##### Table of Contents



FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

|    |  |                                                                                        
|--- |  | ---------------------------------------------------------------------------------------
|[X] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

OR

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0-14207

RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP

---

(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|California                                                     |  | 33-0016355                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|                                                               |  |                                     
|400 South El Camino Real, Suite 1100
San Mateo, California     |  | 94402-1708                          
|                                                               |  |                                     
|(Address of principal
executive offices)                       |  | (Zip Code)                          

(650) 343-9300

---

(Registrants telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X]    No [   ]

Total number of units outstanding as of November 8, 2002: 73,604

1



---

TABLE OF CONTENTS



|                              |                                                                                               |                                            |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | Item 1. Financial Statements                                                                 
|                              |                                                                                               | Consolidated Balance Sheets               
|                              |                                                                                               | Consolidated Statements of Operations     
|                              |                                                                                               | Consolidated Statement of Partners Equity
|                              |                                                                                               | Consolidated Statements of Cash Flows     
|                              |                                                                                               | Notes to Consolidated Financial Statements
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 3. Qualitative and Quantitative Information About Market Risk                           
|                              | Item 4. Controls and procedures                                                              
|Part II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings                                                                    
|                              | Item 2. Changes in Securities and Use of Proceeds                                            
|                              | Item 3. Defaults Upon Senior Securities                                                      
|                              | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                              | Item 5. Other Information                                                                    
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                   



---



##### Table of Contents






PART I. FINANCIAL INFORMATION




Item 1. Financial Statements




RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Balance Sheets
(in thousands, except unit amounts)
(Unaudited)

|                                                                                                                                                        |                                                                                                                                     |                               |                                        |         |               |        |              |         |        |        | 
|------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------- | ----------------------------- | -------------------------------------- | ------- | ------------- | ------ | ------------ | ------- | ------ | ------ | 
|                                                                                                                                                        |                                                                                                                                     |                               |                                        |         | September 30, |        | December 31,
|                                                                                                                                                        |                                                                                                                                     |                               |                                        |         | 2002          |        | 2001        
|                                                                                                                                                        |                                                                                                                                     |                               |                                        |         |               |        |             
|Assets                                                                                                                                                  |                                                                                                                                     |                               |                                        |         |               |        |              |        
|Investments in real estate:                                                                                                                             |                                                                                                                                     |                               |                                        |         |               |        |              |        
|                                                                                                                                                        | Rental properties, gross                                                                                                            |                               | $                                      | 42,299  |               |        | $            | 49,344  |       
|                                                                                                                                                        | Accumulated depreciation                                                                                                            |                               |                                        | (13,723 | )             |        |              | (17,117 | )     
|                                                                                                                                                        |                                                                                                                                     |                               |                                        |         |               |        |              |        
|                                                                                                                                                        | Rental properties, net                                                                                                              |                               |                                        | 28,576  |               |        |              | 32,227  |       
|                                                                                                                                                        | Land held for development                                                                                                           |                               |                                        | 1,214   |               |        |              | 1,214   |       
|                                                                                                                                                        |                                                                                                                                     |                               |                                        |         |               |        |              |        
|                                                                                                                                                        |                                                                                                                                     | Total real estate investments |                                        |         | 29,790        |        |              |         | 33,441 |       
|Cash and cash equivalents                                                                                                                               |                                                                                                                                     |                               | 5,334                                  |         |               |        | 1,462        |        
|Accounts receivable                                                                                                                                     |                                                                                                                                     |                               | 25                                     |         |               |        | 150          |        
|Deferred financing costs and other fees, net of
accumulated amortization of $1,976 and $2,121 at
September 30, 2002 and December 31, 2001, respectively |                                                                                                                                     |                               | 996                                    |         |               |        | 1,123        |        
|Prepaid expenses and other assets                                                                                                                       |                                                                                                                                     |                               | 1,106                                  |         |               |        | 1,048        |        
|                                                                                                                                                        |                                                                                                                                     |                               |                                        |         |               |        |              |        
|                                                                                                                                                        |                                                                                                                                     | Total assets                  |                                        | $       | 37,251        |        |              | $       | 37,224 |       
|                                                                                                                                                        |                                                                                                                                     |                               |                                        |         |               |        |              |        
|Liabilities and Partners Equity                                                                                                                        |                                                                                                                                     |                               |                                        |         |               |        |              |        
|Liabilities:                                                                                                                                            |                                                                                                                                     |                               |                                        |         |               |        |              |        
|                                                                                                                                                        | Notes payable                                                                                                                       |                               | $                                      | 8,015   |               |        | $            | 12,342  |       
|                                                                                                                                                        | Accounts payable and other liabilities                                                                                              |                               |                                        | 517     |               |        |              | 736     |       
|                                                                                                                                                        |                                                                                                                                     |                               |                                        |         |               |        |              |        
|                                                                                                                                                        |                                                                                                                                     | Total liabilities             |                                        |         | 8,532         |        |              |         | 13,078 |       
|                                                                                                                                                        |                                                                                                                                     |                               |                                        |         |               |        |              |        
|Commitments and contingent liabilities (Note 5)                                                                                                         |                                                                                                                                     |                               |                                        |         |               |        |              |        
|Partners Equity:                                                                                                                                       |                                                                                                                                     |                               |                                        |         |               |        |              |        
|                                                                                                                                                        | General partners                                                                                                                    |                               |                                        | (542    | )             |        |              | (798    | )     
|                                                                                                                                                        | Limited partners, 73,662 and 74,034 limited partnership
units outstanding at September 30, 2002 and December
31, 2001, respectively |                               |                                        | 29,261  |               |        |              | 24,944  |       
|                                                                                                                                                        |                                                                                                                                     |                               |                                        |         |               |        |              |        
|                                                                                                                                                        |                                                                                                                                     | Total partners equity        |                                        |         | 28,719        |        |              |         | 24,146 |       
|                                                                                                                                                        |                                                                                                                                     |                               |                                        |         |               |        |              |        
|                                                                                                                                                        |                                                                                                                                     |                               | Total liabilities and partners equity |         | $             | 37,251 |              |         | $      | 37,224 | 
|                                                                                                                                                        |                                                                                                                                     |                               |                                        |         |               |        |              |        

The accompanying notes are an integral part of these consolidated financial statements.

2



---



##### Table of Contents






RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Statements of Operations
(in thousands, except per unit amounts and units outstanding)
(Unaudited)

|                                                                                                                                          |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |       |       |  
|----------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------- | ---------------------------------------------------- | ------ | ------------------ | ----- | ----------------- | ------ | ----- | ----- | ---- | ------ | ----- | ----- | - | ------ | ----- | ----- | -
|                                                                                                                                          |                                           |                                                      |        | Three months ended |       | Nine months ended
|                                                                                                                                          |                                           |                                                      |        | September 30,      |       | September 30,    
|                                                                                                                                          |                                           |                                                      |        |                    |       |                  
|                                                                                                                                          |                                           |                                                      |        | 2002               |       | 2001              |        | 2002  |       | 2001
|                                                                                                                                          |                                           |                                                      |        |                    |       |                   |        |       |       |     
|Revenues                                                                                                                                  |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |      
|                                                                                                                                          | Rental income                             |                                                      | $      | 1,517              |       |                   | $      | 1,492 |       |      | $      | 4,681 |       |   | $      | 4,481 |      
|                                                                                                                                          | Interest and other income                 |                                                      |        | 25                 |       |                   |        | 9     |       |      |        | 54    |       |   |        | 90    |      
|                                                                                                                                          |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |      
|                                                                                                                                          |                                           | Total revenues                                       |        |                    | 1,542 |                   |        |       | 1,501 |      |        |       | 4,735 |   |        |       | 4,571 |  
|                                                                                                                                          |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |      
|Expenses                                                                                                                                  |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |      
|                                                                                                                                          | Operating                                 |                                                      |        | 685                |       |                   |        | 703   |       |      |        | 1,865 |       |   |        | 1,799 |      
|                                                                                                                                          | Interest expense                          |                                                      |        | 203                |       |                   |        | 276   |       |      |        | 655   |       |   |        | 1,036 |      
|                                                                                                                                          | Depreciation and amortization             |                                                      |        | 346                |       |                   |        | 326   |       |      |        | 1,042 |       |   |        | 1,013 |      
|                                                                                                                                          | Expenses associated with undeveloped land |                                                      |        | 108                |       |                   |        | 112   |       |      |        | 787   |       |   |        | 299   |      
|                                                                                                                                          | General and administrative                |                                                      |        | 272                |       |                   |        | 308   |       |      |        | 866   |       |   |        | 925   |      
|                                                                                                                                          |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |      
|                                                                                                                                          |                                           | Total expenses                                       |        |                    | 1,614 |                   |        |       | 1,725 |      |        |       | 5,215 |   |        |       | 5,072 |  
|                                                                                                                                          |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |      
|                                                                                                                                          | Loss from operations                      |                                                      | $      | (72                | )     |                   | $      | (224  | )     |      | $      | (480  | )     |   | $      | (501  | )    
|                                                                                                                                          |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |      
|Income from discontinued operations for all
periods (including gain on sale of $5,120 in
2002)                                            |                                           |                                                      |       |                    |       |                   | 44     |       |       |      | 5,172  |       |       |   | 200    |      
|                                                                                                                                          |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |      
|Net income (loss)                                                                                                                         |                                           | $                                                    | (72    | )                  |       | $                 | (180   | )     |       | $    | 4,692  |       |       | $ | (301   | )    
|                                                                                                                                          |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |      
|Net income (loss) per limited partnership unit:                                                                                           |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |      
|                                                                                                                                          | Operations                                |                                                      | $      | (0.93              | )     |                   | $      | (3.01 | )     |      | $      | (6.50 | )     |   | $      | (6.74 | )    
|                                                                                                                                          | Discontinued operations                   |                                                      |        |                   |       |                   |        | 0.59  |       |      |        | 66.54 |       |   |        | 2.69  |      
|                                                                                                                                          |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |      
|                                                                                                                                          |                                           | Total net income (loss) per limited
partnership unit |        | $                  | (0.93 | )                 |        | $     | (2.42 | )    |        | $     | 60.04 |   |        | $     | (4.05 | )
|                                                                                                                                          |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |      
|Distributions per limited partnership unit:                                                                                               |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |      
|                                                                                                                                          | From net income                           |                                                      | $      |                   |       |                   | $      |      |       |      | $      |      |       |   | $      |      |      
|                                                                                                                                          | Representing return of capital            |                                                      |        |                   |       |                   |        |      |       |      |        |      |       |   |        |      |      
|                                                                                                                                          |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |      
|                                                                                                                                          |                                           | Total distributions per limited
partnership unit     |        | $                  |      |                   |        | $     |      |      |        | $     |      |   |        | $     |      |  
|                                                                                                                                          |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |      
|Weighted average number of limited partnership
units outstanding during each period used to
compute net loss per limited partnership unit |                                           |                                                      | 73,749 |                    |       |                   | 74,190 |       |       |      | 73,879 |       |       |   | 74,272 |      
|                                                                                                                                          |                                           |                                                      |        |                    |       |                   |        |       |       |      |        |       |       |   |        |      

The accompanying notes are an integral part of these consolidated financial statements.

3



---



##### Table of Contents






RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Statement of Partners Equity
For the nine months ended September 30, 2002
(in thousands)
(Unaudited)

|                                        |  |          |      |          |  |       |        |   |  |   |        |  
|--------------------------------------- |  | -------- | ---- | -------- |  | ----- | ------ | - |  | - | ------ | -
|                                        |  | General  |      | Limited  |  |       |        |  
|                                        |  | Partners |      | Partners |  | Total
|                                        |  |          |      |          |  |      
|Balance at December 31, 2001            |  | $        | (798 | )        |  | $     | 24,944 |   |  | $ | 24,146 |  
|Retirement of limited partnership units |  |          |     |          |  |       | (119   | ) |  |   | (119   | )
|Loss from operations                    |  |          |     |          |  |       | (480   | ) |  |   | (480   | )
|Income from discontinued operations     |  |          | 256  |          |  |       | 4,916  |   |  |   | 5,172  |  
|                                        |  |          |      |          |  |       |        |   |  |   |        |  
|Balance at September 30, 2002           |  | $        | (542 | )        |  | $     | 29,261 |   |  | $ | 28,719 |  
|                                        |  |          |      |          |  |       |        |   |  |   |        |  

The accompanying notes are an integral part of these consolidated financial statements.

4



---



##### Table of Contents






RANCON REALTY FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP

Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

|                                                     |                                                                                          |                                                        |                                                         |                                           |     |                   |        |        |       |       |        |  
|---------------------------------------------------- | ---------------------------------------------------------------------------------------- | ------------------------------------------------------ | ------------------------------------------------------- | ----------------------------------------- | --- | ----------------- | ------ | ------ | ----- | ----- | ------ | -
|                                                     |                                                                                          |                                                        |                                                         |                                           |     | Nine months ended
|                                                     |                                                                                          |                                                        |                                                         |                                           |     | September 30,    
|                                                     |                                                                                          |                                                        |                                                         |                                           |     |                  
|                                                     |                                                                                          |                                                        |                                                         |                                           |     | 2002              |        | 2001  
|                                                     |                                                                                          |                                                        |                                                         |                                           |     |                   |        |       
|Cash flows from operating activities:                |                                                                                          |                                                        |                                                         |                                           |     |                   |        |       
|                                                     | Net income (loss)                                                                        |                                                        | $                                                       | 4,692                                     |     |                   | $      | (301   | )    
|                                                     | Adjustments to reconcile net income (loss)
to net cash provided by operating activities: |                                                        |                                                         |                                           |     |                   |        |        |      
|                                                     |                                                                                          |                                                        | Gain on sale of real estate                             |                                           |     | (5,120            | )      |        |       |      |       
|                                                     |                                                                                          |                                                        | Depreciation and amortization                           |                                           |     | 1,118             |        |        |       | 1,290 |       
|                                                     |                                                                                          |                                                        | Amortization of loan fees, included in interest expense |                                           |     | 78                |        |        |       | 81    |       
|                                                     |                                                                                          |                                                        | Changes in certain assets and liabilities:              |                                           |     |                   |        |        |       |       |       
|                                                     |                                                                                          |                                                        |                                                         | Accounts receivable                       |     |                   | 125    |        |       |       | 41     |  
|                                                     |                                                                                          |                                                        |                                                         | Deferred financing costs and other fees   |     |                   | (92    | )      |       |       | (323   | )
|                                                     |                                                                                          |                                                        |                                                         | Prepaid expenses and other assets         |     |                   | (58    | )      |       |       | (183   | )
|                                                     |                                                                                          |                                                        |                                                         | Accounts payable and other liabilities    |     |                   | (219   | )      |       |       | 159    |  
|                                                     |                                                                                          |                                                        |                                                         |                                           |     |                   |        |       
|                                                     |                                                                                          |                                                        |                                                         | Net cash provided by operating activities |     |                   | 524    |        |       |       | 764    |  
|                                                     |                                                                                          |                                                        |                                                         |                                           |     |                   |        |       
|Cash flows from investing activities:                |                                                                                          |                                                        |                                                         |                                           |     |                   |        |       
|                                                     | Net proceeds from sales of real estate                                                   |                                                        |                                                         | 8,382                                     |     |                   |        | 179    |      
|                                                     | Net additions to real estate investments                                                 |                                                        |                                                         | (588                                      | )   |                   |        | (344   | )    
|                                                     | Release of restricted cash                                                               |                                                        |                                                         |                                          |     |                   |        | 284    |      
|                                                     |                                                                                          |                                                        |                                                         |                                           |     |                   |        |       
|                                                     |                                                                                          |                                                        |                                                         | Net cash provided by investing activities |     |                   | 7,794  |        |       |       | 119    |  
|                                                     |                                                                                          |                                                        |                                                         |                                           |     |                   |        |       
|Cash flows from financing activities:                |                                                                                          |                                                        |                                                         |                                           |     |                   |        |       
|                                                     | Notes payable principal payments                                                         |                                                        |                                                         | (4,327                                    | )   |                   |        | (3,168 | )    
|                                                     | Retirement of limited partnership units                                                  |                                                        |                                                         | (119                                      | )   |                   |        | (137   | )    
|                                                     | Distributions to General Partner                                                         |                                                        |                                                         |                                          |     |                   |        | (58    | )    
|                                                     |                                                                                          |                                                        |                                                         |                                           |     |                   |        |       
|                                                     |                                                                                          |                                                        |                                                         | Net cash used for financing activities    |     |                   | (4,446 | )      |       |       | (3,363 | )
|                                                     |                                                                                          |                                                        |                                                         |                                           |     |                   |        |       
|Net increase (decrease) in cash and cash equivalents |                                                                                          |                                                        | 3,872                                                   |                                           |     |                   | (2,480 | )     
|Cash and cash equivalents at beginning of period     |                                                                                          |                                                        | 1,462                                                   |                                           |     |                   | 4,604  |       
|                                                     |                                                                                          |                                                        |                                                         |                                           |     |                   |        |       
|Cash and cash equivalents at end of period           |                                                                                          | $                                                      | 5,334                                                   |                                           |     | $                 | 2,124  |       
|                                                     |                                                                                          |                                                        |                                                         |                                           |     |                   |        |       
|Supplemental disclosure of cash flow information:    |                                                                                          |                                                        |                                                         |                                           |     |                   |        |       
|                                                     |                                                                                          | Cash paid for interest                                 |                                                         | $                                         | 596 |                   |        | $      | 955   |      
|                                                     |                                                                                          |                                                        |                                                         |                                           |     |                   |        |       
|                                                     |                                                                                          | Non-cash activities resulting from refinancing of debt |                                                         | $                                         |    |                   |        | $      | 7,200 |      
|                                                     |                                                                                          |                                                        |                                                         |                                           |     |                   |        |       

The accompanying notes are an integral part of these consolidated financial statements.

5



---



##### Table of Contents






RANCON REALTY FUND IV
A California Limited partnership

Notes to Consolidated Financial Statements

September 30, 2002
(Unaudited)

Note 1. ORGANIZATION

Rancon Realty Fund IV, a California Limited Partnership, (the Partnership),
was organized in accordance with the provisions of the California Uniform
Limited Partnership Act for the purpose of acquiring, developing, operating and
disposing of real property. The General Partners of the Partnership are Daniel
L. Stephenson and Rancon Financial Corporation (RFC) hereinafter referred to
as the Sponsor or the General Partner. RFC is wholly-owned by Daniel L.
Stephenson. The Partnership reached final funding in July 1987.

In November 2000, the Partnership offered to redeem the units of limited
partnership interest (the Units) in the Partnership held by investors who own
no more than four Units in total under any single registered title (the Small
Investments) at a purchase price of $292 per Unit. In 2001, a total of 574
Units were redeemed. During the nine months ended September 30, 2002, a total
of 372 Units were repurchased. As of September 30, 2002, there were 73,662
Units outstanding.

In the opinion of RFC, the General Partner and Glenborough Realty Trust
Incorporated (Glenborough), the Partnerships asset and property manager, the
accompanying unaudited consolidated financial statements contain all
adjustments (consisting of only normal accruals) necessary to present fairly
the consolidated financial position of the Partnership as of September 30, 2002
and December 31, 2001, and the related consolidated statements of operations,
partners equity and cash flows for the nine months ended September 30, 2002
and 2001.

Allocation of Net Income and Net Loss

Allocation of net income and net losses are made pursuant to the terms of the
Partnership Agreement. Generally, net income from operations is allocated 90%
to the limited partners and 10% to the General Partners. Net losses from
operations are allocated 99% to the limited partners and 1% to the General
Partners until such time as a partners capital account is reduced to zero.
Additional losses will be allocated entirely to those partners with positive
capital account balances until such balances are reduced to zero.

Net income other than net income from operations shall be allocated as follows:
(i) first, to the partners who have a deficit balance in their capital account,
provided that, in no event shall the General Partners be allocated more than 5%
of the net income other than net income from operations until the earlier of
sale or disposition of substantially all of the assets or the distribution of
cash (other than cash from operations) equal to the limited partners original
invested capital; (ii) second, to the limited partners in proportion to and to
the extent of the amounts required to increase their capital accounts to an
amount equal to the sum of the adjusted invested capital of their units plus an
additional cumulative non-compounded 6% return per annum (plus additional
amounts depending on the date units were purchased); (iii) third, to the
partners in the minimum amount required to first equalize their capital
accounts in proportion to the number of units owned, and then, to bring the sum
of the balances of the capital accounts of the limited partners and the General
Partners into the ratio of 4 to 1; and (iv) the balance, if any, 80% to the
limited partners and 20% to the General Partners. In no event shall the
General Partners be allocated less than 1% of the net income other than net
income from operations for any period. Net loss other than net loss from
operations shall be allocated 99% to the limited partners and 1% to the General
Partners.

The terms of the Partnership agreement call for the General Partner to restore
any deficits that may exist in its capital account after allocation of gains
and losses from the sale of the final property owned by the Partnership, but
prior to any liquidating distributions being made to the partners.

General Partner and Management Matters

Effective January 1, 1995, Glenborough Corporation (GC) entered into an
agreement with the Partnership and other related Partnerships (collectively,
the Rancon Partnerships) to perform or contract on the Partnerships behalf
for financial, accounting, data processing, marketing, legal, investor
relations, asset and development management and consulting services for a
period of ten years or until the liquidation of the Partnership, whichever
comes first. Effective

6



---



##### Table of Contents



RANCON REALTY FUND IV
A California Limited partnership

Notes to Consolidated Financial Statements

September 30, 2002
(Unaudited)

January 1, 1998, the agreement was amended to eliminate GCs responsibility for
providing investor relation services and Preferred Partnership Services, Inc.,
a California corporation unaffiliated with the Partnership, contracted to
assume the investor relations service. In October 2000, GC merged into
Glenborough. The agreement expires upon the dissolution of the Partnership.

The Partnership will pay Glenborough for its services as follows: (i) a
specified asset administration fee ($525,000 and $507,000 as of September 30,
2002 and 2001); (ii) sales fees of 2% for improved properties and 4% for land
($175,000 and $8,000 as of September 30, 2002 and 2001); (iii) a refinancing
fee of 1% ($200,000 as of September 30, 2001) and (iv) a management fee of 5%
of gross rental receipts. As part of this agreement, Glenborough will perform
certain duties for the General Partner of the Rancon Partnerships. RFC agreed
to cooperate with Glenborough, should Glenborough attempt to obtain a majority
vote of the limited partners to substitute itself as the Sponsor for the Rancon
Partnerships. Glenborough is not an affiliate of RFC or the Partnership.

Risks and Uncertainties

The Partnerships ability to (i) achieve positive cash flow from operations,
(ii) meet its debt obligations, (iii) provide distributions either from
operations or the ultimate disposition of the Partnerships properties or (iv)
continue as a going concern, may be impacted by changes in interest rates,
property values, local and regional economic conditions, or the entry of other
competitors into the market. The accompanying consolidated financial
statements do not provide for adjustments with regard to these uncertainties.

Note 2. SIGNIFICANT ACCOUNTING POLICES

Basis of Accounting  The accompanying consolidated financial statements have
been prepared on the accrual basis of accounting in accordance with accounting
principles generally accepted in the United States. They include the accounts
of certain wholly owned subsidiaries. All significant intercompany transactions
and balances have been eliminated in consolidation.

Use of Estimates  The preparation of financial statements in conformity with
accounting principles generally accepted in the United States 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 results of operations during
the reporting period. Actual results could differ from those estimates.

New Accounting Pronouncements

In June 2001, the FASB approved for issuance SFAS No. 143, Accounting for
Asset Retirement Obligations. SFAS No. 143 requires that the fair value of a
liability for an asset retirement obligation be recognized in the period in
which it is incurred and that the associated asset retirement costs be
capitalized as part of the carrying value of the related long-lived asset. SFAS
No. 143 will be effective January 1, 2003 for the Partnership. Management does
not expect this standard to have a material impact on the Partnerships
consolidated financial position or results of operations.

In August 2001, the FASB approved for issuance SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 broadens the
presentation of discontinued operations to include more transactions and
eliminates the need to accrue for future operating losses. Additionally, SFAS
No. 144 prohibits the retroactive classification of assets as held for sale and
requires revisions to the depreciable lives of long-lived assets to be
abandoned. SFAS No. 144 was effective January 1, 2002 for the Partnership, and
resulted in the presentation of sold real estate as discontinued operations for
all periods.

In May 2002, the FASB approved for issuance SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections. SFAS 145 requires gains and losses from extinguishment of debt
to be classified as an extraordinary item only if the criteria in APB No. 30
has been met.

7



---



##### Table of Contents



RANCON REALTY FUND IV
A California Limited partnership

Notes to Consolidated Financial Statements

September 30, 2002
(Unaudited)

Further, lease modifications with economic effects similar to sale-leaseback
transactions must be accounted for in the same manner as sale-leaseback
transactions. While the technical corrections to existing pronouncements are
not substantive in nature, in some instances they may change accounting
practice. SFAS No. 145 will be effective January 1, 2003 for the Partnership.
Management is currently assessing the impact of this new standard on the
Partnerships consolidated financial position and results of operations.

In June 2002, the FASB approved for issuance SFAS No. 146, Accounting for
Costs Associated with Exit or Disposal Activities. SFAS 146 addresses
accounting and reporting for costs associated with exit and disposal activities
and supercedes Emerging Issues Task Force Issue No. 94-3 (EITF 94-3),
Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring). SFAS 146 requires that a liability for a cost associated with
an exit or disposal activity be recognized when the liability is incurred, as
defined by the Statement. Under EITF 94-3, an exit cost was recognized at the
date an entity committed to an exit plan. Additionally, SFAS 146 provides that
exit and disposal costs should be measured at fair value and that the
associated liability will be adjusted for changes in estimated cash flows. The
provisions of SFAS 146 are effective for exit and disposal activities that are
initiated after December 31, 2002.

Consolidation  In April 1996, the Partnership formed Rancon Realty Fund IV
Tri-City Limited Partnership, a Delaware limited partnership (RRF IV
Tri-City). The limited partner of RRF IV Tri-City is the Partnership and the
General Partner is Rancon Realty Fund IV, Inc. (RRF IV, Inc.), a corporation
wholly owned by the Partnership. Since the Partnership owns 100% of RRF IV,
Inc. and indirectly owns 100% of RRF IV Tri-City, the financial statements of
RRF IV, Inc. and RRF IV Tri-City have been consolidated with those of the
Partnership. All inter-company balances and transactions have been eliminated
in the consolidation.

Rental Properties  Rental properties, including the related land, are stated
at cost unless events or circumstances indicate that cost cannot be recovered,
in which case, the carrying value of the property is reduced to its estimated
fair value. Estimated fair value: (i) is based upon the Partnerships plans
for the continued operations of each property; and (ii) is computed using
estimated sales price, as determined by prevailing market values for comparable
properties and/or the use of capitalization rates multiplied by annualized
rental income based upon the age, construction and use of the building. The
fulfillment of the Partnerships plans related to each of its properties is
dependent upon, among other things, the presence of economic conditions which
will enable the Partnership to continue to hold and operate the properties
prior to their eventual sale. Due to uncertainties inherent in the valuation
process and in the economy, it is reasonably possible that the actual results
of operating and disposing of the Partnerships properties could be materially
different than current expectations.

Depreciation is provided using the straight line method over five to forty
years of the useful lives of the respective assets.

Land Held for Development  Land held for development is stated at cost unless
events or circumstances indicate that cost cannot be recovered, in which case,
the carrying value is reduced to estimated fair value. Estimated fair value:
(i) is based on the Partnerships plans for the development of each property;
(ii) is computed using estimated sales price, based upon market values for
comparable properties; and (iii) considers the cost to complete and the
estimated fair value of the completed project. The fulfillment of the
Partnerships plans related to each of its properties is dependent upon, among
other things, the presence of economic conditions which will enable the
Partnership to either hold the properties for eventual sale or obtain financing
to further develop the properties.

Cash and Cash Equivalents  The Partnership considers short-term investments
(including certificates of deposit and money market funds) with a maturity of
less than ninety days when purchased at the time of investment to be cash
equivalents.

Fair Value of Financial Instruments  For certain financial instruments,
including cash and cash equivalents, accounts receivable, accounts payable and
other liabilities, recorded amounts approximate fair value due to the
relatively short maturity period. Based on interest rates available to the
Partnership for debt with comparable maturities, the carrying value of the
Partnerships notes payable approximates fair value.

8



---



##### Table of Contents



RANCON REALTY FUND IV
A California Limited partnership

Notes to Consolidated Financial Statements

September 30, 2002
(Unaudited)

Deferred Financing Costs and Other Fees  Deferred loan fees are amortized on a
straight-line basis over the life of the related loan and deferred lease
commissions are amortized over the initial fixed term of the related lease
agreement.

Revenues

The Partnership recognizes rental revenue on a straight-line basis at amounts
that it believes it will collect on a tenant by tenant basis. The estimation
process may result in higher or lower levels from period to period as the
Partnerships collection experience and the credit quality of the Partnerships
tenants changes. Actual amounts collected could be lower or higher than the
amounts recognized on a straight-line basis if specific tenants are unable to
pay rent that the Partnership has previously recognized as revenue, or if other
tenants pay rent whom the Partnership previously estimated would not.

The Partnerships portfolio of leases turns over continuously, with the number
and value of expiring leases varying from year to year. The Partnerships
ability to re-lease the space to existing or new tenants at rates equal to or
greater than those realized historically is impacted by, among other things,
the economic conditions of the market in which a property is located, the
availability of competing space, and the level of improvements which may be
required at the property. No assurance can be given that the rental rates that
the Partnership will obtain in the future will be equal to or greater than
those obtained under existing contractual commitments.

Reimbursements from tenants for real estate taxes and other recoverable
operating expenses are recognized as revenue in the period the applicable
expenses are incurred. Differences between estimated and actual amounts are
recognized in the subsequent year.

Sales of Real Estate  The Partnership recognizes sales of real estate when a
contract is in place, a closing has taken place, the buyers investment is
adequate to demonstrate a commitment to pay for the property and the
Partnership does not have a substantial continuing involvement in the property.
Each property is considered a separately identifiable component of the
Partnership and is reported in discontinued operations when the operations and
cash flows of the Property have been (or will be) eliminated from the ongoing
operations of the Partnership as a result of the disposal transaction and the
Property will not have any significant continuing involvement in the operations
of the Partnership after the disposal transaction.

Net Income/Loss Per Limited Partnership Unit  Net income or loss per limited
partnership unit is calculated using the weighted average number of limited
partnership units outstanding during the period and the Limited Partners
allocable share of the net income or loss.

Income Taxes  No provision for income taxes is included in the accompanying
consolidated financial statements as the Partnerships results of operations
are allocated to the partners for inclusion in their respective income tax
returns. Net income (loss) and partners equity (deficit) for financial
reporting purposes will differ from the Partnership income tax return because
of different accounting methods used for certain items, including depreciation
expense, provisions for impairment of investments in real estate,
capitalization of development period interest and rental income and loss
recognition.

Concentration Risk  One tenant represented 20 percent of rental income for the
nine months ended September 30, 2002. Two tenants represented 35 percent of
rental income for the nine months ended September 30, 2001.

Reference to 2001 audited consolidated financial statements  These unaudited
consolidated financial statements should be read in conjunction with the notes
to audited consolidated financial statements included in the December 31, 2001

9



---



##### Table of Contents



RANCON REALTY FUND IV
A California Limited partnership

Notes to Consolidated Financial Statements

September 30, 2002
(Unaudited)

audited consolidated financial statements on Form 10-K.

Note 3. INVESTMENTS IN REAL ESTATE

Rental properties consisted of the following at September 30, 2002 and December
31, 2001 (in thousands):

|                                 |  |      |         |      |  |   |         |  
|-------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                 |  | 2002 |         | 2001
|                                 |  |      |         |     
|Land                             |  | $    | 4,236   |      |  | $ | 4,679   |  
|Buildings                        |  |      | 28,369  |      |  |   | 33,886  |  
|Leasehold and other improvements |  |      | 9,694   |      |  |   | 10,779  |  
|                                 |  |      |         |      |  |   |         |  
|                                 |  |      | 42,299  |      |  |   | 49,344  |  
|Less: accumulated depreciation   |  |      | (13,723 | )    |  |   | (17,117 | )
|                                 |  |      |         |      |  |   |         |  
|Total rental properties, net     |  | $    | 28,576  |      |  | $ | 32,227  |  
|                                 |  |      |         |      |  |   |         |  

On March 20, 2002, the Partnership sold the Two Vanderbilt property to an
anchor tenant, Inland Empire Health Plan, who occupied 78% of the property for
a sales price of $8,750,000. The sale generated net proceeds of approximately
$8,382,000 and a gain on sale of approximately $5,120,000. The Partnership
made a pay down on the line of credit of $4,200,000 from the sales proceeds and
added the remaining cash to its cash reserves.

At September 30, 2002, the Partnerships rental properties included seven
retail and four office/R & D projects at the Tri-City Corporate Centre in San
Bernardino, California.

Land held for development consists of the following at September 30, 2002 and
December 31, 2001 (in thousands):

|                                                            |  |      |       |      |  |   |       | 
|----------------------------------------------------------- |  | ---- | ----- | ---- |  | - | ----- | 
|                                                            |  | 2002 |       | 2001
|                                                            |  |      |       |     
|22.5 acres at Tri-City Corporate Centre,
San Bernardino, CA |  | $    | 1,214 |      |  | $ | 1,214 | 
|                                                            |  |      |       |      |  |   |       | 

Note 4. NOTES PAYABLE

Notes payable as of September 30, 2002 and December 31, 2001 were as follows
(in thousands):

|                                                                                                                                                                                                                                                                                                                                                                      |                     |   |       |       |      |   |       |        | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------- | - | ----- | ----- | ---- | - | ----- | ------ | 
|                                                                                                                                                                                                                                                                                                                                                                      |                     |   | 2002  |       | 2001
|                                                                                                                                                                                                                                                                                                                                                                      |                     |   |       |       |     
|Note payable secured by first deeds of trust on
Service Retail Center, Promotional Retail Center
and Carnegie Business Center I. The note, which
matures May 1, 2006, is a 10-year, 8.744% fixed
rate loan with a 25-year amortization requiring
monthly payments of principal and interest
totaling $53.                                                             |                     | $ | 5,889 |       |      | $ | 5,980 |       
|                                                                                                                                                                                                                                                                                                                                                                     
|Note payable secured by first deed of trust on
the One Vanderbilt building. The note bears a
fixed interest rate of 9%. Monthly payments of
principal and interest totaling $20 are due
until the maturity date of January 1, 2005.                                                                                                                                   |                     |   | 2,126 |       |      |   | 2,162 |       
|                                                                                                                                                                                                                                                                                                                                                                     
|Line of credit with a total availability of $7.2
million secured by first deeds of trust on IRC
building, Circuit City and TGI Fridays with a
variable interest rate of lenders Prime Rate,
monthly interest-only payments, and a maturity
date of April 15, 2004. The balance of this line
of credit was paid down in March 2002 (as
discussed in Note 3 above). |                     |   |      |       |      |   | 4,200 |       
|                                                                                                                                                                                                                                                                                                                                                                      |                     |   |       |       |      |   |       |       
|                                                                                                                                                                                                                                                                                                                                                                      | Total notes payable |   | $     | 8,015 |      |   | $     | 12,342 | 
|                                                                                                                                                                                                                                                                                                                                                                      |                     |   |       |       |      |   |       |       

10



---



##### Table of Contents



RANCON REALTY FUND IV
A California Limited partnership

Notes to Consolidated Financial Statements

September 30, 2002
(Unaudited)

Note 5. COMMITMENTS AND CONTINGENT LIABILITIES

Environmental Matters  The Partnership follows a policy of monitoring its
properties for the presence of hazardous or toxic substances. The Partnership
is not aware of any environmental liability with respect to the properties that
would have a material adverse effect on the Partnerships business, assets or
results of operations. There can be no assurance that such a material
environmental liability does not exist. The existence of any such material
environmental liability could have an adverse effect on the Partnerships
results of operations and cash flows.

Approximately 15 acres of the Tri-City Corporate Centre land owned by the
Partnership was part of a landfill operated by the City of San Bernardino (the
City) from approximately 1950 to 1960. There are no records of which the
Partnership is aware disclosing that hazardous wastes exist at the landfill.
The Partnerships landfill monitoring program currently meets or exceeds all
regulatory requirements and no material capital expenditures have been
incurred. The Partnership is working with the Santa Ana Region of the
California Regional Water Quality Control Board and the City to determine the
need and responsibility for any further testing. There is no current
requirement to ultimately clean up the site; however, no assurance can be made
that circumstances will not arise which could impact the Partnerships
responsibility related to the property.

General Uninsured Losses  The Partnership carries comprehensive liability,
fire, flood, extended coverage and rental loss insurance with policy
specifications, limits and deductibles customarily carried for similar
properties. There are, however, certain types of extraordinary losses, which
may be either uninsurable, or not economically insurable. Further, certain of
the properties are located in areas that are subject to earthquake activity.
Should a property sustain damage as a result of an earthquake, the Partnership
may incur losses due to insurance deductibles, co-payments on insured losses or
uninsured losses. Should an uninsured loss occur, the Partnership could lose
its investment in, and anticipated profits and cash flows from, a property.

Other Matters  The Partnership is contingently liable for subordinated real
estate commissions payable to the Sponsors in the aggregate amount of $643,000
at September 30, 2002, for sales that transpired in previous years. The
subordinated real estate commissions are payable only after the Limited
Partners have received distributions equal to their original invested capital
plus a cumulative non-compounded return of 6% per annum on their adjusted
invested capital. Since the circumstances under which these commissions would
be payable are limited, the liability has not been recognized in the
accompanying consolidated financial statements; however, the amount will be
recorded when and if it becomes payable.

11



---



##### Table of Contents






|        |  |                                                                                      
|------- |  | -------------------------------------------------------------------------------------
|Item 2. |  | Managements Discussion and Analysis of Financial Condition and
Results of Operations

New Accounting Pronouncements

During 2001, the Financial Accounting Standards Board (FASB) approved for
issuance a number of new accounting standards. Management does not expect
these new accounting standards to have a material impact on the Partnerships
consolidated financial position or results of operations other than to modify
the presentation of the operating results of sold properties to recognize such
activity as discontinued operations. These new accounting standards are
discussed in more detail in the notes to the accompanying consolidated
financial statements.

LIQUIDITY AND CAPITAL RESOURCES

The following discussion should be read in conjunction with the Partnerships
December 31, 2001 audited consolidated financial statements and the notes
thereto.

At September 30, 2002, the Partnership had cash of $5,334,000. The remainder of
the Partnerships assets consist primarily of its net investments in real
estate, totaling approximately $29,790,000, which includes $28,576,000 in
rental properties and $1,214,000 of land held for development.

The Partnerships primary liabilities at September 30, 2002 include notes
payable, totaling approximately $8,015,000 which consist of two secured loans
encumbering properties with an aggregate net book value of approximately
$13,667,000 and with maturity dates ranging from January 1, 2005 to May 1,
2006. These notes require monthly principal and interest payments ranging from
$20,000 to $53,000 and bear fixed interest at rates between 8.74% and 9%. A
line of credit, which bears interest at lenders Prime Rate, has no outstanding
balance at September 30, 2002.

On March 20, 2002, the Partnership sold the Two Vanderbilt property to an
anchor tenant, Inland Empire Health Plan, who occupied 78% of the property for
a sales price of $8,750,000. The sale generated net proceeds of approximately
$8,382,000 and a gain on sale of approximately $5,120,000. The Partnership made
a pay down on the line of credit of $4,200,000 from the sales proceeds and
added the remaining cash to its cash reserves.

The Partnership is contingently liable for subordinated real estate commissions
payable to the Sponsors in the aggregate amount of $643,000 at September 30,
2002, for sales that transpired in previous years. The subordinated real estate
commissions are payable only after the Limited Partners have received
distributions equal to their original invested capital plus a cumulative
non-compounded return of 6% per annum on their adjusted invested capital. Since
the circumstances under which these commissions would be payable are limited,
the liability has not been recognized in the accompanying consolidated
financial statements; however, the amount will be recorded when and if it
becomes payable.

Operationally, the Partnerships primary source of funds consists of cash
provided by its rental activities. Other sources of funds may include permanent
financing, draws on the line of credit, property sales, interest income on
certificates of deposit and other deposits of funds invested temporarily. Cash
generated from property sales is generally added to the Partnerships cash
reserves, pending use in the development of properties or distribution to the
partners.

Management believes that the Partnerships cash balance as of September 30,
2002, together with cash from operations, sales and financing, will be
sufficient to finance the Partnerships and the properties continued
operations and development plans on a short-term basis and for the reasonably
foreseeable future. There can be no assurance that the Partnerships results
of operations will not fluctuate in the future and at times affect its ability
to meet its operating requirements.

The Partnership knows of no demands, commitments, events or uncertainties,
which might effect its capital resources in any material respect. In addition,
the Partnership is not subject to any covenants pursuant to its secured debt
that would constrain its ability to obtain additional capital.

Operating Activities

During the nine months ended September 30, 2002, the Partnerships cash
provided by operating activities totaled $524,000.

12



---



##### Table of Contents



The $125,000 decrease in accounts receivable at September 30, 2002, compared to
December 31, 2001, was primarily due to the collection of tenant rents.

The $92,000 increase in deferred financing costs and other fees at September
30, 2002, compared to December 31, 2001 was primarily due to lease commissions
paid for new and renewal leases.

The $58,000 increase in prepaid expenses and other assets at September 30,
2002, compared to December 31, 2001, was primarily due to an increase in the
mortgage impound accounts.

The $219,000 decrease in accounts payable and other liabilities at September
30, 2002, compared to December 31, 2001, was primarily due to payments of
accrued building operating expenses, and the refund of security deposits
related to the sale of the Two Vanderbilt property, partially offset by an
increase in accrued property taxes.

Investing Activities

During the nine months ended September 30, 2002, the Partnerships cash
provided by investing activities totaled $7,794,000, which included $8,382,000
of net cash proceeds from the sale of the Two Vanderbilt property, offset by
$588,000 of cash used primarily for tenant improvements at One Vanderbilt and
Carnegie Business Center I.

Financing Activities

During the nine months ended September 30, 2002, the Partnerships cash used
for financing activities totaled $4,446,000, which consisted of $4,327,000 in
principal payments on notes payable and line of credit, and $119,000 paid to
redeem 372 limited partnership units (Units).

Results of Operations

Revenues

Rental income increased $25,000, or 2%, and $200,000, or 4%, during the three
and nine months ended September 30, 2002, compared to the three and nine months
ended September 30, 2001, respectively, primarily due to increases in weighted
average occupancies at Carnegie Business Center I and Palm Court Retail #1, and
a rent step-up at Inland Regional Center in July 2001.

Occupancy rates at the Partnerships Tri-City Properties were as follows:

|                                 |  |               |     |      |  |  |     |  
|-------------------------------- |  | ------------- | --- | ---- |  |  | --- | -
|                                 |  | September 30,
|                                 |  |              
|                                 |  | 2002          |     | 2001
|                                 |  |               |     |     
|One Vanderbilt                   |  |               | 99  | %    |  |  | 89  | %
|Service Retail Center            |  |               | 93  | %    |  |  | 93  | %
|Carnegie Business Center I       |  |               | 100 | %    |  |  | 97  | %
|Promotional Retail Center        |  |               | 100 | %    |  |  | 100 | %
|Inland Regional Center           |  |               | 100 | %    |  |  | 100 | %
|TGI Fridays                     |  |               | 100 | %    |  |  | 100 | %
|Circuit City                     |  |               | 100 | %    |  |  | 100 | %
|Office Max                       |  |               | 100 | %    |  |  | 100 | %
|Mimis Café                      |  |               | 100 | %    |  |  | 100 | %
|Palm Court Retail #1             |  |               | 100 | %    |  |  | 60  | %
|Palm Court Retail #2             |  |               | 100 | %    |  |  | 100 | %
|                                 |  |               |     |      |  |  |     |  
|Total weighted average occupancy |  |               | 96  | %    |  |  | 93  | %
|                                 |  |               |     |      |  |  |     |  

As of September 30, 2002, tenants at Tri-City occupying substantial portions of
leased rental space included: (i) CompUSA with a lease through August 2003;
(ii) ITT Educational Services with a lease through December 2004; (iii)
PetsMart with a lease through January 2009; (iv) Inland Regional Center with a
lease through July 2009; (v) The University of Phoenix, Inc. with a lease
through August 31, 2009; (vi) Office Max with a lease through October 2013; and
(vii) Circuit City with a lease through January 2018. These seven tenants, in
the aggregate, occupied approximately 254,000 square feet of the 395,000 total
leasable square feet at Tri-City and accounted for approximately 64% of the
rental income of the Partnership during the third quarter of 2002.

13



---



##### Table of Contents



The 10% increase in occupancy from September 30, 2001 to September 30, 2002 at
One Vanderbilt was due to an existing tenant that expanded by 6,694 square feet
in the 3rd quarter of 2002.

The 40% increase in occupancy from September 30, 2001 to September 30, 2002 at
Palm Court Retail # 1 was due to the leasing of 2,000 square feet to a new
tenant in the 3rd quarter of 2002.

Interest and other income increased $16,000 for the three months ended
September 30, 2002, compared to the three months ended September 30, 2001,
respectively, primarily due to a higher average invested cash balance resulting
from the sale of the Two Vanderbilt property. Interest and other income
decreased $36,000 for the nine months ended September 30, 2002, compared to the
nine months ended September 30, 2001, respectively, primarily due to a lower
average invested cash balance as a result of distributions made to the General
and Limited Partners in November 2001 and paydowns on the line of credit in
April 2001 and March 2002, as well as decreases in interest rates, offset by
investment of sales proceeds from the Two Vanderbilt property.

Expenses

Operating expenses decreased $18,000, or 3%, for the three months ended
September 30, 2002, compared to the three months ended September 30, 2001,
primarily due to legal costs incurred in 2001 related to a property tax dispute
and settlement with a tenant, offset by an increase in utility costs.
Operating expenses increased $66,000, or 4%, for the nine months ended
September 30, 2002, compared to the nine months ended September 30, 2001,
primarily due to an increase in utility costs, and increases in occupancy at
One Vanderbilt and Palm Court Retail #1, partially offset by a decrease in
legal costs.

Interest expense decreased $73,000, or 26%, and $381,000, or 37%, for the three
and nine months ended September 20, 2002, compared to the three and nine months
ended September 30, 2001, respectively, primarily due to the replacement of two
higher rate loans with a line of credit with a lower variable interest rate in
April 2001, and paydowns on the line of credit in April 2001 and March 2002.

Depreciation and amortization increased $20,000, or 6%, and $29,000, or 3%, for
the three and nine months ended September 30, 2002, compared to the three and
nine months ended September 30, 2001, respectively, primarily due to additions
to real estate.

Expenses associated with undeveloped land increased $488,000 for the nine
months ended September 30, 2002, compared to the nine months ended September
30, 2001, primarily due to a bond payoff to the City of San Bernardino for the
land parcels, which was paid in the second quarter of 2002.

General and administrative expenses decreased $36,000, or 12%, and $59,000, or
6%, for the three and nine months ended September 30, 2002, compared to the
three and nine months ended September 30, 2001, respectively, primarily due to
a decrease in investor relation service expenses related to the redemption of
Partnership Units, offset by an increase in asset management fees.

Income from discontinued operations

Income from discontinued operations totaled $5,172,000, which included
$5,120,000 of gain on sale from the sale of the Two Vanderbilt property, and
$52,000 of net operating income from the Two Vanderbilt property for the nine
months ended September 30, 2002.

Critical Accounting Policies

Revenue recognized on a straight-line basis

The Partnership recognizes rental revenue on a straight-line basis at amounts
that it believes it will collect on a tenant by tenant basis. The estimation
process may result in higher or lower levels from period to period as the
Partnerships collection experience and the credit quality of the Partnerships
tenants changes. Actual amounts collected could be lower or higher than the
amounts recognized on a straight-line basis if specific tenants are unable to
pay rent that the Partnership has previously recognized as revenue, or if other
tenants remain whom the Partnership previously believed would not.

14



---



##### Table of Contents



Carrying value of rental properties and land held for development

The Partnerships rental properties, including the related land, are stated at
depreciated cost unless events or circumstances indicate that depreciated cost
cannot be recovered, in which case, the carrying value of the property is
reduced to its estimated fair value. Estimated fair value is based upon (i)
the Partnerships plans for the continued operations of each property, and (ii)
is computed using estimated sales price, as determined by prevailing market
values for comparable properties and/or the use of capitalization rates
multiplied by annualized rental income based upon the age, construction and use
of the building. The fulfillment of the Partnerships plans related to each of
its properties is dependent upon, among other things, the presence of economic
conditions which will enable the Partnership to continue to hold and operate
the properties prior to their eventual sale. Due to uncertainties inherent in
the valuation process and in the economy, it is reasonably possible that the
actual results of operating and disposing of the Partnerships properties could
be materially different than current expectations.

Land held for development is stated at cost unless events or circumstances
indicate that cost cannot be recovered, in which case, the carrying value is
reduced to estimated fair value. Estimated fair value: (i) is based on the
Partnerships plans for the development of each property; (ii) is computed
using estimated sales price, based upon market values for comparable
properties; and (iii) considers the cost to complete and the estimated fair
value of the completed project. The fulfillment of the Partnerships plans
related to each of its properties is dependent upon, among other things, the
presence of economic conditions which will enable the Partnership to either
hold the properties for eventual sale or obtain financing to further develop
the properties.

The actual value of the Partnerships portfolio of properties and land held for
development could be significantly higher or lower than their carrying amounts.




Item 3. Qualitative and Quantitative Information About Market Risk

Interest Rates

The Partnerships primary market risk exposure is to changes in interest rates
obtainable on its secured borrowings. The Partnership does not believe that
changes in market interest rates will have a material impact on the performance
or fair value of its portfolio.

For debt obligations, the table below presents principal cash flows and
interest rates by expected maturity dates.

|                        |  |                        |      |      |  |      |      |      |  |            |       |       |  |       |       |   |  |  |   |  |  |   |       |      |  |   |       | 
|----------------------- |  | ---------------------- | ---- | ---- |  | ---- | ---- | ---- |  | ---------- | ----- | ----- |  | ----- | ----- | - |  |  | - |  |  | - | ----- | ---- |  | - | ----- | 
|                        |  | Expected Maturity Date
|                        |  |                       
|                        |  |                        |      |      |  |      |      |      |  |            |       |       |  |       |       |   |  |  |   |  |  |   |       | Fair
|                        |  | 2003                   |      | 2004 |  | 2005 |      | 2006 |  | Thereafter |       | Total |  | value
|                        |  |                        |      |      |  |      |      |      |  |            |       |       |  |      
|                        |  | (in thousands)        
|Secured Fixed Rate Debt |  | $                      | 184  |      |  | $    | 200  |      |  | $          | 2,172 |       |  | $     | 5,459 |   |  |  |  |  |  | $ | 8,015 |      |  | $ | 8,015 | 
|Average interest rate   |  |                        | 8.82 | %    |  |      | 8.82 | %    |  |            | 8.98  | %     |  |       | 8.74  | % |  |  |  |  |  |   | 8.81  | %    |  |   |       | 

The Partnership believes that the interest rates given in the table for fixed
rate borrowings approximate the rates the Partnership could currently obtain
for instruments of similar terms and maturities and that the fair values of
such instruments approximate carrying value at September 30, 2002.




Item 4. Controls and procedures

(a)  Evaluation of disclosure controls and procedures. The Partnerships chief
executive officer and chief financial officer, after evaluating the
effectiveness of the Partnerships disclosure controls and procedures (as
defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15-d-14(c))
as of a date (the Evaluation Date) within 90 days before the filing date of
this quarterly report, has concluded that as of the Evaluation Date, the
Partnerships disclosure controls and procedures were effective and designed to
ensure that material information relating to the Partnership and its
consolidated subsidiaries would be made known to him by others within those
entities.

(b)  Changes in internal controls. There were no significant changes in the
Partnerships internal controls or in other factors that could significantly
affect those controls subsequent to the Evaluation Date.

15



---



##### Table of Contents






Part II. OTHER INFORMATION




Item 1. Legal Proceedings

None.




Item 2. Changes in Securities and Use of Proceeds

Not applicable.




Item 3. Defaults Upon Senior Securities

Not applicable.




Item 4. Submission of Matters to a Vote of Security Holders

None.




Item 5. Other Information

None.




Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

None.

(b) Reports on Form 8-K (incorporated herein by reference):

On July 25, 2002, the Partnership filed a report on Form 8-K
regarding changes in registrants certifying accountant.

16



---



##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.



| | RANCON REALTY FUND IV,
a California limited partnership
| | -------------------------------------------------------



| |     |                                                                           
| | --- | --------------------------------------------------------------------------
| | By: | Rancon Financial Corporation
a California corporation,
its General Partner

|                       |  |  |     |                                
|---------------------- |  |  | --- | -------------------------------
|Date: November 8, 2002 |  |  | By: | /s/ DANIEL L. STEPHENSON       
|                       |  |  |     |                                
|                       |  |  |     | Daniel L. Stephenson, President



|                       |  |     |                                       | 
|---------------------- |  | --- | ------------------------------------- | 
|Date: November 8, 2002 |  | By: | /s/ DANIEL L. STEPHENSON             
|                       |  |     |                                      
|                       |  |     | Daniel L. Stephenson, General Partner

17



---



##### Table of Contents



I, DANIEL L. STEPHENSON, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of RANCON REALTY FUND
IV;                                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and I have:                                                                                                                                                      



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to me by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date;                                                                                                                          



|5. |  | I have disclosed, based on my most recent evaluation, to the registrants
auditors and the audit committee of registrants board of directors (or
persons performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my most
recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: November 8, 2002

/s/ DANIEL L. STEPHENSON

Daniel L. Stephenson
President, and General Partner of
Rancon Financial Corporation

18