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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2001

OR

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission file number: 333-9371

CAPTEC FRANCHISE CAPITAL
PARTNERS L.P. IV
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

38-3304095
(IRS Employer Identification Number)

24 Frank Lloyd Wright Drive, Lobby L, 4th FloorP.O. Box 544, Ann Arbor, Michigan 48106-0544
(Address of principal executive offices, including zip code)

(734) 994-5505
(Issuers telephone number)

Not Applicable
(Former name, former address and former fiscal year, if changed since last year)

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 such shorter period that the registrant
was required to file such reports), and (2) has been subject to filing
requirements for the past 90 days. Yes
X IN BALLOT BOX No OPEN BALLOT BOX

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court: Not applicable

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuers classes of
common equity, as of the latest practicable date: Not
applicable





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TABLE OF CONTENTS



|                                                                                                                                              |                                                                                         |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|Item 1. Financial Statements:                                                                                                                
|                                                                                                                                              | Balance Sheet, September 30, 2001 and December 31, 2000 and December 31, 2000          
|                                                                                                                                              | Statement of Operations for the three and nine months ended September 30, 2001 and 2000
|                                                                                                                                              | Statement of Changes in Partners Capital for the nine months ended September 30, 2001 
|                                                                                                                                              | Statement of Cash Flows for the nine months ended September 30, 2001                   
|                                                                                                                                              | Notes to Financial Statements                                                          
|PART I FINANCIAL INFORMATION                                                                                                                 
|Item 2. Managements Discussion and Analysis of Financial Condition                      and Results of Operations                           
|for the nine months ended September 30, 2000 due to the sale of one equipment lease in March 2000 and the amortization of principal balances.
|PART II OTHER INFORMATION                                                                                                                    
|                                                                                                                                              | Other Information                                                                      
|ITEM 2. CHANGES IN SECURITIES. None.                                                                                                         
|ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None.                                                                                               
|ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None.                                                                           
|CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV PART II  OTHER INFORMATION                                                                        
|SIGNATURES                                                                                                                                   



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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV

Index to Form 10-Q

|           |  |                                                                                         |  |      
|---------- |  | --------------------------------------------------------------------------------------- |  | -----
|Item No.   |  |                                                                                         |  | Page 
|           |  |                                                                                         |  |      
|PART I     |  | FINANCIAL INFORMATION                                                                   |  |      
|Item 1.    |  | Financial Statements:                                                                   |  |      
|           |  | Balance Sheet, September 30, 2001 and December 31, 2000                                 |  | 3    
|           |  | Statement of Operations for the three and nine months
ended September 30, 2001 and 2000 |  | 4    
|           |  | Statement of Changes in Partners Capital for the nine months
ended September 30, 2001  |  | 5    
|           |  | Statement of Cash Flows for the nine months
ended September 30, 2001 and 2000           |  | 6    
|           |  | Notes to Financial Statements                                                           |  | 78  
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition
and Results of Operations   |  | 910 
|PART II    |  | OTHER INFORMATION                                                                       |  |      
|           |  | Other Information                                                                       |  | 1112
|SIGNATURES |  |                                                                                         |  | 13   

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Captec Franchise Capital Partners L.P. IV
Balance Sheet

|                                     |                                       |                                       |            |                                 |            |               |            |            |              |  |  | 
|------------------------------------ | ------------------------------------- | ------------------------------------- | ---------- | ------------------------------- | ---------- | ------------- | ---------- | ---------- | ------------ |  |  | 
|                                     |                                       |                                       |            |                                 |            | (Unaudited)   |            |            |             
|                                     |                                       |                                       |            |                                 |            | September 30, |            |            | December 31,
|                                     |                                       |                                       |            |                                 |            | 2001          |            |            | 2000        
|                                     |                                       |                                       |            |                                 |            |               |            |            |             
|                                     |                                       |                                       | Assets     |                                 |            |               |            |            |              |  | 
|Cash and cash equivalents            |                                       | $                                     | 487,301    |                                 |            | $             | 78,837     |           
|Restricted cash                      |                                       |                                       | 177,614    |                                 |            |               | 100,229    |           
|Investment in property under leases: |                                       |                                       |            |                                 |            |               |            |           
|                                     | Operating leases, net                 |                                       |            | 29,521,108                      |            |               |            | 29,869,323 |             
|                                     | Financing leases, net                 |                                       |            | 4,600,875                       |            |               |            | 5,536,386  |             
|Accounts receivable                  |                                       |                                       | 55,218     |                                 |            |               | 26,751     |           
|Unbilled rent, net                   |                                       |                                       | 938,246    |                                 |            |               | 730,375    |           
|Due from related parties             |                                       |                                       |           |                                 |            |               | 966        |           
|Deferred financing costs, net        |                                       |                                       | 431,516    |                                 |            |               | 476,155    |           
|                                     |                                       |                                       |            |                                 |            |              
|                                     |                                       | Total assets                          |            | $                               | 36,211,878 |               |            | $          | 36,819,022   | 
|                                     |                                       |                                       |            |                                 |            |              
|                                     |                                       |                                       |            | Liabilities & Partners Capital |            |               |            |            |              |  |  | 
|Liabilities:                         |                                       |                                       |            |                                 |            |               |            |           
|                                     | Notes payable                         |                                       | $          | 13,943,820                      |            |               | $          | 13,389,750 |             
|                                     | Accounts payable and accrued expenses |                                       |            | 182,559                         |            |               |            | 110,184    |             
|                                     | Due to related parties                |                                       |            | 19,495                          |            |               |            | 253,454    |             
|                                     |                                       |                                       |            |                                 |            |              
|                                     |                                       | Total liabilities                     |            |                                 | 14,145,874 |               |            |            | 13,753,388   | 
|                                     |                                       |                                       |            |                                 |            |              
|Partners capital:                   |                                       |                                       |            |                                 |            |               |            |           
|Limited partners capital accounts   |                                       |                                       | 22,054,572 |                                 |            |               | 23,069,410 |           
|General partners capital accounts   |                                       |                                       | 11,432     |                                 |            |               | (3,776     | )         
|                                     |                                       |                                       |            |                                 |            |              
|                                     |                                       | Total partners capital               |            |                                 | 22,066,004 |               |            |            | 23,065,634   | 
|                                     |                                       |                                       |            |                                 |            |              
|                                     |                                       | Total liabilities & partners capital |            | $                               | 36,211,878 |               |            | $          | 36,819,022   | 
|                                     |                                       |                                       |            |                                 |            |              

The accompanying notes are an integral part of
the financial statements.

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Captec Franchise Capital Partners L.P. IV
Statement of Operations
(Unaudited)

|                                                                 |                                  |                                    |         |                    |         |   |                   |         |         |      |           |           |           |   |           |           |           | 
|---------------------------------------------------------------- | -------------------------------- | ---------------------------------- | ------- | ------------------ | ------- | - | ----------------- | ------- | ------- | ---- | --------- | --------- | --------- | - | --------- | --------- | --------- | 
|                                                                 |                                  |                                    |         | Three months ended |         |   | Nine months ended |        
|                                                                 |                                  |                                    |         | September 30,      |         |   | September 30,     |        
|                                                                 |                                  |                                    |         |                    |         |   |                   |        
|                                                                 |                                  |                                    |         | 2001               |         |   | 2000              |         |         | 2001 |           |           | 2000      |  
|                                                                 |                                  |                                    |         |                    |         |   |                   |         |         |      |           |           |           |  
|Operating revenue:                                               |                                  |                                    |         |                    |         |   |                   |         |         |      |           |           |           |   |           |          
|                                                                 | Rental income                    |                                    | $       | 840,954            |         |   | $                 | 723,673 |         |      | $         | 2,522,862 |           |   | $         | 2,175,386 |          
|                                                                 | Finance income                   |                                    |         | 105,404            |         |   |                   | 145,326 |         |      |           | 354,236   |           |   |           | 451,619   |          
|                                                                 |                                  |                                    |         |                    |         |   |                   |         |         |      |           |          
|                                                                 |                                  | Total operating revenue            |         |                    | 946,358 |   |                   |         | 868,999 |      |           |           | 2,877,098 |   |           |           | 2,627,005 | 
|Operating costs and expenses:                                    |                                  |                                    |         |                    |         |   |                   |         |         |      |           |           |           |   |           |          
|                                                                 | Interest expense                 |                                    |         | 304,761            |         |   |                   | 214,067 |         |      |           | 908,878   |           |   |           | 642,201   |          
|                                                                 | Depreciation                     |                                    |         | 120,738            |         |   |                   | 93,986  |         |      |           | 362,215   |           |   |           | 282,491   |          
|                                                                 | General and administrative       |                                    |         | 35,401             |         |   |                   | 26,149  |         |      |           | 91,162    |           |   |           | 70,878    |          
|                                                                 |                                  |                                    |         |                    |         |   |                   |         |         |      |           |          
|                                                                 |                                  | Total operating costs and expenses |         |                    | 460,900 |   |                   |         | 334,202 |      |           |           | 1,362,255 |   |           |           | 995,570   | 
|                                                                 |                                  |                                    |         |                    |         |   |                   |         |         |      |           |          
|                                                                 |                                  | Income from operations             |         |                    | 485,458 |   |                   |         | 534,797 |      |           |           | 1,514,843 |   |           |           | 1,631,435 | 
|Other income (expense):                                          |                                  |                                    |         |                    |         |   |                   |         |         |      |           |           |           |   |           |          
|                                                                 | Interest and other income        |                                    |         | 6,411              |         |   |                   |        |         |      |           | 5,971     |           |   |           | 50        |          
|                                                                 | (Loss) gain on sale of equipment |                                    |         |                   |         |   |                   |        |         |      |           |          |           |   |           | 42,433    |          
|                                                                 | Other expense                    |                                    |         |                   |         |   |                   |        |         |      |           |          |           |   |           |          |          
|                                                                 |                                  |                                    |         |                    |         |   |                   |         |         |      |           |          
|                                                                 |                                  | Total other income (expense)       |         |                    | 6,411   |   |                   |         |        |      |           |           | 5,971     |   |           |           | 42,483    | 
|                                                                 |                                  |                                    |         |                    |         |   |                   |         |         |      |           |          
|Net income                                                       |                                  |                                    | 491,869 |                    |         |   | 534,797           |         |         |      | 1,520,814 |           |           |   | 1,673,918 |          
|Net income allocable to general partner                          |                                  |                                    | 4,919   |                    |         |   | 5,348             |         |         |      | 15,208    |           |           |   | 16,739    |          
|                                                                 |                                  |                                    |         |                    |         |   |                   |         |         |      |           |          
|Net income allocable to limited partners                         |                                  | $                                  | 486,950 |                    |         | $ | 529,449           |         |         | $    | 1,505,606 |           |           | $ | 1,657,179 |          
|                                                                 |                                  |                                    |         |                    |         |   |                   |         |         |      |           |          
|Net income per limited partnership unit                          |                                  | $                                  | 16.51   |                    |         | $ | 17.78             |         |         | $    | 50.98     |           |           | $ | 55.59     |          
|                                                                 |                                  |                                    |         |                    |         |   |                   |         |         |      |           |          
|Weighted average number of limited partnership
units outstanding |                                  |                                    | 29,486  |                    |         |   | 29,773            |         |         |      | 29,532    |           |           |   | 29,809    |          

The accompanying notes are an integral part of the financial statements.

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Captec Franchise Capital Partners L.P. IV
Statement of Changes in Partners Capital
for the nine months ended September 30, 2001
(Unaudited)

|                                        |  |           |        |   |           |   |            |           |  |   |           |   |  |   |            |  
|--------------------------------------- |  | --------- | ------ | - | --------- | - | ---------- | --------- |  | - | --------- | - |  | - | ---------- | -
|                                        |  | Limited   |        |   | Limited   |   |            | General   |  |   | Total     |  
|                                        |  | Partners' |        |   | Partners' |   |            | Partner's |  |   | Partners' |  
|                                        |  | Units     |        |   | Accounts  |   |            | Accounts  |  |   | Capital   |  
|                                        |  |           |        |   |           |   |            |           |  |   |           |  
|Balance, December 31, 2000              |  |           | 29,625 |   |           | $ | 23,069,410 |           |  | $ | (3,776    | ) |  | $ | 23,065,634 |  
|Distributions  ($81.56 per unit)       |  |           |       |   |           |   | (2,405,002 | )         |  |   |          |   |  |   | (2,405,002 | )
|Repurchase of limited
partnership units |  |           | (139   | ) |           |   | (115,442   | )         |  |   |           |   |  |   | (115,442   | )
|Net income                              |  |           |       |   |           |   | 1,505,606  |           |  |   | 15,208    |   |  |   | 1,520,814  |  
|                                        |  |           |        |   |           |   |            |           |  |   |           |  
|Balance, September 30, 2001             |  |           | 29,486 |   |           | $ | 22,054,572 |           |  | $ | 11,432    |   |  | $ | 22,066,004 |  
|                                        |  |           |        |   |           |   |            |           |  |   |           |  

The accompanying notes are an integral part of the financial statements.
5Table of Contents
Captec Franchise Capital Partners L.P. IV
Statement of Cash Flows
for the nine months ended September 30, 2001 and 2000
(Unaudited)

|                                               |                                                                               |                                                              |            |            |          |   |            |            |          |  
|---------------------------------------------- | ----------------------------------------------------------------------------- | ------------------------------------------------------------ | ---------- | ---------- | -------- | - | ---------- | ---------- | -------- | -
|                                               |                                                                               |                                                              |            | 2001       |          |   | 2000       |           
|                                               |                                                                               |                                                              |            |            |          |   |            |           
|Cash flows from operating activities:          |                                                                               |                                                              |            |            |          |   |            |           
|                                               | Net Income                                                                    |                                                              | $          | 1,520,814  |          |   | $          | 1,673,918  |         
|                                               | Adjustments to net income:                                                    |                                                              |            |            |          |   |            |            |         
|                                               |                                                                               | Depreciation                                                 |            |            | 362,215  |   |            |            | 282,491  |  
|                                               |                                                                               | Amortization of debt issuance costs                          |            |            | 44,640   |   |            |            | 44,640   |  
|                                               |                                                                               | Loss (gain) on sale of equipment                             |            |            | 258      |   |            |            | (42,433  | )
|                                               |                                                                               | Increase in unbilled rent                                    |            |            | (207,871 | ) |            |            | (249,701 | )
|                                               |                                                                               | (Increase) decrease in accounts receivable                   |            |            | (28,467  | ) |            |            | 24,079   |  
|                                               |                                                                               | Increase (decrease) in accounts payable and accrued expenses |            |            | 72,374   |   |            |            | (53,744  | )
|                                               |                                                                               | Decrease in due from related parties                         |            |            | 966      |   |            |            | 28,480   |  
|                                               |                                                                               | Decrease in due to related parties                           |            |            | (233,959 | ) |            |            | (8,411   | )
|                                               |                                                                               | (Increase) decrease in restricted cash                       |            |            | (77,385  | ) |            |            | 89,637   |  
|                                               |                                                                               |                                                              |            |            |          |  
|Net cash provided by operating activities      |                                                                               |                                                              | 1,453,585  |            |          |   | 1,788,956  |           
|                                               |                                                                               |                                                              |            |            |          |  
|Cash flows from investing activities:          |                                                                               |                                                              |            |            |          |   |            |           
|                                               | Purchase and construction advances for properties
subject to operating leases |                                                              |            | (14,000    | )        |   |            |           |         
|                                               | Proceeds from sale of equipment                                               |                                                              |            |           |          |   |            | 611,121    |         
|                                               | Principal collections on financing leases                                     |                                                              |            | 935,253    |          |   |            | 988,901    |         
|                                               |                                                                               |                                                              |            |            |          |  
|Net cash provided by investing activities      |                                                                               |                                                              | 921,253    |            |          |   | 1,600,022  |           
|                                               |                                                                               |                                                              |            |            |          |  
|Cash flows from financing activities:          |                                                                               |                                                              |            |            |          |   |            |           
|                                               | Proceeds from issuance of notes payable                                       |                                                              |            | 703,000    |          |   |            |           |         
|                                               | Repayments of notes payable                                                   |                                                              |            | (148,930   | )        |   |            |           |         
|                                               | Repurchase of limited partnership units                                       |                                                              |            | (115,442   | )        |   |            | (99,282    | )       
|                                               | Distributions to limited partners                                             |                                                              |            | (2,405,002 | )        |   |            | (2,709,999 | )       
|                                               | Distributions to general partner                                              |                                                              |            |           |          |   |            | (9,205     | )       
|                                               |                                                                               |                                                              |            |            |          |  
|Net cash used in financing activities          |                                                                               |                                                              | (1,966,374 | )          |          |   | (2,818,486 | )         
|                                               |                                                                               |                                                              |            |            |          |  
|Net increase in cash and cash equivalents      |                                                                               |                                                              | 408,464    |            |          |   | 570,492    |           
|                                               |                                                                               |                                                              |            |            |          |  
|Cash and cash equivalents, beginning of period |                                                                               |                                                              | 78,837     |            |          |   | 701,725    |           
|                                               |                                                                               |                                                              |            |            |          |  
|Cash and cash equivalents, end of period       |                                                                               | $                                                            | 487,301    |            |          | $ | 1,272,217  |           
|                                               |                                                                               |                                                              |            |            |          |  

The accompanying notes are an integral part of the financial statements.

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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
NOTES TO FINANCIAL STATEMENTS



|1. |  | THE PARTNERSHIP AND ITS SIGNIFICANT ACCOUNTING PRINCIPLES:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Captec Franchise Capital Partners L.P. IV (the Partnership), a
Delaware limited partnership, was formed on July 23, 1996 for the
purpose of acquiring income-producing commercial real properties and
equipment leased on a triple net or double net basis, primarily to
operators of national and regional chain and nationally franchised
fast food and family style restaurants, as well as other national and
regional retail chains. The general partners of the Partnership upon
formation of the Partnership were Captec Franchise Capital Corporation
IV (the Corporation), a wholly owned subsidiary of Captec Financial
Group, Inc. (Captec), and Patrick L. Beach, an individual,
hereinafter collectively referred to as the Sponsor. Patrick L. Beach
is also the Chairman of the Board of Directors, President and Chief
Executive Officer of the Corporation and Captec. In August, 1998 the
general partnership interest of the Partnership was acquired by Captec
Net Lease Realty, Inc., an affiliate of Captec, for $2,912,000.                       
|  
|   |  | The Partnership commenced a public offering of limited partnership
interest units on December 23, 1996. A maximum of 30,000 units,
priced at $1,000 per unit, were offered on a best efforts, part or
none basis. The Partnership broke impound on March 5, 1997, and the
Partnership immediately commenced operations. The Partnership
completed the sale of all 30,000 units in 1998. During 1999 the
Partnership repurchased a total of 117 units for $105,399, or 90% of
the investors capital account. In April 2000 the Partnership
repurchased a total of 110 Units for $99,282, or 90% of the investors
capital account. In October 2000 the Partnership repurchased 148 Units
for $131,080, or 89% of the investors capital account. An additional
139 Units were repurchased in April 2001 for $115,442, or 83% of the
investors capital account. The repurchase of the units was completed
pursuant to the terms of the Repurchase Plan set forth in the
Partnerships Prospectus. At September 30, 2001, the Partnership had
29,486 units issued and outstanding.
|  
|   |  | Allocation of profits, losses and cash distributions from operations
and cash distributions from sale or refinancing are made pursuant to
the terms of the Partnership Agreement. Profits and losses from
operations are allocated among the limited partners based upon the
number of units owned.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | The balance sheet of the Partnership as of September 30, 2001 and the
statements of operations and cash flows for the period ending
September 30, 2001 and 2000 have not been audited. In the opinion of
the Management, these unaudited financial statements contain all
adjustments necessary to present fairly the financial position and
results of operations and cash flows of the Partnership for the
periods then ended. Results of operations for the interim periods are
not necessarily indicative of results for the full year. These
unaudited financial statements should be read in conjunction with the
financial statements and notes thereto included in the Partnerships
annual report on Form 10-K for the year ended December 31, 2000 filed
with the United States Securities and Exchange Commission on March 30,
2001.                                                                                                                                                                                                                                    

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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
NOTES TO FINANCIAL STATEMENTS (continued)



|2. |  | LAND AND BUILDING SUBJECT TO OPERATING LEASES:                                                
|-- |  | ----------------------------------------------------------------------------------------------
|  
|   |  | The net investment in operating leases as of September 30, 2001 is
comprised of the following:

|                              |  |   |            |  
|----------------------------- |  | - | ---------- | -
|Land                          |  | $ | 11,197,200 |  
|Building and improvements     |  |   | 19,549,581 |  
|                              |  |   |           
|                              |  |   | 30,746,781 |  
|Less accumulated depreciation |  |   | (1,225,673 | )
|                              |  |   |           
|Total                         |  | $ | 29,521,108 |  
|                              |  |   |           



|3. |  | NET INVESTMENT IN FINANCING LEASES:                                                           
|-- |  | ----------------------------------------------------------------------------------------------
|  
|   |  | The net investment in financing leases as of September 30, 2001 is
comprised of the following:

|                                      |  |   |            |  
|------------------------------------- |  | - | ---------- | -
|Minimum lease payments to be received |  | $ | 5,978,264  |  
|Estimated residual value              |  |   | 232,697    |  
|                                      |  |   |           
|Gross investment in financing leases  |  |   | 6,210,961  |  
|Less unearned income                  |  |   | (1,506,942 | )
|Less direct origination costs         |  |   | (103,144   | )
|                                      |  |   |           
|Net investment in financing leases    |  | $ | 4,600,875  |  
|                                      |  |   |           



|4. |  | NOTES PAYABLE:                                                                                                                                                                                                                                                                                
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In November, 1998, the Partnership entered into a $6.375 million term
note, the proceeds of which were used to acquire additional properties.
The note has a 10-year term, is collateralized by certain properties subject
to operating leases, and bears an interest rate of 8.13% per annum.
|  
|   |  | In March, 1999, the Partnership entered into an additional $3.3 million
term note. The note also has a 10-year term, is collateralized by certain
properties subject to operating leases, and bears an interest rate of 8.5%
per annum.                                                       
|  
|   |  | In October 2000, the Partnership assumed a $3.7 million term note in
connection with the acquisition of a net leased property. The note has a
10-year term, and bears an interest rate of 8.35% per annum.                                                                                    
|  
|   |  | Debt issuance costs of approximately $595,500 in aggregate were incurred
in connection with the issuance of the notes, and are being amortized
using the straight-line method over the 10-year term.                                                                                          

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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
PART I  FINANCIAL INFORMATION




ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

When used in this discussion, the words, intends, anticipates, expects,
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties which could
cause actual results to differ materially from those projected. Such risks and
uncertainties include the following: (i) a tenant may default in making rent
payments, (ii) a fire or other casualty may interrupt the cash flow stream from
a property, (iii) the properties may not be able to be leased at the assumed
rental rates, (iv) unexpected expenses may be incurred in the ownership of the
properties, and (v) properties may not be able to be sold at the presently
anticipated prices and times.

As a result of these and other factors, the Partnership may experience material
fluctuations in future operating results on a quarterly or annual basis, which
could materially and adversely affect its business, financial condition and
operating results. These forward-looking statements speak only as of the date
hereof. The Partnership undertakes no obligation to publicly release the
results of any revisions to these forward-looking statements which may be made
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2001.During the three months ended
September 30, 2001 total operating revenue increased 8.9% to approximately
$946,000 as compared to approximately $869,000 for the three months ended
September 30, 2000. Rental revenue from operating leases for the three months
ended September 30, 2001 increased 16.2% to approximately $841,000 as compared
to approximately $724,000 for the three months ended September 30, 2000,
primarily due to the acquisition of one net leased property in October 2000.
Earned income from financing leases for the three months ended September 30,
2001 decreased 27.5% to approximately $105,000 as compared to approximately
$145,000 for the three months ended September 30, 2000 due to the amortization
of principal balances.

Operating expenses were approximately $461,000 for the three months ended
September 30, 2001 as compared to approximately $334,000 for the three months
ended September 30, 2000. The increase in operating expenses for the three
months ended September 30, 2001 as compared to the three months ended September
30, 2000 is due to a full period of depreciation for properties acquired in
preceding periods and an increase in interest expense related to the $3.7
million term note that the Partnership entered into in October 2000, in
conjunction with the acquisition of a property.

Other income was $6,000 for the three months ended September 30, 2001. The
other income was due to late fees and interest income.

As a result of the foregoing, the Partnerships net income decreased 8.0% to
$492,000 for the three months ended September 30, 2001 as compared to $535,000
for the three months ended September 30, 2000.

Nine Months Ended September 30, 2001.During the nine months ended September
30, 2001 total operating revenue increased 9.5% to approximately $2,877,000 as
compared to approximately $2,627,000 for the nine months ended September 30,
2000. Rental revenue from operating leases for the nine months ended September
30, 2001 increased 16.0% to approximately $2,523,000 as compared to
approximately $2,175,000 for the nine months ended September 30, 2000,
primarily due to the acquisition of one net leased property in October 2000.
Earned income from financing leases for the nine months ended September 30,
2001 decreased 21.6% to approximately $354,000 as compared to approximately
$452,000

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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
PART I  FINANCIAL INFORMATION




for the nine months ended
September 30, 2000 due to the sale of one equipment lease in March 2000 and the amortization of principal balances.

Operating expenses were approximately $1,363,000 for the nine months ended
September 30, 2001 as compared to approximately $996,000 for the nine months
ended September 30, 2000. The increase in operating expenses for the nine
months ended September 30, 2001 as compared to the nine months ended September
30, 2000 is due to a full period of depreciation for properties acquired in
preceding periods and an increase in interest expense related to the $3.7
million term note that the Partnership entered into in October 2000, in
conjunction with the acquisition of a property.

Other income was $6,000 for the nine months ended September 30, 2001 as
compared to other income of approximately $42,000 for the nine months ended
September 30, 2000. Other income for the nine months ended September 30, 2001
was due to late fees and interest income. Other income for the nine months
ended September 30, 2000 was a result of a gain on the sale of one equipment
lease.

As a result of the foregoing, the Partnerships net income decreased 9.1% to
$1,521,000 for the nine months ended September 30, 2001 as compared to
$1,674,000 for the nine months ended September 30, 2000.

Distributions.The Partnership announced third quarter distributions of
$750,000, of which $652,591 was distributed to its Limited Partners on October
15, 2001 and the remaining $97,409 will be distributed to those limited
partners who elected to receive distributions on a monthly basis.

LIQUIDITY AND CAPITAL COMMITMENTS

The Partnership commenced the offering of up to 30,000 limited partnership
units registered under the Securities Act of 1933, as amended, by means of a
Registration Statement which was declared effective by the Securities and
Exchange Commission on December 23, 1996. The Offering reached final funding
in December, 1998 with subscriptions for the entire offering of 30,000 units.
Net proceeds after offering expenses were approximately $26.1 million.

In December, 1998 the Partnership entered into a $6.375 million term note. The
Partnership entered into an additional $3.276 million term note in June, 1999.
Proceeds from the notes were used to acquire additional properties. The notes
have a 10-year term, are collateralized by certain properties subject to
operating leases, and bear interest at rates ranging from 8.13 to 8.5% per
annum. Debt issuance costs of approximately $595,500 in aggregate incurred in
connection with the issuance of the notes are being amortized into interest
expense over the life of the notes using the straight-line method.

The Partnership purchased one net leased real estate property in October 2000.
The Partnership assumed a $3.75 million term note in connection with the
acquisition. The note has a 10-year term and bears interest at the rate of
8.35% per annum.

At September 30, 2001, the Partnership had invested $31.9 million in 21 net
leased real estate properties and $7.7 million in 23 equipment packages. As of
September 30, 2001 the Partnerships investments were allocated approximately
80% to properties and 20% to equipment.

The Partnership expects to require limited amounts of liquid assets since the
properties and equipment leases require the lessees to pay all taxes and
assessments, maintenance and repair items (except, with respect to double net
properties, costs associated with maintenance and repair of the exterior walls
and roof of the property) and insurance premiums, including casualty insurance.
The general partners expect that the cash flow to be generated by the
Partnerships properties and equipment will be adequate to pay operating
expenses and provide distributions to Limited Partners.

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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
PART II  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS. None.




ITEM 2. CHANGES IN SECURITIES. None.




ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None.

ITEM 5. OTHER INFORMATION.Captec Net Lease Realty, Inc. (CRRR), the
general partner of Captec Franchise Capital Partners L.P. IV (the
Partnership), has entered into a definitive merger agreement with Commercial
Net Lease Realty, Inc. (NYSE: NNN). The proposed merger is expected to close
in the fourth quarter of 2001. In connection with the merger, CRRR has agreed
to sell its general partnership interest in the partnership to a wholly-owned
subsidiary of CRC Asset Acquisition LLC which is a Michigan limited liability
company of which Patrick L. Beach, the Chairman of the Board of Directors and
President and Chief Executive Officer of CRRR, is the sole member. This will
insure continuity of the management of the Partnership following the
acquisition of CRRR by CNL pursuant to the merger.

In recognition of the above facts and to facilitate the transaction, an
affiliate of Mr. Beach will purchase, immediately after the closing of the
merger, certain non-real estate assets of CRRR and assume liabilities
associated with those assets. The assets to be purchased by Mr. Beach include
the general partners interest in the Partnership.

In order to complete this transition, the limited partners will need to consent
to the transfer of the general partner interest to the affiliate of Mr. Beach.
A proxy statement regarding this consent has been filed with the Securities and
Exchange Commission. Once declared effective, the proxy statement will be
mailed to all limited partners.

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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
PART II  OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.



| |                                                                                           
| | ------------------------------------------------------------------------------------------
| | (a)               The following exhibits are included herein or incorporated by
reference:

|       |  |                                                                                                                                                                                                                                                                                             
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |  | Exhibit                                                                                                                                                                                                                                                                                     
|       |  |                                                                                                                                                                                                                                                                                             
|4      |  | Agreement of Limited Partnership of Registrant. (Incorporated by reference
from Exhibit B of the final Prospectus dated December 23, 1996,
as supplemented and filed with the Securities and Exchange
Commission, SEC File No. 333-9371)                                                    
|4.1    |  | Amended Agreement of Limited Partnership of Registrant.
(Incorporated by reference to the corresponding exhibit in the
Registrants Form 10-K for the year ended December 31, 1998)                                                                                                         
|10.1   |  | Promissory Note dated December 17, 1998 between Registrant and
National Realty Funding L.C. (Incorporated by reference to the
corresponding exhibit in the Registrants Form 10-K for the year
ended December 31, 1998)                                                                     
|10.2   |  | Promissory Note dated June 30, 1999 between Registrant and
National Realty Funding L.C. (Incorporated by reference to the
corresponding exhibit in the Registrants Form 10-Q for the quarter
ended June 30, 1999)                                                                          
|99.1   |  | Pages 35-42 of the final Prospectus dated December 23, 1997 as
supplemented. (Incorporated by reference from the final Prospectus
filed with the Securities and Exchange Commission pursuant to Rule
424(b) promulgated under the Securities Act of 1933, as amended. SEC
File No. 333-9371)



|    |                                                                                  
|--- | ---------------------------------------------------------------------------------
|(b) | Reports on Form 8-K:
30, 2001.                                                   
|   
|    | There were no reports filed on Form 8-K for the quarter ended September
30, 2001.

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SIGNATURES

Pursuant to the requirements 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.

|      |  |                                                                                                    
|----- |  | ---------------------------------------------------------------------------------------------------
|By:   |  | Captec Net Lease Realty, Inc.
Managing General Partner of
Captec Franchise Capital Partners L.P. IV
|     
|By:   |  | /s/ W. Ross MartinW. Ross Martin
Executive Vice President,
Chief Financial Officer                 
|     
|Date: |  | November 14, 2001                                                                                  

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