10-K 1 p-ip410k2001.txt ANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________. Commission File Number 0-18147 DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P. ---------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-3378315 ----------------------- --------------------------------- (State of organization) (IRS Employer Identification No.) 1221 Avenue of the Americas New York, NY 10020 ---------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (800) 829-8585 -------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered ------------------- ----------------------------------------- None None Securities registered pursuant to Section 12(g) of the Act: Units of Limited Partnership Interest ------------------------------------- (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] State the aggregate market value of the voting stock held by nonaffiliates of the registrant. Not Applicable DOCUMENTS INCORPORATED BY REFERENCE None PART I. ITEM 1. BUSINESS ------ -------- The Registrant, Dean Witter Realty Income Partnership IV, L.P. (the "Partnership"), is a limited partnership formed in October 1986 under the Uniform Limited Partnership Act of the State of Delaware for the purpose of investing in income-producing office properties. The Managing General Partner of the Partnership is Dean Witter Realty Fourth Income Properties Inc. (the "Managing General Partner"), a Delaware corporation which is wholly owned by Dean Witter Realty Inc. ("Realty"). The Associate General Partner is Dean Witter Realty Income Associates IV, L.P. (the "Associate General Partner"), a Delaware limited partnership, the general partner of which is the Managing General Partner. The Managing General Partner manages and controls all aspects of the business of the Partnership. The terms of transactions between the Partnership and its affiliates are set forth below in Note 6 to the financial statements in Item 8 and in Item 13. The Partnership issued 304,437 units of limited partnership interest (the "Units") for $152,218,500. The offering has been terminated and no additional Units will be sold. The proceeds from the offering were used to make equity investments in four office properties, all of which were acquired without mortgage debt. As of May 23, 2000, the Partnership had sold all of its property investments. The Partnership Agreement provides that the Partnership shall dissolve upon the sale of the Partnership's last property investment, and that dissolution shall be effective on the day on which the event arises giving rise to the dissolution. Accordingly, the Partnership dissolved pursuant to the terms of its Partnership Agreement, effective May 23, 2000, the date on which Taxter Corporate Park, the last property investment, was sold. The Partnership owned its 40.6% interest in the Taxter property through a joint venture, and the Partnership cannot wind up its affairs and distribute the balance of the Partnership's cash reserves until the joint venture terminates its operations (see Note 4 to the financial statements in Item 8). The Managing General Partner plans to terminate the Partnership as soon as possible. The Partnership considers its business to include one industry segment, investment in real property. Financial information regarding the Partnership is in the Partnership's financial statements in Item 8 below. The Partnership has no employees. All of the Partnership's business is conducted in the United States. ITEM 2. PROPERTIES ------ ---------- The Partnership's principal offices are located at 1221 Avenue of the Americas, New York, New York, 10020. The Partnership has no other offices. As of December 31, 2001, the Partnership did not own any property investments. In May 2000, the partnership ("TPA") which owned Taxter Corporate Park sold the property, which is located in Westchester, New York. The investment in TPA was the Partnership's last property investment. The Partnership owned a 40.6% general partnership interest in TPA. The remaining general partnership interests in TPA were owned by Dean Witter Realty Income Partnership III, L.P. (44.6%) and Dean Witter Realty Income Partnership II, L.P. (14.8%), both of which are affiliated public partnerships. Further information relating to the Partnership's properties is included below in footnote 4 to the financial statements in Item 8. ITEM 3. LEGAL PROCEEDINGS ------ ----------------- None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ------ --------------------------------------------------- No matter was submitted during the fourth quarter of the year to a vote of Unit holders. PART II. ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER ------ MATTERS ----------------------------------------------------------------- An established public trading market for the Units does not exist, and it is not anticipated that such a market will develop in the future. Accordingly, information as to the market value of a Unit at any given date is not available. However, the Partnership does allow its limited partners (the "Limited Partners") to transfer their Units if a suitable buyer can be located. As of March 4, 2002, there were 15,828 holders of limited partnership interests. The Partnership does not pay dividends. It does, however, make distributions of cash to its partners. Pursuant to the Partnership Agreement, distributable cash, as defined, is paid 90% to the Limited Partners and 10% to the general partners (the "General Partners"). Sale proceeds will be distributed, to the extent available, first, to each Limited Partner, until there has been a return of the Limited Partner's capital contribution plus cumulative distributions of distributable cash and sale proceeds in an amount sufficient to provide a 9% cumulative annual return on the Limited Partner's adjusted capital contribution. Thereafter, any remaining sale proceeds will be distributed 85% to the Limited Partners and 15% to the General Partners after the Managing General Partner receives a brokerage fee, if earned, of up to 3% of the selling price of any equity investment. Neither of the General Partners have received or will receive a share of sale proceeds distributions or brokerage fees from the Partnership. The Partnership plans to make a final distribution of its remaining cash reserves when the Managing General Partner terminates the Partnership. During the year ended December 31, 2001, the Partnership distributed, 100% to Limited Partners, approximately $913,000 ($3.00 per Unit). This distribution consisted of approximately $405,000 ($1.33 per Unit) of the remaining undistributed proceeds from the 2000 sale of the Taxter property and $508,000 ($1.67 per Unit) of Partnership cash reserves. Total distributions were $969,679 with $913,311 distributed to the Limited Partners and $56,368 payable to the General Partners. During the year ended December 31, 2000, the Partnership paid cash distributions aggregating $47.00 per Unit (including (a) approximately $43.16 per Unit from a portion of the Partnership's share of the net proceeds from the sale of the Taxter Corporate Park property, (b) $0.31 per Unit from the remaining undistributed proceeds from the sale of the Chesterbrook property and (c) $3.53 per Unit from Partnership cash reserves. Total distributions were $14,427,786 with $14,308,539 distributed to Limited Partners and $119,247 payable to the General Partners. The General Partners deferred receipt of their share of the cash reserve distributions in 2001 and 2000 to ensure that the Partnership would have cash to cover all liabilities that may arise while the Partnership winds up its affairs. Taxable income generally will be allocated in the same proportions as distributions of distributable cash or sale proceeds (except that the General Partners must be allocated at least 1% of taxable income from the sale). In the event there is no distributable cash or sale proceeds, taxable income will be allocated 90% to the Limited Partners and 10% to the General Partners. Any tax loss will be allocated 90% to the Limited Partners and 10% to the General Partners. ITEM 6. SELECTED FINANCIAL DATA ------ ----------------------- The following sets forth a summary of selected financial data for the Partnership:

For the years ended December 31, ~~--------------------------------~~2001 2000[(1]) 1999[(2]) 1998[(3]) 1997[(4]) ~~1996[5]~~ ---------------------------------------------------------------------------------------------------------------------------- Total revenues $ 22,792 $ 5,530,870 $ 549,437 $ 26,768,386 $ 8,574,341 ~~$15,185,608~~ Net (loss) income $ (53,337) $ 5,407,485 $ 362,727 $ 26,464,164 $ 4,674,724 ~~$7,977,890~~ Net (loss) income per Unit of ~~Limited~~limited partner- ship interest $ (0.16) $ 17.64 $ 1.10 $ 86.36 $ 14.30 ~~$24.32~~ Cash distributions paid per Unit of limited partnership interest~~[6]~~ (5),~~[7]~~ (6) $ 3.00 $ 47.00 -- $ 175.34 $ 181.52 ~~$23.75~~ Total assets of December 31 $ 507,641 $ 1,555,667 $10,432,514 $10,104,468 $37,482,536 ~~$115,446,796~~ ------------------ 1. Revenues and net income include the Partnership's share ($5.0 million) of the gain on the sale of the Taxter Corporate Park property. 2. Revenues and net income include the Partnership's share ($81,152) of the additional gain on the 1998 sale of the Chesterbrook property. 3. Revenues and net income include the Partnership's share ($24.7 million) of the gain on the sale of the Chesterbrook property. 4. Revenues include the $4.2 million gain on the sale of the Pasadena Financial Center property; net income includes the Partnership's share ($2.3 million) of such gain. 5. Distributions paid to Limited Partners include returns of capital per Unit of limited partnership interest of $3.00, $28.26, $96.15 and $181.52 for the years ended December 31, 2001, 2000, 1998, and 1997, respectively, calculated as the excess of cash distributed per unit over accumulated earnings per Unit not previously distributed. 6. Includes distributions of proceeds from sales of real estate as follows: 2001-$1.33, 2000-$43.47, 1998-$168.94 and 1997-$156.42. The above financial data should be read in conjunction with the financial statements in Item 8.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ------ -------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS ----------------------------------- Liquidity and Capital Resources ------------------------------- As a result of the September 11, 2001 destruction of the World Trade Center, the Partnership changed the location of its principal offices to 1221 Avenue of the Americas, New York, NY, 10020. The 2 World Trade Center address was the location of management and administration of the Partnership; the Partnership did not hold any of its assets at this location. The Managing General Partner does not expect that the tragedy will adversely affect the operations of the Partnership. The Partnership raised $152,218,500 in a public offering of 304,437 units which was terminated in 1988. The Partnership has no plans to raise additional capital. The Partnership made investments in partnerships which owned four office properties. No additional investments are planned. As discussed in Note 4 to the financial statements in Item 8, the joint venture ("TPA") which owned the Taxter office property sold the property on May 23, 2000. The Partnership's interest in TPA was the Partnership's only remaining property interest. The Partnership dissolved pursuant to the terms of its Partnership Agreement, effective May 23, 2000, the date on which the Taxter property was sold. The Partnership owned its 40.6% interest in the Taxter property through a joint venture, and the Partnership will not be able to wind up its affairs and distribute the balance of the Partnership's cash reserves until the joint venture terminates its operations. The Partnership plans to wind up its affairs, distribute its remaining cash reserves and terminate its existence by filing a certificate of cancellation in the office of the Delaware Secretary of State as soon as possible. As discussed in Note 5 to the financial statements, the Partnership paid, to Limited Partners only, a distribution of $3.00 per Unit during the year ended December 31, 2001. The Partnership believes that its cash reserves are adequate for its needs until it is terminated. Except as described above and in the financial statements, the Managing General Partner is not aware of any trends or events, commitments or uncertainties that may impact liquidity in a material way. Operations ---------- Fluctuations in the Partnership's operating results for the year ended December 31, 2001 compared to 2000 and 2000 compared to 1999 are primarily attributable to the following: The Partnership's equity in earnings of joint ventures was higher in 2000 than in 2001 and 1999 due to the Partnership's share ($5.0 million) of the gain on the May 2000 sale of the Taxter Corporate Park property. The Partnership's equity in earnings also included normal operating income from the Taxter joint venture of $285,000 and $323,000 in 2000 and 1999, respectively. The absence of equity in earnings of joint ventures in 2001 was also due to the loss of operating income from TPA after the sale of the Taxter property. The 2000 earnings included the Partnership's share of Taxter's operating income through the date of the sale of the property. The amount recognized by the Partnership in 1999 was reduced by its share ($229,000) of a bad debt expense recorded by the Taxter joint venture. Interest and other income was also higher in 2000 than in 2001 and 1999 because the Partnership earned interest on the proceeds from the sale of the Taxter property in 2000 until such proceeds were distributed to Limited Partners. Also, interest and other income decreased in 2001 due to a decrease in interest rates and a decline in average cash held by the Partnership (in February 2001, the Partnership distributed over $900,000 of its cash on hand to the Limited Partners). General and administrative expenses decreased in 2001 compared to 2000 and 2000 compared to 1999 primarily due to the decreased level of Partnership activities resulting from the sales of properties. There were no other individually significant factors which caused changes in revenues and expenses. Inflation --------- Inflation has not had a significant effect on the operations of the Partnership or its properties. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. ------- -------------------------------------------- DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P. INDEX (a) Financial Statements Independent Auditors' Report Balance Sheets at December 31, 2001 and 2000 Statements of Operations for the years ended December 31, 2001, 2000 and 1999 Statements of Partners' Capital for the years ended December 31, 2001, 2000 and 1999 Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999 Notes to Financial Statements All schedules have been omitted because either the required information is not applicable or the information is shown in the financial statements or notes thereto. Independent Auditors' Report To The Partners of Dean Witter Realty Income Partnership IV, L.P.: We have audited the accompanying balance sheets of Dean Witter Realty Income Partnership IV, L.P. (the "Partnership") as of December 31, 2001 and 2000, and the related statements of operations, partners' capital, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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, such financial statements present fairly, in all material respects, the financial position of Dean Witter Realty Income Partnership IV, L.P. as of December 31, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1 to the financial statements, during the year ended December 31, 2000, the Partnership sold its last property investment, which effectuated the dissolution of the Partnership. The Partnership is in the process of winding up its affairs, and it plans to terminate. /s/Deloitte & Touche LLP DELOITTE & TOUCHE LLP New York, New York March 19, 2002 DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P. BALANCE SHEETS December 31, 2001 and 2000

2001 2000 ~~1999 1998~~ --------------------------------------------------------------------------------------~~-----------------------------~~ ~~Revenues:~~ASSETS ~~Equity~~Cash inand ~~earnings~~cash ofequivalents ~~joint ventures~~ $~~5,327,687~~ ~~$470~~486,~~468~~279 $26 1,~~491~~542,~~104~~591 ~~Interest~~Investment ~~and~~in ~~other~~joint ~~203~~venture 11,~~183~~404 7811,~~969~~404 ~~277~~Other assets 9,~~282~~958 1,672 --------------------------------------------------------------------------------------~~-----------------------------~~ 5$ 507,~~530~~641 $ 1,~~870~~555,667 ~~549~~====================================================================================== LIABILITIES AND PARTNERS' CAPITAL Accounts payable and accrued liabilities $ 52,~~437~~025 26$ 133,~~768~~403 Distributions payable to General Partners 175,~~386~~615 119,247 -------------------------------------------------------------------------------------- 227,640 252,650 ----------------------------- ~~Expenses: General and administrative 123,385 186,710 304,222~~ --------------------------------------------------------- Partners' capital (deficiency): General Partners (5,576,795) (5,515,093) Limited Partners ($500 per Unit, 304,437 Units issued) 5,856,796 6,818,110 ---------------------------------------------------------- Net income $5,407,485 $362,727 $26,464,164 =================================================================================================================== Net income allocated to: Limited Partners $5,370,964 $334,569 $26,291,055 General Partners 36,521 28,158 173,109 ---------------------------- 280,001 1,303,017 --------------------------------------------------------------------------------------- $~~5,407,485~~ ~~$362~~507,~~727~~641 $26 1,~~464~~555,~~164~~667 =================================================================================================================== Net income per Unit of limited partnership interest $17.64 $1.10 $86.36 ===================================================================================================================

See accompanying notes to financial statements. DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P. STATEMENTS OF OPERATIONS Years ended December 31, 2001, 2000 and 1999

2001 2000 1999 ~~1998~~ ---------------------------------------------------------------------------------~~---------------------------------------------~~ ~~Cash flows from operating activities~~Revenues: ~~Net income $ 5,407,485 $ 362,727 $ 26,464,164 Adjustments to reconcile net income to net cash provided by (used in) operating activities:~~ Equity in earnings of joint ventures ($ -- $ 5,327,687) ($ 470,468) ~~(26,491,104)~~Interest ~~Decrease~~and ~~(increase) in~~ other ~~assets 93~~22,~~222~~792 ~~(74~~203,~~168)~~183 ~~143~~78,~~512~~969 ~~Increase (decrease) in accounts payable and accrued liabilities 24,207 (34,681) (245,750)~~ ---------------------------------------------------------------------------------~~---------------------------------------------~~ ~~Net cash provided by (used in) operating activities 197~~22,~~227~~792 ~~(216~~5,~~590)~~530,870 ~~(129~~549,~~178)~~437 ---------------------------------------------------------------------------------~~---------------------------------------------~~ ~~Cash flows from investing activities~~Expenses: ~~Distributions~~General ~~from~~and ~~joint~~administrative ~~ventures 13~~76,~~936,671~~129 1123,~~036,915~~385 53186,~~961,857~~710 ~~Investments in joint ventures (508,399) (126,341) (572,982)~~ ---------------------------------------------------------------------------------~~---------------------------------------------~~ Net ~~cash~~(loss) ~~provided~~income by$ ~~investing~~(53,337) ~~activities~~$ 135,~~428~~407,~~272~~485 ~~910,574~~$ 53362,~~388,875~~727 ~~------------------------------------------------------------------------------------------------------------------------------~~================================================================================= ~~Cash~~Net ~~flows from financing activities: Cash distributions~~ (~~14,427,786~~loss) -income ~~(53,596,472)~~allocated ~~Increase in distribution payable~~ to: ~~General~~Limited Partners ~~119,247~~$ ~~- - ------------------------------------------------------------------------------------------------------------------------------ Net cash used in financing activities~~ (1448,~~308,539~~003) -$ ~~(53~~5,~~596~~370,~~472)~~964 ~~------------------------------------------------------------------------------------------------------------------------------~~$ ~~(Decrease)~~334,569 ~~increase~~General inPartners ~~cash and cash equivalents~~ (~~683~~5,~~040~~334) ~~693~~36,~~984~~521 ~~(336~~28,~~775)~~158 ~~Cash and cash equivalents at beginning of year 2,225,631 1,531,647 1,868,422~~ ---------------------------------------------------------------------------------~~---------------------------------------------~~ ~~Cash and cash equivalents at end of year~~ $ 1(53,~~542,591~~337) $ 25,~~225~~407,~~631~~485 $ 1362,~~531,647~~727 ================================================================================= Net (loss) income per Unit of limited partnership interest $ (0.16) $ 17.64 $ 1.10 ============================================= ~~See accompanying notes to financial statements.~~====================================

See accompanying notes to financial statements. DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P. STATEMENTS OF PARTNERS' CAPITAL Years ended December 31, 2001, 2000 and 1999

~~2000~~Limited ~~1999~~General ~~1998~~Partners Partners Total --------------------------------------------------------------------------------- Partners' capital (deficiency) at January 1, 1999 $ 15,421,116 $ (5,460,525) $ 9,960,591 Net income 334,569 28,158 362,727 -------------------------------------------------------------------------------- ~~Investments~~Partners' atcapital ~~beginning~~(deficiency) ofat ~~year~~December $31, 81999 15,~~111~~755,~~989~~685 $8(5,~~552~~432,~~095~~367) ~~$35~~10,~~449~~323,~~866~~318 ~~Equity~~Net inincome ~~earnings~~ 5,~~327~~370,~~687~~964 ~~470~~36,~~468~~521 265,~~491~~407,~~104~~485 Distributions (1314,~~936~~308,~~671~~539) (1119,~~036,915~~247) (5314,~~961~~427,~~857~~786) ~~Contributions 508,399 126,341 572,982~~ -------------------------------------------------------------------------------- Partners' capital (deficiency) at December 31, 2000 6,818,110 (5,515,093) 1,303,017 Net loss (48,003) (5,334) (53,337) Distributions (913,311) (56,368) (969,679) -------------------------------------------------------------------------------- ~~Investments~~Partners' capital (deficiency) at ~~end~~December of31, ~~year~~2001 $ 115,~~404~~856,796 $8 (5,~~111~~576,~~989~~795) $8 280,~~552,095~~001 ================================================================================~~===============~~

See accompanying notes to financial statements. DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P. STATEMENTS OF CASH FLOWS Years ended December 31, 2001, 2000 and 1999

2001 2000 1999 ------------------------------------------------------------------------------------------- Cash flows from operating activities: Net ~~Income~~(loss) income $ (~~Loss~~53,337) ~~Per~~$ ~~Unit~~5,407,485 $ 362,727 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Equity in earnings of ~~Limited~~joint ~~Revenue~~ventures ~~Net~~-- ~~Income~~(5,327,687) (~~Loss~~470,468) ~~Partnership~~(Increase) ~~Interest~~decrease in other assets (8,286) 93,222 (74,168) (Decrease) increase in accounts payable and accrued liabilities (81,378) 24,207 (34,681) ------------------------------------------------------------------------------------------- Net cash (used in) provided by operating activities (143,001) 197,227 (216,590) ------------------------------------------------------------------------------------------- ~~2000~~Cash ~~March~~flows 31from ~~$167,141~~investing ~~$122,358~~activities: $Distributions ~~0.36~~from ~~June~~joint 30ventures 5-- 13,~~273~~936,~~072~~671 51,~~235~~036,~~638~~915 ~~17.12~~Investments ~~September~~in 30joint ~~7,081~~ventures -- (44508,~~679~~399) (~~0.13~~126,341) ~~December 31 83,576 94,168 0.29~~ ------------------------------------------------------------------------------------------- Net cash provided by investing activities -- 13,428,272 910,574 ------------------------------------------------------------------------------------------- ~~Total~~Cash ~~$5,530,870~~flows ~~$5,407,485~~from $financing ~~17.64~~activities: ~~=============================================================================================================~~Distributions ~~1999~~(969,679) ~~March~~(14,427,786) 31-- ~~$178,603~~Increase ~~$134,758~~in ~~0.40~~distributions ~~June~~payable 30to 87General Partners 56,~~334~~368 37119,~~568~~247 ~~0.11~~-- ~~September~~------------------------------------------------------------------------------------------- 30Net ~~195,544~~cash ~~148,239~~used ~~0.47~~in ~~December~~financing 31activities 87(913,~~956~~311) 42(14,~~162~~308,539) ~~0.12~~-- ------------------------------------------------------------------------------------------- (Decrease) increase in cash and cash equivalents (1,056,312) (683,040) 693,984 Cash and cash equivalents at beginning of year 1,542,591 2,225,631 1,531,647 ------------------------------------------------------------------------------------------- ~~Total~~Cash and cash equivalents at end of year $~~549~~ 486,~~437~~279 $~~362,727~~ 1~~.10~~,542,591 $ 2,225,631 ===========================================================================================~~===================~~

See accompanying notes to financial statements. DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P. NOTES TO FINANCIAL STATEMENTS 1. The Partnership --------------- Dean Witter Realty Income Partnership IV, L.P. (the "Partnership") is a limited partnership organized under the laws of the State of Delaware in 1986. The Partnership is managed by Dean Witter Realty Fourth Income Properties Inc. (the "Managing General Partner"). In 1987 and 1988, the Partnership issued 304,437 units of limited partnership interest (the "Units") for $152,218,500. No additional Units will be sold. The proceeds of the offering were used to make investments in income-producing office properties which were not encumbered by debt. The Partnership's last property investment was its 40.6% interest in the partnership ("TPA") which owned Taxter Corporate Park. TPA sold the Taxter property on May 23, 2000, and this sale has effectuated the dissolution of the Partnership. However, the Partnership can't wind up its affairs and distribute the balance of the Partnership's cash reserves until TPA terminates its operations (See Note 4). The Managing General Partner plans to terminate the Partnership as soon as possible. 2. Summary of Significant Accounting Policies ------------------------------------------ The Partnership's interest in TPA and its 41.2% general partnership interest in the partnership ("DWCA") which owned interests in Chesterbrook Corporate Center were accounted for on the equity method. The Partnership's records are maintained on the accrual basis of accounting for financial reporting and tax purposes. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P. NOTES TO FINANCIAL STATEMENTS Cash and cash equivalents consist of cash and highly liquid investments with maturities, when purchased, of three months or less. The carrying value of real estate held by the joint ventures included the purchase price paid by the joint ventures and acquisition fees and expenses. Costs of improvements to the properties were capitalized, and repairs were expensed. Depreciation was recorded on the straight-line method. The joint ventures stopped recording depreciation on their properties when the joint ventures reclassified the properties as real estate held for sale. At least annually, and more often if circumstances dictated, the Partnership evaluated the recoverability of the net carrying value of the real estate and related assets held by the joint ventures. As part of this evaluation, the Partnership assessed, among other things, whether there had been a significant decrease in the market value of any of the properties. If events or circumstances indicated that the net carrying value of a property was not recoverable, the expected future net cash flows from the property were estimated for a period of approximately five years (or a shorter period if the Partnership expected that the property would be disposed of sooner), along with estimated sales proceeds at the end of the period. If the total of these future undiscounted cash flows was less than the carrying amount of the property, the property was written down to its fair value as determined (in some cases with the assistance of outside real estate consultants) based on discounted cash flows, and a loss on impairment recognized by a charge to earnings. The cash flows used to evaluate the recoverability of the properties and to determine fair value were based on good faith estimates and assumptions developed by the Managing General Partner. The joint ventures amortized deferred leasing commissions over the applicable lease terms. The joint ventures accounted for tenant leases as operating leases. Rental income was recognized on a straight-line basis over the lives of the respective leases. The joint ventures recorded expense reimbursements paid by tenants pursuant to their leases as a component of their rental income. DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P. NOTES TO FINANCIAL STATEMENTS Net (loss) income per Unit amounts are calculated by dividing net (loss) income allocated to Limited Partners, by the weighted average number of Units outstanding. No provision for income taxes has been made in the financial statements since the liability for such taxes is that of the partners rather than the Partnership. The accounting policies used by the joint ventures for tax reporting purposes differed from those used for financial reporting as follows: (a) depreciation was calculated using accelerated methods; (b) rental income was recognized based on the payment terms in the applicable leases; and (c) writedowns for impairment of real estate were not deductible. In addition, the Partnership's offering costs were treated differently for tax and financial reporting purposes. Primarily as a result of the differing treatments of the offering costs, the tax basis of the Partnership's assets and liabilities is approximately $16.0 million higher than the amounts reported for financial statement purposes as of December 31, 2001. 3. Partnership Agreement --------------------- The Partnership Agreement provides that distributable cash, as defined, will be paid 90% to the Limited Partners and 10% to the General Partners. Sale proceeds will be distributed, to the extent available, first, to each Limited Partner, until there has been a return of the Limited Partner's capital contribution plus cumulative distributions of distributable cash and sale proceeds in an amount sufficient to provide a 9% cumulative annual return on the Limited Partner's adjusted capital contribution. Thereafter, any remaining sale proceeds will be distributed 85% to the Limited Partners and 15% to the General Partners after the Managing General Partner receives a brokerage fee, if earned, of up to 3% of the selling price of any equity investment. Neither of the General Partners have received or will receive a share of sale proceeds distributions or brokerage fees from the Partnership. Taxable income generally is allocated in the same proportions as distributions of distributable cash or sale proceeds (except that DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P. NOTES TO FINANCIAL STATEMENTS the General Partners must be allocated at least 1% of taxable income from sales). In the event there is no distributable cash or sale proceeds, taxable income is allocated 90% to the Limited Partners and 10% to the General Partners. Any tax loss is allocated 90% to the Limited Partners and 10% to the General Partners. Distributions paid to Limited Partners include returns of capital per Unit of limited partnership interest of $3.00 and $28.26 for the years ended December 31, 2001 and 2000, respectively, calculated as the excess of cash distributed per Unit over accumulated earnings per Unit not previously distributed. There were no distributions paid in 1999. 4. Investments in Joint Ventures ----------------------------- Taxter Corporate Park, Westchester County, New York Pursuant to a Purchase and Sale Agreement dated as of April 4, 2000, as amended, on May 23, 2000, TPA sold the land and buildings which comprise the Taxter property to a subsidiary of Mack-Cali Realty Corporation (the "Purchaser"), an unaffiliated party, for a negotiated sale price of $42.725 million. In connection with the sale, TPA acquired from an affiliate and conveyed to the Purchaser certain interests in the Taxter Property, including interests that the affiliate had acquired from KLM Royal Dutch Airlines, for $6.75 million, in February 1999. Of the $42.725 million, TPA remitted $6.75 million of the sale proceeds to the affiliate in connection with the transaction. The purchase price was paid in cash at closing. At closing, the Partnership received approximately $13.7 million, representing its 40.6% share of the cash received by TPA, net of its share of TPA's closing costs, the amount of the obligation owed to the affiliate and other deductions. The Partnership's share of TPA's gain on sale of the Taxter property was approximately $5.0 million; such gain was allocated 100% to Limited Partners. In 2001 and 2000, the Partnership paid, 100% to Limited Partners, cash distributions of approximately $0.4 million($1.33 per unit) and $13.3 million ($43.16 per Unit) from the Taxter sale proceeds it received. DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P. NOTES TO FINANCIAL STATEMENTS TPA is currently appealing the amount of real estate taxes it was charged by the local taxing authorities during the 1997 to 2000 tax years. The Managing General Partner understands that TPA must settle this appeal and resolve other matters, outstanding with the buyer of the Taxter property, before TPA can terminate its operations. Resolution of these matters is not anticipated to require any significant funding from the Partnership. TPA is also owned 44.6% by Dean Witter Realty Income Partnership III, L.P. ("Income III"), an affiliated public partnership, and 14.8% by Dean Witter Realty Income Partnership II, L.P. an affiliated public partnership. The partners of TPA each received cash flow and profits and losses according to their ownership interests. Summarized income statements of the Taxter joint venture are as follows: Years ended December 31, 2001 2000 1999 -------------------------------------------------------------------------------- Gain on sale of real estate $ -- $16,269,151 $ -- Rental income -- 2,120,809 5,269,027 Other income -- 9,523 39,476 -------------------------------------------------------------------------------- -- 18,399,483 5,308,503 -------------------------------------------------------------------------------- Property operating expenses -- 1,193,972 3,144,567 Depreciation and amortization -- 233,374 1,368,026 -------------------------------------------------------------------------------- -- 1,427,346 4,512,593 -------------------------------------------------------------------------------- Net income $ -- $16,972,137 $ 795,910 ================================================================================ DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P. NOTES TO FINANCIAL STATEMENTS Chesterbrook Corporate Center, Valley Forge, Pennsylvania As a part of the 1998 Purchase and Sale Agreement for the Chesterbrook properties, escrows were established for the cost of certain building improvements and tenant improvements (the "Improvements") at the properties. In addition to payment of the purchase price, at closing, the purchaser deposited into these escrows approximately $2.3 million related to the Improvements. The escrowed sales proceeds were not included in the calculation of the 1998 gain on the sale of the property because of the uncertainty of its realization. During 1999, DWCA received approximately $232,000 from the escrow (including $35,000 of interest earned thereon), and approximately $125,000 in settlement of a prior year's expense reimbursement from tenants. The Partnership's share of these amounts, approximately $147,000, was recorded in equity in earnings of joint venture in 1999. In 2000, the Partnership distributed, to Limited Partners only, the remaining undistributed proceeds (approximately $0.31 per Unit) from the 1998 sale of the Chesterbrook property. The Partnership, Income III and an affiliate of the Managing General Partner owned 41.2%, 26.7% and 32.1% interests, respectively, in DWCA. DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P. NOTES TO FINANCIAL STATEMENTS Summarized results of operations of DWCA are as follows: Years ended December 31, 2001 2000 1999 -------------------------------------------------------------------------------- Rental income $- $- $125,413 Other income - - 35,211 Gain on sale of real estate - - 196,971 -------------------------------------------------------------------------------- - - 357,595 -------------------------------------------------------------------------------- Expenses - - -- -------------------------------------------------------------------------------- Net income $- $- $357,595 ================================================================================ Activity in investments in all the joint ventures is as follows: -------------------------------------------------------------------------------- 2001 2000 1999 -------------------------------------------------------------------------------- Investments at beginning of year $ 11,404 $ 8,111,989 $ 8,552,095 Equity in earnings -- 5,327,687 470,468 Distributions -- (13,936,671) (1,036,915) Contributions -- 508,399 126,341 -------------------------------------------------------------------------------- Investments at end of year $ 11,404 $ 11,404 $ 8,111,989 ================================================================================ 5. Distributions ------------- In 2001 and 2000, the Partnership distributed cash reserves of approximately $1.67 per Unit and $3.53 per Unit, respectively, along with its distribution of sales proceeds (see Note 4). The 2001 cash reserves distribution totaled $563,680 with $507,312 distributed to the Limited Partners and $56,368 payable to the General Partners. The 2000 cash reserves distribution totaled $1,192,472 with $1,073,225 distributed to the Limited Partners and $119,247 payable to the General Partners. In 2001, the Partnership's distribution of the Taxter sale proceeds and Partnership cash reserves to Limited Partners totaled $913,311 ($3.00 per unit). In 2000, the Partnership's distributions of the Taxter sale proceeds, Chesterbrook sale proceeds and Partnership cash reserves to Limited Partners totaled $14,308,539 ($47.00 per Unit). DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P. NOTES TO FINANCIAL STATEMENTS The General Partners deferred receipt of their share of the 2001 and 2000 cash reserve distributions to ensure that the Partnership would have cash to cover all liabilities that may arise while the Partnership winds up its affairs. The amounts deferred were charged against General Partners' capital and recorded as distributions payable. 6. Related Party Transactions An affiliate of the Managing General Partner performs administrative functions, processes investor transactions and prepares tax information for the Partnership. The Partnership incurred approximately $26,000, $40,000, and $72,000 for such services during the years ended December 31, 2001, 2000 and 1999, respectively. These amounts are included in general and administrative expenses. DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P. NOTES TO FINANCIAL STATEMENTS 7. Summary of Quarterly Results (Unaudited) ---------------------------------------- Net(Loss) Income Per Unit of Limited Net (Loss) Partnership Revenue Income Interest ------------------------------------------------------------------------------ 2001 March 31 $ 13,881 $ (25,271) $ (0.07) June 30 3,940 (32,274) (0.10) September 30 3,131 18,341 0.05 December 31 1,840 (14,133) (0.04) ------------------------------------------------------------------------------ Total $ 22,792 $ (53,337) $ (0.16) ============================================================================== 2000 March 31 $ 167,141 $ 122,358 $ 0.36 June 30 5,273,072 5,235,638 17.12 September 30 7,081 (44,679) (0.13) December 31 83,576 94,168 0.29 ------------------------------------------------------------------------------ Total $ 5,530,870 $ 5,407,485 $ 17.64 ============================================================================== ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ------ ------------------------------------------------- ACCOUNTING AND FINANCIAL DISCLOSURE ----------------------------------- None. PART III. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ------- -------------------------------------------------- The Partnership is a limited partnership and has no directors or executive officers. The directors and executive officers of the Managing General Partner are as follows: Position with the Name Managing General Partner ---- ------------------------ William B. Smith Chairman of the Board of Directors E. Davisson Hardman, Jr. President and Director Ronald T. Carman Secretary and Director All of the directors have been elected to serve until the next annual meeting of the shareholders of the Managing General Partner or until their successors are elected and qualify. Each of the executive officers has been elected to serve until his successor is elected and qualifies. William B. Smith, age 58, has been an Advisory Director of Morgan Stanley & Co., Incorporated since July 2000. From June 1997 until July 2000, Mr. Smith was a Managing Director of Morgan Stanley & Co., Incorporated and co-head of Morgan Stanley Realty Incorporated. Prior to June 1997, Mr. Smith was an Executive Vice President of Morgan Stanley DW Inc., and Director of its Investment Banking Department for more than five years. E. Davisson Hardman, Jr., age 52, has been an Advisory Director of Morgan Stanley & Co., Incorporated. since September 2001. From June 1997 to September 2001, he was a Managing Director of Morgan Stanley Asia, Ltd. For more than five years before June 1997, Mr. Hardman was a Managing Director of Dean Witter Realty Inc. Ronald T. Carman, age 50, has been an Assistant Secretary of Morgan Stanley Dean Witter & Co. since June 1997 and a Managing Director of Morgan Stanley & Co. Incorporated since July 1998. Previously, he was a Senior Vice President and Associate General Counsel of Morgan Stanley DW Inc., which he joined in 1984. There is no family relationship among any of the foregoing persons. ITEM 11. EXECUTIVE COMPENSATION ------- ---------------------- The General Partners are entitled to receive cash distributions, when and as cash distributions are made to the Limited Partners, and a share of taxable income or tax loss. Descriptions of such distributions and allocations are contained in Item 5 above. The General Partners deferred receipt of their share of the 2001 and 2000 cash reserve distributions ($56,368 and $119,247 for the years ending December 31, 2001 and 2000, respectively) to ensure that the Partnership would have cash to cover all liabilities that may arise while the Partnership winds up its affairs. There were no distributions in 1999. The General Partners and their affiliates were paid certain fees and reimbursed for certain expenses. Information concerning such fees and reimbursements is contained in Note 6 to the Financial Statements in Item 8 above. The directors and executive officers of the Managing General Partner received no remuneration from the Partnership. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND ------- MANAGEMENT ---------------------------------------------------- (a) No person is known to the Partnership to be the beneficial owner of more than five percent of the Units. (b) The executive officers and directors of the Managing General Partner own the following Units as of February 28, 2002: Amount and Nature of Title of Class Name of Beneficial Owner Beneficial Ownership -------------- ------------------------ -------------------- Limited All directors and executive * Partnership officers of the Managing General Interests Partner, as a group ---------------------- *Own, by virtue of ownership of limited partnership interests in the Associate General Partner, less than 1% of the Units of the Partnership. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ------- ---------------------------------------------- As a result of their being partners of a limited partnership which is the Limited Partner of the Associate General Partner, certain current and former officers and directors of the Managing General Partner also own indirect general partnership interests in the Partnership. The Partnership Agreement of the Partnership provides that cash distributions and allocations of income and loss to the General Partners shall be distributed or allocated 50% to the Managing General Partner and 50% to the Associate General Partner. The General Partners' share of cash distributions and income or loss is described in Item 5 above. All of the outstanding shares of common stock of the Managing General Partner are owned by Realty, a Delaware corporation which is a wholly-owned subsidiary of Morgan Stanley, Dean Witter & Co. The general partner of the Associate General Partner is the Managing General Partner. The limited partner of the Associate General Partner is LSA 87 L.P., a Delaware limited partnership. Realty and certain current and former officers and directors of the Managing General Partner are partners of LSA 87 L.P. Additional information with respect to the directors and executive officers and compensation of the Managing General Partner and affiliates is contained in Items 10 and 11 above. The General Partners and their affiliates were paid certain fees and reimbursed for certain expenses. Information concerning such fees and reimbursements is contained in Note 6 to the Financial Statements in Item 8 above. The Partnership believes that the payment of fees and the reimbursement of expenses to the General Partners and their affiliates are on terms as favorable as would be obtained from unrelated third parties. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON ------- ------------------------------------------------------- FORM 8-K -------- (a) The following documents are filed as part of this Annual Report: 1. Financial Statements (see Index to Financial Statements filed as part of Item 8 of this Annual Report). 2. Exhibits (3)a Certificate of Limited Partnership included in the Registration Statement Number 33-16054 is incorporated by reference. (3)b Amended and Restated Agreement of Limited Partnership dated as of October 22, 1987 set forth in Exhibit A to the Prospectus included in the Registration Statement Number 33-16054 is incorporated herein by reference. (4)a Certificate of Limited Partnership included in the Registration Statement Number 33-16054 is incorporated by reference. (4)b Amended and Restated Agreement of Limited Partnership dated as of October 22, 1987 set forth in Exhibit A to the Prospectus included in the Registration Statement Number 33-16054 is incorporated herein by reference. (10)a Purchase and Sale Agreement between Technology Park Associates, Dean Witter/Technology Park II Associates, L.P., and Sprint Communications Company, L.P., a Delaware Limited Partnership filed as exhibit 2 to the Registrant's Report on Form 8-K on December 31, 1996 is incorporated herein by reference. (10)b Purchase and Sale Agreement between Lake Colorado Associates, L.P., and Spieker Properties, L.P., an unaffiliated party filed as exhibit to the Registrant's Report on Form 8-K on April 10, 1997 is incorporated herein by reference. (10)c Purchase and Sale Agreement, dated as of February 10, 1998 between DWR Chesterbrook Associates, Glenhardie Corporation, Dean Witter Realty Income Partnership II, L.P., Dean Witter Realty Income Partnership III, L.P. and Part Six Associates as seller and FV Office Partners, L.P. as Buyer, filed as exhibit 2 to the Registrant's Report on Form 8-K on April 1, 1998 is incorporated herein by reference. (10)d Assignment and Option Agreement dated February 8, 1999 between Taxter Park Associates and DW Taxter Special Corp. filed as exhibit 10(d) to the Registrant's Report on Form 10-K for the year end December 31, 1998 is incorporated herein by reference. (10)e (I) Purchase and Sale Agreement Dated as of April 4, 2000, First Amendment to Purchase and Sale Agreement Dated as of May 3, 2000, Second Amendment to Purchase and Sale Agreement Dated as of May 11, 2000, Third Amendment to Purchase and Sale Agreement Dated as of May 17, 2000, Fourth Amendment to Purchase and Sale Agreement Dated as of May 18, 2000, all between Taxter Park Associates as Seller, DW Taxter Special Corp. as sublandlord and Mack-Cali Realty Acquisition Corp. as Purchaser, (II) Termination, Assignment and Recognition Agreement as of May 23, 2000 between Taxter Park Associates, DW Taxter Special Corp., Mack-Cali Realty Acquisition Corp. and KLM Royal Dutch Airlines and (III) Termination Agreement as of May 23, 2000 between Taxter Park Associates and DW Taxter Special Corp., all filed as Exhibits to the Registrant's Report on Form 8-K on May 23, 2000 are incorporated herein by reference. (b) Report on Form 8-K-- Report on Form 8-K dated September 11, 2001, disclosing the change of the address of the Partnership's executive office due to the destruction of the World Trade Center. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DEAN WITTER REALTY INCOME PARTNERSHIP IV, L.P. By: Dean Witter Realty Fourth Income Properties Inc. Managing General Partner By: /S/ E. Davisson Hardman, Jr. Date: March 27, 2002 ------------------------------------------ E. Davisson Hardman, Jr. President By: /S/ Jeffrey D. Hahn Date: March 27, 2002 ------------------------------------------ Jeffrey D. Hahn Vice President Principal Financial and Accounting Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. DEAN WITTER REALTY FOURTH INCOME PROPERTIES INC. Managing General Partner /S/ William B. Smith Date: March 27, 2002 ----------------------------------------------- William B. Smith Chairman of the Board of Directors /S/ E. Davisson Hardman, Jr. Date: March 27, 2002 ----------------------------------------------- E. Davisson Hardman, Jr. Director /S/ Ronald T. Carman Date: March 27, 2002 ----------------------------------------------- Ronald T. Carman Director

Amount and Nature of Title of Class Name of Beneficial Owner Beneficial Ownership -------------- ------------------------ -------------------- Limited All directors and executive officers of the * Partnership Managing General Partner, as a group Interests

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