SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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

                For the quarterly period ended September 30, 1997

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

                         Commission file number 33-96716

                      ESSEX HOSPITALITY ASSOCIATES IV L.P.

               (Exact name of registrant as specified in charter)

                                    NEW YORK
         (State or other jurisdiction of incorporation or organization)

                                   16-1485632
                      (I.R.S. Employer Identification No.)

                               100 CORPORATE WOODS
                            ROCHESTER, NEW YORK 14623
                     (Address of principal executive office)

       Registrant's telephone number, including area code: (716) 272-2300

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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 
                  ------                              ------

As of  November  10,  1997,  a total of 2,945  Limited  Partnership  Units  were
outstanding.

                                                      


<PAGE>




                                     PART 1

                              FINANCIAL INFORMATION

 Item 1.   Financial Statements
----------------------------------------------------------------------------

                      Essex Hospitality Associates IV L.P.
                                 Balance Sheets
                           September 30, 1997 and 1996
                                   (Unaudited)

                  ASSETS                                 1997          1996
                 --------                               ------         ----
 Investments in real estate, at cost:    
      Land                                          $  2,069,129      2,640,300
      Land improvements                                    4,044
      Building                                         4,430,468
      FF&E                                               512,003
      Construction in progress                           334,462      6,507,304
                                                    ------------    -----------
                                                       7,350,106      9,147,604
      Less accumulated depreciation                      (27,076)          --
                                                    ------------    -----------
         Net investments in real estate                7,323,030      9,147,604
                                                    ------------    -----------
Investment in partnership                                444,210           --

Cash and cash equivalents                                345,220      2,454,055
Restricted cash                                        1,221,819

Deferred costs:
      Debt issuance                                      842,578        690,253
      Franchise                                           85,000        128,000
      Other                                               73,224         60,766
                                                    ------------    -----------
                                                       1,000,802        879,019
      Less accumulated amortization                     (128,676)       (51,361)
                                                    ------------    -----------
                                                         872,126        827,658
                                                    ------------    -----------

Other assets                                             253,090        494,340
                                                    ------------    -----------

      Total assets                                  $ 10,459,495     12,923,657
                                                    ============    ===========

           LIABILIITIES AND PARTNERS' CAPITAL
           ----------------------------------
Liabilities
      Accounts payable - construction               $     54,425         47,696
      Accounts payable and accrued expenses               34,210         46,241
      Subordinated notes payable                       5,298,000      4,920,000
      First mortgage loan payable                      4,500,000           --
     Construction loan payable                              --        4,213,008
      Notes payable                                         --        1,500,000
                                                    ------------    -----------
          Total liabilities                            9,886,635     10,726,945
                                                    ------------    -----------

      Minority interest - Essex Glenmaura L.P.              --          973,087
                                                    ------------    -----------

Commitments and contingencies (notes 5 and 6)

Partners' capital                                        594,375      1,396,824
      Less notes receivable from partners                (21,515)      (173,199)
                                                    ------------    -----------
          Total partners' capital                        572,860      1,223,625
                                                    ------------    -----------

Total liabilities and partners' capital             $ 10,459,495     12,923,657
                                                    ============    ===========



 See accompanying notes to unaudited financial statements.

<PAGE>



                      Essex Hospitality Associates IV L.P.
                               Statement of Income
               For the Quarters ended September 30, 1997 and 1996
                                   (Unaudited)

                                                            1997          1996
                                                            ------        -----
 REVENUE:
 --------
      Rooms                                                420,440       56,629
      Food and beverage                                       --         11,265
      Telephone and other commissions                       17,055        4,313
                                                           -------     --------
                                                           437,495       72,207
                                                           -------     --------

OPERATING EXPENSES:
------------------
      Rooms                                                103,770       27,924
      Food & beverage expenses                                --         21,148
      Commissions expenses                                   3,039          402
      Advertising & promotion                               16,521       13,817
      Repairs & maintenance                                 12,240        8,885
      Utilities                                              8,135         --
      Administrative & general                              20,125        9,438
      Property taxes                                          --           --
      Insurance                                              2,114        1,095
      Royalty fees                                           9,234        2,265
      Management fees                                       15,417        3,254
      Partnership management fees                            2,570          542
      Depreciation and amortization                         57,912       10,995
      Miscellaneous                                         20,266        2,762
                                                           -------     --------
                                                           271,343      102,527
                                                           -------     --------

            Income from operations                         166,152      (30,320)

      Interest expense                                    (128,881)    (111,187)
      Interest income                                          759       17,541
      Equity (loss) of partnership                         (62,384)        --
                                                           -------     --------
                                                          (190,506)     (93,646)
                                                           -------     --------

         Income (loss) before minority interest
              in loss of partnership                       (24,354)    (123,966)
                                                           -------     --------

Minority interest in income/(loss) of partnership             --        (46,697)
                                                           -------     --------

Net loss (loss)                                            (24,354)     (77,269)
                                                          ========     ========

Net loss - general partners                                   (244)        (773)
               - limited partners                          (24,110)     (76,496)
                                                           -------     --------
                                                           (24,354)     (77,269)
                                                          ======================


Net loss per limited partner unit                              (10)         (52)
                                                          ======================

 See accompanying notes to unaudited financial statements.




<PAGE>


<TABLE>
<CAPTION>

                             Essex Hospitality Associates IV L.P.
                                   Statements of Cash Flows
                      For the Quarters ended September 30, 1997 and 1996
                                         (Unaudited)

                                                              1997           1996
                                                             ------         ------
<S>                                                           <C>            <C>   
 Cash flows from operating activities
      Cash received from customers                            385,863        53,310
      Cash paid to suppliers                                 (284,003)      (52,775)
      Interest received                                           759        17,551
      Interest paid                                          (128,881)     (111,187)
                                                           ----------    ----------
         Net cash from operating activities                   (26,262)      (93,101)
                                                           ----------    ----------

Cash flows from investing activities
      Payments for land and construction in progress       (2,023,556)   (3,236,046)
      Increase in restricted cash                          (1,221,819)         --
      Payments for deposits                                   (46,314)      126,756
                                                           ----------    ----------
         Net cash used in investing activities             (3,291,689)   (3,109,290)
                                                           ----------    ----------

Cash flows from financing activities
      Partners' capital contributions                          16,927       270,972
      Payments for syndication costs                          (12,341)      (30,085)
      Proceeds from subordinated notes payable                   --         277,000
      Proceeds from construction loan                            --       3,035,859
      Proceeds from first mortgage loan                     4,500,000          --
      Repayment of advance from affiliate                    (596,156)         --
      Payments for debt acquisition costs                    (232,431)      (38,032)
      Distributions received from partnership investment       22,900          --
      Payments for distributions                              (46,741)      (34,488)
                                                           ----------    ----------
         Net cash from financing activities                 3,652,158     3,481,226
                                                           ----------    ----------
Net increase in cash and cash equivalents                     334,207       278,835

Cash and cash equivalents - beginning of quarter               11,013     1,354,265
                                                           ----------    ----------

Cash and cash equivalents - end of quarter                    345,220     1,633,100
                                                           ==========    ==========

</TABLE>







See accompanying notes to unaudited financial statements.






<PAGE>
<TABLE>
<CAPTION>

                             Essex Hospitality Associates IV L.P.
                                   Statements of Cash Flows
                      For the Quarters ended September 30, 1997 and 1996
                                         (Unaudited)

<S>                                                                              <C>           <C>     
Reconciliation of net income to net cash flows from operating activities:

Net loss                                                                         (24,354)      (77,269)

Adjustments to reconcile net loss to net cash used in operating activities:
      Depreciation and amortization                                               57,912        10,995
       Minority interest in net loss of partnership                                 --         (46,697)
      Equity loss of partnership                                                  62,384          --
      Changes in:
          Other assets                                                          (153,308)      (18,228)
         Accounts payable and other expenses                                      31,104        38,098
                                                                              ----------    ----------
                                                                                 (26,262)      (93,101)
                                                                              ==========    ==========



Supplemental schedule of noncash investing and financing
      activities:
      Obligations incurred (repaid) in connection with
            construction in progress                                          (1,509,106)   (1,299,340)

      Notes received from  (paid by) general and limited
            partners                                                             (16,927)        2,389


</TABLE>




 See accompanying notes to unaudited financial statements.





<PAGE>







                       ESSEX HOSPITALITY ASSOCIATES IV L.P
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                               September 30, 1997

1)       ORGANIZATION
         ------------

         Essex  Hospitality  Associates IV L.P. (the  Partnership) is a New York
         limited  partnership  formed  on August  30,  1995 for the  purpose  of
         acquiring  land and  constructing,  owning  and  operating  a series of
         hotels.  The  Partnership  may also  invest in and lend  funds to other
         partnerships  that  own  hotels.   The  Partnership  is  financing  its
         activities  through a public offering of notes and limited  partnership
         units. The Partnership's  general partner is Essex Partners Inc. (Essex
         Partners), a subsidiary of Essex Investment Group, Inc. (Essex).

         The  Partnership  has acquired  land in order to construct  and operate
         hotels.  In December 1995, land was purchased in Solon,  Ohio.  Hampton
         Inn hotel opened on the Solon site on August 1, 1997. As a condition to
         receiving permanent financing,  a special purpose entity was created to
         own the Solon  Hampton Inn,  Solon Hotel LLC.  The  managing  member of
         Solon Hotel LLC is Essex Hotel LLC, a single  purpose entity created to
         act as the managing member of Solon Hotel LLC. The membership interests
         in Solon  Hotel LLC are owned  99% by the  Partnership  and 1% by Essex
         Hotel LLC, whose sold member is the Partnership.

         In December 1995, the Partnership also purchased land in Warwick, Rhode
         Island in anticipation of the  construction of a Homewood Suites hotel.
         Construction   was  delayed  as  a  result  of  higher  than  projected
         construction costs and a change in market  conditions.  The Partnership
         has decided not to proceed with construction of the Homewood Suites and
         is currently  pursuing a sale of the site. The disposal is not expected
         to have a significant impact on the Partnership's financial statements.

         In June 1997, the Partnership purchased land in Erie,  Pennsylvania for
         construction  of a Hampton  Inn hotel.  In June 1997,  the  Partnership
         transferred  the Erie property to a single purpose  entity,  Erie Hotel
         LLC.  The  managing  member of Erie Hotel LLC is Essex Hotels II LLC, a
         single  purpose  entity  created to act as the managing  member of Erie
         Hotel LLC. The membership  interests in Erie Hotel LLC are owned 99% by
         the Partnership and 1% by Essex Hotels II LLC, whose sole member is the
         Partnership.  The Partnership is currently  negotiating with GMAC for a
         first mortgage loan in the principal  amount of $4.5 million to finance
         the construction of the Erie Hampton Inn hotel.

         In January 1996,  the  Partnership  acquired a 54% limited  partnership
         interest in Essex  Glenmaura L.P.  (Glenmaura)  through the purchase of
         12.5 limited  partnership units for $1,250,000.  The purchase price was
         equal  to the  prorata  portion  of the fair  value  of the net  assets
         acquired.  Glenmaura  owns and operates a Courtyard  by Marriott  hotel
         near Scranton,  Pennsylvania.  Construction  of the hotel was completed
         during 1996 and  operations  began on September 4, 1996. As a condition
         to  receiving  permanent  financing  for the  Solon  Hampton  Inn,  the
         Partnership  was required to reduce its investment in Glenmaura to less
         than 50%. In June 1997, 1.05 units were sold to the general partner for
         $105,000 reducing the Partnership's interest to 49.8%.







<PAGE>


                       ESSEX HOSPITALITY ASSOCIATES IV L.P
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                               September 30, 1997

1) ORGANIZATION (CONTINUED)
   ------------------------

         The  following is a general  description  of the  allocation of income,
         loss, and distributions.  For a more comprehensive  description see the
         Partnership Agreement:

                  Allocation of income from  operations will be allocated 99% to
                  the limited  partners and 1% to the general  partner until the
                  amount allocated to the limited partners equals the cumulative
                  annual  return  of 8% of  their  contribution.  Any  remaining
                  income  from  operations  is  allocated  80%  to  the  limited
                  partners and 20% to the general partner. Income on the sale of
                  any or  all of the  hotels  is  allocated  99% to the  limited
                  partners until each limited partner has been allocated  income
                  in an  amount  equal  to his  or her  pro  rata  share  of the
                  nondeductible syndication expenses and sales commission and 1%
                  to the general partner. Thereafter,  income on the sale of any
                  or all the hotels is  allocated  in the same  manner as income
                  from operations.

                  Allocations of losses from operations will be allocated 80% to
                  the limited  partners  and 20% to the  general  partner in the
                  amounts  sufficient  to offset all income which was  allocated
                  80% to the limited partners. Thereafter,  operating losses are
                  allocated  99% to the limited  partners  and 1% to the general
                  partner.  Loss on the sale of any or all of the hotels will be
                  first allocated in the same manner as losses from  operations,
                  except that the allocation of such loss would be made prior to
                  allocations  of income from  operations.  All other losses are
                  allocated  99% to the limited  partners  and 1% to the general
                  partner.

                  Cash  distributions  will initially be made 99% to the limited
                  partners  and 1% to the  general  partner.  After the  limited
                  partners  have  received a cumulative  annual  return of 8% of
                  their contribution,  additional distributions may then be made
                  80% to the limited  partners  and 20% to the general  partner.
                  Distributions  of the net proceeds of sale or  refinancing  of
                  any or all hotels will be made 1% to the  general  partner and
                  99% to the limited  partners  prorata in  accordance  with the
                  number of units held by each limited partner until the limited
                  partners have received distributions from sale or refinance of
                  hotels  equal to $1,000  per unit.  Thereafter,  distributions
                  shall next be made 1% to the  general  partner  and 99% to the
                  limited  partners until each limited  partner has received any
                  unpaid  cumulative  return  accrued  through  the  date of the
                  distribution.  Additional  distributions will then be made 20%
                  to the general partner and 80% to the limited partners.

         Essex  Partners and its affiliates  are receiving  substantial  fees in
         connection  with the offering of notes and limited  partnership  units.
         Additional   fees  will  be  paid  to  them  in  connection   with  the
         acquisition,  development and operation of the hotels and management of
         the Partnership (see note 5).

         In  accordance  with  the  Partnership  agreement,  the  ratio of gross
         proceeds from the offering of limited  partnership units to total gross
         proceeds  from the public  offering  of notes and  limited  partnership
         units prior to the termination of the offering may not be less than .15
         to 1. At September 30, 1997, that ratio was .36 to 1.


<PAGE>


                       ESSEX HOSPITALITY ASSOCIATES IV L.P
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                               September 30, 1997

(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         ------------------------------------------

         BASIS OF ACCOUNTING
         -------------------

         The  financial  statements  of the  Partnership  were  prepared  on the
         accrual  basis of  accounting in  conformity  with  generally  accepted
         accounting principles.

         UNAUDITED INTERIM FINANCIAL INFORMATION
         ---------------------------------------

         The interim  financial data included in these  financial  statements is
         unaudited;  however, in the opinion of management,  such financial data
         includes all adjustments of a normal  recurring  nature necessary for a
         fair presentation of the Partnership's  financial condition and results
         of operation.

         INVESTMENT IN PARTNERSHIP
         -------------------------

         Investment in partnership with a 50% or less ownership interest will be
         accounted for by the equity method.  Ownership  interests exceeding 50%
         will be accounted for under the consolidated method.

         INVESTMENT IN REAL ESTATE
         -------------------------

         Investment in real estate is stated at cost.  Investment in real estate
         is   reviewed   for   possible   impairment   when  events  or  changed
         circumstances   may   affect  the   underlying   basis  of  the  asset.
         Depreciation is calculated using the straight-line method for buildings
         and accelerated methods for land improvements,  furniture, fixtures and
         equipment  over the following  estimated  useful lives of the assets as
         each hotel commences operations:

               Buildings                                    39 years

               Land improvements                            15 years

               Furniture, fixtures and equipment            5 - 7 years


         CASH AND CASH EQUIVALENTS
         -------------------------

         Cash investments with maturities of three months or less at the time of
         purchase are considered to be cash equivalents.

         DEFERRED COSTS
         --------------

         Costs of issuing the subordinated  notes payable will be amortized on a
         straight-line basis over the term of the notes.

         Franchise fees paid for the right to own and operate the hotels will be
         amortized  on a  straight-line  basis  over the term of each  franchise
         agreement, as each hotel commences operations.


<PAGE>


                       ESSEX HOSPITALITY ASSOCIATES IV L.P
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                               September 30, 1997

(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         ------------------------------------------------------

         SYNDICATION COSTS
         -----------------

         Selling  commissions and legal,  accounting,  printing and other filing
         costs  totaling  $339,479  related  to  the  offering  of  the  limited
         partnership  units were  charged  against  the  proceeds  of the public
         offering.

         INCOME TAXES
         ------------

         No provision for income taxes has been provided  since any liability is
         the individual responsibility of the partners.

         RECOGNITION OF REVENUE
         ----------------------

         Revenues  are  recognized  as earned  in  accordance  with  contractual
         arrangements for each transaction.

         LIMITED PARTNERSHIP PER UNIT DATA
         ---------------------------------

         Net loss per limited partner unit is calculated by dividing net loss by
         the weighted average number of units  outstanding  during the year. The
         weighted average number of units outstanding was 2,402 during the third
         quarter, 1997.

         USE OF ESTIMATES
         ----------------

         The  preparation  of  the  financial   statements  in  conformity  with
         generally accepted  accounting  principles requires the general partner
         to make estimates and assumptions  that affect the reported  amounts of
         asset  and  liabilities   and  disclosure  of  contingent   assets  and
         liabilities  at the date of the financial  statements  and the reported
         amounts of income and  expenses  during the  reporting  period.  Actual
         results could differ from those estimates.


(3)      DEBT
         ----

         FIRST MORTGAGE LOAN
         -------------------

         On July 7, 1997, Solon Hotel LLC obtained permanent financing from GMAC
         Commercial  Mortgage  Corporation for $4,500,000.  The term of the loan
         will be for four years  with a one year  extension  available  upon the
         payment of an extension  fee and if certain  debt  service  coverage is
         attained.  Interest  will accrue at 3.25% over the 30-day  LIBOR index.
         Monthly  payments  of  interest  only will be due for the  first  year.
         Principal and interest  payments are due thereafter  based on a 25-year
         amortization.  Starting in the second year of the loan, Solon Hotel LLC
         will be  required to  maintain a  replacement  reserve of 2% of monthly
         room revenues.  The replacement  reserve payment will increase to 4% of
         monthly  room  revenues  in the  third  year of the  loan.  The loan is
         collateralized  by the real and  personal  property  and certain  other
         assets.



<PAGE>


                       ESSEX HOSPITALITY ASSOCIATES IV L.P
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                               September 30, 1997

(3)      DEBT (CONTINUED)
         ----------------

         SUBORDINATED NOTES PAYABLE
         --------------------------

         Subordinated  notes  payable  of the  Partnership  of  $5,182,000  bear
         interest  at a rate of 10.5% per  annum,  payable  monthly,  and mature
         December 31, 2001,  unless  extended by the Partnership to December 31,
         2002 upon  payment to holders of an  extension  fee equal to .5% of the
         principal amount of the subordinated notes  outstanding.  The notes are
         issued as unsecured obligations of the Partnership.

         The aggregate annual principal payments of the debt obligations for the
         three months ended  December 31, 1997 and years  subsequent to 1997 are
         as follows:


                  1997                                 -0-
                  1998                              24,039
                  1999                              51,484
                  2000                              56,383
                  2001                           9,666,094
                                  ------------------------
                                                 9,798,000
                                  ========================
                        
         In the third  quarter  1997,  interest  of $73,057 was  capitalized  in
         investments in real estate as the debt was used to finance construction
         of hotels. No interest was capitalized in the third quarter, 1996.

(4)      FRANCHISE FEES
         --------------

         In 1995, Promus  Corporation  (Promus) approved a license agreement for
         the  Partnership  to  operate a Hampton  Inn hotel in Solon,  Ohio.  An
         initial  franchise  fee of $40,000 was paid. In 1997,  the  Partnership
         entered into a license  agreement  with Promus to operate a Hampton Inn
         in Erie,  Pennsylvania  which  required  an  initial  franchise  fee of
         $45,000. The term and amortization period of the license agreements are
         twenty years.  In addition,  for each hotel,  the  Partnership  will be
         required  to pay  Promus a  monthly  royalty  fee of 4% of gross  rooms
         revenues,  a  monthly  marketing/reservation  fee of 4% of gross  rooms
         revenue,  an initial  software license fee of $3,000 plus $85 per guest
         room with a monthly maintenance charge of $300 to $400 per month, and a
         monthly  amount equal to any sales tax or similar tax imposed on Promus
         on payments  received  under the  license  agreement.  The  Partnership
         incurred  royalty and marketing/  reservation fees of $9,234 during the
         third  quarter,  1997.  No royalty or  marketing/reservation  fees were
         incurred in the third quarter, 1996.

         Promus  requires the  Partnership to establish a capital reserve escrow
         account based on a percentage of gross revenues generated by each hotel
         which  will be used for  product  quality  requirements  of the  hotel.
         Cumulative funding of the reserve for the first five years increases


<PAGE>


                       ESSEX HOSPITALITY ASSOCIATES IV L.P
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                               September 30, 1997

(4)      FRANCHISE FEES (CONTINUED)
         --------------------------

         from 1% to 5% of gross  revenues and  stabilizes  at 5% for the term of
         the  agreement.   The  Promus  franchise   agreements   impose  certain
         restrictions  on the  transfer  of limited  partnership  units.  Promus
         restricts  the  sale,  pledge  or  transfer  of units in  excess of 25%
         without their consent.

         In 1995, the Partnership  entered into a license  agreement with Promus
         to operate a Homewood Suites hotel in Warwick, Rhode Island. An initial
         franchise  fee of $40,000 was paid.  The  franchise  agreement  for the
         Homewood  Suites in Warwick has  expired.  The  franchise  fee has been
         written off since the franchise agreement has expired.

(5)      RELATED PARTY TRANSACTIONS
         --------------------------

         A summary of fees earned by Essex  Partners or its  affiliates  for the
         three  months  ended   September  30,  1997  under  the  terms  of  the
         Partnership agreement follows:
<TABLE>
<CAPTION>


                                                                              3RD QTR         3RD QTR
  TYPE OF FEE                   AMOUNT OF FEE                                  1997            1996
  -----------                   -------------                                  ----            ----
<S>                          <C>                                        <C>               <C>     
Selling Commission            Up to $80 per limited partnership           $       -0-        $ 36,120
                              unit and $55 per $1,000 sold

Organization and              3.4% of the gross proceeds of the                   -0-          18,620
Offering Fee                  offering

Acquisition Fee               $110,000 per hotel site                             -0-             -0-

Development Fee               $160,000 per hotel, plus 5% of the               34,000             -0-
                              total cost of the hotel in excess of
                              $2.7 million (not to exceed $325,000
                              per hotel)

Property                      4.5% of gross operating revenues                 15,417             -0-
Management Fee                from the hotels

Partnership                   .75% to 1.25% of gross operating                  2,570             -0-
Management Fee                revenues from the hotels

Accounting Fee                $800 per month                                    1,600             -0-
                                                                             $ 53,587        $ 54,740
                                                                             ========        ========

</TABLE>






<PAGE>


                       ESSEX HOSPITALITY ASSOCIATES IV L.P
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                               September 30, 1997


(5)      RELATED PARTY TRANSACTIONS (CONTINUED)
         --------------------------------------

         The above fees are reflected in the accompanying  financial  statements
as follows:
<TABLE>
<CAPTION>

          
                                                                   3rd Qtr      3rd Qtr
          Balance Sheet:                                            1997         1996
                                                                 ----------   --------
<S>                                                              <C>          <C> 
     Investment in real estate                                   $   34,000   $   -0-

     Deferred debt issuance costs                                       -0-     24,655

     Syndication costs, charged to partner's capital                    -0-     30,085

                                                                 $   34,000   $ 54,740
                                                                 ==========   ========
          Statements of Operations:

     Management fees to affiliates                                  $15,417        -0-

     Administrative expense                                           1,600        -0-

     Partnership management fees                                      2,570        -0-

                                                                    $19,587   $    -0-
                                                                 ==========   ========
</TABLE>

         Organization  and offering fees are allocated to syndication  costs and
         debt issuance  costs based on the pro-rata  share of limited  partner's
         units and notes payable to the total offering.

         Under the terms of the  Partnership  agreement,  Essex  Partners or its
         affiliates will also earn other fees as follows:



              TYPE OF FEE                   AMOUNT OF FEE
              -----------                   -------------
     Investor Relations Fee    .25% of the gross proceeds of the offering 
                                payable annually in 1998 through 2001
     Refinancing Fee           1% of the gross proceeds of re-financing any 
                               or all of the hotels
     Sales Fee                 3% of the gross sale price of any or all 
                               of the hotels


         The  Partnership  will  also be  subject  to a number of  conflicts  of
         interest arising from its relationships  with the general partner,  its
         owners and affiliates and due to other activities and entities in which
         the  general  partner and its  affiliates  have or may have a direct or
         indirect financial interest.


<PAGE>


                       ESSEX HOSPITALITY ASSOCIATES IV L.P
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                               September 30, 1997


(6)      INVESTMENT IN PARTNERSHIP
         -------------------------

         The Partnership owns a 49.8% interest in Essex Glenmaura L.P. (see note
         1). Summarized financial  information for Essex Glenmaura as of and for
         the three monthls ended June 30, 1997 follows:


                Assets                            $ 7,620,000

                Liabilities                         6,649,000

                Partners' capital                     971,000

                Revenues                              587,000

                Net loss                            (125,000)






<PAGE>




                                 Essex Glenmaura L.P.
                                  Balance Sheet
                           September 30, 1997 and 1996
                                   (unaudited)


                       ASSETS                      1997          1996
                      --------                    ------         -----
 Investments in real estate, at cost:
      Land                                      $ 1,223,636     1,223,636
      Land improvements                             283,116          --
      FF&E                                        1,387,260          --
      Building                                    4,969,620          --
      Construction in progress                         --       6,004,688
                                                -----------    ----------
                                                  7,863,632     7,228,324
      Less accumulated depreciation                (577,136)         --
                                                -----------    ----------
         Net investments in real estate           7,286,497     7,228,324
                                                -----------    ----------

Unrestricted cash and cash equivalents              (44,265)       56,731

Restricted cash and cash equivalents                 89,005          --

Deferred costs:
      Debt issuance                                 268,887       192,115
      Franchise                                      48,000        48,000
      Other                                          10,000        10,000
                                                -----------    ----------
                                                    326,887       250,115
      Less accumulated amortization                (173,583)      (18,376)
                                                -----------    ----------
                                                    153,304       231,739
                                                -----------    ----------

Other assets                                        135,429       492,386
                                                -----------    ----------

      Total assets                              $ 7,619,970     8,009,180
                                                ===========    ==========

        LIABILIITIES AND PARTNERS' CAPITAL
        ----------------------------------
Liabilities
      Accounts payable and accrued expenses     $   129,307        39,047
      Accounts payable - construction                19,876        21,491
      First mortgage loan payable                 5,000,000          --
      Construction loan payable                        --       4,213,008
      Notes payable                               1,500,000     1,500,000
                                                -----------    ----------
          Total liabilities                       6,649,183     5,773,546
                                                -----------    ----------

Commitments and contingencies (notes 5 and 6)

Partners' capital                                   970,787     2,235,634
                                                -----------    ----------

Total liabilities and partners' capital         $ 7,619,970     8,009,180
                                                ===========    ==========


See accompanying notes to unaudited financial statements.



<PAGE>



                                Essex Glenmaura L.P.
                                Statements of Income
                 For the Quarters ended September 30, 1997 and 1996
                                    (unaudited)


                                                   1997          1996 
                                                   ----          ---- 
Revenue:
      Rooms                                        499,710      56,629
      Food and beverage                             54,153      11,265
      Telephone and other commissions               33,132       7,136
                                                   -------      ------
                                                   586,995      75,030
                                                   -------      ------

Operating expenses:
      Rooms                                        133,012      27,991
      Food & beverage expenses                      55,130      21,148
      Administrative & general                      46,431       9,104
      Utilities                                     29,888        --
      Advertising & promotion                       35,287      12,684
      Repairs & maintenance                         26,713       8,885
      Management fees                               27,204        --
      Royalty fees                                  22,075        --
      Commissions expenses                          15,648         402
      Property taxes                                28,592        --
      Insurance                                      4,906       1,095
      Miscellaneous                                    433        --
      Partnership management fees                    4,534        --
      Depreciation and amortization                133,418        --   
                                                   -------      ------
                                                   563,271      81,309
                                                   -------      ------

Income (loss) from operations before interest       23,724      (6,279)

      Interest expense                            (149,010)       --
      Interest income                                   18          10
                                                   -------      ------
                                                  (148,992)         10
                                                   -------      ------

 Net loss                                         (125,268)     (6,269)
                                                  --------      ------ 


 Net loss - general partners                        (5,011)       (251)
                - limited partners                (120,257)     (6,018)
                                                  --------      ------ 
                                                 $(125,268)   $ (6,269)
                                                 =========    ========

 Net loss per limited partner unit               $  (5,466)   $   (274)
                                                 =========    ========



 See accompanying notes to unaudited financial statements.






<PAGE>



<TABLE>
<CAPTION>

                                  Essex Glenmaura L.P.
                                Statements of Cash Flows
                   For the Quarters Ended September 30, 1997 and 1996
                                       (unaudited)

                                                                                1997          1996
                                                                                ----          ----
<S>                                                                         <C>           <C>   
 Cash flows from operating activities
      Cash received from customers                                            $ 623,564        42,895
      Cash paid to suppliers                                                   (427,153)     (288,801)
      Interest received                                                              18            10
      Interest paid                                                            (149,010)         --
                                                                              ---------    ----------
         Net cash from operating activities                                      47,419      (245,896)
                                                                              ---------    ----------

Cash flows from investing activities
      Payments for land and construction in progress                            (68,863)   (2,865,208)
      Payments for deposits                                                       5,732       126,756
                                                                              ---------    ----------
         Net cash used in investing activities                                  (63,131)   (2,738,452)
                                                                              ---------    ----------

Cash flows from financing activities
      Construction loan advances                                                   --       3,035,859
      Escrow account deposits                                                   (34,653)         --
      Escrow account disbursements                                               66,167          --
      Payments for debt acquisition costs                                          (457)      (11,435)
      Payments for distributions                                                (46,000)         --
                                                                              ---------    ----------
         Net cash from financing activities                                     (14,943)    3,024,424
                                                                              ---------    ----------

Net increase in cash and cash equivalents                                       (30,655)       40,076

Cash and cash equivalents - beginning of period                                 (13,610)       16,655
                                                                              ---------    ----------

Cash and cash equivalents - end of period                                     $ (44,265)       56,731
                                                                              =========    ==========


Reconciliation of net income to net cash flows
  from operating activities:

Net loss                                                                       (125,268)       (6,269)

Adjustments to reconcile net loss to net cash used in operating activities:
      Depreciation and amortization                                             133,418          --
      Changes in:
         Shortterm assets                                                        13,104      (203,346)
         Accounts payable and other expenses                                     26,165        38,749
                                                                              ---------    ----------
                                                                              $  47,419      (245,896)
                                                                              =========    ==========

Supplemental schedule of noncash investing and financing
      activities:
      Obligations paid in connection with
            construction in progress                                               --       1,320,000


</TABLE>

See accompanying notes to unaudited financial statements.

<PAGE>


 


                                  ESSEX GLENMAURA L.P.
                                 (A Limited Partnership)
                         Notes to Unaudited Financial Statements
                               September 30, 1997 and 1996

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      SCOPE OF BUSINESS

      The Partnership is a New York Limited Partnership formed to construct, own
      and  operate  a  120-room  hotel,  Courtyard  by  Marriott,  Southeast  of
      Scranton,   Pennsylvania   under  a  franchise   agreement  with  Marriott
      International,  Inc. (the Project). Construction was completed during 1996
      and operations began on September 4, 1996.

      The  Partnership  was  formed on May 18,  1995 and will  terminate  on the
      earlier of December  31, 2045 or the date the  Partnership  is  terminated
      pursuant to the partnership agreement or by law.

      UNAUDITED INTERIM FINANCIAL INFORMATION

      The interim  financial  data  included in these  financial  statements  is
      unaudited;  however,  in the opinion of  management,  such  financial data
      includes all adjustments of a normal recurring nature necessary for a fair
      presentation  of the  Partnership's  financial  condition  and  results of
      operations
 .
      ALLOCATIONS OF INCOME OR LOSS

      The Partnership  agreement  provides that net losses of the Partnership be
      first allocated among the Partners to the extent of the positive  balances
      in the Partners' capital accounts,  to make the respective  balances equal
      to the distributions  that would have been made had the aggregate balances
      in all Partners' capital accounts been distributed in accordance with each
      Partner's pro rata share.  Losses are next  allocated in  accordance  with
      each Partner's pro rata share in an amount equal to the difference between
      nonrecourse  debt  of  the  Partnership  and  the  adjusted  basis  of the
      Partnership property securing such nonrecourse debt. All additional losses
      are allocated to the General Partner. Net income is allocated first to the
      General  Partner in an amount  equal to the loss  allocated to the General
      Partner as described above.  Next,  income is allocated in accordance with
      each  Partner's pro rata share in an amount equal to the loss allocated to
      the  Partners  as  described  above.  Income  is then  allocated  to those
      Partners with negative balances in their capital accounts.  All additional
      income is then allocated in accordance with each Partner's pro rata share.

      CASH AND CASH EQUIVALENTS

      For the purposes of the financial  statements,  cash and cash  equivalents
      include money market funds and commercial savings accounts.

      METHOD OF ACCOUNTING

      The  Partnership  has prepared  its  financial  statements  on the accrual
      method of accounting.

      INCOME TAXES

      No provision for income taxes has been provided since any liability is the
      individual responsibility of the Partners.

      INVESTMENT IN REAL ESTATE

      The  investment in real estate is stated at cost and includes  $261,929 of
      capitalized  interest.  Depreciation is calculated using straight-line and
      accelerated methods over the estimated useful lives of the assets.


                                        1

<PAGE>


                                   ESSEX GLENMAURA L.P.
                                 (A Limited Partnership)
                         Notes to Unaudited Financial Statements
                               September 30, 1997 and 1996

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      DEFERRED COSTS

      Organization  costs are being  amortized on a  straight-line  basis over a
      period of sixty months, beginning the first month of operation.

      Debt  acquisition  fees are being  amortized  over the life of the related
      debt on a straight-line basis.

      DISTRIBUTIONS

      Distributions  shall be made in  accordance  with each  Partner's pro rata
      share at an amount and time determined by the General Partner.

      SYNDICATION COSTS

      Selling commissions, legal and other costs totaling $46,617 related to the
      offering  of limited  Partnership  units were  charged  against  Partner's
      capital.

      USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

      The  preparation  of financial  statements  in conformity  with  generally
      accepted  accounting  principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure  of  contingent  assets  and  liabilities  at the  date  of the
      financial  statements  and the  reported  amounts of revenues and expenses
      during the  reporting  period.  Actual  results  could  differ  from those
      estimates.

      REVENUE RECOGNITION

      Revenues  are  recognized  as  earned  in  accordance   with   contractual
      arrangements fro each transaction.

      IMPAIRMENT OF LONG-LIVED ASSETS

      In accordance  with Statement of Financial  Accounting  Standards No. 121,
      "Accounting for Impairment of Long-Lived  Assets and for Long-Lived Assets
      to Be Disposed Of", the Partnership  reviews long-lived assets and certain
      identifiable  intangibles  for  possible  impairment  whenever  events  or
      changes in circumstances indicate that the carrying amount of an asset may
      not be recoverable.

2.    DEPOSIT

      The Partnership has made a  non-refundable  deposit of $55,000 pursuant to
      an option  to  purchase  a second  parcel  of land  (the  Second  Project)
      adjacent to the Project for purposes of  constructing a second hotel.  The
      option  agreement  expired  in  December  of 1996 but is  currently  being
      renegotiated.




              
                                        2

<PAGE>


                                   ESSEX GLENMAURA L.P.
                                 (A Limited Partnership)
                         Notes to Unaudited Financial Statements
                               September 30, 1997 and 1996

3.    FINANCING OF INVESTMENT IN REAL ESTATE

      Financing of real estate  consists of the  following at September 30, 1997
      and 1996:

      NOTES PAYABLE

      Notes payable consist of $1,500,000 of unsecured  notes requiring  monthly
      installments of interest only at 10.5% per annum. The notes mature on June
      1, 1998 upon  which  all  principal  will be due  unless  the  Partnership
      exercises its early repayment or note extension  options.  The Partnership
      has the right to repay the notes at face value.  The Partnership  also has
      the option to exercise two one-year  extensions at extension  fees ranging
      from one-half to one percent.  Essex Partners Inc.  guarantees  payment of
      principal and interest on the notes.

      MORTGAGE LOAN

      On February 28, 1997, the Partnership  obtained  permanent  financing from
      GMAC Corporation for $5,000,000. The term of the loan is four years with a
      one year extension available if certain debt service coverage is attained.
      Monthly  payments  of interest  only are due for the first year.  Interest
      accrues at 3% over the LIBOR rate. Principal and interest payments are due
      thereafter based on a twenty-five year loan amortization.  Starting in the
      second year of the loan,  the  Partnership  will be required to maintain a
      replacement  reserve  escrow at 4% of room  revenues.  A commitment fee of
      $50,000 (1% of the loan proceeds) was paid, 50% of the fee upon acceptance
      of the commitment and 50% at closing.  The loan is  collateralized  by the
      real and personal property and certain other assets.

      The aggregate annual  principal  payments for the years subsequent to 1997
      are as follows: (there are no principal payments required in 1997)


                  1998             $ 1,539,129
                  1999                  51,449
                  2000                  56,836
                  2001               4,852,586
                                 -------------
                                   $ 6,500,000
                                 =============


      CONSTRUCTION LOAN

      The  Partnership  received  construction  financing from Key Bank of up to
      $4,500,000,  of which  $1,177,149  had been drawn down as of June 30, 1996
      and required  monthly payments of interest only at a rate of 2.5% over the
      LIBOR rate. The construction  loan was repaid with proceeds from the first
      mortgage loan.




                                        3

<PAGE>


                                   ESSEX GLENMAURA L.P.
                                 (A Limited Partnership)
                         Notes to Unaudited Financial Statements
                               September 30, 1997 and 1996

4.    RELATED PARTY TRANSACTIONS

      A summary of the fees earned by Essex  Partners or its  affiliates in 1996
      and 1995 under the terms of the Partnership agreement are as follows:
<TABLE>
<CAPTION>

                                                                                THREE MONTHS ENDED
                                                                                -------------------

TYPE OF FEE                   AMOUNT OF FEE                                      SEPT 1997   SEPT 1996
-----------                   -------------                                      ---------   ---------
<S>                          <C>                                                  <C>         <C>     
Property Management Fee      4.5% of gross operating revenues from the hotel      27,204         --
Partnership Management Fee   .75% of gross operating revenues from the hotel       4,534         --
Accounting Fee               $800 per month                                        2,400         --
</TABLE>


      In addition, Essex Partners may receive the following fees:

      a)    a refinancing  fee upon the closing of a refinancing of the Project,
            in  the  aggregate  amount  of 1%  of  the  gross  proceeds  of  the
            refinancing,

      b)    a sales  fee  upon  the  closing  of a sale of the  Project,  in the
            aggregate amount of 2.5% of the gross sales price, provided that the
            sum of such fee and any competitive  real estate  commission paid by
            the Partnership  with respect to such sale does not exceed 5% of the
            gross sale price, and that Essex Partners Inc.  renders  substantial
            services in connection with the sale,

      c)    in the event the General  Partner  elects to proceed with the Second
            Project  on behalf of the  Partnership,  Essex  Partners  Inc.  will
            receive  additional  compensation  related to the acquisition of the
            second  parcel,  construction  of the Second  Project  and  securing
            additional  equity and debt financing to fund such activities.  Such
            compensation  will include an  acquisition  fee equal to $50,000 for
            its services  related to the  acquisition of the second parcel and a
            development fee up to $150,000 plus 3% of total  construction,  site
            development  and  fixtures,   furniture  and  equipment   costs,  as
            compensation  for its  services  related to the  development  of the
            Second  Project.   In  addition,   as  compensation   for  arranging
            construction and permanent  financing for the Second Project,  Essex
            Partners  Inc. may receive a financing  fee equal to 1% of the gross
            proceeds of the financing.  Essex Partners Inc. also will receive an
            additional  property  management fee and partnership  management fee
            calculated as described in the summary  schedule  above based on the
            gross  operating  revenues  of the  Second  Project.  If the  Second
            Project is sold and/or refinanced,  Essex Partners Inc. will receive
            additional sales and/or  refinancing fees calculated as described in
            paragraphs  (a)  and (b)  above  based  on the  gross  sales  and/or
            refinancing proceeds of the Second Project, and

      d)    Essex   Partners   Inc.  and  its   affiliates   also  will  receive
            offering-related  fees  for  services  in  connection  with  (I) the
            offering of additional  partnership  interests and/or notes, or (ii)
            the  possible  refinancing  of the Project or the Second  Project to
            fund the acquisition of the land and/or  construction or one or both
            of those  projects.  Essex  Partners  Inc.  and its  affiliates  are
            expressly  authorized to receive from the  Partnership  the fees and
            sales commissions customarily charged by Essex Partners Inc. and its
            affiliates for rendering comparable services on competitive terms.


                                        4

<PAGE>


                                   ESSEX GLENMAURA L.P.
                                 (A Limited Partnership)
                         Notes to Unaudited Financial Statements
                               September 30, 1997 and 1996
5.    FRANCHISE FEES

      The  Partnership  has entered  into a franchise  agreement  with  Marriott
      International, Inc. Under the terms of the agreement, the Partnership paid
      an initial franchise fee of $48,000.  The term and amortization  period of
      the franchise  agreement is twenty  years,  with an option to renew for an
      additional ten-year period.

      The  Partnership  is  required  to pay a monthly  royalty fee in an amount
      equal to 4% of gross room  rentals  for the first two years of  operations
      and 5% during the remainder of the term of the agreement,  a marketing fee
      of 2-3% of gross revenues, a reservation system fee, a property management
      system  fee, a  communication  support fee and a revenue  management  fee.
      Payments to Marriott for the three month period ending  September 30, 1997
      included royalty fees of $22,074,  marketing fees of $11,037,  reservation
      system fees of $14,680 and other fees of $13,765.  There were no fees paid
      in the three months ending September 30, 1996.



                                        5

<PAGE>




ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
-------  ---------------------------------------------------------

The Partnership was formed on August 30, 1995. Since its formation, the
Partnership has been involved in raising capital pursuant to the Original
Prospectus, and the acquisition and construction of properties. The Partnership
has received Gross Offering Proceeds of $7.6 million, including approximately
$6.3 million from the sale of subordinated notes and approximately $2.3 million
from the sale of limited partnership units. The two sites specified in the
Prospectus were acquired on December 29, 1995, a 2.535 acre site in Warwick,
Rhode Island and a 2.28 acre site in Solon, Ohio. Limited partnership units in
another partnership were purchased in the first quarter, 1996.

The Partnership began construction of a 103-room Hampton Inn in Solon, Ohio in
late 1996, which opened August 1, 1997. The Solon Hampton Inn is expected to
cost about $7,000,000, including the cost of the land, cost of construction,
cost of furnishings, construction period interest, financing costs (debt and
equity) and all soft costs such as architectural costs, engineering, franchise
fee and working capital. The General Partner secured first mortgage financing
from GMAC Commercial Mortgage Corporation (GMAC) in July, 1997. As a condition
of receiving financing, the Partnership was required to create special purpose
entities to own each of its properties. Solon Hotel LLC was created to own the
Solon Hampton Inn. The membership interests of the Solon Hotel LLC are owned 99%
by the Partnership and 1% by Essex Hotel LLC, whose sole member is the
Partnership. The first mortgage is in the amount of $4.5 million and is to be
advanced in three installments. The first installment of $1,000,000 (net of
offering costs) was received upon the closing of the loan. The second
installments was received at the end of August, 1997. The third installment has
been delayed until the final negotiations with the general contractor over the
total cost of construction are completed, which is expected to be by the end of
November. The term of the first mortgage loan is for a period of four years,
with a one year extension upon the payment of an extension fee and the
achievement of a specified debt service coverage ratio. Monthly payments of
interest only are due for the first year, thereafter, monthly payments of
principal and interest are due based on a 25 year amortization. Interest will
accrue at the rate of 3.25% over the 30-day LIBOR index. Starting in the second
year of the loan, Solon Hotel LLC will be required to maintain a replacement
reserve escrow at 2% of room revenues. The required replacement reserve
increases to 4% of room revenues in the third year of the loan. The balance of
the amount required to complete the Solon Hampton Inn was provided through the
Partnership's offering of Notes and Units.

The Partnership acquired a site in Erie Pennsylvania in June, 1997 as a possible
location for the construction and operation of a Hampton Inn hotel. The site is
approximately 2.5 acres and was acquired for an aggregate purchase price of
$650,000 plus closing costs of $27,000 and demolition costs of approximately
$15,000. The Partnership has obtained a license agreement from Promus Hotel to
construct and operate a 100-room Hampton Inn hotel. The General Partner started
construction of the Erie Hampton Inn in October, 1997. The hotel is expected to
open in the late spring, 1998. The Partnership does not have sufficient funds to
complete construction of the Erie Hampton Inn. So as to enable the Partnership
to pursue favorable external financing opportunities with respect to the Erie
Hampton Inn, in June 1997 the Partnership transferred the Erie property to Erie
Hotel LLC, a single purpose entity. The membership interests of the Erie Hotel
LLC are owned 99% by the Partnership and 1% by Essex Hotels II LLC, whose sole
member is the Partnership. The Partnership is currently negotiating with GMAC
for a first mortgage loan in the principal amount of $4.5 million to finance
construction of the Erie Hampton Inn. As of the date of this filing, the
Partnership has received no commitment for external financing.

The Partnership acquired 12.5 limited partnership units in Essex Glenmaura for
$1,250,000 with proceeds from the offering, representing a limited partnership
interest of 54.3%. Essex Glenmaura completed construction of a 120- room
Marriott Courtyard in Scranton, Pennsylvania in September, 1996. The total cost
of the project was $8.7 million, including the cost of the land, cost of
construction, cost of furnishings, construction period interest, financing costs
(debt and equity) and all soft costs such as architectural costs, engineering,
franchise fee and working capital. The project was funded with $2,300,000 of
partner equity, $1,500,000 of unsecured notes and a $5,000,000 first mortgage
loan from GMAC. The term of the first mortgage loan is for a period of four
years, with a one year extension upon the payment of an extension fee and the
achievement of a specified debt service coverage ratio. Monthly payments of
interest only are due for the first year, thereafter, monthly payments of
principal and interest are due based on a 25 year amortization. Interest will
accrue at the rate of 3% over the 30-day LIBOR index. Starting in the second
year of the loan, Essex Glenmaura will be required to maintain a replacement
reserve


<PAGE>



escrow at 4% of room revenues. As a condition of receiving the first mortgage
loan for the Solon Hampton Inn, the Partnership was required to reduce its
investment in Essex Glenmaura to less than 50%. In June 1997, the Partnership
sold 1.05 limited partnership units to the General Partner at a purchase price
of $105,000, which is equal to the purchase price originally paid by the
Partnership. As a result, the Partnership now owns a 49.8% interest in Essex
Glenmaura.

The Partnership intended to build an 80-room Homewood Suites hotel in Warwick,
Rhode Island. The purchase price for the property was $501,400. However, prior
to commencing construction, the Partnership learned that additional hotels were
planned for construction near the Warwick site which would be competitive with
the Partnership's hotel and result in a 57% potential increase in the number of
hotel rooms in the area. The Partnership elected to postpone construction until
it could better assess the effect of the additional hotel rooms on the expected
performance of the Partnership's hotel. Based on the results of an updated
market survey, the Partnership concluded that the estimated 57% potential
increase in the number of hotel rooms in the area would have a significant
negative impact upon the expected performance of the Partnership's hotel. In
light of these findings, the Partnership has elected not to proceed with
development of the Warwick site and is currently pursuing the sale of the site.
In the second quarter, 1997, the franchise agreement for the Warwick site
expired. Although the Partnership has received some interest in the site from
potential buyers, there is no assurance that the Partnership will sell the
Warwick site or that it will be sold at a price sufficient to enable the
Partnership to recover all the costs and expenses incurred by the Partnership
with respect to the Warwick site. The Partnership has invested approximately
$682,000 in the Warwick site, including the cost of the site, the cost of the
franchise fee and engineering and architectural costs.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

The following discussion analyzes the financial statements of the Partnership as
of September 30, 1997 and 1996.  The  Partnership  had an ownership  interest of
54.3% in Essex  Glenmaura  until June 9, 1997,  at which time the  Partnership's
ownership  interest  was  reduced  to  49.8%.  For the third  quarter,  1997 the
Partnership's  investment  in Essex  Glenmaura  is  accounted  for on the equity
method. The financial  statements of the Partnership and Essex Glenmaura for the
third  quarter 1996 are  consolidated.  The  consolidated  financial  statements
include the accounts of the Partnership and Essex  Glenmaura.  Also attached are
the financial  statements for Essex  Glenmaura for the third  quarter,  1997 and
1996.

From July 1, 1997 to September 30, 1997, the total assets of the Partnership
increased approximately $2.4 million. The investments in real estate increased
$459,000 for additional costs incurred for the Solon and Erie construction. The
Partnership's unrestricted cash balance increased approximately $334,000 from
proceeds of the Solon first mortgage loan. The restricted cash balance increased
$1,222,000, which represents primarily the remaining proceeds of the Solon first
mortgage loan which are expected to be advanced by the end of November. The
assets of the Partnership at September 30, 1997 include $444,000 of investment
in partnership, which represents the Partnership's investment in Glenmaura, net
of reductions for net losses of $665,000 incurred through September 30, 1997,
the sale of 1.05 limited partnership units for $105,000 and distributions of
$35,400. The deferred assets of the Partnership increased $202,000 from costs
incurred for the Solon first mortgage loan.

The Partnership's liabilities increased approximately 2.4 million from July 1,
1996 to September 30, 1997, primarily from the receipt of the $4.5 million first
mortgage loan for Solon. Accounts payable-construction decreased $1.5 million
from the payment of the outstanding construction invoices for the Solon Hampton
Inn. The Due to affiliate of $596,000 was also repaid in the third quarter from
proceeds from the first mortgage loan. Partners' capital was reduced $67,000 in
third quarter. During the quarter, the Partnership incurred a $24,000 net loss,
received $16,000 in promissory note payments from investors, incurred $12,000 in
additional syndication costs and paid $47,000 in partner distributions.

The primary revenue source for the quarter ended September 30, 1997 was room
revenues of $420,000 from the Solon Hampton Inn, which was the only hotel in
operation. Telephone and other commission revenue totaled $17,000, for total
revenues of $437,000. For the quarter ended September 30, 1996, total revenues
were $72,200, which represents revenue generated by Essex Glenmaura L.P. after
opening on September 4, 1996. Operating


<PAGE>



expenses for the quarter ended September 30, 1997, before depreciation and
amortization, totaled $213,000. Depreciation and amortization of $57,000 was
recorded for income from operations of $166,000. The single largest operating
expense for the Partnership is rooms expense, which totaled $104,000 for the
quarter. Operating expenses for the third quarter 1996 totaled $103,000 after
depreciation and amortization of $10,000 composed primarily of rooms expenses of
$28,000 and food and beverage expenses of $21,000. The loss from operations for
the third quarter 1996 totaled $30,000. The Partnership's interest expense for
the third quarter 1997, net of interest income was $128,000, representing
interest incurred on the subordinated notes payable and the first mortgage loan
for Solon since August 1, 1997. Interest expense prior to August 1, 1997 was
capitalized. Net interest expense for the third quarter 1996 totaled $94,000,
and represented interest incurred by Essex Glenmaura since the opening of the
Courtyard hotel in September, 1996, and interest incurred by the Partnership to
the extent not required for construction. Also included in other expenses are
the Partnership's equity in the loss of Glenmaura for the third quarter of
$62,000. The net loss for the quarter is $187,000 before allocating $23,000 of
the net loss to the minority interest in Glenmaura. The net loss for the
Partnership for the quarter ended September 30, 1997 was $24,000. For the
quarter ended September 30, 1996, the loss before minority interest was
$124,000, and the net loss was $77,000 after allocating $47,000 of loss to the
minority interests in Glenmaura.

The Solon Hampton Inn opened in August, 1997. The property achieved an average
occupancy of 81% for the two months it was open in the third quarter, at an
average daily rate of $82.61. The revenue per available room was $66.92. The
Solon Hampton Inn is located in a commercial area outside Cleveland, close to
some major tourist attractions which generate heavy travel in the summer months.
The Solon Hampton Inn has had a much stronger start than the typical hotel due
to its location and the timing of its opening. The general partner expects Solon
to generate strong revenues until the holiday season, when commercial travel
typically slows down.

The Courtyard by Marriott owned by Glenmaura opened in September, 1996. The
property achieved an average occupancy of 69% for the third quarter of 1997, at
an average daily rate of $65.77. The revenue per available room for the third
quarter of 1997 was $45.38. Glenmaura is in the start-up phase of operations.
New hotels require from several months to a couple years to establish a stable
customer base. During the start-up phase, occupancy is building, and room rates
may be lower to attract new customers. When a strong customer base is
established, room rates can be raised to a more competitive level.

As of September 30, 1997 the Partnership had approximately $9.8 million of
outstanding long term indebtedness comprised of the subordinated notes of $5.3
million and the first mortgage loan for Solon of $4.5 million. The subordinated
notes are due in December 2001, unless extended by their terms for one year to
December 2002. The Solon loan is due in July 2001 unless extended by its terms
for one year to July 2002. Once the Solon Hampton Inn hotel reaches more
stabilized operations, the Partnership expects to be able to place a larger new
first mortgage loan on the property, such that when it needs to refinance the
total outstanding indebtedness, which is expected to be $9.8 million in July
2001, it can do so through a combination of retained excess working capital, new
first mortgage financing and, if necessary, new subordinated note financing. If
additional Offering proceeds are sold and the Partnership secures External
Financing and/or a General Partner Loan to finance construction of the Erie
Hampton Inn, it is expected the Partnership's long term indebtedness would total
between $12.5 million and $14.5 million. Again, once the Solon Hampton Inn and
the Erie Hampton Inn hotels reach more stabilized operations, the Partnership
would expect to be able to refinance the total outstanding indebtedness through
a combination of retained excess working capital, larger new first mortgage
loans and, if necessary, new subordinated note financing.

At the current time, the Partnership does not have sufficient funds to complete
the construction of the Erie Property. The Partnership intends to raise
additional funds from the Offering and obtain External Financing from an
institutional lender. No commitments have been received as of the date of this
Prospectus for such External Financing. Since the Partnership can control the
timing of construction, the construction of the Erie Property can be delayed
until the required additional financing can be obtained. If the Partnership is
unable to secure sufficient External Financing, however, the Partnership will
not be able to complete the construction of the Erie Hampton Inn and it will try
to sell the Erie Property. A portion of any excess working capital generated as
a result of the sale of the Erie Property ( and the Warwick Property) can also
be used to reduce the outstanding indebtedness.



<PAGE>



The Partnership included a working capital reserve in its total costs for the
Solon Hampton Inn. The Partnership expects that the working capital reserve will
be sufficient to fund any operating deficits of the Solon Hampton Inn.



<PAGE>




                                     PART II
                                     -------

                                OTHER INFORMATION
                                -----------------


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

         a.       EXHIBITS
                  --------

                  None

         b.       REPORTS ON FORM 8-K
                  -------------------

                  There was one report 8-K filed in the third quarter, 1997. The
                  report was dated June 9, 1997 and described the sale of
                  limited partnership units in Essex Glenmaura L.P.. A balance
                  sheet of Essex Glenmaura L.P. and pro forma statements of
                  operations for the year ended December 31, 1996 and the six
                  months ended June 30, 1997 were included, reflecting the sale
                  of the limited partnership units. The amended report was filed
                  on September 18, 1997.





                                   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.


                                    ESSEX HOSPITALITY ASSOCIATES IV L.P.
                                           Registrant



Dated:   November 13, 1997          /s/ Lorrie L. LoFaso
                                    --------------------
                                    Essex Hospitality Associates IV L.P.
                                    Essex Partners Inc.
                                    Lorrie L. LoFaso
                                    Vice President and Chief Accounting Officer