SC 14D9 1 a2113947zsc14d9.htm SC 14D9
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

SCHEDULE 14D-9
(RULE 14d-101)

SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION 14(d)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
(Name of Subject Company)

C.R.I., Inc., Managing General Partner
(Name of Person(s) Filing Statement)

Units of Limited Partner Interest
(Title of Class of Securities)

Not applicable
(CUSIP Number of Class of Securities)

Melissa Lackey, General Counsel
C.R.I., Inc.
11200 Rockville Pike
Rockville. MD 20852
(301) 231-0255
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)

Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Item 1. Subject Company Information.

The name, address and telephone number of the subject company are as follows:

Capital Realty Investors-IV Limited Partnership
c/o C.R.I., Inc., Managing General Partner
11200 Rockville Pike
Rockville, Maryland 20852
(301) 468-9200

The title and number of the class of equity securities to which this Statement relates are 73,500 outstanding units of Limited Partner Interest.

Item 2. Identity and Background of Filing Person.

The name, address and telephone number of the filing person are as follows:

C.R.I., Inc., Managing General Partner
11200 Rockville Pike
Rockville, Maryland 20852
(301) 468-9200

The filing person is an affiliate of the subject company. C.R.I., Inc. holds a 0.01% General Partner Interest in the Partnership and serves as its Managing General Partner.

The Statement relates to the tender offer initiated on or about June 17, 2003 for up to eleven thousand twenty five (11,025) of the outstanding units of Limited Partner Interest in the subject company by:

Equity Resource Weston Fund Limited Partnership
c/o Equity Resources Group, Inc.
44 Brattle Street
Cambridge, Massachusetts 02138

The tender offeror will hereinafter be referred to as Equity Resources.

Item 3. Past Contacts, Transactions, Negotiations and Agreements.

There are no material agreements, arrangements or understandings, or any actual or potential conflicts of interest, between the filing person or its affiliates and (i) the subject company, its executive officers, directors or affiliates, other than a Partnership Management Agreement between CRICO Management Corporation, an affiliate of the filing person, and the subject company (as to which there is no conflict of interest because the current tender offer applies only to Limited Partner Interests and does not purport to affect management of the subject company), or (ii) Equity Resources, its executive officers, directors or affiliates.

On May 23, 2003, Equity Resources initiated an unregistered tender offer to purchase 1,470 units at a price of $40 per unit. Equity Resources and its affiliates have stated that they have purchased 407 units in the subject company for $40 per unit during the past year. Currently, Equity Resources and affiliates are believed to own 8,843 units, or approximately 12% of the outstanding units.

Since 1988, various affiliates of Equity Resources have engaged in conversations and correspondence with the filing person and various of its affiliates with regard to their ownership of interests in the subject company and other CRI-sponsored partnerships.

Item 4. The Solicitation or Recommendation.

This Statement relates to the recommendation of the filing person, in its capacity as Managing General Partner of the subject company, with respect to the Equity Resources tender offer.

The filing person is advising holders of the subject securities to reject the tender offer because it views the offer price as inadequate, as discussed below:

As of March 31, 2003, the subject company maintained the sum of $4,490,196 in cash and cash equivalents. Dividing the cash balance among the 73,500 units of Limited Partner interest in the subject company results in a current cash value of $61 per unit, approximately fifty two percent (52%) higher than the Equity Resources tender offer price.

The filing person, as Managing General Partner, attempts to maximize the value of the Partnership by evaluating each of the apartment complexes owned by the Local Partnerships in which it remains invested ("Local Partnerships") and determining the optimum use of the cash reserves. CRI-IV currently intends to use its cash reserves for payments with respect to the purchase money notes secured by its interests in Local Partnerships which CRI believes to have equity. The cash reserves may be applied to paying the notes in full, purchasing the notes at a discount if possible or making partial payments in exchange for a further extension of the maturity of the notes (thereby obtaining more time to sell or re-finance the underlying property or, at the least, deferring the adverse tax consequences of losing CRI-IV's interest in the Local Partnerships). The goal of the allocation of the cash reserves is to help preserve CRI-IV's interest in those remaining Local Partnerships that have associated purchase money notes.

The filing person also believes the Equity Resources offer price to be inadequate because, in addition to the subject company's $4,490,196 cash reserves, additional value exists in its interests in the properties owned by Local Partnerships. The subject company is not in the practice of valuing its limited partner interests in the Local Partnerships and has not engaged any financial advisor to evaluate the terms of the Equity Resources offer or to determine the value of the units. Most of the properties owned by the Local Partnerships have not been appraised for many years. However, the filing person is of the view that the subject company has equity in some of the 21 Local Partnerships in which it holds interests. For example, the local managing general partner of the local partnership that owns Campbell Terrace is currently negotiating a contract for sale of the property. Although there can be no assurance that the sale will be consummated during 2004 as currently anticipated, the successful closing should produce approximately $10,000,000 in net proceeds to CRI-IV. If all of these proceeds are distributed to the limited partners a distribution of approximately $135 per investment unit may result. Due to the amount of the subject company's cash reserves and the opportunity to use those funds to increase the value of the subject company by dealing with the remaining purchase money note obligations, as discussed above, the filing person regards appraisals or an independent fairness opinion as not essential to substantiate its recommendation to reject the Equity Resources tender offer as inadequate in price.

The subject company's balance sheet, as of March 31, 2003, also shows liabilities in excess of $93,716,100 associated with non-recourse purchase money notes secured by its limited partner interests in 12 of the 21 Local Partnerships in which it remains invested. However, the subject company has no personal liability with respect to the notes, which could be satisfied by surrender to the note holders of the Local Partnership interests that secure the notes.

The filing person's recommendation to reject the Equity Resources tender offer assumes that the Limited Partners wish to hold their interests for long term appreciation. However, there can be no assurance that the properties owned by the Local Partnerships will appreciate in value. Also, regardless of whether Limited Partners choose to accept the tender offer or not, they will be allocated their proportional share of Section 1231 capital gain for tax purposes in connection with the transfer of CRI-IV's interest in Canonsburg Housing, Char House, Highland Village, Glenridge Gardens, Liberty Towers and Wellington Woods properties to the noteholders. Additionally, the possible sale and/or transfer of the Pilgrim Tower East, Pilgrim Tower North and Valley View properties during 2003 would create additional Section 1231 gain. Furthermore, Limited Partners who choose to tender their units may also incur capital gains taxes in excess of the tender amount. In addition, if a Limited Partner desires to liquidate his or her investment in the short term, there is no established market for the purchase and sale of Limited Partner units in the subject company. Although several secondary market services exist, activity has been limited and sporadic. The most recent transfers of which the subject company is aware were for prices equal to or lower than the current tender offer by Equity Resources.

Neither the filing person nor, to its knowledge after making reasonable inquiry, any executive officer, director or affiliate of the filing person, currently holds any Limited Partner interest that is subject to the tender offer. Thus, no such person could intend to tender, sell or hold subject securities that are held of record or beneficially owned by that person.

Item 5. Person/Assets, Retained, Employed, Compensated or Used.

No persons or classes of persons have been employed, retained or are to be compensated to make recommendations in connection with this transaction.

Item 6. Interest in Securities of the Subject Company.

Neither the filing person, nor any person within the scope of the instructions to Item 1008(b) of Regulation M-A, engaged in any transaction in the subject securities in the past 60 days.

There is no established market for the purchase and sale of units of Limited Partner Interest in the subject company, although several secondary market services exist. In 2001, one unregistered tender offer was made by Bond Purchase LLC for units of Limited Partner Interest in the subject company for a price of $33 per unit (less the $100 transfer fee per transaction).

Item 7. Purposes of the Transaction and Plans or Proposals.

The subject company is not undertaking or engaged in any negotiations in response to the tender offer that relate to:

1.

A tender offer or other acquisition of the subject company's securities by C.R.I., Inc., any of its affiliates, or any other person; or

2.

A. Any extraordinary transaction, such as a merger, reorganization or liquidation, involving the subject company (which has no subsidiaries);

1.: Any purchase, sale or transfer of a material amount of assets of the subject company;
2.: Any material change in the present dividend rate or policy, or indebtedness or capitalization of the subject company.

Item 8. Additional Information.

There is no additional material information necessary to make the required statements, in light of the circumstances under which they are made, not materially misleading.

Item 9. Exhibits.

Exhibit A attached hereto is a letter dated June 27, 2003, by the filing person to the holders of Units of Limited Partner Interest in the subject company, recommending against acceptance of the Equity Resources tender offer.

SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

		CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
		By:		C.R.I., Inc.
		Its:		Managing General Partner
		By:
		Name:		William B. Dockser
		Title:		Director, Chairman of the Board and Treasurer (Principal Executive Officer)
		Date:		June 27, 2003

CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP
11200 Rockville Pike
Rockville, MD 20852

June 27, 2003

Re:: Recommendation to REJECT the $40 per Unit Tender Offer by Equity Resource Weston Fund to Purchase 11,025 Units of CRI-IV Limited Partner Interest

Dear Limited Partner:

C.R.I., Inc. ("CRI"), as Managing General Partner of Capital Realty Investors-IV Limited Partnership ("CRI-IV" or the "Partnership"), recommends that Limited Partners REJECT the recent tender offer by Equity Resource Weston Fund ("Equity Resource") to buy up to 11,025 units of Limited Partner Interest in CRI-IV for Forty Dollars ($40) per unit, because CRI has concluded that the Equity Resource tender offer is inadequate and not in the best interests of the Limited Partners.

According to the Equity Resource offer, dated June 17, 2003, Equity Resource desires to purchase up to twenty (20%) of the outstanding Limited Partner units in CRI-IV for $40 per unit (less the amount of any distributions declared or paid by CRI-IV with regard to the units after June 17, 2003, and less a $100 transfer fee per transaction).

As of March 31, 2003, CRI-IV maintained the sum of $4,490,196 in cash and cash equivalents. Dividing the cash balance among the 73,500 units of Limited Partner interest in CRI-IV results in a current cash value of approximately $61 per unit, approximately 52% more than the amount of the Equity Resource offer price.

CRI attempts to maximize the value of the Partnership by evaluating each of the 21 apartment complexes owned by the Local Partnerships in which it remains invested ("Local Partnerships") and determining the optimum use of the cash reserves. CRI-IV currently intends to use its cash reserves for payments with respect to the purchase money notes secured by its interests in Local Partnerships which CRI believes to have equity. The cash reserves may be applied to paying the notes in full, purchasing the notes at a discount if possible or making partial payments in exchange for a further extension of the maturity of the notes (thereby obtaining more time to sell or re-finance the underlying property or, at the least, deferring the adverse tax consequences of losing CRI-IV's interest in the Local Partnerships). The goal of the allocation of the cash reserves is to help preserve CRI-IV's interest in those remaining Local Partnerships that have associated purchase money notes.

CRI also believes the Equity Resource offer price to be inadequate because, in addition to CRI-IV's $4,490,196 cash reserves, additional value exists in its interests in the properties owned by Local Partnerships. CRI-IV is not in the practice of valuing its limited partner interests in the Local Partnerships and has not engaged any financial advisor to evaluate the terms of the Equity Resource offer or to determine the value of the units. Most of the properties owned by the Local Partnerships have not been appraised for many years. However, CRI is of the view that CRI-IV has equity in some of the 21 Local Partnerships in which it holds interests. For example, the local managing general partner of the local partnership which owns Campbell Terrace is currently negotiating a contract for sale of the property. Although there can be no assurance that the sale will be consummated during 2004 as currently anticipated, the successful closing should produce approximately $10,000,000 in net proceeds to CRI-IV. If all of these proceeds are distributed to the limited partners a distribution of approximately $135 per investment unit may result. Due to the amount of CRI-IV's cash reserves and the opportunity to use those funds to increase the value of CRI-IV by dealing with the remaining purchase money note obligations, as discussed above, CRI regards appraisals or an independent fairness opinion as not essential to substantiate its recommendation to reject the Equity Resource tender offer as inadequate in price.

CRI-IV's balance sheet as of March 31, 2003 also shows liabilities in excess of $93,716,100 associated with non-recourse purchase money notes secured by its limited partner interests in 12 of the 21 limited partnerships in which it remains invested. However, CRI-IV has no personal liability with respect to the notes, which could be satisfied by surrender to the note holders of the Local Partnership interests that secure the notes.

CRI's recommendation to reject the Equity Resource tender offer assumes that the Limited Partners wish to hold their interests for long term appreciation. However, there can be no assurance that the properties owned by the Local Partnerships will appreciate in value. Also, regardless of whether Limited Partners choose to accept the tender offer or not, they will be allocated Section 1231 capital gain for tax purposes in connection with the transfer of CRI-IV's interests in the Canonsburg Housing, Char House, Highland Village, Glenridge Gardens, Liberty Towers and Wellington Woods properties (approximately $500 per investment unit), and possibly from the sale or transfer of the Pilgrim Tower East, Pilgrim Tower North and Valley View properties, if the sales or transfers are consummated during 2003 (approximately $500 per investment unit). (The transactions giving rise to the Section 1231 capital gains will not result in any cash distribution to limited partners.) Further, Limited Partners who choose to tender their units may incur capital gains taxes in excess of the tender amount. In addition, if a Limited Partner desires to liquidate his or her investment in the short term, there is no established market for the purchase and sale of Limited Partner units in CRI-IV. Although several secondary market services exist, activity has been limited and sporadic. The most recent transfers of which CRI-IV is aware were for prices equal to or lower than Equity Resource's current tender offer.

The Equity Resource tender offer applies only to acquisitions of Limited Partner units in CRI-IV. The offeror has represented that it does not presently intend to acquire any General Partner interests or to change management of CRI-IV. CRI, as Managing General Partner of CRI-IV, receives annual fees for its services, as well as expense reimbursement. The tender offer does not purport to change the economic proceeds of CRI's interest in CRI-IV. Neither CRI-IV, CRI, CRI-IV's individual General Partners, nor any of their respective affiliates, are parties to the Equity Resource offer or own any units subject to the tender offer.

As with any contemplated sale, CRI recommends that Limited Partners carefully review the offer and the Partnership's publicly available reports and consult with their own tax or financial advisors to determine the consequences of acceptance or rejection of the proposed tender offer. Although Equity Resource's tender offer materials address certain tax consequences of the proposed transaction, each Limited Partner's situation is unique, so consultation with personal advisors may be helpful.

If a Limited Partner elects not to accept Equity Resource's tender offer, no action is required.

Limited Partners may receive additional SEC-registered tender offers or so-called mini-tender offers (for a smaller number of units) from time to time. CRI urges you to review this letter, as well as other reports and communications from the Partnership, before making a decision whether or not to tender your units.

Please feel free to call our Investment Communications Department at 1-301-468-9200 or 1-800-678-1116 for assistance in any CRI-IV matter.

Sincerely,

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SIGNATURE
CAPITAL REALTY INVESTORS-IV LIMITED PARTNERSHIP 11200 Rockville Pike Rockville, MD 20852

Capital Realty Investors-IV Limited Partnership

C.R.I., Inc.

Managing General Partner

William B. Dockser, Chairman

H. William Willoughby, President