the investment in each of the related Local
Partnerships. Thus, even a complete loss of the Partnership's interest in these
Local Partnerships would not have a material adverse impact on the financial
condition of the Partnership.
The Managing General Partner continues to investigate possible alternatives
to reduce the Partnership's debt obligations. These alternatives include, among
others, retaining the cash available for distribution to meet the purchase money
note requirements, paying off certain purchase money notes at a discounted
price, extending the due dates of certain purchase money notes, refinancing the
respective properties' underlying debt, or selling the underlying real estate
and using the Partnership's share of the proceeds to pay or buy down certain
purchase money note obligations. Although the Managing General Partner has had
some success applying these strategies in the past, the Managing General Partner
cannot assure that these strategies will be successful in the future. If the
Managing General Partner is unable to negotiate an extension or discounted
payoff, in the event that the purchase money notes remain unpaid upon maturity,
the noteholders may have the right to foreclose on the Partnership's interest in
the related Local Partnerships. In the event of a foreclosure or other transfer
of the Partnership's interest, the excess of the nonrecourse indebtedness over
-6-
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009 and 2008
(Unaudited)
3. INVESTMENTS IN PARTNERSHIPS - Continued
the carrying amount of the Partnership's investment in the related Local
Partnership will result in a taxable gain. This gain will be taxable to Limited
Partners at a federal tax rate of up to 35.0%. Additionally, the Partnership
would lose its investment in the Local Partnership and, likewise, its share of
any future cash distributed by the Local Partnership from rental operations,
mortgage debt refinancings, or sale of the real estate. Of the eight Local
Partnerships in which the Partnership is invested as of September 30, 2009, the
two Local Partnerships with associated purchase money notes which have matured,
or which mature through September 30, 2010, and which remain unpaid or
unextended as of November 12, 2009, represented the following percentages of the
Partnership's total distributions received from Local Partnerships and share of
income from Local Partnerships for the immediately preceding two calendar years.
Percentage of Total Partnership's Share of
Distributions Received Income from
For the Year Ending from Local Partnerships Local Partnerships
------------------- ----------------------- ----------------------
December 31, 2007 0% $0
December 31, 2008 10.4% $57,257
The Managing General Partner continues to address the maturity and
impending maturity of the Partnership's debt obligations and to seek solutions
that will provide the most favorable outcome to the Limited Partners. However,
there can be no assurance that these strategies will be successful.
Interest expense on the Partnership's purchase money notes for the three
and nine month periods ended September 30, 2009, was $159,351 and $479,210,
respectively, and $433,472 and $1,501,764 for the three and nine month periods
ended September 30, 2008, respectively. The accrued interest payable on the
purchase money notes of $11,065,979 and $19,565,411 as of September 30, 2009 and
December 31, 2008, respectively, is due upon the earliest of: (i) sale or
refinancing of the respective Local Partnership's rental property; (ii) payment
in full of the respective Local Partnership's permanent loan; or (iii) maturity.
Cedar Point
-----------
The Partnership defaulted on its purchase money note secured by its
interest in Southwest Development Company (Cedar Point) on August 30, 2004, when
the note matured and was not paid. The default amount included principal and
accrued interest of $1,320,000 and $3,122,592, respectively. The Partnership had
agreed in principle to assign its interest in Cedar Point to the noteholders in
satisfaction of the nonrecourse note. There had been no communication with the
noteholders since 2006. Therefore, on December 31, 2007, the Partnership's basis
in Cedar Point, along with associated acquisition fees and property purchase
costs which had been reclassified to investment in partnerships held for sale or
transfer, were returned to their respective operating accounts. The Partnership
was subsequently informed by counsel of the purchase money noteholders that
consent to transfer the Partnership's interest has been obtained from the
Illinois Housing Development Authority (IHDA). Effective January 1, 2009, the
Partnership's interest was transferred to the purchase money noteholders. As of
January 1, 2009, the principal and accrued interest balances were $1,320,000 and
$3,907,607, respectively. The transfer resulted in gain from extinguishment of
debt for financial statement purposes of $2,566,944 in 2009 and in gain of
approximately $3.9 million for federal tax purposes.
-7-
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009 and 2008
(Unaudited)
3. INVESTMENTS IN PARTNERSHIPS - Continued
Due to the impending transfer of the Partnership's interest in Cedar Point,
the Partnership's basis in the Local Partnership, along with the net unamortized
amount of acquisition fees and property purchase costs, which totaled
$2,660,663, at December 31, 2008, was reclassified to investment in partnerships
held for sale or transfer in the accompanying consolidated balance sheet at that
date.
DeAngelis Manor
---------------
On March 19, 2002, DeAngelis Manor was sold. Proceeds received by the
Partnership from the sale of the property were used to pay off, at a discount,
the remaining purchase money note related to DeAngelis Manor, although, as of
November 12, 2009, the note has not been canceled pending final receipt of
accumulated cash from the property's previous operations and payment thereof to
the purchase money noteholder. The final cancellation of the note will have no
financial impact to the Partnership.
Pilgrim Tower East
------------------
The Partnership defaulted on its purchase money note secured by its
interest in Pilgrim Tower East Associates (Pilgrim Tower East) on December 1,
1999, when the note matured and was not paid. The default amount included
principal and accrued interest of $1,650,000 and $2,719,372, respectively. As of
November 12, 2009, principal and accrued interest of $1,450,000 and $4,882,928,
respectively, were due. The Partnership and the noteholders signed a contract to
sell the Partnership's interest in Pilgrim Tower East to the noteholder in
exchange for the outstanding principal and accrued interest on the purchase
money note and two $100,000 payments on the purchase money note, one of which
was paid in February 2002, and one of which was paid in January 2003. The
noteholders failed to obtain required regulatory consent to the sale within the
required time frame and the contract for the sale of the Partnership's interest
expired in November 2003.Under the terms of the note and the Assignment and
Security Agreement, the noteholders have the right to enforce their security
interests in the Local Partnership subject to approval by California Housing
Finance Agency (CHFA) and all other government agencies with jurisdiction over
the property. The Partnership has been informed by the noteholders that they are
working to obtain regulatory consent to the transfer of the Partnership's
interest. There is no assurance that a transfer of the Partnership's interest in
Pilgrim Tower East will occur.
Due to the impending transfer of the Partnership's interest in Pilgrim
Tower East, the Partnership's basis in the Local Partnership, along with the net
unamortized amount of acquisition fees and property purchase costs, which
totaled $27,554 and $39,732 at September 30, 2009 and December 31, 2008,
respectively, has been reclassified to investment in partnerships held for sale
or transfer in the accompanying consolidated balance sheets.
-8-
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009 and 2008
(Unaudited)
3. INVESTMENTS IN PARTNERSHIPS - Continued
Thornwood House
---------------
The Partnership defaulted on its purchase money note secured by its
interest in Thornwood House Associates (Thornwood House) on August 30, 2004,
when the note matured and was not paid. The default amount included principal
and accrued interest of $1,775,000 and $4,025,568, respectively. The Partnership
had agreed in principle to assign its interest to the noteholder in satisfaction
of the nonrecourse note. There had been no communication with the noteholders
since 2006. Therefore, on December 31, 2007, the Partnership's basis in
Thornwood House, along with associated acquisition fees and property purchase
costs which had been reclassified to investment in partnerships held for sale or
transfer, were returned to their respective operating accounts. The Partnership
was subsequently informed by counsel of the purchase money noteholders that
consent to transfer the Partnership's interest has been obtained from IDHA.
Effective January 1, 2009, the Partnership's interest was transferred to the
purchase money noteholders. As of January 1, 2009, the principal and accrued
interest balances were $1,775,000 and $5,071,035, respectively. The transfer
resulted in gain from extinguishment of debt for financial statement purposes of
$6,390,833 in 2009 and in gain of approximately $7.7 million for federal tax
purposes.
Due to the impending transfer of the Partnership's interest in Thornwood
House, the Partnership's basis in the Local Partnership, along with the net
unamortized amount of acquisition fees and property purchase costs, which
totaled $455,202, at December 31, 2008, was reclassified to investment in
partnerships held for sale or transfer in the accompanying consolidated balance
sheet at that date.
Westport Village
----------------
The Partnership defaulted on its purchase money notes secured by its
interest in Westport Associates (Westport Village) on September 1, 1999, when
the notes matured and were not paid. The default amount included principal and
accrued interest of $840,000 and $1,615,644, respectively. As of November 12,
2009, principal and accrued interest of $840,000 and $2,801,789, respectively,
were due. The Partnership was sued by the noteholders but there has not been any
legal action since 2000. The Partnership and the noteholders had agreed in
principle that the Partnership would deposit assignments of its interests in
Westport Village in escrow, together with an option agreement pursuant to which
the noteholders could purchase the interests for the outstanding debt if the
property were not sold and/or the notes were not repaid by January 8, 2001. At
that time, the Partnership's basis in the Local Partnership, along with the net
unamortized amount of acquisition fees and property purchase costs, which
totaled $46,989, was reclassified to investment in partnerships held in escrow.
However, there has been no response from the noteholders concerning implementing
the settlement since 2000. Therefore, effective December 31, 2003, the
acquisition fees and property purchase costs which had been reclassified to
investment in partnerships held in escrow were returned to their respective
accounts.
-9-
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009 and 2008
(Unaudited)
3. INVESTMENTS IN PARTNERSHIPS - Continued
The loan encumbering the property associated with the Partnership's
investment in Westport Village is in default. The Managing General Partner of
the Local Partnership was unable to reach an agreement with IHDA to a mortgage
restructuring. IHDA has provided notice of foreclosure sale of the property. The
Partnership's non-recourse purchase money notes and accrued interest thereon
total $840,000 and $2,788,325, respectively, at September 30, 2009 relating to
this property. The Partnership is not anticipating any loss resulting from the
change in ownership.
Due to the impending foreclosure, the Partnership's basis in the Local
Partnership, along with the net unamortized amount of acquisition fees and
property purchased costs, which totaled $0 at both September 30, 2009 and
December 31, 2008, has been reclassified to investment in partnerships held for
sale or transfer in the accompanying consolidated balance sheets.
b. Completed sales
---------------
Asbury Tower
------------
The purchase money note secured by the Partnership's interest in Asbury
Tower Associates Limited Partnership (Asbury Tower) was due to mature on August
31, 2004. However, the noteholder orally agreed to extend the maturity date on a
month to month basis until such time as the noteholder provides a 30 day advance
notice to the Partnership. Effective January 1, 2008 the interest rate was
reduced to 4 percent. On August 28, 2008, the property owned by Asbury Towers
was sold to an affiliate of the Local Managing General Partner. Proceeds from
the sale were used to payoff the purchase money note at a discount. As of August
28, 2008, the principal and accrued interest balances were $3,432,081 and
$24,789,908, respectively. The sale resulted in gain from extinguishment of debt
for financial statement purposes of $28,168,263 in 2008 and total gain of
$29,838,732 for federal tax purposes.
c. Assets held for sale or transfer
--------------------------------
Pilgrim Tower East
------------------
See Note 3.a., above.
Westport Village
----------------
See Note 3.a., above.
d. Summarized financial information
--------------------------------
Combined statements of operations for the eight and ten Local Partnerships
in which the Partnership was invested as of September 30, 2009 and 2008,
respectively, follow. The combined statements have been compiled from
information supplied by the management agents of the properties and are
unaudited. The information for each of the periods is presented separately for
those Local Partnerships which have investment basis (equity method), and for
those Local Partnerships which have cumulative losses in excess of the amount of
the Partnership's investments in those Local Partnerships (equity method
suspended). Appended after the combined statements is information concerning the
-10-
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009 and 2008
(Unaudited)
3. INVESTMENTS IN PARTNERSHIPS - Continued
Partnership's share of income from partnerships related to cash distributions
recorded as income, and related to the Partnership's share of income from Local
Partnerships.
COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended
September 30,
------------------------------------------------------------
2009 2008
-------------------------- ---------------------------
Equity Equity
Method Suspended Method Suspended
---------- ---------- ---------- ----------
Number of Local Partnerships 2 6 4 6
= = = =
Revenue:
Rental $ 434,245 $1,799,944 $ 846,588 $1,744,027
Other (76,077) 82,808 8,272 97,277
---------- ---------- ---------- ----------
Total revenue 358,168 1,882,752 854,860 1,841,304
---------- ---------- ---------- ----------
Expenses:
Operating 260,750 1,143,425 809,683 1,114,397
Interest 10,343 422,322 (10,596) 411,690
Depreciation and amortization 77,232 355,101 170,505 350,660
---------- ---------- ---------- ----------
Total expenses 348,325 1,920,848 969,592 1,876,747
---------- ---------- ---------- ----------
Net income (loss) $ 9,843 $ (38,096) $ (114,732) $ (35,443)
========== ========== ========== ==========
Cash distributions recorded
as income -- 232,330 -- 4,330
Partnership's share of Local
Partnership net income (loss) 9,743 -- (113,574) --
-------------------------- ---------------------------
Share of income (loss) from partnerships $242,073 $(109,244)
======== =========
-11-
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009 and 2008
(Unaudited)
3. INVESTMENTS IN PARTNERSHIPS - Continued
For the nine months ended
September 30,
-----------------------------------------------------------
2009 2008
------------------------- --------------------------
Equity Equity
Method Suspended Method Suspended
---------- ---------- ---------- ----------
Number of Local Partnerships 2 6 4 6
= = = =
Revenue:
Rental $1,129,282 $5,399,831 $2,558,394 $5,232,080
Other 27,209 248,423 177,111 291,832
---------- ---------- ---------- ----------
Total revenue 1,156,491 5,648,254 2,735,505 5,523,912
---------- ---------- ---------- ----------
Expenses:
Operating 823,640 3,430,274 2,243,796 3,343,190
Interest 31,028 1,266,967 (31,788) 1,235,069
Depreciation and amortization 231,696 1,065,303 511,514 1,051,980
---------- ---------- ---------- ----------
Total expenses 1,086,364 5,762,544 2,723,522 5,630,239
---------- ---------- ---------- ----------
Net income (loss) $ 70,127 $ (114,290) $ 11,983 $ (106,327)
========== ========== ========== ==========
Cash distributions $ -- $ 669,833 $ -- $ 492,013
========== ========== ========== ==========
Cash distributions recorded
as income $ -- $ 669,833 $ -- $ 492,013
Partnership's share of Local
Partnership net income 69,418 -- 11,862 --
-------------------------- ---------------------------
Share of income from partnerships $739,251 $503,875
======== ========
Cash distributions received from Local Partnerships which have investment
basis (equity method) are recorded as a reduction of investments in partnerships
and as cash receipts on the respective consolidated balance sheets. Cash
distributions received from Local Partnerships which have cumulative losses in
excess of the amount of the Partnership's investments in those Local
Partnerships (equity method suspended) are recorded as share of income from
partnerships on the respective consolidated statements of operations and as cash
receipts on the respective consolidated balance sheets. As of September 30, 2009
and 2008, the Partnership's share of cumulative losses to date for six of the
eight and six of the ten Local Partnerships, respectively, exceeded the amount
of the Partnership's investments in those Local Partnerships by $6,925,552 and
$6,765,998, respectively. As the Partnership has no further obligation to
advance funds or provide financing to these Local Partnerships, the excess
losses have not been reflected in the accompanying consolidated financial
statements.
-12-
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009 and 2008
(Unaudited)
4. RELATED PARTY TRANSACTIONS
In accordance with the terms of the Partnership Agreement, the Partnership
is obligated to reimburse the Managing General Partner or its affiliates for
direct expenses in connection with managing the Partnership. The Partnership
paid $59,869 and $248,865 for the three and nine month periods ended September
30, 2009, respectively, and $40,983 and $178,802 for the three and nine month
periods ended September 30, 2008, respectively. Such expenses are included in
general and administrative expenses in the accompanying consolidated statements
of operations.
In accordance with the terms of the Partnership Agreement, the Partnership
is obligated to pay the Managing General Partner an annual incentive management
fee (Management Fee) after all other expenses of the Partnership are paid. The
Partnership paid the Managing General Partner a Management Fee of $93,750 for
each of the three month periods ended September 30, 2009 and 2008 and $281,250
for each of the nine month periods ended September 30, 2009 and 2008.
In accordance with the terms of the Partnership Agreement, the Managing
General Partner and/or its affiliates may receive a fee of not more than two
percent of the sale price of an investment in a Local Partnership or the
property it owns, payable under certain conditions upon the sale of an
investment in a Local Partnership or the property it owns. The payment of the
fee is subject to certain restrictions, including the achievement of a certain
level of sale proceeds and making certain minimum distributions to limited
partners.
5. CASH DISTRIBUTIONS
On May 17, 2009, the Partnership declared a cash distribution of $1,857,597
($25 per Unit) to the Limited Partners who were holders of record as of May 17,
2009, of which, in June 2009, $1,268,386 was paid to the Limited Partners. From
the distribution amount, in April 2009, $590,097 was paid to the State of New
Jersey for non-resident withholding tax.
6. CASH CONCENTRATION RISK
Financial instruments that potentially subject the Partnership to
concentrations of risk consist primarily of cash. The Partnership maintains
three cash accounts with the same bank. As of September 30, 2009, the uninsured
portion of the cash balance was $0.
# # #
-13-
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Capital Realty Investors-IV Limited Partnership's (the Partnership)
Management's Discussion and Analysis of Financial Condition and Results of
Operations section is based on the consolidated financial statements, and
contains information that may be considered forward looking, including
statements regarding the effect of governmental regulations. Actual results may
differ materially from those described in the forward looking statements and
will be affected by a variety of factors including national and local economic
conditions, the general level of interest rates, governmental regulations
affecting the Partnership and interpretations of those regulations, the
competitive environment in which the Partnership operates, and the availability
of working capital.
New Accounting Pronouncements
-----------------------------
On July 1, 2009, the Partnership adopted Financial Accounting Standards
Board Accounting Standards Codification ("ASC"), which establishes the ASC as
the source of authoritative accounting principles to be applied in preparation
of financial statements in conformity with US GAAP. The adoption of this
standard did not have a material impact on the financial position, results of
operations or cash flows.
On January 1, 2009, the Partnership adopted the new accounting standard
which requires adoption of the fair value standards in the ASC for nonfinancial
assets and nonfinancial liabilities. The adoption did not have a material impact
on the financial position, results of operations or cash flows.
During the quarter ended June 30, 2009, the Partnership adopted the new
accounting standard which requires disclosure regarding the fair value of
financial instruments for interim reporting periods as well as in annual
financial statements.
The ASC establishes general standards of accounting and disclosure of
events that occur after the balance sheet date but before the Partnership issues
financial statements or has them available to issue. The ASC defines (i) the
period after the balance sheet date during which a reporting entity's management
should evaluate events or transactions that may occur for potential recognition
or disclosure in the financial statements, (ii) the circumstances under which an
entity should recognize events or transactions occurring after the balance sheet
date in its financial statements, and (iii) the disclosures an entity should
make about events or transactions that occurred after the balance sheet date.
The guidance became effective for periods ending after June 15, 2009. Subsequent
events have been evaluated through November 12, 2009, which is the issue date of
the financial statements. The adoption of the guidance did not have a material
impact on the financial position, results of operations or cash flows.
Critical Accounting Policies
----------------------------
The Partnership has disclosed its selection and application of significant
accounting policies in Note 1 of the notes to consolidated financial statements
included in the Partnership's annual report on Form 10-K at December 31, 2008.
The Partnership accounts for its investments in partnerships (Local
Partnerships) by the equity method because the Partnership is a limited partner
in the Local Partnerships. As such the Partnership has no control over the
selection and application of accounting policies, or the use of estimates, by
the Local Partnerships. Environmental and operational trends, events and
uncertainties that might affect the properties owned by the Local Partnerships
would not necessarily have a significant impact on the Partnership's application
of the equity method of accounting, since the equity method has been suspended
for six Local Partnerships which have cumulative losses in excess of the amount
of the Partnership's investments in those Local Partnerships.
-14-
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations - Continued
General
-------
Some of the rental properties owned by the Local Partnerships are financed
by state and federal housing agencies. The Managing General Partner has sold or
refinanced, and will continue to sell or refinance, certain properties pursuant
to programs developed by these agencies. These programs may include
opportunities to sell a property to a qualifying purchaser who would agree to
maintain the property as low to moderate income housing, or to refinance a
property, or to obtain supplemental financing. The Managing General Partner
continues to monitor certain state housing agency programs, and/or programs
provided by certain lenders, to ascertain whether the properties would qualify
within the parameters of a given program and whether these programs would
provide an appropriate economic benefit to the Limited Partners of the
Partnership.
The U. S. Department of Housing and Urban Development (HUD) subsidies are
provided principally under Sections 8 and 236 of the National Housing Act. Under
Section 8, the government pays to the applicable apartment partnership the
difference between market rental rates (determined in accordance with government
procedures) and the rate the government deems residents can afford. Under
Section 236, the government provides interest subsidies directly to the
applicable apartment partnership through a reduction in the property's mortgage
interest rate. In turn, the partnership provides a corresponding reduction in
resident rental rates. In compliance with the requirements of Section 8, and
Section 236, residents are screened for eligibility under HUD guidelines.
Subsidies are provided under contracts between the federal government and the
apartment partnerships.
Subsidy contracts for the investment apartment properties are scheduled to
expire through 2019. The Local Partnerships seek renewal of expiring subsidy
contracts, when appropriate, for its properties. HUD has in the past approved
new subsidy contracts on an annual basis subject to annual appropriations by
Congress. The initial HUD contract renewal process currently provides owners six
options for renewing their Section 8 contract depending upon whether the owner
can meet the eligibility criteria. Historically, the Local Partnerships in which
the Partnership is invested have met the criteria necessary to renew their
respective Section 8 contracts.
Fairway Park Apartments has a Section 8 HAP contract which expires December
31, 2009. The Section 8 HAP contract covers 42 of the apartment units in Fairway
Park Apartments. It is anticipated that the Local Partnership will extend its
Section 8 HAP contract for a one-year period at expiration.
As of September 30, 2009, the carrying amount of the Partnership's
investment in the Local Partnership with a Section 8 HAP contract expiring in
the next 12 months and which was not sold on or before November 12, 2009, was
$0.
The Managing General Partner continues to seek strategies to deal with
affordable housing policy. While the Managing General Partner cannot predict the
outcome for any particular property at this time, the Managing General Partner
will continue to work with the Local Partnerships to develop strategies that
maximize the benefits to investors.
Financial Condition/Liquidity
-----------------------------
The Partnership's liquidity, with unrestricted cash resources of $5,839,082
as of September 30, 2009, along with anticipated future cash distributions from
Local Partnerships, is expected to be adequate to meet its current and
anticipated operating cash needs. As of November 12, 2009, there were no
material commitments for capital expenditures.
-15-
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations - Continued
The Partnership's obligations with respect to its investments in Local
Partnerships, in the form of nonrecourse purchase money notes having an
aggregate principal balance of $2,790,000 plus aggregate accrued interest of
$11,065,979 as of September 30, 2009, are payable in full upon the earliest of:
(i) sale or refinancing of the respective Local Partnership's rental property;
(ii) payment in full of the respective Local Partnership's permanent loan; or
(iii) maturity.
Asbury Towers was paid off at a discount from proceeds of the sale of the
property owned by the Local Partnership in 2008. Effective January 1, 2009, the
Partnership's interest in Cedar Point and Thornwood House were transferred to
the purchase money noteholders and/or their affiliates or assignees.
Property Principal Date Disposition
-------- ----------- ------------ -----------
Asbury Towers $3,432,081 August 2008 Sale
Cedar Point 1,320,000 January 2009 Transfer
Thornwood House 1,775,000 January 2009 Transfer
The purchase money notes related to the following properties have matured
and have not been paid or extended as of November 12, 2009.
Accrued Interest
as of
Property Principal September 30, 2009 Maturity
-------- ----------- ------------------ --------
Westport Village $ 840,000 $2,788,325 09/01/99
Pilgrim Tower East 1,450,000 (1) 4,857,544 11/30/03
(1) Remaining principal, after a partial payment.
The remaining purchase money note related to Northridge Park matures in
2025. As of September 30, 2009, principal and accrued interest balances were
$500,000 and $3,420,110, respectively.
See the notes to consolidated financial statements contained in Part I,
Item 1, hereof, for additional information concerning purchase money notes.
The purchase money notes, which are nonrecourse to the Partnership, are
generally secured by the Partnership's interest in the respective Local
Partnerships. There is no assurance that the underlying properties will have
sufficient appreciation and equity to enable the Partnership to pay the purchase
money notes' principal and accrued interest when due. If a purchase money note
is not paid in accordance with its terms, the Partnership will either have to
renegotiate the terms of repayment or risk losing its partnership interest in
the respective Local Partnership. In the event that a purchase money note
remains unpaid upon maturity, the noteholder may have the right to foreclose on
the Partnership's interest in the related Local Partnership.
The Partnership's inability to pay certain of the purchase money note
principal and accrued interest balances when due, and the resulting uncertainty
regarding the Partnership's continued ownership interest in the related Local
Partnerships, does not adversely impact the Partnership's financial condition
because the purchase money notes are nonrecourse and secured solely by the
Partnership's interest in the related Local Partnerships. Therefore, should the
investment in any of the Local Partnerships with matured or maturing purchase
money notes not produce sufficient value to satisfy the related purchase money
notes, the Partnership's exposure to loss is limited because the amount of the
nonrecourse indebtedness of each of the matured or maturing purchase money notes
exceeds the carrying amount of the investment in each of the related Local
Partnerships. Thus, even a complete loss of the Partnership's interest in these
Local Partnerships would not have a material adverse impact on the financial
condition of the Partnership.
-16-
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations - Continued
The Managing General Partner continues to investigate possible alternatives
to reduce the Partnership's debt obligations. These alternatives include, among
others, retaining the cash available for distribution to meet the purchase money
note requirements, paying off certain purchase money notes at a discounted
price, extending the due dates of certain purchase money notes, refinancing the
respective properties' underlying debt, or selling the underlying real estate
and using the Partnership's share of the proceeds to pay or buy down certain
purchase money note obligations. Although the Managing General Partner has had
some success applying these strategies in the past, the Managing General Partner
cannot assure that these strategies will be successful in the future. If the
Managing General Partner is unable to negotiate an extension or discounted
payoff, in the event that the purchase money notes remain unpaid upon maturity,
the noteholders may have the right to foreclose on the Partnership's interest in
the related Local Partnerships. In the event of a foreclosure or other transfer
of the Partnership's interest, the excess of the nonrecourse indebtedness over
the carrying amount of the Partnership's investment in the related Local
Partnership will result in a taxable gain. This gain will be taxable to Limited
Partners at a federal tax rate of up to 35.0%. Additionally, the Partnership
would lose its investment in the Local Partnership and, likewise, its share of
any future cash distributed by the Local Partnership from rental operations,
mortgage debt refinancings, or sale of the real estate. Of the eight Local
Partnerships in which the Partnership is invested as of September 30, 2009, the
two Local Partnerships with associated purchase money notes which have matured,
or which mature through September 30, 2010, and which remain unpaid or
unextended as of November 12, 2009, represented the following percentages of the
Partnership's total distributions received from Local Partnerships and share of
income from Local Partnerships for the immediately preceding two calendar years.
Percentage of Total Partnership's Share of
Distributions Received Income from
For the Year Ended from Local Partnerships Local Partnerships
------------------ ----------------------- ----------------------
December 31, 2007 0% $0
December 31, 2008 10.4% $57,257
The Managing General Partner continues to address the maturity and
impending maturity of the Partnership's debt obligations and to seek solutions
that will provide the most favorable outcome to the Limited Partners. However,
there can be no assurance that these strategies will be successful.
The Partnership closely monitors its cash flow and liquidity position in an
effort to ensure that sufficient cash is available for operating requirements.
For the nine month period ended September 30, 2009, existing cash resources and
receipt of distributions from partnerships were adequate to support cash used in
operating and financing activities. Cash and cash equivalents decreased
$2,136,279 during the nine month period ended September 30, 2009, primarily due
to operating expenses paid in cash and distributions paid.
On May 17, 2009, the Partnership declared a cash distribution of $1,857,597
($25 per Unit) to the Limited Partners who were holders of record as of May 17,
2009, of which, in June 2009, $1,268,386 was paid to the Limited Partners. From
the distribution amount, in April 2009, $590,097 was paid to the State of New
Jersey for non-resident withholding tax.
Results of Operations
---------------------
The Partnership recognized net loss for the three month period ended
September 30, 2009 compared to net income in 2008, primarily due to decreases in
gain from extinguishment of debt and interest revenue, partially offset by
increased share of income from partnerships. Interest revenue decreased due to
lower cash and cash equivalent balances and rates in 2009. Share of income from
partnerships increased primarily due to higher cash distributions received.
-17-
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations - Continued
The Partnership's net income for the nine month period ended September 30,
2009 decreased compared to 2008, primarily due to decreases in gain from
extinguishment of debt and interest revenue and increased general and
administrative expenses, partially offset by increased share of income from
partnerships and decreased interest expense. Interest revenue decreased due to
lower cash and cash equivalent balances and rates in 2009. General and
administrative expenses increased primarily due to filing fees paid by the
Partnership and higher reimbursed payroll costs. Share of income from
partnerships increased primarily due to cash distributions received. Interest
expense decreased due to a lower purchase money note balance.
For financial reporting purposes, the Partnership, as a limited partner in
the Local Partnerships, does not record losses from the Local Partnerships in
excess of its investment to the extent that the Partnership has no further
obligation to advance funds or provide financing to the Local Partnerships. As a
result, the Partnership's share of income from partnerships for the three and
nine month periods ended September 30, 2009 did not include losses of $139,339
and $418,021, respectively, compared to excluded losses of $137,762 and $413,283
for the three and nine month periods ended September 30, 2008, respectively.
No other significant changes in the Partnership's operations have taken
place during the three month period ended September 30, 2009.
Certain states may assert claims against the Partnership for failure to
withhold and remit state income tax on operating profit or where the sale(s) of
property in which the Partnership was invested failed to produce sufficient cash
proceeds with which to pay the state tax and/or to pay statutory partnership
filing fees. The Partnership is unable to quantify the amount of such potential
claims at this time. The Partnership has consistently advised its Partners that
they should consult with their tax advisors as to the necessity of filing
non-resident returns in such states with respect to their proportional taxes
due.
Item 4. Controls and Procedures
In October 2009, representatives of the Managing General Partner of the
Partnership carried out an evaluation of the effectiveness of the design and
operation of the Partnership's disclosure controls and procedures, pursuant to
Exchange Act Rules 13a-15 and 15d-15. The Managing General Partner does not
expect that the Partnership's disclosure controls and procedures will prevent
all error and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable assurance that the objectives of the
control system are met. Further, the design of a control system must reflect the
fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. The design of any system of
controls also is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions. Over time,
controls may become inadequate because of changes in conditions, or the degree
of compliance with the policies or procedures may deteriorate. Because of the
inherent limitations in a cost-effective control system, misstatements due to
error or fraud may occur and not be detected. Based on such evaluation, our
principal executive officer and principal financial officer have concluded that
as of September 30, 2009, our disclosure controls and procedures were effective
to ensure that (i) the information required to be disclosed by us in the reports
filed or submitted by us under the Securities Exchange Act of 1934, as amended,
was recorded, processed, summarized or reported within the time periods
specified in the SEC's rules and forms and (ii) such information was accumulated
-18-
Part I. FINANCIAL INFORMATION
Item 4. Controls and Procedures - Continued
and communicated to management, including our principal executive officer and
principal financial officer, to allow timely decisions regarding required
disclosure. In addition, there have been no significant changes in the
Partnership's internal control over financial reporting that occurred during the
Partnership's most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Partnership's internal control over
financial reporting.
Part II. OTHER INFORMATION
Item 3. Defaults upon Senior Securities
See Note 3.a. of the notes to consolidated financial statements contained
in Part I, Item 1, hereof, for information concerning the Partnership's defaults
on certain purchase money notes.
Item 5. Other Information
There has not been any information required to be disclosed in a report on
Form 8-K during the quarter ended September 30, 2009, but not reported, whether
or not otherwise required by this Form 10-Q at September 30, 2009.
There is no established market for the purchase and sale of units of
additional limited partner interest (Units) in the Partnership, although various
informal secondary market services exist. Due to the limited markets, however,
investors may be unable to sell or otherwise dispose of their Units.
On May 17, 2009, the Partnership declared a cash distribution of $1,857,597
($25 per Unit) to the Limited Partners who were holders of record as of May 17,
2009, of which, in June 2009, $1,268,386 was paid to the Limited Partners. From
the distribution amount, in April 2009, $590,097 was paid to the State of New
Jersey for non-resident withholding tax.
Item 6. Exhibits
Exhibit No. Description
----------- -----------
31.1 Certification of Principal Executive Officer, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certification of Principal Financial Officer, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32 Certification of Principal Executive Officer and Principal
Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
All other Items are not applicable.
-19-
SIGNATURE
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.
CAPITAL REALTY INVESTORS-IV LIMITED
PARTNERSHIP
----------------------------------------------
(Registrant)
by: C.R.I., Inc.
-----------------------------------------
Managing General Partner
November 12, 2009 by: /s/ H. William Willoughby
----------------- ------------------------------------
DATE H. William Willoughby,
Director, President, Secretary,
Principal Financial Officer and
Principal Accounting Officer
-20-