AmREIT Monthly Income & Growth Fund IV LP - FORM 10-Q

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EX-31.2 - CERTIFICATION OF CFO PURSUANT TO SECTION 302 - AmREIT Monthly Income & Growth Fund IV LP	amreitmigiv112515_ex31-2.htm
EX-32.2 - CERTIFICATION OF CFO PURSUANT TO SECTION 906 - AmREIT Monthly Income & Growth Fund IV LP	amreitmigiv112515_ex32-2.htm
EX-32.2 - CERTIFICATION OF CEO PURSUANT TO SECTION 906 - AmREIT Monthly Income & Growth Fund IV LP	amreitmigiv112515_ex32-1.htm
EX-31.1 - CERTIFICATION OF CEO PURSUANT TO SECTION 302 - AmREIT Monthly Income & Growth Fund IV LP	amreitmigiv112515_ex31-1.htm

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2011

o 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 000-53203

AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P.
(Exact Name of Registrant as Specified in Its Charter)


Delaware		20-5685431
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

8 Greenway Plaza, Suite 1000 Houston, Texas (Address of Principal Executive Offices)		77046 (Zip Code)

713-850-1400 (Registrant’s Telephone Number, Including Area Code)

Not applicable (Former Name, Former Address and Formal 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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company x
(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

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			Page
Part I – Financial Information
	Item 1 -	Financial Statements and Notes	1
	Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
	Item 3 -	Quantitative and Qualitative Disclosures About Market Risk	19
	Item 4 -	Controls and Procedures	19

Part II – Other Information
	Item 6 -	Exhibits	20

Signatures			21
Exhibit Index			22

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 2011 and December 31, 2010
(in thousands, except unit data)


	March 31, 2011			December 31, 2010
	(unaudited)

ASSETS
Real estate investments at cost:
Land	$	12,402		$	12,381
Buildings		12,965			12,891
Tenant improvements		337			332
		25,704			25,604
Less accumulated depreciation and amortization		(1,561	)		(1,446	)
		24,143			24,158

Investment in non-consolidated entities		9,967			9,961
Acquired lease intangibles, net		71			80
Net real estate investments		34,181			34,199

Cash and cash equivalents		566			1,309
Tenant receivables, net		245			251
Accounts receivable		—			16
Accounts receivable - related party		105			112
Notes receivable		—			2
Deferred costs, net		74			66
Other assets		129			199
TOTAL ASSETS	$	35,300		$	36,154

LIABILITIES AND CAPITAL
Liabilities:
Notes payable	$	6,045		$	6,067
Notes payable - related party		1,370			1,291
Accounts payable and other liabilities		352			576
Accounts payable - related party		124			247
Acquired below-market lease intangibles, net		15			18
Security deposits		72			72
TOTAL LIABILITIES		7,978			8,271

Capital:
Partners’ capital:
General partner		—			—
Limited partners, 1,988 units outstanding at March 31, 2011 and December 31, 2010, respectively		20,374			21,004
TOTAL PARTNERS’ CAPITAL		20,374			21,004

Non-controlling interests		6,948			6,879
TOTAL CAPITAL		27,322			27,883

TOTAL LIABILITIES AND CAPITAL	$	35,300		$	36,154

See Notes to Consolidated Financial Statements.

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AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per unit data)
(unaudited)


	Three months ended March 31,
	2011			2010

Revenues:
Rental income from operating leases	$	220		$	921
Total revenues		220			921

Expenses:
General and administrative		6			15
General and administrative - related party		61			76
Asset management fees - related party		108			108
Property expense		138			371
Property management fees - related party		11			29
Legal and professional		86			77
Depreciation and amortization		133			4,624
Total operating expenses		543			5,300

Operating loss		(323	)		(4,379	)

Other income (expense):
Interest and other income		2			3
Interest expense		(102	)		(442	)
Equity in losses from non-consolidated entities		(276	)		(212	)
Margin tax expense		1			(7	)
Total other expense		(375	)		(658	)

Net loss, including non-controlling interests		(698	)		(5,037	)

Net loss attributable to non-controlling interests		68			1,813

Net loss attributable to partners	$	(630	)	$	(3,224	)

Weighted average units outstanding		1,988			1,988
Net loss per unit	$	(316.90	)	$	(1,621.73	)

See Notes to Consolidated Financial Statements.

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AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CAPITAL
For the three months ended March 31, 2011
(in thousands)
(unaudited)


	Partners’ Capital
	General Partner		Limited Partners			Non-Controlling Interests			Total
Balance at December 31, 2010	$	—	$	21,004		$	6,879		$	27,883

Net loss (1)		—		(630	)		(68	)		(698	)
Contributions from non-controlling interests		—		—			137			137

Balance at March 31, 2011	$	—	$	20,374		$	6,948		$	27,322


(1)	The allocation of net loss includes a curative allocation to increase the General Partner capital account by $6 for the three months ended March 31, 2011. The cumulative curative allocation since inception of the Partnership is $232. The Partnership Agreement provides that no Partner shall be required to fund a deficit balance in their capital account.

See Notes to Consolidated Financial Statements.

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AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)


	Three months ended March 31,
	2011			2010
Cash flows from operating activities:
Net loss, including non-controlling interests	$	(698	)	$	(5,037	)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense		22			(7	)
Loss from non-consolidated entities		276			212
Depreciation and amortization		133			4,624
Amortization of above- and below-market leases, net		(3	)		(93	)
Amortization of loan acquisition costs		1			23
(Increase) decrease in tenant receivables		(16	)		26
Decrease in accounts receivable		16			—
Decrease (increase) in accounts receivable - related party		7			(5	)
Increase in deferred costs		(13	)		(43	)
Decrease (increase) in other assets		70			(31	)
Decrease in accounts payable and other liabilities		(281	)		(608	)
(Decrease) increase in accounts payable - related party		(44	)		123
Increase in security deposits		—			13
Net cash used in operating activities		(530	)		(803	)

Cash flows from investing activities:
Improvements to real estate		(84	)		(132	)
Payments received on notes receivable		2			—
Increase in notes receivable - related party		—			(1	)
Investment in non-consolidated entities		(282	)		(233	)
Net proceeds applied to land basis		36			—
Net cash used in investing activities		(328	)		(366	)

Cash flows from financing activities:
Payments on notes payable		(22	)		(21	)
Proceeds from notes payable - related party		—			600
Contributions from non-controlling interests		137			249
Net cash provided by financing activities		115			828

Net decrease in cash and cash equivalents		(743	)		(341	)
Cash and cash equivalents, beginning of period		1,309			469
Cash and cash equivalents, end of period	$	566		$	128

Supplemental schedule of cash flow information:

Cash paid during the period for:
Interest	$	84		$	298

Supplemental schedule of noncash investing and financing activities:

During 2011, $79,000 in accounts payable - related party was reclassified to notes payable - related party.

During 2011, we capitalized $57,000 of accrued property taxes into the basis of our land at Woodlake Pointe. We are in the intital stages of planning a major redevelopment at the Woodlake Pointe shopping center.

See Notes to Consolidated Financial Statements.

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AmREIT MONTHLY INCOME & GROWTH FUND IV, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
(unaudited)


1.	DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS

AmREIT Monthly Income & Growth Fund IV, L.P., a Delaware limited partnership (hereinafter referred to as the “Partnership,” “MIG IV,” “we,” “us” or “our”), was formed on October 10, 2006 to acquire, develop and operate, directly or indirectly, a portfolio of commercial real estate consisting primarily of multi-tenant shopping centers and mixed-use developments. The General Partner of the Partnership is AmREIT Monthly Income & Growth IV Corporation, a Delaware corporation (the “General Partner”), which is a subsidiary of AmREIT, Inc., an SEC reporting, non-traded Maryland corporation that has elected to be taxed as a real estate investment trust (“AmREIT”). The General Partner maintains its principal place of business in Houston, Texas.

We commenced our principal operations on January 12, 2007, when we raised the minimum offering of $1.0 million (the “Offering”) pursuant to the terms of our Offering Memorandum dated November 15, 2006 (the “Offering Memorandum”) and issued the initial 40 limited partnership units (the “Units”). We closed the offering on March 31, 2008 when we had received $49.7 million from the sale of 1,991 Units. As of March 31, 2011, our investments included a wholly-owned property comprising approximately 36,000 square feet of gross leasable area, a property in which we own a controlling interest comprising approximately 82,000 square feet of gross leasable area and four properties in which we own a non-controlling interest through joint ventures comprising approximately 1,155,000 square feet of gross leasable area.

Our Units were sold pursuant to exemptions from registration under the Securities Act of 1933, as amended (the “Securities Act”), and are not currently listed on a national securities exchange. These Units will be transferable only if we register them under applicable securities laws (such registration is not expected) or they are transferred pursuant to an exemption under the Securities Act and applicable state securities laws. We do not anticipate that any established public trading market for the Units will develop.

The U.S. economy is still experiencing weakness from recent economic conditions, which resulted in increased unemployment, weakening of tenant financial condition, large-scale business failures and tight credit markets. Our results of operations may be sensitive to changes in overall economic conditions that impact tenant leasing practices. Adverse economic conditions affecting tenant income, such as employment levels, business conditions, interest rates, tax rates, fuel and energy costs and other matters, could reduce overall tenant leasing or cause tenants to shift their leasing practices. In addition, periods of economic slowdown or recession, rising interest rates or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in rents or an increased incidence of defaults under existing leases. Although the U.S. economy has emerged from the recent recession, high levels of unemployment have persisted, and rental rates and valuations for retail space have not fully recovered to pre-recession levels. At this time, it is difficult to determine the breadth and duration of the financial market problems and the various ways in which they may affect our tenants and our business in general. A significant additional deterioration in the U.S. economy or the bankruptcy or insolvency of one or more of our significant tenants could cause our cash resources to be insufficient to meet our obligations over the next 12 months. Effective July 15, 2009, we suspended all distributions in an effort to conserve cash and to protect our limited partners’ invested capital. As we have several projects that are mid-stream in redevelopment, we are conserving cash from operations to improve our ability to fund capital improvements, tenant improvements and leasing commissions, and to meet our obligations, including debt service. We expect that the economy and real estate market will recover prior to our anticipated liquidation commencement date of November 15, 2013. However, if the economy has not recovered, we may seek to postpone liquidation if we believe such liquidation is not in the best interests of the Partners at that time.

Projected cash sources (including cash on hand) and uses for the Partnership indicate periods of cash shortfalls during the year ended December 31, 2011. However, we believe that we will be able to generate sufficient liquidity to satisfy any cash shortfalls through (1) managing the timing of forecasted capital expenditures related to the lease-up of properties, (2) deferral of fees paid to our General Partner and its affiliates, (3) new third-party joint venture equity investments in existing non-consolidated entities, (4) financings of unencumbered properties and (5) sales of certain of our investments in non-consolidated entities. No assurance can be given that we will be able to generate such liquidity. In the event that we are unable to generate sufficient liquidity, we may be forced to sell one or more properties at a time when it is disadvantageous to do so, potentially resulting in losses on the disposition of those properties.

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2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

Our financial records are maintained on the accrual basis of accounting whereby revenues are recognized when earned and expenses are recorded when incurred. The consolidated financial statements include our accounts as well as the accounts of any wholly- or majority-owned subsidiaries in which we have a controlling financial interest. Investments in joint ventures and partnerships in which we have the ability to exercise significant influence but do not exercise financial and operating control are accounted for using the equity method (see Note 3). The significant accounting policies of our non-consolidated entities are consistent with those of our subsidiaries in which we have a controlling financial interest. As applicable, we consolidate certain joint ventures and partnerships in which we own less than a 100% equity interest if the entity is a variable interest entity and we are the primary beneficiary (as defined in Accounting Standards Codification (“ASC”) 810, Consolidation). As of March 31, 2011, we do not have any interests in variable interest entities. All significant inter-company accounts and transactions have been eliminated in consolidation.

As discussed further in Note 3, we and our affiliated partners sold a 90% interest in the Woodlake Square property to a third-party institutional partner in July 2010. As a result of this transaction, we retained a net 6% non-controlling financial interest in the Woodlake Square property, but such interest provides us with the ability to exercise significant influence. Accordingly, we deconsolidated this property as of the date of the transaction and began accounting for the net 6% retained interest in the property on the equity method of accounting. As such, the conditions for discontinued operations presentation were not met as we will continue to have cash flows from our retained interest and will continue to be involved with the operations of the entity through our position of significant influence. As a result, the operations associated with this entity are reflected in the consolidated statement of operations up to the date on which we disposed of our controlling interest.

The consolidated financial statements included in this Quarterly Report on Form 10-Q (“Report”) are unaudited; however, amounts presented in the consolidated balance sheet as of December 31, 2010 are derived from our audited financial statements as of that date. In our opinion, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted of normal recurring items.

REVENUE RECOGNITION

We lease space to tenants under agreements with varying terms. All of the leases are accounted for as operating leases, and, although certain leases of the properties provide for tenant occupancy during periods for which no rent is due and/or increases or decreases in the minimum lease payments over the terms of the leases, revenue is recognized on a straight-line basis over the terms of the individual leases. Revenue recognition under a lease begins when the lessee takes possession of or controls the physical use of the leased asset. Generally, possession or control occurs on the lease commencement date. We have determined that we are the owner of any tenant improvements that we fund pursuant to the lease terms. In cases where significant tenant improvements are made prior to lease commencement, the leased asset is considered to be finished space, and revenue recognition therefore begins when the improvements are substantially complete.

Accrued rents are included in tenant receivables. Revenue from tenant reimbursements of taxes, maintenance expenses and insurance is recognized in the period the related expense is recorded. Additionally, certain of the lease agreements contain provisions that grant additional rents based on tenants’ sales volumes (contingent or percentage rent). Percentage rents are recognized when the tenants achieve the specified targets as defined in their lease agreements. No percentage rents were recognized during the three months ended March 31, 2011 and 2010. We recognize lease termination fees in the period that the lease is terminated and collection of the fees is reasonably assured. During the three months ended March 31, 2011 and 2010, we recognized no lease termination fees. Upon early lease termination, as applicable, we also provide for losses related to unrecovered intangibles and other assets and write off any assets or liabilities and the associated accumulated amortization.

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REAL ESTATE INVESTMENTS

Development Properties – Land, buildings and improvements are recorded at cost. Expenditures related to the development of real estate are carried at cost which includes capitalized carrying charges, acquisition costs and development costs. Carrying charges, primarily interest, real estate taxes and loan acquisition costs, and direct and indirect development costs related to buildings under construction, are capitalized as part of construction in progress. The capitalization of such costs ceases at the earlier of one year from the date of completion of major construction or when the property, or any completed portion, becomes available for occupancy. We capitalize costs associated with pending acquisitions of raw land as incurred. Such costs are expensed if and when such land acquisition becomes no longer probable. During the three months ended March 31, 2011 and 2010, interest and taxes in the amount of $57,000 and $74,000, respectively, were capitalized on properties under development or redevelopment.

Acquired Properties and Acquired Lease Intangibles – We account for operating real estate acquisitions pursuant to ASC 805, Business Combinations, as we believe most operating real estate meets the definition of a “business” pursuant to this guidance. Accordingly, we allocate the purchase price of the acquired operating properties to land, building and improvements, identifiable intangible assets and acquired liabilities based on their respective fair values. Identifiable intangibles include amounts allocated to acquired above and below market leases, out of market debt, the value of in-place leases and customer relationship value, if any. We determine fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends and specific market and economic conditions that may affect the property. Factors considered by management in our analysis of determining the as-if-vacant property value include an estimate of carrying costs during the expected lease-up periods considering market conditions and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and estimates of lost rentals at market rates during the expected lease-up periods, tenant demand and other economic conditions. Management also estimates costs to execute similar leases including leasing commissions, tenant improvements, legal and other related expenses. Intangibles related to above (and below) market leases and in-place lease value are recorded as acquired lease intangibles (liabilities) and are amortized as an adjustment to rental income or amortization expense, as appropriate, over the remaining terms of the underlying leases. Below-market leases include fixed-rate renewal periods. Premiums or discounts on acquired above and below market debt are amortized to interest expense over the remaining term of such debt.

We expense acquisition costs associated with operating properties as incurred in accordance with ASC 805, Business Combinations (“ASC 805”). We did not expense any acquisition costs or capitalize any interest or taxes during the three months ended March 31, 2011 and 2010.

Depreciation – Depreciation is computed using the straight-line method over an estimated useful life of up to 36 years for buildings, up to 11 years for site improvements and over the term of lease for tenant improvements. We re-evaluate the useful lives of our buildings and improvements as warranted by changing conditions at our properties. As part of this re-evaluation, we may also consider whether such changing conditions indicate a potential impairment, and we perform an impairment analysis, as necessary, at the property level. In the case of a property redevelopment, we reassess the useful lives of specific buildings or other improvements to be demolished as part of that redevelopment once the redevelopment is probable of occurring. During 2010, we re-evaluated the useful lives of certain buildings within our Woodlake Square retail center as a result of our decision to redevelop the property and demolish certain buildings. The redevelopment commenced in July 2010 was substantially completed in April 2011. As a result of this change in estimate, depreciation expense was $4.1 million higher during the three months ended March 31, 2010 than it otherwise would have been. As a result of the deconsolidation of Woodlake Square in July 2010, the net assets of this property are now included in our investment in non-consolidated entities.

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Properties Held for Sale – Properties will be classified as held for sale if we have decided to market the property for immediate sale in its present condition with the belief that the sale will be completed within one year. Properties held for sale will be carried at the lower of cost or fair value less cost to sell. Depreciation and amortization will be suspended during the held for sale period. As of March 31, 2011 and December 31, 2010, we had no properties held for sale.

Impairment – We review our properties for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets, including acquired lease intangibles and accrued rental income, may not be recoverable through operations. We determine whether an impairment in value occurred by comparing the estimated future cash flows (undiscounted and without interest charges), including the residual value of the property, with the carrying value of the individual property. If impairment is indicated, a loss will be recorded for the amount by which the carrying value of the asset exceeds its fair value. Both the estimated undiscounted cash flow analysis and fair value determination are based upon various factors that require complex and subjective judgments to be made by management. Such assumptions include projecting lease-up periods, holding periods, cap rates, rental rates, operating expenses, lease terms, tenant creditworthiness, tenant improvement allowances, terminal sales value and certain macroeconomic factors among other assumptions to be made for each property. For our multi-building retail centers, we consider the entire retail center as the asset group for purposes of our impairment analysis. We review our investments in non-consolidated entities for impairment based on a similar review of the properties held by the investee entity.

ENVIRONMENTAL EXPOSURES

We are subject to numerous environmental laws and regulations as they apply to real estate, including those addressing chemicals used by the dry cleaning industry, the existence of asbestos in older shopping centers and underground petroleum storage tanks. We believe that the tenants occupying our properties who currently operate dry cleaning plants or gas stations do so in accordance with current laws and regulations. We believe that the ultimate disposition of currently known environmental matters will not have a material affect on our financial position, liquidity, or operations (see Note 10). However, we can give no assurance that existing environmental studies with respect to the shopping centers have revealed all potential environmental liabilities; that any previous owner, occupant or tenant did not create any material environmental condition not known to it; that the current environmental condition of the shopping centers will not be affected by tenants and occupants, by the condition of nearby properties or by unrelated third parties; or that changes in applicable environmental laws and regulations or their interpretation will not result in additional environmental liability to the Partnership.

RECEIVABLES AND ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS

Tenant Receivables – Included in tenant receivables are base rents, tenant reimbursements and adjustments attributable to recording rents on a straight-line basis. An allowance for the uncollectible portion of accrued rents and accounts receivable is determined based upon customer credit-worthiness (including expected recovery of our claim with respect to any tenants in bankruptcy), historical bad debt levels and current economic trends. Bad debt expenses and any related recoveries related to tenant receivables are included in property expense. As of March 31, 2011 and December 31, 2010, our allowance for uncollectible accounts related to our tenant receivables was $195,000 and $179,000, respectively.

Accounts Receivable - Related Party - Included in accounts receivable - related party are short-term cash advances provided to certain of our affiliated investment entities primarily for their working capital needs. These cash advances are due upon demand.

DEFERRED COSTS

Deferred costs include deferred leasing costs and loan acquisition costs, net of amortization. Loan acquisition costs are incurred in obtaining financing and are amortized to interest expense over the term of the debt agreements using a method that approximates the effective interest method. Deferred leasing costs consist of external commissions associated with leasing our properties and are amortized to depreciation and amortization expense on a straight-line basis over the lease term. If a lease is terminated early, or if a loan is repaid prior to maturity, the remaining costs will be disposed of. Accumulated amortization related to loan acquisition costs totaled $12,000 and $11,000 as of March 31, 2011 and December 31, 2010, respectively. Accumulated amortization related to leasing costs totaled $19,000 and $24,000 as of March 31, 2011 and December 31, 2010, respectively.

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INCOME TAXES

Federal – No provision for U.S. federal income taxes is included in the accompanying consolidated financial statements. As a partnership, we are not subject to U.S. federal income tax, and the federal tax effect of our activities is passed through to our partners.

State – In May 2006, the State of Texas adopted House Bill 3, which modified the state’s franchise tax structure, replacing the previous tax based on capital or earned surplus with one based on margin (often referred to as the “Texas Margin Tax”), effective with franchise tax reports filed on or after January 1, 2007. The Texas Margin Tax is computed by applying the applicable tax rate (1% for the Partnership) to the profit margin, which, generally, will be determined for us as total revenue less a 30% standard deduction. Although House Bill 3 states that the Texas Margin Tax is not an income tax, the Partnership believes that ASC 740, Income Taxes, applies to the Texas Margin Tax. We have recorded margin tax provisions of approximately $2,000 and $7,000 for the Texas Margin Tax for each of the three months ended March 31, 2011 and 2010, respectively.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with U.S. 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

FAIR VALUE MEASUREMENTS

We account for assets and liabilities measured at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The three levels of inputs used to measure fair value are as follows:


	•	Level 1 Inputs – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

	•	Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

	•	Level 3 Inputs – Unobservable inputs for the asset or liability, which are typically based on the Company’s own assumptions, as there is little, if any, related market activity.

ASC 820 requires the use of observable market data, when available, in making fair value measurements. Observable inputs that the market participants would use in pricing the asset or liability are developed based on market data obtained from sources independent of our own. Unobservable inputs are inputs that reflect our assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. When inputs used to measure fair value fall within different levels of the hierarchy, 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.

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The following table presents our assets and liabilities and related valuation inputs within the fair value hierarchy utilized to measure fair value as of March 31, 2011and December 31, 2010 (in thousands):


March 31, 2011	Level 1		Level 2		Level 3
Notes Payable	$	—	$	6,276	$	—

December 31, 2010	Level 1		Level 2		Level 3
Notes Payable	$	—	$	6,367	$	—
Investment in Non-Consolidated Entities	$	—	$	—	$	225

Notes Payable – We disclose the fair value of our financial instruments in accordance with ASC 825, Financial Instruments, on a recurring basis. Our consolidated financial instruments consist of cash and cash equivalents, tenant receivables, accounts receivable, accounts receivable – related party, notes receivable, notes payable, notes payable – related party, and accounts payable and other liabilities. The carrying values of all of the financial instruments except the notes payable are representative of the fair values due to the short term nature of the instruments. In determining the fair value of our debt instruments, we determine the appropriate Treasury Bill Rate based on the remaining time to maturity for each of the debt instruments. We then add the appropriate yield spread to the Treasury Bill Rate. The yield spread is a risk premium estimated by investors to account for credit risk involved in debt financing. The spread is typically estimated based on the property type and loan-to-value ratio of the debt instrument. The result is an estimate of the market interest rate a typical investor would expect to receive given the underlying subject asset (property type) and remaining time to maturity. We believe the fair value of our notes payable is classified in Level 2 of the fair value hierarchy. As of March 31, 2011 and December 31, 2010, the carrying value of debt obligations associated with our consolidated entities was approximately $6.0 million and $6.1 million of fixed rate obligations, respectively, with an estimated fair value of $6.3 million and $6.4 million, respectively.

Investments in Non-Consolidated Entities – Due to the downturn in the real estate market, in particular for raw land, an impairment test was performed during 2010 on our Cambridge & Holcombe property. We determined the fair value of the property based on comparable market sales data that we have adjusted for any significant differences, to the extent known, between the identified comparable assets and the assets being valued. As such, we have determined that this non-recurring fair value measurement falls within Level 3 of the fair value hierarchy.

CASH AND CASH EQUIVALENTS

We consider all highly-liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of demand deposits at commercial banks and money market funds.

INTEREST

Interest is charged to interest expense as it accrues. No interest has been capitalized on our wholly-owned property since the inception of the Partnership.

SEGMENT REPORTING

ASC 280, Segment Reporting, establishes standards for reporting financial and descriptive information about an enterprise’s reportable segments. We determined that we have one reportable segment with activities related to investing in real estate. Our investments in real estate generate rental revenue and other income through the leasing of multi-tenant retail properties, which comprised 100% of our total consolidated revenues for all periods presented. We evaluate operating performance on an individual property level. However, as each of our properties have similar economic characteristics, tenants and products and services, our properties have been aggregated into one reportable segment.

RECLASSIFICATIONS

Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the presentation used in the current period consolidated financial statements.

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3.	INVESTMENTS IN NON-CONSOLIDATED ENTITIES

Since inception, we have made the following investments in four entities through which we own an interest in four properties:


	•	In January 2007, we acquired a 50% interest in AmREIT Casa Linda, LP, which owns Casa Linda Plaza, a multi-tenant retail property located in Dallas, Texas with a combined gross leasable area of approximately 325,000 square feet. The remaining 50% is owned by AmREIT Monthly Income & Growth Fund III, Ltd. (“MIG III”), an affiliated AmREIT entity.

	•	In December 2007, we acquired a 50% interest in Cambridge & Holcombe, LP, which owns 2.02 acres of raw land that may be developed, sold or contributed to a joint venture in the future. The property is located adjacent to the Texas Medical Center in Houston, Texas. The remaining 50% is owned by an unaffiliated third party. Due to the downturn in the real estate market, in particular for raw land, an impairment test was performed during 2010. We recorded an impairment of approximately $2.6 million on this investment in 2010. During 2011, the joint venture defaulted on its loan in the amount of $8.1 million that was due to mature in June 2011. We have executed a forbearance agreement with the lender, whereby we are able to defer a portion of the interest payments and extend the agreement through March 2012.

	•	In February 2008, we acquired a 10% interest in Shadow Creek Holding Company LLC, which owns Shadow Creek Ranch, a multi-tenant retail property located in Pearland, Texas with a combined gross leasable area of approximately 624,000 square feet. The remaining 90% is owned by an unaffiliated third party (80%) and AmREIT (10%).

	•	Between June 2008 and July 2010, we owned a 60% interest in AmREIT Woodlake, LP (Woodlake LP), which owns Woodlake Square, a grocery-anchored, multi-tenant retail property located at the corner of Westheimer and Gessner in Houston, Texas with a combined gross leasable area of approximately 206,000 square feet. In July 2010, we and our affiliated entities sold a 90% interest in Woodlake LP to a third-party institutional partner. We ultimately retained a net 6% interest in the new property owner (“VIF II/AmREIT Woodlake, LP”) through our 60% controlling interest in the managing member of the new property owner, and the remaining 94% is owned by the third-party institutional partner (90%), ARIC (1%) and by MIG III (3%), an affiliated AmREIT entity. Due to our retention of the controlling financial interest in VIF II/AmREIT Woodlake, LP’s managing member, the 10% interest retained by us and our affiliated entities is presented as investment in non-consolidated entities with the 4% owned by AmREIT Realty Investment Corporation (“ARIC”) and MIG III presented as non-controlling interests in the accompanying balance sheet.

We report our investments in these four entities using the equity method of accounting due to our ability to exercise significant influence over them. Combined condensed financial information for the underlying investee entities (at 100%) is summarized for the three months ended March 31, 2011 and 2010, as follows (in thousands):


	Three months ended March 31,
	2011			2010
Revenue	$	3,765		$	4,055
Depreciation and amortization		(1,577	)		(5,858	)
Interest expense		(1,725	)		(1,788	)
Net loss		(1,071	)		(5,199	)

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4.	ACQUIRED LEASE INTANGIBLES

In accordance with ASC 805, we have identified and recorded the value of acquired lease intangibles at the property acquisition date. Such intangibles include the value of acquired in-place leases and above and below-market leases. Acquired lease intangible assets (in-place leases and above-market leases) are amortized over the leases’ remaining terms, which range from two months to approximately thirteen years. Acquired lease intangible liabilities (below-market leases) are accreted over the leases’ remaining non-cancelable lease term, plus any fixed-rate renewal options, if any, which range from two months to thirteen years. The amortization of above (and below) market leases is recorded as a reduction of (increase in) rental income, and the amortization of in-place leases is included in depreciation and amortization expense. The amortization expense related to in-place leases was approximately $9,000 and $184,000 for the three months ended March 31, 2011 and 2010, respectively. The amortization of above-market leases, which was recorded as a reduction of rental income, was approximately $0 and $8,000 for the three months ended March 31, 2011 and 2010, respectively. Accretion of below-market leases was approximately $3,000 and $101,000 for the three months ended March 31, 2011 and 2010, respectively. Such accretion is recorded as an increase to rental income.

Acquired in-place lease and above- and below-market lease values and their respective accumulated amortization are as follows (in thousands):


	March 31, 2011			December 31, 2010
Acquired lease intangible assets:
In-place leases	$	667		$	667
In-place leases – accumulated amortization		(596	)		(587	)
Above-market leases		13			13
Above-market leases – accumulated amortization		(13	)		(13	)
Acquired lease intangibles, net	$	71		$	80

Acquired lease intangible liabilities:
Below-market leases	$	150		$	150
Below-market leases – accumulated amortization		(135	)		(132	)
Acquired below-market lease intangibles, net	$	15		$	18


5.	NOTES PAYABLE

Our outstanding debt at March 31, 2011 and December 31, 2010 consisted of a fixed-rate mortgage loan of $6.0 million and $6.1 million, respectively secured by the Village on the Green property. This mortgage loan matures in April 2017 and may be prepaid, but is subject to a yield-maintenance premium or prepayment penalty. As of March 31, 2011, the weighted-average interest rate on our fixed-rate debt is 5.5%, and the weighted average remaining life of such debt is 6.02 years.

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As of March 31, 2011, scheduled principal repayments on notes payable were as follows (in thousands):


Scheduled Payments by Year	Scheduled Principal Payments		Term-Loan Maturities		Total Payments
2011	$	64	$	—	$	64
2012		90		—		90
2013		96		—		96
2014		102		—		102
2015		107		—		107
Thereafter		143		5,443		5,586
Total	$	602	$	5,443	$	6,045

We serve as the guarantor of debt in the amount of $45.0 million that is the primary obligation of our non-consolidated joint ventures. During 2011, one of those joint ventures defaulted on its loan in the amount of $8.1 million which was due to mature in June 2011. We have executed a forbearance agreement with the lender, whereby we are able to defer a portion of the interest payments and extend the agreement through March 2012. However, should that entity be unable to pay or refinance the mortgage, we would be liable for 50% of the balance. The remaining debt for which we serve as guarantor matures in 2014 and 2015. We have not accrued any liability with respect to these guarantees as we believe it is unlikely we would be required to perform and, therefore, the fair value of any obligation would be insignificant.

Notes Payable – Related Party – As of March 31, 2011 and December 31, 2010, the balance of our notes payable – related party was $1.4 million and $1.3 million, respectively. The note accrues interest monthly at LIBOR plus a spread of 3.5% with a floor of 5.0% and is due on demand. The note is secured by our investment interests in the Woodlake Pointe and Woodlake Square properties.


6.	CONCENTRATIONS

As of March 31, 2011 and December 31, 2010, each of our two consolidated properties individually comprises greater than 10% of our consolidated total assets. Consistent with our strategy of investing in areas that we know well, both properties are located in Texas metropolitan areas. These Texas properties represent 100% of our rental income for the three months ended March 31, 2011 and 2010.

Following are the base rents generated by our top tenants during the three months ended March 31, 2011 and 2010 (in thousands):


	Three months ended March 31,
Tenant	2011		2010
Paesano’s	$	49	$	49
Alamo Heights Pediactrics		18		18
Rouse Dental		12		12
Café Salsita		9		9
The Mutual Fund Store		9		9
	$	97	$	97


7.	PARTNERS’ CAPITAL AND NON-CONTROLLING INTERESTS

The General Partner invested $800,000 as a limited partner and $1,000 as a general partner in MIG IV. We began raising capital in December 2006. We closed the offering on March 31, 2008 when we had raised approximately $49.7 million. The General Partner’s $800,000 investment represents a 1.6% limited partner interest in the Partnership.

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Limited Optional Redemption — Our Units were sold pursuant to exemptions from registration under the Securities Act of 1933 and are not currently listed on a national exchange or otherwise traded in an organized securities market. These Units may be transferred only with the consent of the General Partner after the delivery of required documents, and in any event, only if we register the offer and sale of the Units under applicable securities laws or if an exemption from such registration is available. We do not expect to register the offer and sale of Units. Moreover, we do not anticipate that any public market for the Units will develop. In order to provide limited partners with the possibility of liquidity, at any time after November 15, 2009 and prior to November 15, 2013, limited partners who have held their Units for at least three years may receive the benefit of interim liquidity by presenting all of those Units to the Partnership for redemption. At that time, we may, at our sole election and subject to the conditions and limitations described below, redeem the Units presented for cash to the extent that we have sufficient funds available to us to fund such redemption. The redemption price to be paid will be 92% of the limited partner’s unreturned invested capital. At no time during a 12-month period, however, may the number of Units redeemed by us exceed 2% of the number of Units outstanding at the beginning of that 12-month period. We received no redemption requests during the three months ended March 31, 2011 and 2010. During the three months ended March 31, 2009, we received four redemption requests, two of which were denied in the aggregate amount of $115,000 and two of which were granted in the amount of $62,000, despite the restriction on redemptions until November 15, 2009. All redemption requests that have been granted represent a return of capital. We suspended the optional redemption program during the second quarter of 2009 due to macroeconomic conditions and the need to preserve cash.

Distributions — During the operating stage of the Partnership, net cash flow, as defined, will be distributed 99% to the limited partners and 1% to the General Partner. We paid a distribution of 7.5% per annum on invested capital through December 2008. Beginning in January 2009 through June 2009, we paid a distribution of 3.0% per annum on invested capital. Effective July 15, 2009, we suspended payment of all distributions and we do not plan to resume the payment of distributions until improvements in the real estate and liquidity markets warrant such payment. All distributions to date have been a return of capital. During the liquidation stage of the Partnership (anticipated to commence in November 2013, unless extended), net cash flow, as defined, will be distributed among the limited partners and the General Partner in the following manner:


	•	First - 100% to the Limited Partners (in proportion to their unreturned actual invested capital) until such time as the Limited Partners have received cumulative distributions from all sources equal to 100% of their actual invested capital (calculated using the actual purchase price per Unit);

	•	Second - 100% to the General Partner until it has received cumulative distributions from all sources equal to 100% of its actual invested capital of $1,000;

	•	Third - 1% to the General Partner and 99% to the limited partners on a per Unit basis until such time as the limited partners have received cumulative distributions from all sources equal to 8.5% per annum, cumulative, uncompounded return on their unreturned deemed capital contributions (which will be equal to (i) the product of $25,000 per Unit (regardless of the purchase price paid for a Unit) multiplied by the number of Units owned by a partner, reduced by (ii) the aggregate amount of any distributions received that constitute a return of capital contributions);

	•	Fourth – 100% to the General Partner until it has received cumulative distributions from all sources (other than with respect to the Units it purchased) in an amount equal to 40% of the net cash flow paid to date to the Limited Partners in excess of their actual invested capital; and

	•	Thereafter - 60% to the limited partners on a per Unit basis and 40% to the General Partner.

Non-controlling Interests – Non-controlling interests represent a 40% ownership interest that our affiliates have in a real estate partnership that we consolidate as a result of our 60% controlling financial interest in such partnership.

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8.	RELATED PARTY TRANSACTIONS

Certain of our affiliates received fees and compensation during the organizational stage of the Partnership, including securities commissions and due diligence reimbursements, marketing reimbursements and reimbursement of organizational and offering expenses. In the event that these companies are unable to provide us with the respective services, we would be required to find alternative providers of these services. The following table summarizes the amount of such compensation paid to our affiliates during the three months ended March 31, 2011 and 2010:


	Three months ended March 31,
Type of service	2011		2010
Asset management fees	$	108	$	108
Property management fees and leasing costs		23		67
Administrative costs reimbursements		61		76
	$	192	$	251

In addition to the above fees paid by us, the non-consolidated entities in which we have investments paid $177,000 and $137,000 in property management and leasing fees to one of our affiliated entities for the three months ended March 31, 2011 and 2010, respectively. See also Note 3 regarding investments in non-consolidated entities.


9.	REAL ESTATE ACQUISITIONS AND DISPOSITIONS

We did not have any real estate acquisitions or dispositions during the three months ended March 31, 2011 and 2010.

See Note 3 for a discussion of our investment activity since our inception with respect to our non-consolidated entities.


10.	COMMITMENTS AND CONTINGENCIES

Litigation – In the ordinary course of business, we may become subject to litigation or claims. There are no material pending legal proceedings known to be contemplated against us.

Environmental matters – In connection with the ownership and operation of real estate, we may be potentially liable for costs and damages related to environmental matters. We have not been notified by any governmental authority of any non-compliance, liability or other claim.


11.	SUBSEQUENT EVENTS

We have evaluated all events or transactions as of the date through which the financial statements were made available for issuance. During this period, we did not have any material subsequent events that impacted our consolidated financial statements.

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ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and notes thereto.

Certain information presented in this Report constitutes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, our actual results could differ materially from those set forth in the forward-looking statements. Certain factors that might cause such a difference include the following: changes in general economic conditions, changes in real estate market conditions, continued availability of proceeds from our debt or equity capital, our ability to locate suitable tenants for our properties, the ability of tenants to make payments under their respective leases, timing of acquisitions, development starts and sales of properties, the ability to meet development schedules and other risks, uncertainties and assumptions. Any forward-looking statement speaks only as of the date on which it was made, and the Partnership undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operation results over time.

Overview

We are a Delaware limited partnership formed on October 10, 2006 to acquire, develop and operate, directly or indirectly through joint venture arrangements, a portfolio of commercial real estate consisting primarily of multi-tenant shopping centers and mixed-use developments throughout Texas. We focus on properties characterized by high automobile traffic counts, high populations, high household incomes and limited opportunities for competition.

We have no employees and are managed by AmREIT Monthly Income & Growth IV Corporation, our General Partner, pursuant to our Partnership Agreement. Our General Partner is a wholly-owned subsidiary of AmREIT. Our General Partner has contributed $1,000 to us for its general partner interest and has contributed $800,000 to us in exchange for Units. The remaining Units are held by other Limited Partners. We qualify as a partnership for federal income tax purposes.

As of March 31, 2011, our investments included a wholly-owned property comprised of approximately 36,000 square feet of gross leasable area, one property in which we own controlling interests comprised of approximately 82,000 square feet of gross leasable area and four properties in which we own investment interests through joint ventures comprised of approximately 1,155,000 square feet of gross leasable area. A majority of our properties are located in highly-populated, suburban communities in Texas. We derive a substantial portion of our revenue from rental income from these properties, primarily from net leasing arrangements, where most of the operating expenses of the properties are absorbed by our tenants. As a result, our operating results and cash flows are primarily influenced by rental income from our properties and interest expense on our property acquisition indebtedness. Rental income accounted for 100% of our total revenue during the three months ended March 31, 2011 and 2010. As of March 31, 2011, our properties had an average occupancy rate of approximately 79%, and the average debt leverage ratio of the properties in which we own an interest was approximately 60%, with 85% of such debt carrying a fixed-rate of interest.

Summary of Critical Accounting Policies

Our results of operations and financial condition, as reflected in the accompanying consolidated financial statements and related footnotes, are subject to management’s evaluation and interpretation of business conditions, retailer performance, changing capital market conditions and other factors, which could affect the ongoing viability of our tenants. Management believes the most critical accounting policies in this regard are revenue recognition, regular evaluation of whether the value of a real estate asset has been impaired, accounting for the investment in real estate assets, accounting for the investment in non-consolidated entities, allowance for uncollectible accounts and accounting for real estate acquisitions. We evaluate our assumptions and estimates on an on-going basis. We base our estimates on historical experience as well as various other assumptions that we believe to be reasonable under the circumstances. Actual results could vary from those estimates, perhaps in material adverse ways, and those estimates could be different under different assumptions or conditions.

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An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements. Information with respect to the Partnership’s critical accounting policies that the Partnership believes could have the most significant effect on the Partnership’s reported results and require subjective or complex judgments by management is contained in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010. Management believes that as of March 31, 2011, there have been no material changes to these policies.

Results of Operations

We commenced our principal operations on January 12, 2007, when we accepted subscriptions for the minimum offering of $1.0 million pursuant to the terms of our Offering Memorandum and issued the initial 40 Units to investors. During 2007, we made investments in three joint ventures through which we obtained an ownership interest in three properties. During 2008, we acquired a direct interest in one property, made an investment in a joint venture through which we obtained an ownership interest in one property and made additional investments in two joint ventures through which we obtained additional ownership interests in two properties. As of March 31, 2011, our investments included a wholly-owned property comprised of approximately 36,000 square feet of gross leasable area, one property in which we owned controlling interests comprised of approximately 82,000 square feet of gross leasable area and four properties in which we owned investment interests through joint ventures comprised of approximately 1,155,000 square feet of gross leasable area.

Three Months Ended March 31, 2011 versus Three Months Ended March 31, 2010

Revenue. Revenue decreased approximately $701,000 during the three months ended March 31, 2011 as compared to the same period in 2010 ($220,000 in 2011 versus $921,000 in 2010). The decrease is primarily due to the deconsolidation of Woodlake Square in July 2010. The first quarter of 2010 includes three months of operations for Woodlake Square, whereas our share of the property’s earnings was recorded through the equity in loss from non-consolidated entities for the first quarter of 2011. The decrease is also due to a reduction in rental income from Woodlake Pointe due to reduced occupancy rates and reduced recoverable property expenses.

Property Expense. Property expense decreased approximately $233,000 during the three months ended March 31, 2011 compared to the same period in 2010 ($138,000 in 2011 versus $371,000 in 2010). The decrease is primarily due to the deconsolidation of Woodlake Square in July 2010. The first quarter of 2010 includes three months of operations for Woodlake Square, whereas our share of the property’s earnings was recorded through the equity in loss from non-consolidated entities for the first quarter of 2011.

Property Management Fees – Related Party. Property management fees decreased approximately $18,000 during the three months ended March 31, 2011 as compared to the same period in 2010 ($11,000 in 2011 versus $29,000 in 2010). Property management fees are calculated based on tenant billings. The decrease is primarily due to the deconsolidation of Woodlake Square in July 2010. The first quarter of 2010 includes three months of operations for Woodlake Square, whereas our share of the property’s earnings was recorded through the equity in loss from non-consolidated entities for the first quarter of 2011.

Depreciation and Amortization Expense. Depreciation and amortization expense decreased approximately $4.5 million during the three months ended March 31, 2011 as compared to the same period in 2010 ($133,000 in 2011 versus $4.6 million in 2010). The decrease is primarily due to the deconsolidation of Woodlake Square in July 2010. The first quarter of 2010 includes three months of operations for Woodlake Square, whereas our share of the property’s earnings was recorded through the equity in loss from non-consolidated entities for the first quarter of 2011. Also, during Q1 2010, we reassessed and shortened the estimated useful lives of various buildings as part of the redevelopment, which accelerated the depreciation in 2010.

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Interest Expense. Interest expense decreased approximately $340,000 during the three months ended March 31, 2011 as compared to the same period in 2010 ($102,000 in 2011 versus $442,000 in 2010). The decrease is primarily due to the deconsolidation of Woodlake Square in July 2010. The first quarter of 2010 includes three months of operations for Woodlake Square, whereas our share of the property’s earnings was recorded through the equity in loss from non-consolidated entities for the first quarter of 2011.

Equity in Losses From Non-Consolidated Entities. Loss from non-consolidated entities increased approximately $64,000 during the three months ended March 31, 2011 as compared to the same period in 2010 ($276,000 in 2011 versus $212,000 in 2010). These amounts represent our ownership portion of our joint ventures’ net income or loss for the period. The increased loss is attributable to Woodlake Square. We deconsolidated the property in July 2010 and account for the property under the equity method of accounting. Woodlake Square’s earnings were included in the consolidated financials during the first quarter of 2010, whereas our share of the property’s earnings was recorded through the equity in loss from non-consolidated entities during the first quarter of 2011.

Net Loss Attributable to Non-controlling Interests. Net loss attributable to non-controlling interests decreased approximately $1.7 million during the three months ended March 31, 2011 as compared to the same period in 2010 ($68,000 in 2011 versus $1.8 million in 2010). The decrease is primarily due to the deconsolidation of Woodlake Square in July 2010. The first quarter of 2010 includes three months of operations for Woodlake Square, whereas our share of the property’s earnings was recorded through the equity in loss from non-consolidated entities for the first quarter of 2011.

Liquidity and Capital Resources

We expect to meet our liquidity requirements through cash on-hand, net cash provided by distributions from joint ventures, proceeds from secured or unsecured financings from banks and other lenders, the selective and strategic sale of properties and net cash flows from operations. We expect that our primary uses of capital will be for investment in real estate properties and related improvements and the payment of operating expenses, including interest expense on any outstanding indebtedness. In addition to selling properties during our operating period, we plan to strategically reinvest the proceeds from such sales rather than distributing the proceeds to our partners.

As of March 31, 2011 and December 31, 2010, our cash and cash equivalents totaled approximately $566,000 and approximately $1.3 million, respectively. Cash flows provided by (used in) operating activities, investing activities and financing activities for the three months ended March 31, 2011 and 2010 are as follows (in thousands):


	Three months ended March 31,
	2011			2010
Operating activities	$	(530	)	$	(803	)
Investing activities		(328	)		(366	)
Financing activities		115			828

Net cash flows used in operating activities decreased approximately $273,000 during the three months ended March 31, 2011 as compared to the same period in 2010 ($530,000 of net cash flows used in operating activities in 2011 versus $803,000 in 2010). This decrease in operating cash outflows was primarily attributable to a reduction in property taxes that were paid during the three months ended March 31, 2011 as compared to the same period in 2010.

Net cash flows used in investing activities decreased approximately $38,000 during the three months ended March 31, 2011 as compared to the same period in 2010 ($328,000 of net cash flows used in investing activities in 2011 versus $366,000 in 2010). This decrease in investing outflows was primarily due to a decrease in improvements to real estate, coupled with net proceeds applied to the land basis on our Woodlake Pointe property of $36,000 during the three months ended March 31, 2011. This decrease in investing outflows was partially offset by an increase in our investments made in our non-consolidated entities of $49,000.

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Net cash flows provided by financing activities decreased approximately $713,000 during the three months ended March 31, 2011 as compared to the same period in 2010 ($115,000 in 2011 versus $828,000 in 2010). This decrease in financing inflows was primarily attributable to proceeds received from notes payable – related party of approximately $600,000 during the three months ended March 31, 2010. We received no such proceeds during the three months ended March 31, 2010. Additionally, contributions received from non-controlling interests decreased by $112,000.

The U.S. economy is still experiencing weakness from recent economic conditions, which resulted in increased unemployment, weakening of tenant financial condition, large-scale business failures and tight credit markets. Our results of operations may be sensitive to changes in overall economic conditions that impact tenant leasing practices. Adverse economic conditions affecting tenant income, such as employment levels, business conditions, interest rates, tax rates, fuel and energy costs and other matters, could reduce overall tenant leasing or cause tenants to shift their leasing practices. In addition, periods of economic slowdown or recession, rising interest rates or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in rents or an increased incidence of defaults under existing leases. Although the U.S. economy has emerged from the recent recession, high levels of unemployment have persisted, and rental rates and valuations for retail space have not fully recovered to pre-recession levels. At this time, it is difficult to determine the breadth and duration of the financial market problems and the various ways in which they may affect our tenants and our business in general. A significant additional deterioration in the U.S. economy or the bankruptcy or insolvency of one or more of our significant tenants could cause our 2011 cash resources to be insufficient to meet our obligations. Effective July 15, 2009, we suspended all distributions in an effort to conserve cash and to protect partners’ invested capital. As we have several projects that are mid-stream in redevelopment, we are conserving cash from operations to improve our ability to fund capital improvements, tenant improvements and leasing commissions, and to meet our obligations, including debt service. We expect that the economy and real estate market will recover prior to our anticipated liquidation commencement date of November 15, 2013. However, if the economy has not recovered, we may seek to postpone liquidation if we believe such liquidation is not in the best interests of the Partners at that time. Projected cash sources (including cash on hand) and uses for the Partnership indicate periods of cash shortfalls during the year ended December 31, 2011. However, we believe that we will be able to generate sufficient liquidity to satisfy any cash shortfalls through (1) managing the timing of forecasted capital expenditures related to the lease-up of properties, (2) deferral of fees paid to our General Partner and its affiliates, (3) new third-party joint venture equity investments in existing non-consolidated entities, (4) financings of unencumbered properties and (5) sales of certain of our investments in non-consolidated entities. No assurance can be given that we will be able to generate such liquidity. In the event that we are unable to generate sufficient liquidity, we may be forced to sell one or more properties at a time when it is disadvantageous to do so, potentially resulting in losses on the disposition of those properties.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.


ITEM 4.	CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our General Partner’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), our General Partner’s management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act) as of March 31, 2011. Based on that evaluation, our General Partner’s CEO and CFO concluded that, as of March 31, 2011, our disclosure controls and procedures were effective in causing material information relating to us to be recorded, processed, summarized and reported by management on a timely basis and to ensure the quality and timeliness of our public disclosures in accordance with SEC disclosure obligations.

Changes in Internal Controls

There has been no change to our internal control over financial reporting during the quarter ended March 31, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION


ITEM 6.	EXHIBITS.

The exhibits listed on the accompanying Exhibit Index are filed, furnished or incorporated by reference (as stated therein) as part of this Report.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	AmREIT Monthly Income & Growth Fund IV, L.P.

	By:	AmREIT Monthly Income & Growth IV Corporation, its General Partner

Date: May 13, 2011

	By:	/s/ H. Kerr Taylor
		H. Kerr Taylor
		President, Chief Executive Officer and Director

	By:	/s/ Chad C. Braun
		Chad C. Braun
		Executive Vice President, Chief Operating Officer,
		Chief Financial Officer, Treasurer and Secretary

Table of Contents

EXHIBIT INDEX


Exhibit 3.1	Certificate of Limited Partnership of AmREIT Monthly Income & Growth Fund IV, L.P., dated October 10, 2006 (incorporated herein by reference from Exhibit 3.1 to the Partnership’s Registration Statement on Form 10-12G dated April 29, 2008).

Exhibit 3.2	Agreement of Limited Partnership of AmREIT Monthly & Income Growth Fund IV, L.P., dated October 10, 2006 (incorporated herein by reference from Exhibit 3.2 to the Partnership’s Registration Statement on Form 10-12G dated April 29, 2008).

Exhibit 3.2.1	Amendment No. 1 to Agreement of Limited Partnership of AmREIT Monthly & Income Growth Fund IV, L.P., dated December 7, 2006 (incorporated herein by reference from Exhibit 3.3 to the Partnership’s Registration Statement on Form 10-12G dated April 29, 2008).

Exhibit 31.1	Certification of the Chief Executive Officer of the Partnership’s General Partner pursuant to Exchange Act Rule 13a-14(a) (filed herewith).

Exhibit 31.2	Certification of the Chief Financial Officer of the Partnership’s General Partner pursuant to Exchange Act Rule 13a-14(a) (filed herewith).

Exhibit 32.1	Certification of the Chief Executive Officer of the Partnership’s General Partner pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

Exhibit 32.2	Certification of the Chief Financial Officer of the Partnership’s General Partner pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

AmREIT Monthly Income & Growth Fund IV LP - FORM 10-Q - May 13, 2011

Attached files

AmREIT Monthly Income & Growth Fund IV LP Reports