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| 8-K - 8-K - RANCON REALTY FUND IV | v357581_8k.htm |
October 23, 2013
Dear Limited Partner in Rancon Realty Fund 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, we’d 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 us toll free at 888.909.7774.
PARTNERSHIP DISSOLUTION APPROACHING
As we have mentioned in previous correspondence, Rancon IV is required, by the terms of its partnership agreement, to dissolve on December 31, 2015. During the course of this year, we have been exploring the options available in connection with the anticipated dissolution of the Partnership. The current plan is to develop and prepare a Consent Solicitation Statement (“Consent Statement”) in compliance with the partnership agreement and the SEC’s proxy rules, and to send the Consent Statement to all Limited Partners during the 2nd quarter of 2014.
The Consent Statement will request the approval of the Limited Partners to dissolve and to begin an orderly liquidation of the Partnership’s assets, which would include selling all the properties of the Partnership and distributing the net proceeds to the Limited Partners. The Consent Statement would include information about the Partnership and the proposed dissolution in accordance with the SEC’s proxy rules. Dissolution of the Partnership prior to December 31, 2015 will require approval by the Limited Partners holding a majority of the outstanding units of the Partnership.
During the consent solicitation process, we plan to interview one or more real estate brokerage firms for the purpose of identifying those that could create a comprehensive marketing plan to sell the properties owned by Rancon IV. Retention of any firm would be conditional upon approval of the Partnership’s dissolution by the Limited Partners of Rancon IV. The firm or firms selected would then move forward in presenting the properties in their best light to attract the most promising potential buyers. Many factors will influence the timing of the sale of the properties, including the local markets in which the properties of the Partnership are located and the state of the local and national economies.
CAN PARTNERSHIP UNITS BE SOLD?
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 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. Historically, units sold in the secondary market result in prices of between 10% to 40% of Rancon IV’s valuation estimate of its outstanding units. The Partnership’s current valuation estimate of its outstanding units is $610 per unit.
Unaudited financial statements at June 30, 2013, and December 31, 2012, and for the three and six months ended June 30, 2013, and June 30, 2012, are included with this letter. If you have questions or need additional information, please don’t hesitate to contact Investor Services, toll free at 888.909.7774. We are here to help – 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. |
261 Boeing Court
Livermore, California 94551
925.241.7143 Fax 925.371.0167
Toll-free 888.909.7774
| RANCON REALTY FUND IV, | ||||||||||
| A CALIFORNIA LIMITED PARTNERSHIP | ||||||||||
| Consolidated Balance Sheets | ||||||||||
| (in thousands, except units outstanding) | ||||||||||
| (Unaudited) |
| June 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| Assets | ||||||||
| Investments in real estate: | ||||||||
| Rental properties | $ | 63,963 | $ | 64,177 | ||||
| Accumulated depreciation | (24,737 | ) | (23,518 | ) | ||||
| Rental properties, net | 39,226 | 40,659 | ||||||
| Cash and cash equivalents | 3,815 | 2,856 | ||||||
| Accounts receivable, net | 189 | 215 | ||||||
| Deferred costs, net of accumulated amortization of $2,207 and $1,889 as of | ||||||||
| June 30, 2013 and December 31, 2012, respectively | 1,780 | 2,033 | ||||||
| Prepaid expenses and other assets | 2,181 | 2,199 | ||||||
| Total assets | $ | 47,191 | $ | 47,962 | ||||
| Liabilities and Partners’ Equity (Deficit) | ||||||||
| Liabilities: | ||||||||
| Note payable and line of credit | $ | 28,901 | $ | 29,137 | ||||
| Accounts payable and other liabilities | 371 | 491 | ||||||
| Prepaid rent | 148 | 140 | ||||||
| Total liabilities | 29,420 | 29,768 | ||||||
| Commitments and contingent liabilities (Note 6) | ||||||||
| Partners’ Equity (Deficit): | ||||||||
| General Partner | (869 | ) | (865 | ) | ||||
| Limited partners, 65,819 limited partnership units outstanding | ||||||||
| as of June 30, 2013 and December 31, 2012 | 18,640 | 19,059 | ||||||
| Total partners’ equity | 17,771 | 18,194 | ||||||
| Total liabilities and partners’ equity | $ | 47,191 | $ | 47,962 | ||||
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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 | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Operating revenue | ||||||||||||||||
| Rental revenue and other | $ | 2,049 | $ | 2,010 | $ | 4,085 | $ | 4,065 | ||||||||
| Tenant reimbursements | 216 | 209 | 428 | 487 | ||||||||||||
| Total operating revenue | 2,265 | 2,219 | 4,513 | 4,552 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Property operating expenses | 1,007 | 936 | 1,977 | 1,905 | ||||||||||||
| Depreciation and amortization | 890 | 889 | 1,757 | 1,810 | ||||||||||||
| General and administrative | 204 | 230 | 419 | 452 | ||||||||||||
| Total operating expenses | 2,101 | 2,055 | 4,153 | 4,167 | ||||||||||||
| Operating income | 164 | 164 | 360 | 385 | ||||||||||||
| Interest and other income | 15 | - | 15 | - | ||||||||||||
| Interest expense (including amortization of loan fees) | (399 | ) | (405 | ) | (798 | ) | (812 | ) | ||||||||
| Net loss | $ | (220 | ) | $ | (241 | ) | $ | (423 | ) | $ | (427 | ) | ||||
| Basic and diluted net loss per limited partnership unit | $ | (3.31 | ) | $ | (3.62 | ) | $ | (6.37 | ) | $ | (6.42 | ) | ||||
| Weighted average number of limited partnership units outstanding | 65,819 | 65,819 | 65,819 | 65,819 | ||||||||||||
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Rancon Realty Fund IV
261 Boeing Court
Livermore, CA 94551
Address Service Requested
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