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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

		QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

		TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to                

CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV

Delaware

38-3304095

24 Frank Lloyd Wright Drive, Lobby L, 4th Floor
P.O. Box 544, Ann Arbor, Michigan 48106-0544

(734) 994-5505

Not Applicable

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 such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by court: Not applicable

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: Not applicable

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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV

Index to Form 10-Q

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Captec Franchise Capital Partners L.P. IV
Balance Sheet

The accompanying notes are an integral part of the financial statements.

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Captec Franchise Capital Partners L.P. IV
Statement of Operations
(Unaudited)

The accompanying notes are an integral part of the financial statements.

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Captec Franchise Capital Partners L.P. IV
Statement of Changes in Partners’ Capital
for the nine months ended September 30, 2002
(Unaudited)

The accompanying notes are an integral part of the financial statements.

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Captec Franchise Capital Partners L.P. IV
Statement of Cash Flows
for the nine months ended September 30, 2002 and 2001
(Unaudited)

The accompanying notes are an integral part of the financial statements.

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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
NOTES TO FINANCIAL STATEMENTS

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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
NOTES TO FINANCIAL STATEMENTS (continued)

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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
PART I — FINANCIAL INFORMATION

This Quarterly Report or Form 10-Q contains “forward-looking statements” which represent the Partnership’s beliefs or expectations with respect to matters, which may arise in the future. Any statements in the Form 10-Q, which are not statements of historical fact, may be deemed to be forward-looking statements. When used in this discussion, words such as “intends”, “anticipates”, “expects”, “will”, “could”, “estimate” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those, discussed herein. Such risks and uncertainties, some of which are beyond the Partnership’s control, include the following: (i) tenant defaults in making rent payments, (ii) fire or other casualty may interrupt the cash flow from a property, (iii) properties may not be able to be leased at the assumed rental rates, (iv) unexpected expenses may be incurred and (v) properties may not be able to be sold at the presently anticipated prices and/or times.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2002. During the three months ended September 30, 2002 total operating revenue decreased 3.4% to approximately $914,000 as compared to approximately $946,000 for the three months ended September 30, 2001. Rental revenue from operating leases for the three months ended September 30, 2002 remained unchanged at $840,954. Earned income from financing leases for the three months ended September 30, 2002 decreased 30.8% to approximately $73,000 as compared to approximately $105,000 for the three months ended September 30, 2001 due to the amortization of principal balances and the January 2002 suspension of income on an impaired equipment lease.

Operating expenses increased 5.1% to approximately $484,000 for the three months ended September 30, 2002 as compared to approximately $461,000 for the three months ended September 30, 2001. Total operating expenses for the three months ended September 30, 2002 is comprised of approximately $122,000 of depreciation expense, $47,000 of general and administrative expenses and $315,000 of interest expense. The increase in operating expenses for the three months ended September 30, 2002 as compared to the three months ended September 30, 2001 is due to a full period of depreciation for properties leased in preceding periods and increased interest expense resulting from the $1.5 million term note that the Partnership entered into in November 2001. The note was used to fund property purchases and provide cash for future property acquisitions.

The other income of approximately $6,000 for the three months ended September 30, 2001 was due to late fees and interest income.

As a result of the foregoing, the Partnership’s net income decreased 12.6% to $430,000 for the three months ended September 30, 2002 as compared to $492,000 for the three months ended September 30, 2001.

Nine Months Ended September 30, 2002. During the nine months ended September 30, 2002 total operating revenue decreased 3.8% to approximately $2,768,000 as compared to approximately $2,877,000 for the nine months ended September 30, 2001. Rental revenue from operating leases for the nine months ended September 30, 2002 remained unchanged at $2,522,862. Earned income from financing leases for the nine months ended September 30, 2002 decreased 30.8% to approximately $245,000 as compared to

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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
PART I — FINANCIAL INFORMATION

approximately $354,000 for the nine months ended September 30, 2001 due to the amortization of principal balances and the January 2002 suspension of income on an impaired equipment lease.

Operating expenses increased 6.8% to approximately $1,455,000 for the nine months ended September 30, 2002 as compared to approximately $1,362,000 for the nine months ended September 30, 2001. Total operating expenses for the nine months ended September 30, 2002 is comprised of approximately $368,000 of depreciation expense, $133,000 of general and administrative expenses and $954,000 of interest expense. The increase in operating expenses for the nine months ended September 30, 2002 as compared to the nine months ended September 30, 2001 is due to a full period of depreciation for properties leased in preceding periods and increased interest expense resulting from the $1.5 million term note that the Partnership entered into in November 2001. The note was used to fund property purchases and provide cash for future property acquisitions.

Other income was approximately $1,400 for the nine months ended September 30, 2002 as compared to approximately $6,000 for the nine months ended September 30, 2001. Other income for the nine months ended September 30, 2002 was due to interest income. Other income for the nine months ended September 30, 2001 was due to late fees and interest income.

As a result of the foregoing, the Partnership’s net income decreased 13.6% to $1,315,000 for the nine months ended September 30, 2002 as compared to $1,521,000 for the nine months ended September 30, 2001.

Distributions. The Partnership announced third quarter distributions of $750,000, of which $652,111 was distributed to its limited partners on October 15, 2002 and the remaining $97,889 will be distributed to those limited partners who elected to receive distributions on a monthly basis.

LIQUIDITY AND CAPITAL COMMITMENTS

The Partnership commenced an offering of up to 30,000 units registered under the Securities Act of 1934, as amended, by means of a Registration Statement filed on Form S-11 that was declared effective by the Securities and Exchange Commission on December 23, 1996. The Partnership accepted subscriptions for the Minimum Number of Units on March 5, 1997 and immediately commenced operations. The offering reached final funding in December 1998 with subscriptions for the entire 30,000 units. Net proceeds after offering expenses were approximately $26.1 million.

In December 1998, the Partnership entered into a $6.4 million term note. The Partnership entered into an additional $3.3 million term note in March 1999. Proceeds from the notes were used to acquire additional properties. The notes have a ten-year term, are collateralized by certain properties subject to operating leases, and bear interest at rates ranging from 8.13% to 8.5% per annum. Debt issuance costs of approximately $595,000 incurred in connection with the issuance of the notes are being amortized into interest expense over the life of the notes using the straight-line method.

The Partnership purchased one net leased real estate property in October 2000 and assumed a $3.75 million term note in connection with the acquisition. The note has a ten-year term and bears interest at the rate of 8.35% per annum.

In November 2001, the Partnership entered into an additional $1.5 million term note. The note has a two-year term, is collateralized by certain properties subject to operating leases and bears interest at the rate of prime plus 2% per annum. Proceeds from this note were used to repay approximately $700,000 of short-term borrowings and to provide working capital intended to be used to fund unit repurchases and potential property acquisitions.

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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
PART I — FINANCIAL INFORMATION

As of September 30, 2002, the Partnership had invested $31.9 million in 21 net leased real estate properties and $6.2 million in 19 equipment packages. One equipment lease during the third quarter of 2002 was sold for total proceeds of $159,770. As of September 30, 2002, the Partnership has not made any commitments to purchase additional properties, but will continue to consider property purchases to the extent that it has capital available to invest.

The Partnership has one impaired equipment lease at September 30, 2002, with a recorded investment of $210,542, net of a related allowance of $65,000. The net investment in the impaired lease represents the estimated net proceeds that the Partnership expects to receive. Rental payments on this lease are delinquent by more than 90 days, and income accrual has been suspended by the Partnership. The tenant, a Denny’s restaurant franchisee, filed for Chapter 11 bankruptcy protection in September 2001 and subsequently converted to a Chapter 7 filing in May 2002. The restaurant in which the equipment is located is a leased facility and the restaurant is currently being operated by the landlord. It is anticipated that the restaurant’s operations will be sold and that, as a result, the restaurant in which the leased equipment is located will remain in operation. However, if no buyer is found, the restaurant could close and the Partnership could be forced to liquidate the equipment, which could result in an additional investment writedown. There is no definitive timetable for resolution of this default.

The Partnership expects that only limited amounts of liquid assets will be required for existing properties since its property and equipment leases require lessees to pay all taxes, assessments, maintenance, repairs and casualty and other insurance premiums thereby minimizing the Partnership’s operating expenses and capital requirements. The Partnership expects that the cash flow to be generated by the Partnership’s property and equipment leases will provide adequate liquidity and capital resources to pay operating expenses and provide distributions to limited partners.

Mr. Beach, acting in his capacity as the principal executive officer of GP4 Asset Acquisition, is ultimately responsible for the disclosure controls and procedures of the Partnership. Disclosure controls and procedures are established and maintained by the Partnership to ensure that information required to be disclosed by the Partnership in the reports that it files or submits pursuant to the Securities Exchange Act of 1934, as amended (the “Act”), is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Mr. Beach has evaluated the effectiveness of the Partnership’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the “Evaluation Date”), and has determined that the Partnership’s disclosure controls and procedures effectively communicate the information required to be disclosed by the Partnership in the reports it files or submits under the Act in a manner that allows timely decisions regarding such required disclosure.

There have been no significant changes in the Partnership’s internal controls or in other factors that could significantly affect these controls subsequent to the Evaluation Date, including, but not limited to, any corrective actions with regard to significant deficiencies and material weaknesses

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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
PART II — OTHER INFORMATION

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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
PART II — OTHER INFORMATION

	(a) The following exhibits are included herein or incorporated by reference:

	(b) Reports on Form 8-K:

	There were no reports filed on Form 8-K for the quarter ended September 30, 2002.

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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.

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CERTIFICATIONS

           I, Patrick L. Beach, certify that:

           1. I have reviewed this quarterly report on Form 10-Q of Captec Franchise Capital Partners L.P. IV;

           2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

           3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

           4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

           a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

           b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

           c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

           5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

           a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

           b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

           6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:      November 14, 2002           By:      Patrick L. Beach

             President, GP4 Asset Acquisition, LLC

           The foregoing certification is as required by Section 302(a) of the Sarbanes-Oxley Act of 2002 and amended Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934, which state that the wording of such certification may not be changed in any respect, even if such change would appear inconsequential in nature. GP4 Asset Acquisition, LLC is a single member limited liability company, the sole member of which is a limited liability company of which Patrick L. Beach is the sole and managing member. As a result, neither the Partnership or GP4 Asset Acquisition, LLC has a board of directors or audit committee and Patrick L. Beach is only certifying officer and is ultimately responsible for establishing and maintaining the registrant's disclosure controls.

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EXHIBIT INDEX