RANCON REALTY FUND IV - FORM 10-Q

Attached files

Attached files

RANCON REALTY FUND IV Reports

Also read

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

file	filename
EX-32 - CERTIFICATION OF CEO AND CFO OF THE GP PURSUANT TO 18 U.S.C SECTION 1350 - RANCON REALTY FUND IV	dex32.htm
EX-31 - CERTIFICATION OF CEO AND CFO OF THE GP PURSUANT TO RULE 13A-14(A) - RANCON REALTY FUND IV	dex31.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2010

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

Commission file number: 0-14207

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)


California		33-0016355
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

400 South El Camino Real, Suite 1100 San Mateo, California		94402-1708
(Address of principal executive offices)		(Zip Code)

(650) 343-9300

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant 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 ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer, large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

INDEX

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP


		Page No.
PART I FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements of Rancon Realty Fund IV (Unaudited):

	Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009	3

	Consolidated Statements of Operations for the three and six months ended June 30, 2010 and 2009	4

	Consolidated Statement of Partners’ Equity for the six months ended June 30, 2010	5

	Consolidated Statements of Cash Flows for the six months ended June 30, 2010 and 2009	6

	Notes to Consolidated Financial Statements	7-13

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14-18

Item 3.	Qualitative and Quantitative Disclosures About Market Risk	18

Item 4.	Controls and Procedures	18

Item 4T.	Controls and Procedures	18

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	19

Item 1A.	Risk Factors	19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19

Item 3.	Defaults Upon Senior Securities	19

Item 4.	[Removed and Reserved]	19

Item 5.	Other Information	19

Item 6.	Exhibits	19

SIGNATURES		20

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Balance Sheets

(in thousands, except units outstanding)

(Unaudited)


	June 30, 2010			December 31, 2009
Assets
Investments in real estate:
Rental properties	$	65,711		$	65,407
Accumulated depreciation		(19,838	)		(18,310	)

Rental properties, net		45,873			47,097

Cash and cash equivalents		1,991			1,916
Accounts receivable, net		19			4
Deferred costs, net of accumulated amortization of $1,676 and $1,419 as of June 30, 2010 and December 31, 2009, respectively		2,042			2,033
Prepaid expenses and other assets		1,476			1,295

Total assets	$	51,401		$	52,345


Liabilities and Partners’ Equity (Deficit)
Liabilities:
Note payable and line of credit	$	28,556		$	28,756
Accounts payable and other liabilities		295			415
Tenant and building improvements payable		1,637			1,707
Prepaid rent		198			204

Total liabilities		30,686			31,082

Commitments and contingent liabilities (Note 7)

Partners’ Equity (Deficit):
General Partner		(848	)		(843	)
Limited partners, 65,819 limited partnership units outstanding as of June 30, 2010 and December 31, 2009		21,563			22,106

Total partners’ equity		20,715			21,263

Total liabilities and partners’ equity	$	51,401		$	52,345

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

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Statements of Operations

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

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Operating revenue
Rental revenue and other	$	1,938		$	1,951		$	3,897		$	3,965
Tenant reimbursements		248			291			506			597

Total operating revenue		2,186			2,242			4,403			4,562


Operating expenses
Property operating expenses		1,004			1,052			2,007			2,013
Depreciation and amortization		931			833			1,783			2,554
General and administrative		193			246			427			500

Total operating expenses		2,128			2,131			4,217			5,067

Operating income (loss)		58			111			186			(505	)

Interest and other income		1			1			1			2
Interest expense (including amortization of loan fees)		(366	)		(436	)		(735	)		(873	)

Net loss	$	(307	)	$	(324	)	$	(548	)	$	(1,376	)

Basic and diluted net loss per limited partnership unit	$	(4.62	)	$	(4.87	)	$	(8.25	)	$	(20.70	)

Weighted average number of limited partnership units outstanding		65,819			65,819			65,819			65,819

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

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Statement of Partners’ Equity

For the six months ended June 30, 2010

(in thousands)

(Unaudited)


	General Partner			Limited Partners			Total
Balance (deficit) at December 31, 2009	$	(843	)	$	22,106		$	21,263
Net loss		(5	)		(543	)		(548	)

Balance (deficit) at June 30, 2010	$	(848	)	$	21,563		$	20,715

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

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


	Six Months Ended June 30,
	2010			2009
Cash flows from operating activities:
Net loss	$	(548	)	$	(1,376	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		1,783			2,554
Amortization of loan fees, included in interest expense		26			156
Changes in certain assets and liabilities:
Accounts receivable		(15	)		24
Deferred costs		(266	)		(168	)
Prepaid expenses and other assets		(181	)		279
Accounts payable and other liabilities		(120	)		(217	)
Prepaid rent		(6	)		41

Net cash provided by operating activities		673			1,293


Cash flows from investing activities:
Additions to real estate investments		(398	)		(555	)

Net cash used in investing activities		(398	)		(555	)


Cash flows from financing activities:
Note payable principal payments		(200	)		(190	)
Payment of deferred loan fees		—			(3	)

Net cash used in financing activities		(200	)		(193	)

Net increase in cash and cash equivalents		75			545

Cash and cash equivalents at beginning of period		1,916			3,039

Cash and cash equivalents at end of period	$	1,991		$	3,584

Supplemental disclosure of cash flow information:
Cash paid for interest	$	710		$	717

Supplemental disclosure of non-cash operating activities:
Write-off of fully depreciated rental property assets	$	24		$	1,983

Write-off of fully amortized deferred costs	$	—		$	97

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

RANCON REALTY FUND IV,

A California Limited Partnership

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1. ORGANIZATION

Rancon Realty Fund IV, a California Limited Partnership (“the Partnership”), was organized in accordance with the provisions of the California Uniform Limited Partnership Act for the purpose of acquiring, developing, operating and disposing of real property. The Partnership was organized in 1984 and reached final funding in July 1987. The general partners of the Partnership are Daniel L. Stephenson and Rancon Financial Corporation (“RFC”), hereinafter collectively referred to as the General Partner. RFC is wholly-owned by Daniel L. Stephenson. The Partnership has no employees.

As of June 30, 2010, there were 65,819 Units (“Units”) outstanding.

The Partnership commenced on April 3, 1984 and shall continue until December 31, 2015, unless previously terminated in accordance with the provisions of the Partnership Agreement.

Allocation of Net Income and Net Loss

Allocation of net income and net loss is made pursuant to the terms of the Partnership Agreement. Generally, net income from operations is allocated 90% to the limited partners and 10% to the General Partner. Net losses from operations are allocated 99% to the limited partners and 1% to the General Partner; however, if the limited partners and the General Partner have, as a result of an allocation of net loss, a deficit balance in their capital accounts, net loss shall not be allocated to the limited partners and General Partner in excess of the positive balance until the balances of the limited partners’ and General Partner’s capital accounts are reduced to zero. Capital accounts shall be determined after taking into account the other allocations and distributions for the fiscal year.

Net income other than net income from operations shall be allocated as follows: (i) first, to the partners who have a deficit balance in their capital account, provided that, in no event, shall the General Partner be allocated more than 5% of the net income other than net income from operations until the earlier of sale or disposition of substantially all of the assets or the distribution of cash (other than cash from operations) equal to the Unit holder’s original invested capital; (ii) second, to the limited partners in proportion to and to the extent of the amounts required to increase their capital accounts to an amount equal to the sum of the adjusted invested capital of their units plus an additional cumulative non-compounded 12% return per annum (plus additional amounts depending on the date Units were purchased); (iii) third, to the partners in the minimum amount required to first equalize their capital accounts in proportion to the number of units owned, and then, to bring the sum of the balances of the capital accounts of the limited partners and the General Partner into the ratio of 4 to 1; and (iv) the balance, if any, 80% to the limited partners and 20% to the General Partner. In no event shall the General Partner be allocated less than 1% of the net income other than net income from operations for any period.

Net loss other than net loss from operations is allocated 99% to the limited partners and 1% to the General Partner. Such net losses will be allocated among limited partners as necessary to equalize their capital accounts in proportion to their Units, and thereafter will be allocated in proportion to their Units.

The terms of the Partnership Agreement call for the General Partner to restore any deficits that may exist in its capital account after allocation of gains and losses from the sale of the final property owned by the Partnership, but prior to any liquidating distributions being made to the partners.

Distribution of Cash

The Partnership shall make annual or more frequent distributions of substantially all cash available to be distributed to partners as determined by the General Partner, subject to the following: (i) distributions may be restricted or suspended for limited periods when the General Partner determines in its absolute discretion that it is in the best interests of the Partnership; and (ii) all distributions are subject to the payment of Partnership expenses and maintenance of reasonable reserves for debt service, alterations and improvements, maintenance, replacement of furniture and fixtures, working capital and contingent liabilities.

All excess cash from operations shall be distributed 90% to the limited partners and 10% to the General Partner.

All cash from sales or refinancing and any other cash determined by the General Partner to be available for distribution other than cash from operations shall be distributed in the following order of priority: (i) first, 1% to the General Partner and 99% to the limited partners in proportion to the outstanding positive amounts of Adjusted Invested Capital (as defined in the Partnership Agreement) for each of their Units until Adjusted Invested Capital (as defined in the Partnership Agreement) for each Unit is reduced to zero; (ii) second, 1% to the General Partner and 99% to the limited partners until each of the limited partners has received an amount which, including cash from operations previously distributed to the limited partners, equals a 12% annual cumulative non-compounded return on the Adjusted Invested Capital (as defined in the Partnership Agreement) of their Units plus such limited partners’ Limited Incremental Preferential Return (as defined in the Partnership Agreement), if any, with respect to each such Unit, on the Adjusted Investment Capital (as defined in the Partnership Agreement) of such Units for the

RANCON REALTY FUND IV,

A California Limited Partnership

Notes to Consolidated Financial Statements—(Continued)

(Unaudited)

twelve month period following the date upon which such Unit was purchased from the Partnership and following the admission of such limited partner; (for limited partners admitted to the Partnership before March 31, 1985, there are additional cumulative non-compounded returns of 9%, 6%, or 3% depending on purchase date, through October 31, 1985); (iii) third, 99% to the General Partner and 1% to the limited partners, until the General Partner has received an amount equal to 20% of all distributions of cash from sales or refinancing; and (iv) the balance, 80% to the limited partners, pro rata in proportion to the number of Units held by each, and 20% to the General Partner.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements present the consolidated financial position of the Partnership and its subsidiaries as of June 30, 2010 and December 31, 2009, and the consolidated results of operations of the Partnership and its subsidiaries for the three and six months ended June 30, 2010 and 2009 and cash flows of the Partnership for the six months ended June 30, 2010 and 2009. All significant intercompany transactions, receivables and payables have been eliminated in consolidation.

In the opinion of the General Partner, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal accruals) necessary to present fairly the consolidated financial position of the Partnership as of June 30, 2010 and December 31, 2009, and the related consolidated statements of operations for the three and six months ended June 30, 2010 and 2009, the consolidated statement of partners’ equity for the six months ended June 30, 2010 and the consolidated statement of cash flows for the six months ended June 30, 2010 and 2009.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported results of operations during the reporting period. Actual results could differ from those estimates.

Rental Properties

Rental properties, including the related land, are stated at depreciated cost unless events or circumstances indicate that such amounts cannot be recovered, in which case, the carrying value of the property is reduced to its estimated fair value. Estimated fair value is computed using estimated sales price, as determined by prevailing market values for comparable properties and/or the use of capitalization rates applied to annualized net operating income based upon the age, construction and use of the building. Due to uncertainties inherent in the valuation process and in the economy, it is reasonably possible that the actual results of operating and disposing of the Partnership’s properties could be materially different than current expectations. Rental properties are reviewed for impairment whenever there is a triggering event and at least annually.

Depreciation is provided using the straight-line method over the useful lives of the respective assets. The useful lives are as follows:


Building and improvements		5 to 40 years
Tenant improvements		Lesser of the initial term of the related lease, or the estimated useful life of the improvements
Furniture and equipment		5 to 7 years

Fair Value of Investments

The Partnership adopted policies related to the accounting for fair value measurements effective January 1, 2008. There was no material impact on the Partnership’s financial position, results of operations and cash flows as a result of such adoption.

The guidance related to accounting for fair value measurements defines fair value and establishes a framework for measuring fair value in order to meet disclosure requirements for fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This guidance also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This hierarchy describes three levels of inputs that may be used to measure fair value.

RANCON REALTY FUND IV,

A California Limited Partnership

Notes to Consolidated Financial Statements—(Continued)

(Unaudited)

Financial assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:

Level 1. Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market.

Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.

Level 3. Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation using unobservable inputs. This category generally includes long-term derivative contracts, real estate and unconsolidated joint ventures.

Cash and Cash Equivalents

The Partnership considers money market funds with original maturities of less than ninety days when purchased to be cash equivalents.

Deferred Costs

Deferred loan fees are capitalized and amortized on a straight-line basis, which approximates the effective interest method, over the life of the related loan. Lease commissions are capitalized and amortized on a straight-line basis over the initial fixed term of the related lease agreements.

Revenues

The Partnership recognizes rental revenue on a straight-line basis over the term of the leases. Actual amounts collected could be lower or higher than the amounts recognized on a straight-line basis if specific tenants are unable to pay rent that the Partnership has previously recognized as revenue. For tenants with percentage rent, the Partnership recognizes revenue when the tenants’ specified sales targets have been met. The reimbursements from tenants for real estate taxes and other recoverable operating expenses are recognized as revenue on an estimated basis during the current year. The Partnership develops a revised estimate of the amount recoverable from tenants based on updated expenses for the year and amounts to be recovered and records adjustments to income in the current year financial statement accounts. Any final changes in estimate based on lease-by-lease reconciliations and tenant negotiations and collection are recorded in the period those negotiations are settled.

Net (Loss) Income Per Limited Partnership Unit

Net (loss) income per Unit is calculated using the weighted average number of Units outstanding during the period and the limited partners’ allocable share of the net (loss) income.

Effective January 1, 2009, the Partnership adopted guidance which improves the comparability of earnings per unit calculations for master limited partnerships (MLPs) with incentive distribution rights (IDRs). As such, the distributions should impact the calculation of earnings per unit (“EPU”) using the two-class method.

RANCON REALTY FUND IV,

A California Limited Partnership

Notes to Consolidated Financial Statements—(Continued)

(Unaudited)

Net loss per Unit is as follows (in thousands, except for weighted average units and per unit amounts):


	For the three months ended												For the six months ended
	June 30, 2010						June 30, 2009						June 30, 2010						June 30, 2009
	General Partner			Limited Partners			General Partner			Limited Partners			General Partner			Limited Partners			General Partner			Limited Partners
Loss allocation:	General Partner			Limited Partners			General Partner			Limited Partners			General Partner			Limited Partners			General Partner			Limited Partners
Net loss	$	(3	)	$	(304	)	$	(3	)	$	(321	)	$	(5	)	$	(543	)	$	(14	)	$	(1,362	)
Weighted average number of limited partnership units outstanding during each period					65,819						65,819						65,819						65,819
Basic and diluted loss per limited partnership unit				$	(4.62	)				$	(4.87	)				$	(8.25	)				$	(20.70	)

The calculation of net (loss) income per Unit assumes that the income (loss) otherwise allocable to the limited partners is first used to fund distributions to the General Partner. As discussed in Note 1, because distributions of available cash have exceeded cumulative earnings and the General Partner has a deficit, the General Partner would restore that deficit in liquidation. The calculation of net (loss) income per unit does not assume a liquidation in the periods presented and therefore the net (loss) income per limited partner Unit may be less than what would be realized in a liquidation due to the requirement for the General Partner to restore deficits.

Income Taxes

No provision for income taxes is included in the accompanying consolidated financial statements as the Partnership’s results of operations are allocated to the partners for inclusion in their respective income tax returns. Net (loss) income and partners’ equity (deficit) for financial reporting purposes will differ from the Partnership’s income tax return because of different accounting methods used for certain items, including depreciation expense, provisions for impairment of investments in real estate, capitalization of development period interest and rental income and loss recognition. There was no material impact related to the Partnership’s adoption of accounting policies related to income tax uncertainties on January 1, 2007.

Concentration Risk

Two tenants (Art Institute of California and University of Phoenix) represented a combined 38% of rental revenue for the six months ended June 30, 2010. For the six months ended June 30, 2009 three tenants (Inland Counties Regional Center, University of Phoenix and Art Institute of California) represented a combined 49% of rental revenue. Inland Counties Regional Center Inc., the tenant who occupied all of Northcourt Plaza, vacated the building in September 2009, at the end of its lease.

Recently Issued Accounting Literature

In June 2009, the Financial Accounting Standards Board (“the FASB”) issued the FASB Accounting Standards Codification (Codification) which identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of an entity’s financial statements that are presented in conformity with GAAP. Effective September 30, 2009, the Partnership adopted the Codification, which did not have any impact on the Partnership’s financial statements.

In May 2009, the FASB issued guidance related to disclosures of subsequent events which involves accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This adoption did not have any impact on the Partnership’s financial statements.

Reference to 2009 audited consolidated financial statements

These unaudited consolidated financial statements should be read in conjunction with the notes to audited consolidated financial statements included in the Partnership’s December 31, 2009 audited consolidated financial statements on Form 10-K.

RANCON REALTY FUND IV,

A California Limited Partnership

Notes to Consolidated Financial Statements—(Continued)

(Unaudited)

NOTE 3. INVESTMENTS IN REAL ESTATE

Rental properties consist of the following (in thousands):


	June 30, 2010			December 31, 2009
Land	$	4,690		$	4,690
Buildings		49,719			49,692
Building and tenant improvements		11,302			11,025

		65,711			65,407
Less: accumulated depreciation		(19,838	)		(18,310	)

Total rental properties, net	$	45,873		$	47,097

As of June 30, 2010, the Partnership’s rental properties included five office properties and seven retail properties (see detailed listing of properties in Management’s Discussion & Analysis of Financial Condition and Results of Operations).

NOTE 4. LAND HELD FOR DEVELOPMENT

As of June 30, 2010, the Partnership owned approximately 14.7 acres of undeveloped land which is part of a landfill-monitoring program managed by the City of San Bernardino (as discussed in Note 7). On an annual basis the partnership conducts a comprehensive review of all real estate assets in accordance with the guidance related to impairment of long lived assets, which indicates that asset values should be analyzed whenever events or changes in circumstances indicate that the carrying value of a property may not be fully recoverable. Based on such analyses the Partnership concluded that this asset was impaired and accordingly the asset was written down to fair value of zero, in 2008.

NOTE 5. NOTE PAYABLE AND LINE OF CREDIT

Note payable and line of credit consist of the following (in thousands):


	June 30, 2010		December 31, 2009
Note payable collateralized by first deeds of trust on eight properties (discussed below). The note has a fixed interest rate of 5.46%, a maturity date of January 1, 2016, with a 30-year amortization requiring monthly payments of principal and interest totaling $136.	$	22,478	$	22,678
Line of credit		6,078		6,078

Total note payable and line of credit	$	28,556	$	28,756

The note payable is collateralized by Promotional Retail #2, Mimi’s Cafe, Palm Court Retail #1 and #2, Promotional Retail Center, Service Retail Center, TGI Friday’s and One Vanderbilt. This note provides for a one-time loan assumption and release provisions for individual assets.

The line of credit is collateralized by Carnegie Business Center and Vanderbilt Plaza and has a total availability of $10,000,000. The line of credit requires monthly interest-only payments and bears variable interest at the 30-day LIBOR plus 2.75% (3.10% at June 30, 2010). The line of credit had an original maturity date of December 19, 2009, with two one-year extension options, the first of which was exercised so that the line now matures on December 19, 2010. As of June 30, 2010, $6,078,000 was outstanding under the line of credit.

RANCON REALTY FUND IV,

A California Limited Partnership

Notes to Consolidated Financial Statements—(Continued)

(Unaudited)

The required principal payments on the Partnership’s note payable for the next five years and thereafter, as of June 30, 2010, are as follows (in thousands).


2010	$	207
2011		429
2012		453
2013		479
2014		506
Thereafter		20,404

Total	$	22,478

NOTE 6. RELATED PARTY TRANSACTIONS

In May 2006, the Partnership extended its then current Property Management and Services Agreement (the “Agreement”) with Glenborough Properties L.P. (“Glenborough”) through December 31, 2009. Effective March 1, 2009 the Partnership and Glenborough LLC again amended the Agreement, to reduce certain fees (as noted below) charged by Glenborough LLC, and extend the term of the agreement through December 31, 2015, or if earlier, until the completion of sale of all real property assets of the Partnership. The Partnership engaged Glenborough LLC to perform services for the following fees:


	Six Months Ended
	June 30, 2010		June 30, 2009
(i) property management fees of 2.5% effective March 1, 2009, and 3% prior to that, of gross rental revenue which was included in property operating expenses in the accompanying consolidated statements of operations	$	100,000	$	121,000
(ii) a construction services fee which was capitalized and included in rental properties on the accompanying consolidated balance sheets		27,000		22,000
(iii) an asset and Partnership management fee which was included in general and administrative expenses in the accompanying consolidated statements of operations		125,000		133,000
(iv) a leasing services fee which was included in the deferred costs on the accompanying consolidated balance sheets		46,000		63,000
(v) a sales fee of 1% for all properties, as amended and effective March 1, 2009		—		—
(vi) a financing services fee of 1% of the gross loan amount which was included in the deferred costs on the accompanying consolidated balance sheets		—		—
(vii) a development fee equal to 5% of the hard costs of the development project which was included in the construction in progress and /or rental properties on the accompanying consolidated balance sheets, excluding the cost of the land, the development fee and the general contractor’s fee shall not exceed 11.5%, in the aggregate, of the hard costs of the development fee project		—		—
(viii) data processing fees which were included in property operating expenses in the accompanying consolidated statements of operations		40,000		37,000
(ix) engineering fees which were included in property operating expenses in the accompanying consolidated statements of operations		13,000		9,000

As of June 30, 2010, Glenborough Fund XV LLC, an affiliate of Glenborough LLC, held 7,386 or 11.22% of the Units, all of which were purchased from unaffiliated third parties.

RANCON REALTY FUND IV,

A California Limited Partnership

Notes to Consolidated Financial Statements—(Continued)

(Unaudited)

NOTE 7. COMMITMENTS AND CONTINGENT LIABILITIES

Environmental Matters

The Partnership follows a policy of monitoring its properties for the presence of hazardous or toxic substances. The Partnership is not aware of any environmental liability with respect to the properties that would have a material adverse effect on the Partnership’s business, assets or results of operations. There can be no assurance that such a material environmental liability does not exist. The existence of any such material environmental liability could have an adverse effect on the Partnership’s consolidated results of operations and cash flows.

Approximately 14.7 acres of the Tri-City land owned by the Partnership was part of a 27-acre landfill operated by the City of San Bernardino (“the City”) from approximately 1950 to 1960. This landfill incorporates two land parcels and part of a third parcel. In 1996, the Santa Ana Regional Water Quality Control Board (“SARWQCB”), with regulatory jurisdiction over the closure and monitoring of landfills, determined that the City was primarily responsible for the landfill. Therefore, the City and the Partnership entered into a Limited Access Easement Agreement, giving the City access to the site for development, implementation and financial responsibility for a plan for the remediation of the landfill. It was determined that the City was to improve the landfill cover system (The Waterman Landfill Cover Improvement Plans, April 2002), perform groundwater monitoring and install a permanent gas extraction system (Landfill Gas Collection System). Under the Limited Access Easement Agreement with the Partnership, methane monitoring is handled directly by the City. The City’s installation of the cover improvement system was completed in the first quarter of 2007 along with the gas extraction system. The system is now operational and working properly to eliminate methane from the landfill. All controlled wells are in compliance with County standards. Presently, the Partnership does not have any plans to develop or sell this site. No assurance can be made that circumstances will not arise which could impact the Partnership’s responsibility related to the land.

General Uninsured Losses

The Partnership carries property and liability insurance with respect to the properties. This coverage has policy specification and insured limits customarily carried for similar properties. However, certain types of losses (such as from earthquakes and floods) may be either uninsurable or not economically insurable. Should the properties sustain damage as a result of an earthquake or flood, the Partnership may incur losses due to insurance deductibles, co-payments on insured losses or uninsured losses. Additionally, the Partnership has elected to obtain insurance coverage for “certified acts of terrorism” as defined in the Terrorism Risk Insurance Act of 2002, as amended and reauthorized to date; however, our policies of insurance may not provide coverage for other acts of terrorism. Any losses from such other acts of terrorism might be uninsured. Should an uninsured loss occur, the Partnership could lose some or all of its capital investment, cash flow and anticipated profits related to the properties.

Other Matters

The Partnership is contingently liable for subordinated real estate commissions payable to the General Partner in the aggregate amount of $643,000 at June 30, 2010, for sales that were completed in previous years. The subordinated real estate commissions are payable only after the Limited Partners have received distributions equal to their original invested capital plus a cumulative non-compounded return of 12% per annum on their adjusted invested capital. Since the circumstances under which these commissions would be payable are not met currently, the liability has not been recognized in the accompanying consolidated financial statements; however, the amount will be recorded when and if it becomes payable.

NOTE 8. SUBSEQUENT EVENTS

In preparing the consolidated financial statements, the Partnership evaluated subsequent events occurring through August 13, 2010, the date these financial statements were issued, in accordance with the guidance related to disclosures of subsequent events.

Financing Activity

On July 20, 2010 a further draw on the line of credit of $1,500,000 was made in order to fund tenant improvements at Northcourt Plaza, bringing the total amount outstanding under the line of credit to $7,578,000.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our December 31, 2009 audited consolidated financial statements and the notes thereto included in our latest Annual Report on Form 10-K.

Background

During 1984 and 1985, our initial acquisition of property consisted of approximately 76.56 acres of partially developed and unimproved land located in San Bernardino, California. The property is part of a master-planned development of 153 acres known as Tri-City Corporate Centre (“Tri-City”) and is zoned for mixed commercial, office, hotel, transportation-related, and light industrial uses and all of the parcels thereof are separately owned by us and Rancon Realty Fund V (“Fund V”), a partnership sponsored by the General Partner.

Overview

Tri-City Properties

As of June 30, 2010, our rental properties consist of five office and seven retail properties, aggregating approximately 555,000 rentable square feet, of which 400,000 square feet are office space, and 155,000 square feet are retail space.


Property	Type	Square Footage
One Vanderbilt	Four-story office building	73,730
Carnegie Business Center I	Two office buildings	62,538
Service Retail Center	Two retail buildings	20,780
Promotional Retail Center	Four retail buildings	66,244
Northcourt Plaza (formerly known as Inland Regional Center)	Two-story office building	77,589
TGI Friday’s	Restaurant	9,956
Promotional Retail Center #2	Retail building	39,123
Mimi’s Café	Restaurant	6,455
Palm Court Retail #1	Retail building	5,053
Palm Court Retail #2	Retail building	7,433
Vanderbilt Plaza	Four-story office building	114,707
North River Place (began operations January 2009)	Three-story office building	71,157

		554,765

As of June 30, 2010, the weighted average occupancy of the twelve properties was 68%.

Promotional Retail Center #2 (formerly known as Circuit City) is currently unoccupied. The former tenant, Circuit City, which occupied 100% of the Partnership’s 39,123 square foot Promotional Retail Center #2, filed for bankruptcy in November 2008 and vacated the building in March 2009. Northcourt Plaza, which was unoccupied as a result of Inland Regional Center vacating the building at the end of its lease in September 2009, is now 46% occupied due to two new leases signed with a tenant during the first quarter of 2010. North River Place, which was placed into service in January 2009, is 44% occupied as of June 30, 2010. Management is actively marketing the vacant space in all of the buildings for lease.

Land

As of June 30, 2010, we owned approximately 14.7 acres of unimproved land.

monitoring of landfills, determined that the City was primarily responsible for the landfill. Therefore, the City and the Partnership entered into a Limited Access Easement Agreement, giving the City access to the site for development, implementation and financial responsibility for a plan for the remediation of the landfill. It was determined that the City was to improve the landfill cover system (The Waterman Landfill Cover Improvement Plans, April 2002), perform groundwater monitoring and install a permanent gas extraction system (Landfill Gas Collection System). Under the Limited Access Easement Agreement with the Partnership, methane monitoring is handled directly by the City. The City’s installation of the cover improvement system was completed in the first quarter of 2007 along with the gas extraction system. The system is now operational and working properly to eliminate methane from the landfill. All controlled wells are in compliance with County standards. Presently, the Partnership does not have any plans to develop or sell this site. No assurance can be made that circumstances will not arise which could impact the Partnership’s responsibility related to the land.

The Partnership conducts a comprehensive review of all real estate assets in accordance with the guidance related to accounting for impairment, which indicates that asset values should be analyzed whenever events or changes in circumstances indicate that the carrying value of a property may not be fully recoverable. The process entails the analysis of each asset for instances where the book value exceeds the estimated fair value. As a result of the analyses performed in 2008 the Partnership concluded that this asset was impaired and accordingly, in 2008, the asset was written down to fair value and a non-cash impairment charge of $268,000 was recognized, as management does not believe development or sale of this asset is probable.

Results of Operations

Comparison of the three and six months ended June 30, 2010 to the three and six months ended June 30, 2009.

Revenue

Rental revenue and other decreased $13,000, or 1% and $68,000 or 2%, for the three and six months ended June 30, 2010 compared to the three and six months ended June 30, 2009, respectively. While the overall changes were relatively small there were a number of significant changes which combined to produce these variances. Occupancy at Northcourt Plaza declined from 100% during the first quarter of 2009 to 46% in the first and second quarters of 2010. This decline is the result of the single tenant, Inland Regional Center, vacating the building at the end of its lease in September 2009. Lower occupancy at Northcourt Plaza reduced rental revenues by $124,000 and $334,000 for the three and six month periods, respectively. In addition the vacancy at Promotional Retail #2 reduced rental revenues by $42,000 and $160,000 for the three and six month periods respectively. Circuit City vacated Promotional Retail #2 in March 2009 and the building remains entirely vacant. A number of smaller declines in occupancy and lower rental rates across several properties further contributed to the decrease. These decreases were partially offset by $193,000 and $409,000 of revenue received in the three and six month periods of 2010, respectively from North River Place, which was unoccupied during the first half of 2009, but leased to 44% in 2010, and $53,000 and $104,000 increased revenue at One Vanderbilt, due to an increase in occupancy.

Tenant reimbursements decreased $43,000, or 15%, and $91,000 or 15% for the three and six months ended June 30, 2010 compared to the three and six months ended June 30, 2009, respectively. This was primarily due to the vacancy at Northcourt Plaza in the first half of 2010.

Expenses

Property operating expenses decreased $48,000, or 5%, and $6,000 or less than 1% for the three and six months ended June 30, 2010, compared to the three and six months ended June 30, 2009, respectively. The decrease for the three month period was due to lower operating expenses at Northcourt Plaza, and Promotional Retail Center #2 as a result of the occupancy declines in those properties. These decreases were partially offset by higher operating costs associated with North River Place, since nearly half of the space is now occupied whereas in the first quarter of 2009 it was unoccupied.

Depreciation and amortization increased $98,000, or 12%, and decreased $771,000 or 30% for the three and six months ended June 30, 2010, compared to the three and six months ended June 30, 2009, respectively. The increase for the three month period was due to depreciation related to tenant improvements at North River Place and Northcourt Plaza. The decrease for the six month period was primarily due to the fact that the first quarter of 2009 included expenses associated with fully amortizing the remaining unamortized tenant improvements and leasing commissions of $880,000, related to the early termination of the Circuit City lease in the first quarter of 2009.

General and administrative expenses decreased by $53,000, or 22%, and $73,000 or 15% for the three and six months ended June 30, 2010, compared to the three and six months ended June 30, 2009, respectively. The decrease for the three month period is due to lower audit fees and investor relations expenses of $32,000 and $16,000 respectively. The decrease for the six month period is due to lower tax and license fee payments, audit fees and asset management fees of $40,000, $26,000 and $8,000, respectively. The lower audit fees are related to the decision by the SEC to permanently exempt smaller companies from Sarbanes Oxley external auditor testing requirements.

Non-operating income / expenses

Interest expense decreased $70,000, or 16%, and $138,000 or 16% for the three and six months ended June 30, 2010, compared to the three and six months ended June 30, 2009, respectively, due to higher amortization of loan fees during the first and second quarters of 2009, associated with the new line of credit, which was obtained in December 2008.

Liquidity and Capital Resources

As of June 30, 2010, we have cash and cash equivalents of $1,991,000.

As of June 30, 2010, our primary liability is a note payable of approximately $22,478,000, collateralized by properties with an aggregate net carrying value of approximately $13,732,000. The note has a 10-year term requiring monthly principal and interest payments based on a 30-year amortization of approximately $136,000, bears a fixed interest rate of 5.46%, and has a maturity date of January 1, 2016. The note is collateralized by Promotional Retail Center #2 (formerly known as Circuit City), Mimi’s Cafe, Palm Court Retail #1 and #2, Promotional Retail Center, Service Retail Center, TGI Friday’s and One Vanderbilt. This note also provides for a one-time loan assumption and release provisions for individual assets.

We have a line of credit, which is collateralized by Carnegie Business Center and Vanderbilt Plaza and has a total availability of $10,000,000. The line of credit requires monthly interest-only payments and bears variable interest at the 30-day LIBOR plus 2.75% (3.10% at June 30, 2010). The line of credit had an original maturity date of December 19, 2009, with two one-year extension options, the first of which was exercised such that the line now matures December 19, 2010. As of June 30, 2010, $6,078,000 was outstanding under the line of credit. In order to extend the line of credit the Partnership must be in compliance with the covenants concerning loan constant (prescribed ratio of property results of operations to total availability on the line), minimum net worth, debt to total assets and loan to value ratio, as well as comply with notification requirements and pay an extension fee. The line of credit agreement contains a maximum availability covenant. The Partnership was in compliance with all covenants as of June 30, 2010. Subsequent to the end of the reporting period a further draw on the line of credit of $1,500,000 was made in order to fund tenant improvements at Northcourt Plaza, bringing the total amount outstanding under the line of credit to $7,578,000.

We are contingently liable for subordinated real estate commissions payable to the General Partner in the aggregate amount of $643,000 at June 30, 2010, for sales that transpired in previous years. The subordinated real estate commissions are payable only after the limited partners have received distributions equal to their original invested capital plus a cumulative non-compounded return of 12% per annum on their adjusted invested capital. Since the conditions under which these commissions would be payable are not currently met, the liability has not been recognized in the accompanying consolidated financial statements; however, the amount will be recorded when and if it becomes payable.

Cash Flows

For the six months ended June 30, 2010, cash provided by operating activities was $673,000, as compared to $1,293,000 for the same period in 2009. The change was due to changes in cash flows related to certain assets and liabilities, primarily prepaid expenses and other assets. For the six months ended June 30, 2010, cash used in investing activities was $398,000, as compared to cash used in investing activities of $555,000 for the same period in 2009. The change was due to lower capital expenditures in the first half of 2010 compared to the first half of 2009, primarily due to higher building improvements at North River Place during 2009. For the six months ended June 30, 2010, cash used in financing activities was $200,000, as compared to cash used in financing activities of $193,000 for the same period in 2009, primarily related to principal payments on the note payable.

Our expectation is that cash and cash equivalents as of June 30, 2010, together with cash from operations, sales and financing, and the line of credit, will be adequate to meet our operating requirements on a short-term basis and for the reasonably foreseeable future. There can be no assurance that our results of operations will not fluctuate in the future and at times affect our ability to meet operating requirements.

Operationally, our primary source of funds consists of cash provided by rental activities. Other sources of funds may include permanent financing, draws on the line of credit, property sales and interest income on money market funds. Cash generated from property sales is generally added to our cash reserves, pending use in the development of properties or distribution to the partners.

Contractual Obligations

As of June 30, 2010, our contractual obligations consist of the following (in thousands):


	Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years		Total
Collateralized mortgage loans	$	207	$	882	$	985	$	20,404	$	22,478
Interest on indebtedness		611		2,387		2,285		1,101		6,384
Line of credit		6,078		—		—		—		6,078

Total	$	6,896	$	3,269	$	3,270	$	21,505	$	34,940

The line of credit had an original maturity date of December 19, 2009, with two one-year extension options, the first of which was exercised such that the line now matures December 19, 2010.

We are unaware of any demands, commitments, events or uncertainties, which might affect capital resources in any material respect. In addition, we are not subject to any covenants pursuant to our collateralized debt that would constrain our ability to obtain additional capital.

Critical Accounting Policies

In the preparation of financial statements, we utilize certain critical accounting policies. There has been no change to our significant accounting policies included in the notes to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2009.

Inflation

Leases at the office properties typically provide for rent adjustment and pass-through of certain operating expenses during the term of the lease. Substantially all of the leases at the office and retail properties provide for pass-through to tenants of certain operating costs, including real estate taxes, common area maintenance expenses, and insurance. We anticipate that these provisions may permit us to increase rental rates or other charges to tenants in response to rising prices and, therefore, serve to reduce our exposure to the adverse effects of inflation.

Forward Looking Statements; Factors That May Affect Operating Results

This Report on Form 10-Q contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding our expectations, hopes, intentions, beliefs and strategies regarding the future. These forward looking statements include statements relating to:

•

Our belief that cash and cash generated by operations, sales and financing will be sufficient to meet our operating requirements in both the short and the long-term;

•

Our expectation that changes in market interest rates will not have a material impact on the performance or the fair value of our portfolio;

•

Our belief that certain claims and lawsuits which have arisen against us in the normal course of business will not have a material adverse effect on our financial position, cash flow or results of operations;

•

Our belief that properties are competitive within our market;

•

Our expectation to achieve certain occupancy levels;

•

Our estimation of market strength;

•

Our knowledge of any material environmental matters or issues relating to the landfill property; and

•

Our expectation that lease provisions may permit us to increase rental rates or other charges to tenants in response to rising prices, and therefore serve to reduce exposure to the adverse effects of inflation.

All forward-looking statements included in this document are based on information available to us on the date hereof. Because these forward looking statements involve risk and uncertainty, there are important factors that could cause our actual results to differ materially from those stated or implied in the forward-looking statements. Those important factors include:

•

market fluctuations in rental rates and occupancy;

•

reduced demand for rental space;

•

availability and creditworthiness of prospective tenants;

•

defaults or non-renewal of leases by customers;

•

differing interpretations of lease provisions regarding recovery of expenses;

•

increased operating costs;

•

changes in interest rates and availability of financing that may render the sale or financing of a property difficult or unattractive;

•

our failure to obtain necessary outside financing;

•

risks and uncertainties affecting property development and construction (including construction delays, cost overruns, our inability to obtain necessary permits and public opposition to these activities);

•

the unpredictability of both the frequency and final outcome of litigation; and

•

the inability to develop all or any portion of the former landfill site, due to environmental, legal or economic impediments.

The forward-looking statements in this Quarterly Report on Form 10-Q are subject to additional risks and uncertainties further discussed under “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2009. We assume no obligation to update or supplement any forward looking-statement.

Risks of Litigation

Certain claims and lawsuits have arisen against us in our normal course of business. We believe that such claims and lawsuits will not have a material adverse effect on our financial position, cash flow or results of operations.

Item 3.

Qualitative and Quantitative Disclosures About Market Risk

Interest Rates

We are exposed to changes in interest rates obtainable on our borrowings. Our expectation is that changes in market interest rates will not have a material impact on the performance or fair value of our portfolio.

For debt obligations, the table below presents principal cash flows by expected maturity dates of a note payable with a fixed interest rate of 5.46% and the line of credit with a maturity date of December 19, 2010 and variable interest rate of 3.10% as of June 30, 2010.


	Expected Maturity Date
	2010		2011		2012		2013		2014		Thereafter		Total
	(in thousands)
Collateralized fixed rate debt	$	207	$	429	$	453	$	479	$	506	$	20,404	$	22,478
Line of credit	$	6,078	$	—	$	—	$	—	$	—	$	—	$	6,078

As of June 30, 2010, we had cash and cash equivalents of $1,991,000.

The line of credit had an original maturity date of December 19, 2009, with two one-year extension options, the first of which was exercised such that the line now matures December 19, 2010.

Item 4.

Controls and Procedures

See items 4T.

Item 4T.

Controls and Procedures

The principal executive officer and principal financial officer of the General Partner have evaluated the disclosure controls and procedures of the Partnership as of the end of the period covered by this quarterly report. As used herein, the term “disclosure controls and procedures” has the meaning given to the term by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and includes the controls and other procedures of the Partnership that are designed to ensure that information required to be disclosed by the Partnership in the reports that it files with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Based upon his evaluation, the principal executive officer and principal financial officer of the General Partner has concluded that the Partnership’s disclosure controls and procedures were effective such that the information required to be disclosed by the Partnership in this quarterly report is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms applicable to the preparation of this report and is accumulated and communicated to the General Partner’s management, including the General Partner’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

There have not been any changes in the Partnership’s internal control over financial reporting that occurred during the Partnership’s fiscal quarter ended June 30, 2010 that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

Certain claims and lawsuits have arisen against the Partnership in its normal course of business. The Partnership

believes that such claims and lawsuits will not have a material adverse effect on the Partnership’s financial position, cash flow or results of operations.

Item 1A.

Risk Factors

There are no material changes to any of the risk factors as previously disclosed in Item 1A. to Part I of the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

[Removed and Reserved]

None.

Item 5.

Other Information

None.

Item 6.

Exhibits

Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of the General Partner Pursuant to Rule 13a-14(a) of the Exchange Act.

Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of the General Partner Pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This certification, required by Section 906 of the Sarbanes-Oxley Act of 2002, other than as required by Section 906, is not to be deemed “filed” with the Commission or subject to the rules and regulations promulgated by the Commission under the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18 of said Act.

SIGNATURES

Pursuant to the requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	RANCON REALTY FUND IV,
	a California limited partnership

	By:	Rancon Financial Corporation
		a California corporation,
		its General Partner

Date: August 13, 2010	By:	/S/ DANIEL L. STEPHENSON
		Daniel L. Stephenson, President

Date: August 13, 2010	By:	/S/ DANIEL L. STEPHENSON
		Daniel L. Stephenson, General Partner

EXHIBIT INDEX

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP



Exhibit 31		Certification of Chief Executive Officer and Chief Financial Officer of the General Partner Pursuant to Rule 13a-14(a) of the Exchange Act.

Exhibit 32		Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of the General Partner Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This certification, required by Section 906 of the Sarbanes-Oxley Act of 2002, other than as required by Section 906, is not to be deemed “filed” with the Commission or subject to the rules and regulations promulgated by the Commission under the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18 of said Act.

Large Accelerated Filer

Accelerated Filer

Non-accelerated filer

Smaller reporting company