ITEM 1. BUSINESS:
Real Estate Associates Limited IV ("REAL IV" or the "Partnership") is a limited partnership which was formed under the laws of the State of California on August 24, 1981. On March 12, 1982, REAL IV offered 3,000 units consisting of 6,000 Limited Partnership Interests and Warrants to purchase a maximum of 6,000 Additional Limited Partnership Interests through a public offering managed by Lehman Brothers, Inc.
The general partners of Real IV are National Partnership Investments Corp. ("NAPICO"), a California corporation (the "Corporate General Partner"), and Coast Housing Investment Associates ("CHIA"). CHIA is a limited partnership formed under the California Limited Partnership Act and consists of Messrs. Nicholas G. Ciriello, an unrelated individual, as general partner, and Charles H. Boxenbaum as limited partner. The business of REAL IV is conducted primarily by its general partners as REAL IV has no employees of its own.
Casden Investment Corporation ("CIC") owns 100 percent of NAPICO's stock. The current members of NAPICO's Board of Directors are Charles H. Boxenbaum, Bruce E. Nelson, Alan I. Casden, Henry C. Casden and Brian D. Goldberg.
REAL IV holds limited partnership interests in twenty-two local limited partnerships as of December 31, 1995 and a general partner interest in Real Estate Associates II ("REA II") which in turn holds limited partnership interests in an additional seven limited partnerships. Therefore, REAL IV holds directly or indirectly through REA II investments in twenty-nine local limited partnerships. The general partners of REA II are REAL IV and NAPICO. Each of the local partnerships own a low income housing project which is subsidized and/or has a mortgage note payable to or insured by agencies of the federal or local government.
In order to stimulate private investment in low income housing, the federal government and certain state and local agencies have provided significant ownership incentives, including interest subsidies, rent supplements, and mortgage insurance, with the intent of reducing certain market risks and providing investors with certain tax benefits, plus limited cash distributions and the possibility of long-term capital gains. There remains, however, significant risks. The long-term nature of investments in government assisted housing limits the ability of REAL IV to vary its portfolio in response to changing economic, financial and investment conditions. These investments are also subject to changes in local economic circumstances and housing patterns, as well as rising operating costs, vacancies, rent collection difficulties, energy shortages and other factors which have an impact on real estate values. These projects also require greater management expertise and may have higher operating expenses than conventional housing projects.
The partnerships in which REAL IV has invested were, at least initially, organized by private developers who acquired the sites, or options thereon, and applied for applicable mortgage insurance and subsidies. REAL IV became the principal limited partner in these local limited partnerships pursuant to arm's-length negotiations with these developers, or others, who act as general partners. As a limited partner, REAL IV's liability for obligations of the local limited partnership is limited to its investment. The local general partner of the local limited partnership retains responsibility for developing, constructing, maintaining, operating and managing the project. Under certain circumstances, REAL IV has the right to replace the general partner of the local limited partnerships.
Although each of the partnerships in which REAL IV has invested generally owns a project which must compete in the market place for tenants, interest subsidies and rent supplements from governmental agencies make it possible to offer these dwelling units to eligible "low income" tenants at a cost significantly below the market rate for comparable conventionally financed dwelling units in the area.
During 1995, the projects in which REAL IV had invested were substantially rented. The following is a schedule of the status as of December 31, 1995, of the projects owned by local limited partnerships in which REAL IV, either directly or indirectly, has invested.
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS IN WHICH REAL IV HAS AN INVESTMENT DECEMBER 31, 1995
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS IN WHICH REAL IV HAS AN INVESTMENT DECEMBER 31, 1995 (CONTINUED)
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS IN WHICH REAL IV HAS AN INVESTMENT DECEMBER 31, 1995 (CONTINUED)
ITEM 2.

ITEM 2. PROPERTIES:
Through its investment in local limited partnerships, REAL IV holds interests in real estate properties. See Item 1 and Schedule XI for information pertaining to these properties.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS:
As of December 31, 1995, the Partnership's Corporate General Partner was a plaintiff or defendant in several lawsuits. None of these suits were related to REAL IV.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
Not applicable.
PART II.
ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS AND RELATED SECURITY HOLDER MATTERS:
The limited partnership interests are not traded on a public exchange but were sold through a public offering managed by Lehman Brothers Inc. It is not anticipated that any public market will develop for the purchase and sale of any partnership interest. Limited partnership interests may be transferred only if certain requirements are satisfied. At December 31, 1995, there were 2,703 registered holders of units in REAL IV. No distributions have been made from the inception of the Partnership to December 31, 1995. The Partnership has invested in certain government assisted projects under programs which in many instances restrict the cash return available to project owners. The Partnership was not designed to provide cash distributions to investors in circumstances other than refinancing or disposition of its investments in limited partnerships.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA:
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS:
LIQUIDITY
The Partnership's primary sources of funds include interest income on money market funds and certificates of deposit and distributions from local partnerships in which the Partnership has invested. It is not expected that any of the local limited partnerships in which the Partnership has invested will generate cash flow sufficient to provide for distributions to the Partnership's limited partners in any material amount.
CAPITAL RESOURCES
REAL IV received $16,500,000 in subscriptions for units of limited partnership interests (at $5,000 per unit) during the period March 12, l982 to July 15, 1982, pursuant to a registration statement on Form S-11. As of March 31, 1983, REAL IV received an additional $16,500,000 in subscriptions pursuant to the exercise of warrants and the sale of additional limited partnership interests.
RESULTS OF OPERATIONS
The Partnership was formed to provide various benefits to its partners as discussed in Item 1. It is anticipated that the local limited partnerships in which REAL IV has invested could produce tax losses for as long as 20 years. The Partnership will seek to defer income taxes from capital gains by not selling any projects or project interests within 10 years, except to qualified tenant cooperatives, or when proceeds of the sale would supply sufficient cash to enable the partners to pay applicable taxes.
Tax benefits will decline over time as the advantages of accelerated depreciation are greatest in the earlier years, as deductions for interest expense will decrease as mortgage principal is amortized, and as the Tax Reform Act of 1986 limits the deductions available. The Partnership accounts for its investments in the local limited partnerships on the equity method, thereby adjusting its investment balance by its proportionate share of the income or loss of the local limited partnerships.
The Partnership accounts for its investments in the local limited partnerships on the equity method, thereby adjusting its investment balance by its prportionate share of the income or loss of the local limited partnerships. Losses incurred after the limited partnership investment account is reduced to zero are not recognized.
Distributions received from limited partnerships are recognized as return of capital until the investment balance has been reduced to zero or to a negative amount equal to future capital contributions required. Subsequent distributions received are recognized as income.
Except for certificates of deposit and money market funds, the Partnership's investments are entirely interests in other limited partnerships owning government assisted projects. Available cash not invested in Limited Partnerships is invested in these funds earning interest income as reflected in the statements of operations. These money market funds and certificates of deposit can be converted to cash to meet obligations as they arise. The Partnership intends to continue investing available funds in this manner.
A recurring partnership expense is the annual management fee. The fee is payable to the Corporate General Partner of the Partnership and is calculated as a percentage of the Partnership's invested assets. The management fee is paid to the corporate general partner for its continuing management of Partnership affairs. The fee is payable beginning with the month following the Partnership's initial investment in a local limited partnership.
Operating expenses, exclusive of management fees and interest,consist substantially of professional fees for services rendered to the Partnership.
The Partnership, as a limited partner in the local limited partnerships in which it has invested, is subject to the risks incident to the management and ownership of improved real estate. The Partnership investments are also subject to adverse general economic conditions, and, accordingly, the status of the national economy, including substantial unemployment and concurrent inflation, could increase vacancy levels, rental payment defaults, and operating expenses, which in turn, could substantially increase the risk of operating losses for the projects.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
The Financial Statements and Supplementary Data are listed under Item 14.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE:
Not applicable.
REAL ESTATE ASSOCIATES LIMITED IV (A California limited partnership)
FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND INDEPENDENT PUBLIC ACCOUNTANTS' REPORT DECEMBER 31, 1995
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Real Estate Associates Limited IV (A California limited partnership)
We have audited the accompanying balance sheets of Real Estate Associates Limited IV (a California limited partnership) as of December 31, 1995 and 1994, and the related statements of operations, partners' equity (deficiency) and cash flows for each of the three years in the period ended December 31, 1995. Our audits also included the financial statement schedules listed in the index on item 14. These financial statements and financial statement schedules are the responsibility of the management of the Partnership. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We did not audit the financial statements of certain limited partnerships, the investments in which are reflected in the accompanying financial statements using the equity method of accounting. The investments in these limited partnerships represent 22 percent and 30 percent of total assets as of December 31, 1995 and 1994, respectively, and the equity in income of these limited partnerships represents 27 percent, 20 percent and 33 percent of the total net income of the Partnership for the years ended December 31, 1995, 1994 and 1993, respectively, and represent a substantial portion of the investee information in Note 2 and the financial statement schedules. The financial statements of these limited partnerships are audited by other auditors. Their reports have been furnished to us and our opinion, insofar as it relates to the amounts included for these limited partnerships, is based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audits and the reports of other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Real Estate Associates Limited IV as of December 31, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. Also, in our opinion, based on our audits and the reports of other auditors, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Los Angeles, California March 29, 1996
REAL ESTATE ASSOCIATES LIMITED IV (a California limited partnership)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
The accompanying notes are an integral part of these financial statements.
REAL ESTATE ASSOCIATES LIMITED IV (a California limited partnership)
STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
The accompanying notes are an integral part of these financial statements.
REAL ESTATE ASSOCIATES LIMITED IV (a California limited partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY) FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
The accompanying notes are an integral part of these financial statements.
REAL ESTATE ASSOCIATES LIMITED IV (a California limited partnership)
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
The accompanying notes are an integral part of these financial statements.
REAL ESTATE ASSOCIATES LIMITED IV (a California limited partnership)
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Real Estate Associates Limited IV (the Partnership) was formed under the California Limited Partnership Act on August 24, 1981. The Partnership was formed to invest either directly or indirectly in other limited partnerships which own and operate primarily federal, state and local government-assisted housing projects. The general partners are National Partnership Investments Corp. (NAPICO), the corporate general partner, and Coast Housing Investments Associates (CHIA), a limited partnership. Casden Investment Corp. owns 100 percent of NAPICO's stock. The limited partner of CHIA is an officer of NAPICO.
The Partnership issued 13,200 limited partner interests through a public offering. The general partners have a 1 percent interest in operating profits and losses of the Partnership. The limited partners have the remaining 99 percent interest in proportion to their respective investments.
The Partnership shall be dissolved only upon the expiration of 52 complete calendar years (December 31, 2033) from the date of formation of the Partnership or the occurrence of various other events as specified in the terms of the Partnership Agreement.
Upon total or partial liquidation of the Partnership or the disposition or partial disposition of a project or project interest and distribution of the proceeds, the general partners will be entitled to a liquidation fee as stipulated in the Partnership Agreement. The limited partners will have a priority item equal to their invested capital attributable to the project(s) or project interest(s) sold and shall receive from the sale of the project(s) or project interest(s) sold and shall receive from the sale of the project(s) an amount sufficient to pay state and federal income taxes, if any, calculated at the maximum rate then in effect. The general partners' liquidation fee may accrue but shall not be paid until the limited partners have received distributions equal to 100 percent of their capital contributions.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Principles of Consolidation
These financial statements include the accounts of the Partnership and Real Estate Associates II (REA II), a California general partnership in which the Partnership holds a 99.9 percent general partner interest. Losses in excess of the minority interest is equity that would otherwise be attributed to the minority interest are being allocated to the Partnership.
REAL ESTATE ASSOCIATES LIMITED IV (a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Method of Accounting for Investments in Limited Partnerships
The investments in limited partnerships are accounted for on the equity method. Acquisition, selection and other costs related to the acquisition of the projects have been capitalized as part of the investment account and are being amortized on a straight line basis over the estimated lives of the underlying assets, which is generally 30 years.
Net Income Per Limited Partnership Interest
Net income per limited partnership interest was computed by dividing the limited partners' share of net income by the number of limited partnership interests outstanding during the year. The number of limited partnership interests was 13,202 for all years presented.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and bank certificates of deposit with an original maturity date of three months or less.
Short Term Investments
Short term investments consist of bank certificates of deposit with original maturities ranging from more than three months to twelve months. The fair value of these securities, which have been classified as held for sale, approximates their carrying value.
2. INVESTMENTS IN LIMITED PARTNERSHIPS
The Partnership holds limited partnership interests in twenty-two limited partnerships. In addition, the Partnership holds a general partner interest in REA II. NAPICO is also a general partner in REA II. REA II, in turn, holds limited partner interests in seven additional limited partnerships. In total, therefore, the Partnership holds interests, either directly or indirectly through REA II, in twenty-nine partnerships which own residential low income rental projects consisting of 2,783 apartment units. The mortgage loans of these projects are payable to or insured by various governmental agencies.
The Partnership, as a limited partner, is entitled to between 80 percent and 99 percent of the profits and losses of the limited partnerships it has invested in directly. The Partnership is also entitled to 99.9 percent of the profits and losses of REA II. REA II is entitled to a 99 percent interest in each of the limited partnerships in which it has invested.
Equity in loss of the limited partnerships is recognized until the investment balance is reduced to zero. Losses incurred after the limited partnership investment account is reduced to zero are not recognized. The cumulative amount of the unrecognized equity in losses of certain limited partnerships was approximately $9,713,000 and $9,316,000 as of December 31, 1995 and 1994, respectively.
REAL ESTATE ASSOCIATES LIMITED IV (a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
Distributions from the limited partnerships are accounted for as a return of capital until the investment balance is reduced to zero or to a negative amount equal to further capital contributions required. Subsequent distributions received are recognized as income.
The following is a summary of the investments in limited partnerships and reconciliation to the limited partnership accounts:
The difference between the investment per the accompanying balance sheets at December 31, 1995 and 1993, and the deficiency per the limited partnerships' combined financial statements is due primarily to cumulative unrecognized equity in losses of certain limited partnerships, additional basis costs capitalized to the investment account and cumulative distributions recognized as income.
Selected financial information from the combined financial statements at December 31, 1995 and 1994 and for each of the three years in the period ended December 31, 1995, of the limited partnerships in which the Partnership has invested directly or indirectly, is as follows:
Balance Sheets
REAL ESTATE ASSOCIATES LIMITED IV (a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
Statements of Operations
Land and buildings above have been adjusted for the amount by which the investments in the limited partnerships exceed the Partnership's share of the net book value of the underlying net assets of the investee which are recorded at historical costs. Depreciation on the adjustment is provided for over the estimated remaining useful lives of the properties.
An affiliate of NAPICO is the general partner in two of the limited partnerships included above, and another affiliate receives property management fees of 5 percent of their revenue. The affiliate received property management fees of $120,060, $119,980 and $117,316 in 1995, 1994 and 1993, respectively. The following sets forth the significant data for these partnerships, reflected in the accompanying financial statements using the equity method of accounting:
REAL ESTATE ASSOCIATES LIMITED IV (a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995
3. NOTES PAYABLE
Certain of the Partnership's investments involved purchases of partnership interests from partners who subsequently withdrew from the operating partnership. The Partnership is obligated on non-recourse notes payable of $1,230,743 bearing interest at 10 percent, to the sellers of the partnership interests. The notes and the related interest are payable by the Partnership through REA II, and have principal maturity dates ranging from 2015 to 2022 or upon sale or refinancing of the underlying partnership properties. The notes are collateralized by REA II's investment in the respective limited partnerships and are payable only out of cash distributions from the investee partnerships as defined in the notes. Unpaid interest is due at maturity of the notes.
Maturity dates on the notes payable are as follows:
4. FEES AND EXPENSES DUE GENERAL PARTNER
Under the terms of the Restated Certificate and Agreement of Limited Partners, the Partnership is obligated to NAPICO for an annual management fee equal to .4 percent of the original invested assets of the limited partnerships. Invested assets is defined as the costs of acquiring project interests, including the proportionate amount of the mortgage loans related to the Partnerships interest in the capital accounts of the respective partnerships.
The Partnership reimburses NAPICO for certain expenses. The reimbursement to NAPICO was $32,004, $30,841 and $30,665 in 1995, 1994 and 1993, respectively, and is included in operating expenses.
5. CONTINGENCIES
The corporate general partner of the Partnership is a plaintiff in various lawsuits and has also been named a defendant in other lawsuits arising from transactions in the ordinary course of business. In the opinion of management and the corporate general partner, the claims will not result in any material liability to the Partnership.
REAL ESTATE ASSOCIATES LIMITED IV (a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1995
6. INCOME TAXES
No provision has been made for income taxes in the accompanying financial statements since such taxes, if any, are the liability of the individual partners.
The major differences in tax and financial reporting result from the use of different bases and depreciation methods for the properties held by the limited partnerships. Differences in tax and financial reporting also arise as losses are not recognized for financial reporting purposes when the investment balance has been reduced to zero.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosure about Fair Value of Financial Instruments," requires disclosure of fair value information about financial instruments, when it is practicable to estimate that value. The notes payable are collateralized by the Partnership's investments in the investee limited partnerships and are payable only out of cash distributions from the investee partnerships. The operations generated by the investee limited partnerships are subject to various government rules, regulations and restrictions which make it impracticable to estimate the fair value of the notes payable and related accrued interest. The carrying amount of other assets and liabilities reported on the balance sheets that require such disclosure approximates fair value due to their short-term maturity.
8. FOURTH-QUARTER ADJUSTMENT
The Partnership's policy is to record its equity in the income (loss) of limited partnerships on a quarterly basis, using estimated financial information furnished by the various local operating general partners. The equity in income (loss) of limited partnerships reflected in the accompanying financial statements is based primarily upon audited financial statements of the investee limited partnerships. The increase, approximately $91,000, between the estimated nine-month equity in income and the actual 1995 income has been recorded in the fourth quarter.
SCHEDULE
REAL ESTATE ASSOCIATES LIMITED IV INVESTMENT IN LIMITED PARTNERSHIPS YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
SCHEDULE (CONTINUED)
REAL ESTATE ASSOCIATES LIMITED IV INVESTMENT IN LIMITED PARTNERSHIPS YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
SCHEDULE (CONTINUED) REAL ESTATE ASSOCIATES LIMITED IV INVESTMENT IN LIMITED PARTNERSHIPS YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
SCHEDULE (Continued)
REAL ESTATE ASSOCIATES LIMITED IV INVESTMENT IN LIMITED PARTNERSHIPS YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
NOTES: 1. Equity in income (losses) of the limited partnerships represents the Partnership's allocable share of the net income (loss) from the limited partnerships for the year. Equity in income (losses) of the limited partnerships will be recognized until the investment balance is reduced to zero, or below zero to an amount equal to future capital contributions to be made by the Partnership.
2. Cash distributions from the limited partnerships will be treated as a return on the investment and will reduce the investment balance until such time as the investment is reduced to an amount equal to additional contributions. Distributions subsequently received will be recognized as income.
SCHEDULE III REAL ESTATE ASSOCIATES LIMITED IV REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS IN WHICH REAL IV HAS INVESTMENTS DECEMBER 31, 1995
(A) This project was complete when REAL IV entered the Partnership.
SCHEDULE III (Continued)
REAL ESTATE ASSOCIATES LIMITED IV REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS IN WHICH REAL IV HAS INVESTMENTS DECEMBER 31, 1995
NOTES: 1. Each local limited partnership has developed, owns and operates the housing project. Substantially all project costs, including construction period interest expense, are being capitalized by the limited partnerships.
2. Depreciation is, or will be, provided for by various methods over the estimated useful lives of the projects. The estimated composite useful lives of the buildings are generally from 25 to 40 years.
3. Investments in property and equipment:
SCHEDULE III (Continued)
REAL ESTATE ASSOCIATES LIMITED IV REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS IN WHICH REAL IV HAS INVESTMENTS DECEMBER 31, 1995
PART III.
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
REAL ESTATE ASSOCIATES LIMITED IV (the "Partnership") has no directors or executive officers of its own.
National Partnership Investment Corp. ("NAPICO" or "the Managing General Partner") is a wholly-owned subsidiary of Casden Investment Corporation, an affiliate of The Casden Company. The following biographical information is presented for the directors and executive officers of NAPICO with principal responsibility for the Partnership's affairs.
CHARLES H. BOXENBAUM, 66, Chairman of the Board of Directors and Chief Executive Officer of NAPICO.
Mr. Boxenbaum has been associated with NAPICO since its inception. He has been active in the real estate industry since 1960, and prior to joining NAPICO was a real estate broker with the Beverly Hills firm of Carl Rhodes Company.
Mr. Boxenbaum has been a guest lecturer at national and state realty conventions, certified properties exchanger's seminars, Los Angeles Town Hall, National Association of Home Builders, International Council of Shopping Centers, Society of Conventional Appraisers, California Real Estate Association, National Institute of Real Estate Brokers, Appraisal Institute, various mortgage banking seminars, and the North American Property Forum held in London, England. In 1963, he was the winner of the Snyder Award, the highest annual award offered by the National Association of Real Estate Boards for Best Exchange. He is one of the founders and a past director of the First Los Angeles Bank, organized in November 1974. Mr. Boxenbaum was a member of the Board of Directors of the National Housing Council. Mr. Boxenbaum received his Bachelor of Arts degree from the University of Chicago.
BRUCE E. NELSON, 44, President and a director of NAPICO.
Mr. Nelson joined NAPICO in 1980 and became President in February 1989. He is responsible for the operations of all NAPICO sponsored limited partnerships. Prior to that he was primarily responsible for the securities aspects of the publicly offered real estate investment programs. Mr. Nelson is also involved in the identification, analysis, and negotiation of real estate investments.
From February 1979 to October 1980, Mr. Nelson held the position of Associate General Counsel at Western Consulting Group, Inc., private residential and commercial real estate syndicators. Prior to that time, Mr. Nelson was engaged in the private practice of law in Los Angeles. Mr. Nelson received his Bachelor of Arts degree from the University of Wisconsin and is a graduate of the University of Colorado School of Law. He is a member of the State Bar of California and is a licensed real estate broker in California and Texas.
ALAN I. CASDEN, 50, Chairman of The Casden Company, an affiliate of Casden Properties (formerly CoastFed Properties), a director and member of the audit committee of NAPICO, and chairman of the Executive Committee of NAPICO.
Mr. Casden is Chairman of the Board, Chief Executive Officer and sole shareholder of The Casden Company and Casden Investment Company. Prior to that, he was the president and chairman of Mayer Group, Inc., which he joined in 1975. He is also chairman of Mayer Management, Inc., a real estate management firm. Mr. Casden has been involved in approximately $3 billion of real estate financings and sales and has been responsible for the development and construction of more than 12,000 apartment units and 5,000 single-family homes and condominiums.
Mr. Casden is a member of the American Institute of Certified Public Accountants and of the California Society of Certified Public Accountants. Mr. Casden is a member of the advisory board of the National Multi-Family Housing Conference, the Multi-Family Housing Council, and the President's Council of the California Building Industry Association. He also serves on the advisory board to the School of Accounting of the University of Southern California. He holds a Bachelor of Science degree and a Masters in Business Administration degree from the University of Southern California.
HENRY C. CASDEN, 52, President, Chief Operating Officer and Secretary of The Casden Company and a director and secretary of NAPICO.
Mr. Casden has been President and Chief Operating Officer of The Casden Company, as well as a director of NAPICO since February 1988. He became secretary of both companies in late 1994. From 1982 to 1988, Mr. Casden was of counsel and a partner in the Los Angeles law firm of Troy, Casden & Gould. From 1978 to 1981, he was of counsel and a partner in the Los Angeles law firm of Loeb & Loeb. From 1972 to 1978, Mr. Casden was a member of the Beverly Hills law firm of Fink & Casden, Professional Corporation.
Mr. Casden received his Bachelor of Arts degree from the University of California at Los Angeles, and is a graduate of the University of San Diego Law School. Mr. Casden is a member of the State Bar of California and has numerous professional affiliations.
BRIAN D. GOLDBERG, 32, Chief Financial Officer of The Casden Company and a director of NAPICO.
Mr. Goldberg joined The Casden Company in 1990 as Vice President of Finance and became Chief Financial Officer in March 1991. Prior to joining The Casden Company, Mr. Goldberg was with Arthur Andersen & Co., an international public accounting firm, from August 1985 until July 1990 in their Los Angeles office. He received his bachelor of science degree in Accounting from the University of Denver. Mr. Goldberg is a member of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants.
SHAWN HORWITZ, 36, Executive Vice President and Chief Financial Officer.
Mr. Horwitz joined NAPICO in 1990 and is responsible for the financial affairs of NAPICO and the limited partnerships sponsored by NAPICO. Prior to joining NAPICO, Mr. Horwitz was President for approximately one year of Star Sub Shops, Inc., a corporation engaged in the business of selling fast food franchises, was an audit manager in the real estate industry group for Altschuler, Melvin & Glasser for six years, and was an auditor with Arthur Young & Co. for 3 years.
Mr. Horwitz received his Bachelor of Commerce degree in accounting from Rhodes University in South Africa and is a member of the Illinois Society of Certified Public Accountants, the American Institute of Certified Public Accountants and the South African Institute of Chartered Accountants.
BOB SCHAFER, 54, Vice President and Corporate Controller.
Mr. Schafer joined NAPICO in 1984 and is the Corporate Controller responsible for the financial reporting function of the Company. Prior to this, he was a Group and Division Controller at Bergen Brunswig for over eight years, Controller at a Flintkote subsidiary for over four years, and Assistant Controller at an electronics subsidiary of General Electric for two years.
Mr. Schafer is a member of the California Society of Certified Public Accountants. He holds a Bachelor of Science degree in accounting from Woodbury University, Los Angeles.
PATRICIA W. TOY, 66, Senior Vice President - Communications and Assistant Secretary.
Mrs. Toy joined NAPICO in 1977, following her receipt of an MBA from the Graduate School of Management, UCLA. From 1952 to 1956, Mrs. Toy served as a U.S. Naval Officer in communications and personnel assignments. She holds a Bachelor of Arts Degree from the University of Nebraska.
MARK L. WALTHER, 35, Executive Vice President, General Counsel and Assistant Secretary.
Mr. Walther joined NAPICO in 1987 and is responsible for the legal affairs of the NAPICO sponsored limited partnerships. Prior to joining NAPICO, Mr. Walther worked in the San Francisco law firm of Browne and Kahn which specialized in construction litigation. Mr. Walther received his Bachelor of Arts Degree in Political Science from the University of California, Santa Barbara and is a graduate of the University of California, Davis, School of Law. He is a member of the State Bar of Hawaii.
ITEM 11.

ITEM 11. MANAGEMENT RENUMERATION AND TRANSACTIONS:
Real Estate Associates Limited IV has no officers, employees or directors. However, under the terms of the Restated Certificate and Agreement of Limited Partnership, the Partnership is obligated to pay the Corporate General Partner an annual management fee. The annual management fee is approximately equal to .4% of the invested assets, including the Partnership's allocable share of the mortgages related to real estate properties held by local limited partnerships. The fee is earned beginning in the month the Partnership makes its initial contribution to the limited partnership. In addition, the Partnership reimburses the Corporate General Partner for certain expenses.
An affiliate of the General Partner is responsible for the on-site property management for certain properties owned by the limited partnerships in which the Partnership has invested.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
(a) Security Ownership of Certain Beneficial Owners
The general partners own all of the outstanding general partnership interests of REAL IV; no person is known to own beneficially in excess of 5% of the outstanding limited partnership interests.
(b) At December 31, 1995, security ownership of management is as listed:
* Cumulative limited partnership interests owned by corporate officers or the General Partner is less than 1% interest of total outstanding Limited Partnership interests.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
The Partnership has no officers, directors or employees of it's own. All of its affairs are managed by the Corporate General Partner, National Partnership Investments Corp. The transactions with the Corporate General Partner are primarily in the form of fees paid by the Partnership to the general partner for services rendered to the Partnership, as discussed in Item 11 and in the notes to the accompanying financial statements.
ITEM 14.

ITEM 14. FINANCIAL STATEMENTS, SCHEDULES, EXHIBITS AND REPORT ON FORM 8-K:
FINANCIAL STATEMENTS
Report of Independent Public Accountants.
Balance Sheets as of December 31, 1995 and December 31, 1994.
Statements of Operations for the years ended December 31, 1995, 1994 and 1993.
Statements of Partners' Equity (Deficiency) for the years ended December 31, 1995, 1994 and 1993.
Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993.
Notes to Financial Statements December 31, 1995.
FINANCIAL STATEMENT SCHEDULES APPLICABLE TO REAL ESTATE ASSOCIATES LIMITED IV, REAL ESTATE ASSOCIATES II AND TO THE LIMITED PARTNERSHIPS IN WHICH REAL ESTATE ASSOCIATES IV AND REAL ESTATE ASSOCIATES II HAVE INVESTMENTS:
Schedule - Investment in Limited Partnerships, December 31, 1995, 1994 and 1993.
Schedule III - Real Estate and Accumulated Depreciation, December 31, 1995.
The remaining schedules are omitted because any required information is included in the financial statements and notes thereto.
EXHIBITS
(3) Articles of incorporation and bylaws: The registrant is not incorporated. The Partnership Agreement was filed with Form S-11, File #274063 which is hereby incorporated by reference.
(10) Material contracts: The registrant is not party to any material contracts, other than the Restated Certificate and Agreement of Limited Partnership dated August 24, 1981, and the twenty-nine contracts representing the Partnership investment directly or indirectly in local limited partnerships as previously filed at the Securities Exchange Commission, File #274063 which is hereby incorporated by reference.
(13) Annual report to security holders: Pages ____ to ____.
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the year ended December 31, 1995.


Item 1 hereof for a description of the terms of the Lease and Sublease.
Item 3. Legal Proceedings.
The Property of Registrant is the subject of the following pending litigation:
(1) On October 21, 1991, the holder of a $20,000 original participation in Registrant brought suit in New York Supreme Court, New York County against the Registrant, the Partners; the Sublessee; Harry B. Helmsley, a partner in Sublessee; and Counsel. Registrant is a nominal defendant. The suit claims that the defendants have engaged in breaches of fiduciary duty and acts of self-dealing in relation to the Partners' solicitation of consents and authorizations of the participants in Registrant in September 1991 and in relation to other unrelated acts of the Partners and Sublessee. The suit
is styled as a class action, but the Court has ruled that class certification shall not be granted. The suit seeks relief including an injunction and an accounting. On January 10, 1992, all defendants answered the complaint and denied all material allegations of liability and damage. The complaint does not seek any relief against Registrant, and accordingly, Registrant's counsel is of the opinion that no loss or other unfavorable outcome of the action against Registrant is anticipated. The action has been dismissed against Sublessee and Mr. Helmsley.
(2) In December 1994, Registrant received a notice of default from Trump Empire State Partners ("Trump"). The Trump default notice to Registrant claims that Registrant is in violation of its master lease because of extensive work which Sublessee has undertaken as part of an improvement program that commenced before Trump reportedly acquired its interest in the property in 1994. Trump's notice also complains that the Building is in need of repairs.
On February 14, 1995, Registrant and Sublessee filed an action in New York State Supreme Court against Trump for a declaratory judgment that none of the matters set forth in the notice of default constitutes a violation of the master lease or sublease, and that the notice of default is entirely without merit. Registrant's and Sublessee's suit also seeks an injunction to prevent Trump from implementing the notice of default.
On February 15, 1995, Trump filed an action against Registrant, Sublessee, Counsel, Harry B. Helmsley, Helmsley-Spear, Inc. (the management company of Empire State Building), and the Partners in New York State Supreme Court, alleging that the notice of default is valid and seeking damages and related relief based thereon. The defendants intend to defend against Trump's action and seek its dismissal. Counsel believes that Registrant and Sublessee should prevail in their actions against Trump, and that Trump's action should be dismissed.
On March 24, 1995, the New York State Supreme Court granted Registrant a preliminary injunction against Trump. The injunction prohibits Trump from acting on its notice of default to Registrant, at any time, pending the prosecution of claims by Registrant and Sublessee for a final judgment granting a permanent injunction and other relief against the Trump defendants.
In May 1995, Registrant and Sublessee filed a separate legal action against Trump and various affiliated persons for breach of the master lease and sublease, and disparagement of the property in violation of Registrant's and Sublessee's leasehold rights. This action seeks money damages and related relief.
Item 4. Submission of Matters to a Vote of Participants.
During the fourth quarter of the fiscal year ended December 31, 1995, Registrant did not submit any matter to a vote by the Participants through the solicitation of proxies or otherwise.
PART II
Item 5. Market for Registrant's Common Equity and Related Security Holder Matters.
Registrant is a partnership organized pursuant to a partnership agreement dated as of July 11, 1961.
Registrant has not issued any common stock. The securi- ties registered by it under the Securities Exchange Act of 1934, as amended, consist of participations in the partnership interests of the Partners in Registrant (the "Participations") and are not shares of common stock nor their equivalent. The Participations represent each Participant's fractional share in a Partner's undivided interest in Registrant and are divided approximately equally among the Partners. A full unit of the Participations was offered originally at a purchase price of $10,000; fractional units were also offered at proportionate purchase prices. Regis- trant has not repurchased Participations in the past and is not likely to change that policy in the future.
(a) The Participations neither are traded on an established securities market nor are readily tradable on a secondary market or the substantial equivalent thereof. Based on Registrant's transfer records, Participations are sold by the holders thereof from time to time in privately negotiated transac- tions and, in many instances, Registrant is not aware of the prices at which such transactions occur. During the past year there were 207 transfers. In 39 instances, the indicated purchase price was equal to two times the face amount of the Participation transferred, i.e., $20,000 for a $10,000 participation. In all other cases, no consideration was indicated.
(b) As of December 31, 1995, there were 2,641 holders of Participations of record.
(c) Registrant does not pay dividends. During the year ended December 31, 1995, Registrant made regular monthly distributions of $98.21 for each $10,000 Participation. On February 28, 1995, Registrant made an additional distribution for each $10,000 Participation of $1,036.15. Such distribution represented primarily Overage Rent payable by Sublessee for the prior year. There was no Overage Rent payable for the year ended December 31, 1995. See Item 1 hereof. There are no restrictions on Registrant's present or future ability to make distributions; however, the amount of such distributions, particularly distributions of Overage Rent, depends solely on Sublessee's ability to make payments of Basic Rent and Overage Rent to Registrant. See Item 1 hereof. Registrant expects to make distributions in the future so long as it receives the payments provided for under the Sublease. See Item 7 hereof.
Item 6. EMPIRE STATE BUILDING ASSOCIATES
SELECTED FINANCIAL DATA
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation.
Registrant was organized solely for the purposes of owning the Property described in Item 2

Item 8. Financial Statements and Supplementary Data.
The financial statements, together with the accompanying report by, and the consent to the use thereof by Jacobs Evall & Blumenfeld LLP, immediately following, are being filed in response to this item.
Item 9.

Item 9. Disagreements on Accounting and Financial Disclosure.
Not applicable.
PART III
Item 10.

Item 10. Directors and Executive Officers of Registrant.
Registrant has no directors or officers or any other centralization of management. There is no specific term of office for any Partner. The table below sets forth as to each Partner as of December 31, 1995 the following: name, age, nature of any family relationship with any other Partner, business experience during the past five years and principal occupation and employment during such period, including the name and principal business of any corporation or any organization in which such occupation and employment was carried on and the date such individual became a Partner:
Principal Date Nature of Occupation Individual Family Business and became Name Age Relationship Experience Employment Partner
Donald A. Bettex 64 None Attorney-at-Law Senior Partner 1988 Wien, Malkin & Bettex, Counsellors- at-Law
Peter L. Malkin 62 None Attorney-at-Law Senior Partner 1961 Wien, Malkin & Bettex, Counsellors- at-Law
C. Michael Spero 59 None Attorney-at-Law Senior Partner 1995 Wien, Malkin & Bettex, Counsellors- at-Law
As stated above, the Partners are members of Counsel. See Items 1, 11, 12 and 13 hereof for a description of the services rendered by, and the compensation paid to, Counsel and for a discussion of certain relationships which may pose actual or potential conflicts of interest among Registrant, Sublessee and certain of their respective affiliates.
The names of entities which have a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 or are subject to the requirements of Section 15(d) of that Act, and in which the Partners are either a director, joint venturer or general partner are as follows:
C. Michael Spero is a joint venturer in 250 West 57th St. Associates; and a general partner in Navarre - 500 Building Associates and 60 East 42nd St. Associates.
Peter L. Malkin is a joint venturer in 250 West 57th St. Associates and Navarre-500 Building Associates and a general partner in Garment Capitol Associates, Navarre-500 Building Associates and 60 East 42nd St. Associates.
Donald A. Bettex is a general partner in Garment Capitol Associates and 60 East 42nd St. Associates.
Item 11.

Item 11. Executive Compensation.
As stated in Item 10 hereof, Registrant has no directors or officers or any other centralization of management.
No remuneration was paid during the current fiscal year ended December 31, 1995 by Registrant to any of the Partners as such. Registrant pays Counsel, for supervisory services and dis- bursements, fees of $100,000 per annum plus 6% of all sums distributed to the Participants in excess of 9% per annum on their original cash investment. Pursuant to such arrangements described herein, Registrant incurred fees to Counsel of $159,417 for supervisory services rendered during the fiscal year ended December 31, 1995. The supervisory services include, among other items, the preparation of reports and related documentation required by the Securities and Exchange Commission, the monitoring of all areas of federal and local security law compliance, the preparation of certain financial reports, as well as the supervision of accounting and other documentation related to the administration of Registrant's business. See Item 7 hereof. Out of its fees, Counsel paid all disbursements and costs of regular accounting services. As noted in Items 1 and 10 of this report, the Partners are also members of Counsel.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) Registrant has no voting securities. See Item 5 hereof. At December 31, 1995, no person owned of record or was known by Registrant to own beneficially more than 5% of the outstanding Participations.
(b) At December 31, 1995, the Partners (see Item 10 hereof) beneficially owned, directly or indirectly, the following Participations:
Name & Address Amount of of Beneficial Beneficial Percent Title of Class Owners Ownership of Class
Participations Donald A. Bettex $20,000 .0606% in Partnership 700 Park Avenue Interests New York, NY 10021
C. Michael Spero $35,000 .1061% 1165 Park Avenue New York, NY 10128
Peter L. Malkin $63,750 .1932% 21 Bobolink Lane Greenwich, CT 06830
At such date, certain of the Partners (or their respective spouses) held additional Participations as follows:
Barbara N. Bettex, the wife of Donald A. Bettex, owned of record and beneficially, $12,500 of Participations. Mr. Bettex disclaims any beneficial ownership of such Participations.
Peter L. Malkin owned of record as trustee or co-trustee but not beneficially, $170,000 of Participations. Mr. Malkin disclaims any beneficial ownership of such Participations.
Peter L. Malkin owned of record as co-trustee of two separate trusts a total of $40,000 of Participa- tions. Mr. Malkin has a remainder interest in each of such trusts.
Isabel W. Malkin, the wife of Peter L. Malkin, owned of record and beneficially, $100,000 of Participa- tions. Mr. Malkin disclaims any beneficial ownership of such Participations.
(c) Not applicable.
Item 13.

Item 13. Certain Relationships and Related Transactions.
(a) As stated in Item 1 hereof, Mr. Donald A. Bettex, Mr. Peter L. Malkin and Mr. C. Michael Spero are the three Partners of Registrant and also act as agents for the Participants in their respective partnership interests. Mr. Malkin is also a partner in Sublessee. As a consequence of one of the three Partners being a partner in Sublessee and all three Partners being members of Counsel (which represents Registrant and Sublessee),
certain actual and potential conflicts of interest may arise with respect to the management and administration of the business of Registrant. However, under the respective participating agreements pursuant to which the Partners act as agents for the Participants, certain transactions require the prior consent of a specified number of the Participants in order for the agents to act on their behalf. Such transactions include modifications and extensions of the Sublease, or a sale or other disposition of the Property or substantially all of Registrant's other assets.
Reference is made to Items 1 and 2 hereof for a description of the terms of the Sublease between Registrant and Sublessee. The respective interests of the Partners in Registrant and in the Sublease arise solely from ownership of their respec- tive participations in Registrant and, in the case of Mr. Malkin, his ownership of a partnership interest in Sublessee. The Partners receive no extra or special benefit not shared on a pro rata basis with all other security holders of Registrant or partners in Sublessee. However, each of the Partners, by reason of his respective interest in Counsel, is entitled to receive his pro rata share of any legal fees or other remuneration paid to Counsel for professional services rendered to Registrant and Sublessee.
Reference is also made to Items 1 and 10 hereof for a description of the relationship between Registrant and Counsel, of which the Partners are among its members. The interest of each Partner in any remuneration paid or given by Registrant to Counsel arise solely from the ownership of such Partner's interest in Counsel. See Item 11 hereof for a description of the remuneration arrangements between Registrant and Counsel.
(b) Reference is made to Paragraph (a) above.
(c) Not applicable.
(d) Not applicable.
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a)(1) Financial Statements:
Consent of Jacobs Evall & Blumenfeld LLP, Certified Public Accountants, dated March 18, 1996.
Accountant's Report of Jacobs Evall & Blumenfeld LLP, Certified Public Accountants, dated February 27, 1996.
Balance Sheets at December 31, 1995 and at December 31, 1994 (Exhibit A).
Statements of Income for the fiscal years ended December 31, 1995, 1994 and 1993 (Exhibit B).
Statement of Partners' Capital for the fiscal year ended December 31, 1995 (Exhibit C-1).
Statement of Partners' Capital for the fiscal year ended December 31, 1994 (Exhibit C-2).
Statement of Partners' Capital for the fiscal year ended December 31, 1993 (Exhibit C-3).
Statements of Cash Flows for the fiscal years ended December 31, 1995, 1994 and 1993 (Exhibit D).
Notes to Financial Statements for the fiscal years ended December 31, 1995, 1994 and 1993.
(2) Financial Statement Schedules:
List of Omitted Schedules.
Real Estate and Accumulated Depreciation - December 31, 1995 (Schedule III).
(3) Exhibits: See Exhibit Index.
(b) No Form 8-K was filed by Registrant for the final quarter of 1995.
[LETTERHEAD OF JACOBS EVALL & BLUMENFELD LLP CERTIFIED PUBLIC ACCOUNTANTS]
March 18, 1996
Empire State Building Associates New York, N. Y.
We consent to the use of our independent accountants' report dated February 27, 1996 covering our audits of the accompanying financial statements of Empire State Building Associates in connection with and as part of your December 31, 1995 annual report (Form 10-K) to the Securities and Exchange Commission.
Jacobs Evall & Blumenfeld LLP
Certified Public Accountants
INDEPENDENT ACCOUNTANTS' REPORT
To the participants in Empire State Building Associates (a Partnership) New York, N. Y.
We have audited the accompanying balance sheets of Empire State Building Associates ("Associates") as of December 31, 1995 and 1994, and the related statements of income, partners' capital and cash flows for each of the three years in the period ended December 31, 1995, and the supporting financial statement schedule as contained in Item 14(a)(2) of this Form 10-K. These financial statements and schedule are the responsibility of Associates' management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Empire State Building Associates as of December 31, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles, and the related financial statement schedule, when considered in relation to the basic financial statements, presents fairly, in all material respects, the information set forth therein.
As discussed in Note 9 to the financial statements, Associates has been included as a defendant in actions with other related parties, including the Agents for Associates and Empire State Building Company, the sublessee.
Jacobs Evall & Blumenfeld LLP
Certified Public Accountants New York, N. Y. February 27, 1996
EXHIBIT A
EMPIRE STATE BUILDING ASSOCIATES
BALANCE SHEETS
A S S E T S
See accompanying notes to financial statements.
EXHIBIT B
EMPIRE STATE BUILDING ASSOCIATES
STATEMENTS OF INCOME
See accompanying notes to financial statements.
EXHIBIT C-1
EMPIRE STATE BUILDING ASSOCIATES
STATEMENT OF PARTNERS' CAPITAL YEAR ENDED DECEMBER 31, 1995
See accompanying notes to financial statements.
EXHIBIT C-2
EMPIRE STATE BUILDING ASSOCIATES
STATEMENT OF PARTNERS' CAPITAL YEAR ENDED DECEMBER 31, 1994
See accompanying notes to financial statements.
EXHIBIT C-3 EMPIRE STATE BUILDING ASSOCIATES
STATEMENT OF PARTNERS' CAPITAL YEAR ENDED DECEMBER 31, 1993
See accompanying notes to financial statements.
EXHIBIT D
EMPIRE STATE BUILDING ASSOCIATES
STATEMENTS OF CASH FLOWS
See accompanying notes to financial statements.
EMPIRE STATE BUILDING ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
1. Business Activity
Empire State Building Associates ("Associates") is a general partnership which holds the tenant's position in the master leasehold of the Empire State Building, located at 350 Fifth Avenue, New York City. Associates subleases the property to Empire State Building Company ("Company").
2. Summary of Significant Accounting Policies
a. Cash and Cash Equivalents:
Cash and cash equivalents include investments in money market funds and all highly liquid debt instruments purchased with a maturity of three months or less.
b. Real Estate and Amortization of Leasehold:
Real estate, consisting of a leasehold, is stated at cost. In 1988, Associates determined that it would exercise its first renewal option under the lease, and did so in January 1989. Amortization of the leasehold is being computed by the straight-line method over the estimated useful life of 25 years, from January 1, 1988 to January 5, 2013 (see Note 4).
c. Use of Estimates:
In preparing financial statements in conformity with generally accepted accounting principles, management often makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
3. Related Party Transactions - Rent Income
Rent income for the years ended December 31, 1995, 1994 and 1993, totalling $6,018,750, $9,616,637 and $13,731,568, respectively, consists of the minimum annual rent plus overage rent under an operating sublease dated December 27, 1961, as modified February 15, 1965, with Company (the "sublessee"), as follows:
Year ended December 31,
1995 1994 1993
Minimum net basic rent...... $6,018,750 $6,018,750 $ 6,018,750 Overage rent earned......... - 3,597,887 7,712,818
$6,018,750 $9,616,637 $13,731,568
EMPIRE STATE BUILDING ASSOCIATES
NOTES TO FINANCIAL STATEMENTS (Continued)
3. Related Party Transactions - Rent Income (continued)
The sublease provides for the same initial term and renewal options as the leasehold (see Note 4), less one day. The initial term of the sublease expired on January 4, 1992 and the annual minimum net basic rent during such term was $6,780,560. In January 1989, the sublessee exercised its option to renew the sublease for the first renewal period from January 4, 1992 to January 4, 2013. The annual minimum net basic rent during the first renewal term was reduced to $6,018,750, and is to be further reduced to $5,895,625 during each of the remaining three renewal terms.
Overage rent earned is equal to fifty percent of the sublessee's annual net income (as defined in the sublease) in excess of $1,000,000.
A partner in Associates is also a partner in the sublessee.
4. Leasehold Rent
Leasehold rent represents the net basic rent of $3,470,560 per annum under an operating lease dated December 27, 1961, as modified February 15, 1965, with The Prudential Insurance Company of America ("Prudential"), over the initial term of the lease, 30 years and 9 days, from December 27, 1961 to January 5, 1992.
In January 1989, Associates exercised its option to renew the lease for the first renewal period from January 5, 1992 to January 5, 2013. The lease contains options for Associates to renew the leasehold for an additional 3 successive periods of 21 years each. The basic rent was reduced to $1,970,000 per annum during the first renewal term, and is to be further reduced to $1,723,750 per annum during each of the remaining three renewal terms.
On November 27, 1991, Prudential sold the property to E.G. Holding Co., Inc. which, through merger and conveyance, reportedly transferred its interest as lessor to Trump Empire State Partners ("Trump") (see Note 9). Associates' rights under the master leasehold remain unchanged.
5. Related Party Transactions - Supervisory Services
Supervisory services (including disbursements and cost of regular accounting services) during the years ended December 31, 1995, 1994 and 1993, totalling $159,417, $377,670 and $625,826, respectively, represent fees paid to the firm of Wien, Malkin & Bettex. Some partners in that firm are also partners in Associates.
Fees for supervisory services are paid pursuant to an agreement, which amount is based on a rate of return of investment achieved by the participants in Associates each year.
EMPIRE STATE BUILDING ASSOCIATES
NOTES TO FINANCIAL STATEMENTS (Continued)
6. Number of Participants
There were approximately 2,620 participants in the participating groups at December 31, 1995, 1994 and 1993.
7. Determination of Distributions to Participants
Distributions to participants in 1995, 1994 and 1993 of $7,308,634, $11,196,399 and $16,223,486, respectively, represented the following:
EMPIRE STATE BUILDING ASSOCIATES
NOTES TO FINANCIAL STATEMENTS (Continued)
8. Distributions and Amount of Income per $10,000 Participation Unit
Distributions per $10,000 participation unit during the years 1995, 1994 and 1993 based on 3,300 participation units outstanding during each year, consisted of the following:
Year ended December 31,
1995 1994 1993
Income........................ $1,126 $2,152 $3,330
Return of capital............. 1,089 1,241 1,586
TOTAL DISTRIBUTIONS......... $2,215 $3,393 $4,916
Net income is computed without regard to income tax expense since Associates does not itself pay a tax on its income; instead, any such taxes are paid by the participants in their individual capacities.
9. Litigation
a. On October 21, 1991, the holder of a $20,000 original participation in Associates brought suit in New York Supreme Court, New York County against the Agents for Associates (Peter L. Malkin, Donald A. Bettex and Alvin Silverman); Company; Harry B. Helmsley ("Helmsley"), a partner in Company; and Wien, Malkin & Bettex, counsel to Associates. Associates is a nominal defendant. The suit claims that the defendants have engaged in breaches of fiduciary duty and acts of self-dealing in relation to the Agents' solicitation of consents and authorizations of the participants in Associates in September 1991 and in relation to other unrelated acts of the Agents and the sublessee. The suit is styled as a class action, but the Court has ruled that class certification shall not be granted. The suit seeks relief including an injunction and an accounting. On January 10, 1992, all defendants answered the complaint and denied all material allegations of liability and damage. The complaint does not seek any relief against Associates, and accordingly, Associates' counsel is of the opinion that no loss or other unfavorable outcome of the action against Associates is anticipated. The action has been dismissed against Company and Helmsley.
b. In December 1994, Associates received a notice of default from Trump. The Trump default notice to Associates claims that Associates is in violation of its master lease because of extensive work which the sublessee, Company, has undertaken as part of an improvement program that commenced before Trump reportedly acquired its interest in the property in 1994. Trump's notice also complains that the building is in need of repairs.
EMPIRE STATE BUILDING ASSOCIATES
NOTES TO FINANCIAL STATEMENTS (Continued)
9. Litigation (continued)
On February 14, 1995, Associates and Company filed an action in New York State Supreme Court against Trump for a declaratory judgment that none of the matters set forth in the notice of default constitutes a violation of the master lease or sublease, and that the notice of default is entirely without merit. Associates' and Company's suit also seeks an injunction to prevent Trump from implementing the notice of default.
On February 15, 1995, Trump filed an action against Associates, Company, Wien, Malkin & Bettex, Helmsley, Helmsley-Spear, Inc. (the management company of the Empire State Building), and the Agents for Associates in New York State Supreme Court, alleging that the notice of default is valid and seeking damages and related relief based thereon. The defendants intend to defend against Trump's action and seek its dismissal. Counsel believes that Associates and Company should prevail in their actions against Trump, and that Trump's action should be dismissed.
On March 24, 1995, the New York State Supreme Court granted Associates a preliminary injunction against Trump. The injunction prohibits Trump from acting on its notice of default to Associates, at any time, pending the prosecution of claims by Associates and Company for a final judgement granting a permanent injunction and other relief against the Trump defendants.
In May, 1995, Associates and Company filed a separate legal action against Trump and various affiliated persons for breach of the master lease and sublease, and disparagement of the property in violation of Associates' and Company's leasehold rights. This action seeks money damages and related relief.
10. Contingent Liability of Sublessee
The State of New York has asserted a utility tax deficiency of $1,528,816, plus accrued interest, against the sublessee through December 31, 1992 in connection with electricity, water and steam charges to tenants. The Supreme Court, New York County granted summary judgement in favor of the State, which ruling was affirmed by the Appellate Division, First Department, holding that the State utility tax applies to such rent inclusion charges. The sublessee is seeking permission to appeal the Appellate Division decision before the Court of Appeals and the final outcome of the appeal cannot presently be determined. The City of New York has also asserted a utility tax deficiency of $277,125, plus accrued interest, against the sublessee through December 31, 1994 in connection with electricity, water and steam charges to tenants. An appeal before the New York City taxing authority is pending and the final outcome of the appeal cannot presently be determined. EMPIRE STATE BUILDING ASSOCIATES
NOTES TO FINANCIAL STATEMENTS (Continued)
10. Contingent Liability of Sublessee (continued)
If it is finally determined that the State's and City's positions are correct, the sublessee would also be liable for additional utility taxes for quarterly periods ending after December 31, 1992 for New York State utility tax and for periods after December 31, 1994 for New York City utility tax. Any amounts for which the sublessee might be ultimately liable would reduce the sublessee's net income in the year it becomes determinable, and may therefore impact additional rent payable to Associates.
11. Concentration of Credit Risk
Associates maintains cash balances in a bank, money market fund (Fidelity U.S. Treasury Income Portfolio), and a distribution account held by Wien, Malkin & Bettex. The bank balance is insured by the Federal Deposit Insurance Corporation up to $100,000, and at December 31, 1995 was completely insured. The cash in the money market fund and the distribution account held by Wien, Malkin & Bettex is not insured. The funds held in the distribution account were paid to the participants on January 1, 1996.
EMPIRE STATE BUILDING ASSOCIATES
OMITTED SCHEDULES
The following schedules have been omitted as not applicable in the present instance:
SCHEDULE I - Condensed financial information of registrant.
SCHEDULE II - Valuation and qualifying accounts.
SCHEDULE IV - Mortgage loans on real estate.
SCHEDULE III EMPIRE STATE BUILDING ASSOCIATES
Real Estate and Accumulated Depreciation December 31, 1995
(a) There have been no changes in the carrying values of real estate for the years ended December 31, 1995, December 31, 1994 and December 31, 1993. The costs for federal income tax purposes are the same as for financial statement purposes.
(b) Accumulated amortization Balance at January 1, 1993 $34,830,613 Amortization: F/Y/E 12/31/93 $208,469 12/31/94 208,469 12/31/95 208,469 625,407
Balance at December 31, 1995 $35,456,020
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
The individual signing this report on behalf of Registrant is Attorney-in-Fact for Registrant and each of the Partners in Registrant, pursuant to a Power of Attorney, dated March 29, 1996 (the "Power").
EMPIRE STATE BUILDING REGISTRANT (Registrant)
By /s/Stanley Katzman Stanley Katzman, Attorney-in-Fact*
Date: March 29, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person as Attorney-in-Fact for each of the Partners in Registrant, pursuant to the Power, on behalf of Registrant and as a Partner in Registrant on the date indicated.
By /s/Stanley Katzman Stanley Katzman, Attorney-in-Fact*
Date: March 29, 1996
______________________ * Mr. Katzman supervises accounting functions for Registrant.
EXHIBIT INDEX
Number Document Page*
3(a) Registrant's Partnership Agreement dated July 11, 1961, filed as Exhibit No. 1 to Registrant's Registration Statement on Form S-1 as amended (the "Registration Statement") by letter dated August 8, 1962 and assigned File No. 2-18741, is incorporated by reference as an exhibit hereto.
3(b) Amended Business Certificate of Registrant filed with the Clerk of New York County on October 25, 1995 reflecting a change in the Partners of Registrant.
4 Registrant's form of Participating Agreement, filed as Exhibit No. 6 to the Registration Statement by letter dated August 8, 1962 and assigned File No. 2-18741, is incorporated by reference as an exhibit hereto.
10(a) Mortgage dated December 21, 1951 from Imperium Corporation to Prudential Insurance Company of America ("Prudential"), filed by letter dated March 31, 1981 (Commission File No. 0-827) as Exhibit 10(a) to Registrant's Form 10-K for the fiscal year ended December 31, 1980, is incorporated by reference as an exhibit hereto.
10(b) Modification of Indenture of Lease dated December 27, 1961 between Prudential and Registrant filed by letter dated March 31, 1981 (Commission File No. 0-827) as Exhibit 10(b) to Registrant's Form 10-K for the fiscal year ended December 31, 1980, is incorporated by reference as an exhibit hereto.
______________________ * Page references are based on sequential numbering system.
10(c) Sublease dated December 27, 1961 between Registrant and Sublessee, filed by letter dated March 31, 1981 (Commission File No. 0-827) as Exhibit 10(d) to Registrant's Form 10-K for the fiscal year ended December 31, 1980, is incorporated by reference as an exhibit hereto.
10(e) Modification and Extension Agreement, dated October 26, 1964 between The Bowery Savings Bank and Celeritas Realty Corp., filed by letter dated March 31, 1981 (Commission File No. 0-827) as Exhibit 10(e) to Registrant's Form 10-K for the fiscal year ended December 31, 1980, is incorporated by reference as an exhibit hereto.
13 Letter to Participants, dated March 6, 1996 with financial reports for the fiscal year ended December 31, 1995. The foregoing material shall not be deemed to be "filed" with the Commission or otherwise subject to the liabilities of Section 18 of the Securities Exchange Act of 1934.
24 Power of Attorney dated March 29, 1996, between Peter L. Malkin, C. Michael Spero and Donald A. Bettex, the partners of Registrant and Richard A. Shapiro and Stanley Katzman.
27 Financial Data Schedule of Registrant for the fiscal year ended December 31, 1995
Exhibit 3(b)
AMENDED BUSINESS CERTIFICATE
The undersigned hereby certify that a certificate of business under the assumed name
EMPIRE STATE BUILDING ASSOCIATES
for the conduct of business at 60 East 42nd Street, New York, New York, was filed in the office of the County Clerk New York County, State of New York, on the 23rd day of August, 1961, under index number 6543/61; that the last amended certificate was filed on the 17th day of January 1989, in the office of said County Clerk under index number 6543/61.
It is hereby further certified that this amended certificate is made for the purposes of more accurately setting forth the facts recited in the original certificate or the last amended certificate and to set forth the following changes in such facts.
ALVIN SILVERMAN, residing at 110 Redwood Drive, Roslyn, New York 11576, has been succeeded as a partner by C. MICHAEL SPERO, residing at 1165 Park Avenue, New York, New York 10128.
The members of EMPIRE STATE BUILDING ASSOCIATES now consist of: Donald A. Bettex, Peter L. Malkin and C. Michael Spero.
IN WITNESS WHEREOF, the undersigned have as of the 2nd day of July, 1995 made and signed this certificate.
/s/ Alvin Silverman /s/ Donald A. Bettex ALVIN SILVERMAN DONALD A. BETTEX
/s/ C. Michael Spero C. MICHAEL SPERO
State of New York, County of New York ss.:
On this 2nd day of July, 1995, before me personally appeared ALVIN SILVERMAN, C. MICHAEL SPERO and DONALD A. BETTEX, to me known and known to me to be the individuals described in and who executed the foregoing certificate, and they thereupon duly acknowledged to me that they executed the same.
/s/ Estelle Beeber Notary Public State of New York No. 5241708 Qualified in New York County Commission Expires 9/30/96
STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK )
On the __ day of March, 1996 before me personally came
PETER L. MALKIN, DONALD A BETTEX and C. MICHAEL SPERO, to me known
to be the individuals described in and who executed the foregoing
instrument, and acknowledged that they executed the same.
/s/___________________________ NOTARY PUBLIC