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8-K - FORM 8-K - RANCON REALTY FUND IV | d472175d8k.htm |
EX-99.2 - LETTER TO CUSTODIANS AND PENSION PLAN TRUSTEES FROM THE GENERAL PARTNERS - RANCON REALTY FUND IV | d472175dex992.htm |
Exhibit 99.1
January 28, 2013
Dear Limited Partner in Rancon Realty Fund IV:
During the time that Rancon IV has existed, the investment culture has gone full-circle several times. Real estate investments, stocks and mutual funds, municipal bonds, even gold and precious metals have been in and out of favor. Revisions to state and federal income tax regulations have had an impact on the perceived and actual value of investments. Today, the media is filled with concerns about unemployment, gas prices and even the fiscal cliff. Throughout it all, the long-term goal of your partnership has remained the same to create, improve and maintain the value of the properties owned by Rancon IV.
HELP RANCON REALTY FUND IV GO GREEN!
In an effort to reduce paper and the costs associated with printing and mailing of reports such as this one, wed like to offer you the option of receiving your quarterly and annual reports and other similar communications via email. If you are interested, please send an email to rancon@myinvestment.com and include your email address, plus your name and current mailing address and the P* number from the address section on the outside cover of this report. Reports and other communications sent to you via email will be sent to you without cost. You may change your election at any time and, even if you elect to receive materials by email, you may request a paper copy of the referenced materials at no charge by calling Investor Services toll free at 888.909.7774.
PROPERTY UPDATE
The twelve properties owned by Rancon Realty Fund IV as a part of the Tri City Corporate Centre include the following five office buildings and seven retail properties.
Office Property | Description/Square Footage | |
Carnegie Business Center I | Two office buildings/62,538 square feet of space | |
Northcourt Plaza | Two-story office building/77,589 square feet of space | |
North River Place | Three-story office building/71,157 square feet of space | |
One Vanderbilt | Four-story office building/73,729 square feet of space | |
Vanderbilt Plaza | Four-story office building/114,707 square feet of space | |
Retail Property | Description/Square Footage | |
Mimis Café | Restaurant/6,455 square feet of space | |
Palm Court Retail #1 | Retail building/5,053 square feet of space | |
Palm Court Retail #2 | Retail building/7,433 square feet of space | |
Promotional Retail Center | Four retail buildings/66,244 total square feet of space | |
Promotional Retail Center II | Retail building/39,123 square feet of space | |
Service Retail Center | Two retail buildings/20,780 total square feet of space | |
TGI Fridays | Restaurant/9,956 square feet of space |
Combined occupancy at the properties increased from 69% as of September 30, 2011, to 71% as of September 30, 2012. According to the recent CBRE MarketView report on the Inland Empire Office Market, Since the fourth quarter of 2008, the overall vacancy rate in the Inland Empire has been above 20% and is expected to remain at this level through the third quarter of next year. Occupancy at the Rancon IV Office Properties is at the 79% level, reflective of CBREs observations. The corresponding CBRE MarketView report on the Inland Empire Retail Market
261 Boeing Court
Livermore, California 94551
925.241.7143 Fax 925.371.0167
Toll-free 888.909.7774
indicates that The Inland Empire retail market was among those hardest hit [however] rental rates should begin to slowly tick upwards into the second half of next year. Our goal is to strengthen property values by increasing occupancy, and by managing the upkeep and appearance of the properties and grounds.
Rancon IV is required, by the terms of its partnership agreement, to dissolve by no later than December 31, 2015. In 2013, we intend to explore the options available in connection with the anticipated dissolution of the Partnership.
VALUATION ESTIMATE FOR 2013
The per Unit valuation estimate for Rancon Realty Fund IV as of December 31, 2012, is $610 per Unit. The General Partners have established the per Unit valuation estimate based solely on the estimated net asset value of the Partnerships properties and other assets. For further detail on how the valuation was determined, please refer to our Current Report on Form 8-K, dated January 25, 2013, which has been filed with the SEC, and can be obtained by request to Investor Services or from the SECs website at www.sec.gov.
Unlike stocks and mutual funds, which experience daily price changes, the Partnerships valuation of its outstanding Units is made once a year, as of December 31, and is not revised throughout the year. It thus does not reflect changes in the net asset value of the Partnerships properties and other assets that may occur throughout the year. No third-party appraisals were obtained in connection with the General Partners valuation of the Units, and the General Partners valuation and the methodology they employed to value the Units has not been verified or reviewed by any third-party advisor, including Rancon IVs auditors. The actual amount for which the Partnerships properties are eventually sold may be materially lower than the current estimates of their fair market values made by the General Partners. The General Partners valuation of the Units also does not represent the price Units can be sold for on the informal secondary market. That price is generally 10 to 40% of the current per Unit valuation, less any fees or commissions that may be charged.
Some investors have contacted us, asking how to liquidate (sell) their Partnership Units. Remember that Rancon Realty Fund IV is not publicly traded, so options for selling are extremely limited. Upon request, we can provide a list of potential buyers that you can contact and possibly negotiate with to facilitate the sale of your Units. While we can provide a list of potential buyers, we cannot confirm the potential buyers ability to follow through on any proposal they may make to you to purchase your Units. Anyone who purchases Rancon IV units does so at prices between 10% and 40% of the current valuation estimate (noted above).
This letter also includes unaudited financial information for the quarter ended September 30, 2012. Reference is made to the Partnerships Quarterly Report on Form 10-Q, as filed with the SEC, for further information on the Partnerships result of operations for the quarter ended September 30, 2012.
If you have questions or need additional information, please dont hesitate to contact Investor Services, toll free at 888.909.7774. We are here to help you if you have questions about changing your address or transferring your IRA to a new custodian, contact us either by phone or by visiting our website at www.myinvestment.com. On the website, you can find information on how to contact us by email, and even submit a change of address electronically.
Sincerely,
Dan Stephenson | Judy Henrich | |
General Partner | Preferred Partnership Services, Inc. |
Note: Certain statements contained in this Report may be deemed to be forward-looking statements under the federal securities laws. Such statements generally can be identified by our use of words such as may, will, can, intend, anticipate, estimate, think, continue, or other similar words. For a list of the factors that could cause actual results to vary materially from those expressed in these forward-looking statements, see our Annual Report on Form 10-K for the year ended December 31, 2011, and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.
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RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Balance Sheets
(in thousands, except units outstanding)
(Unaudited)
September 30, 2012 |
December 31, 2011 |
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Assets |
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Investments in real estate: |
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Rental properties |
$ | 64,086 | $ | 65,714 | ||||
Accumulated depreciation |
(22,965 | ) | (22,757 | ) | ||||
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Rental properties, net |
41,121 | 42,957 | ||||||
Cash and cash equivalents |
2,800 | 2,624 | ||||||
Accounts receivable, net |
250 | 130 | ||||||
Deferred costs, net of accumulated amortization of $1,751 and $1,918 as of September 30, 2012 and December 31, 2011, respectively |
2,183 | 2,075 | ||||||
Prepaid expenses and other assets |
2,361 | 1,784 | ||||||
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Total assets |
$ | 48,715 | $ | 49,570 | ||||
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Liabilities and Partners Equity (Deficit) |
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Liabilities: |
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Note payable and line of credit |
$ | 29,253 | $ | 29,591 | ||||
Accounts payable and other liabilities |
677 | 418 | ||||||
Tenant and building improvements payable |
| 213 | ||||||
Prepaid rent |
227 | 234 | ||||||
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Total liabilities |
30,157 | 30,456 | ||||||
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Commitments and contingent liabilities (Note 6) |
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Partners Equity (Deficit): |
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General Partner |
(862 | ) | (864 | ) | ||||
Limited partners, 65,819 limited partnership units outstanding as of September 30, 2012 and December 31, 2011 |
19,420 | 19,978 | ||||||
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Total partners equity |
18,558 | 19,114 | ||||||
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Total liabilities and partners equity |
$ | 48,715 | $ | 49,570 | ||||
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RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
Consolidated Statements of Operations
(in thousands, except per unit amounts and units outstanding)
(Unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, |
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2012 | 2011 | 2012 | 2011 | |||||||||||||
Operating revenue |
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Rental revenue and other |
$ | 1,988 | $ | 2,035 | $ | 6,053 | $ | 5,989 | ||||||||
Tenant reimbursements |
341 | 297 | 828 | 799 | ||||||||||||
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Total operating revenue |
2,329 | 2,332 | 6,881 | 6,788 | ||||||||||||
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Operating expenses |
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Property operating expenses |
1,225 | 1,206 | 3,130 | 3,150 | ||||||||||||
Depreciation and amortization |
847 | 902 | 2,657 | 2,671 | ||||||||||||
General and administrative |
196 | 216 | 648 | 674 | ||||||||||||
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Total operating expenses |
2,268 | 2,324 | 6,435 | 6,495 | ||||||||||||
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Operating income |
61 | 8 | 446 | 293 | ||||||||||||
Interest and other income |
12 | | 12 | 1 | ||||||||||||
Interest expense (including amortization of loan fees) |
(404 | ) | (415 | ) | (1,216 | ) | (1,188 | ) | ||||||||
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Loss before gain on sale of property |
(331 | ) | (407 | ) | (758 | ) | (894 | ) | ||||||||
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Gain on sale of property |
202 | | 202 | | ||||||||||||
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Net Loss |
$ | (129 | ) | $ | (407 | ) | $ | (556 | ) | $ | (894 | ) | ||||
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Basic and diluted net loss per limited partnership unit |
$ | (2.07 | ) | $ | (6.12 | ) | $ | (8.48 | ) | $ | (13.45 | ) | ||||
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Rancon Realty Fund IV
261 Boeing Court
Livermore, CA 94551
Address Service Requested