##### Table of Contents

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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



For the quarterly period ended September 30, 2005



OR



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



Commission file number: 0-14207



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RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)



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|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|California                                                    |  | 33-0016355                         
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification No.)



|                                                          |  |           
|--------------------------------------------------------- |  | ----------
|400 South El Camino Real, Suite 1100San Mateo, California |  | 94402-1708
|(Address of principal executive offices)                  |  | (Zip Code)



(650) 343-9300

(Registrants telephone number, including area code)



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Indicate by
check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes ̈No  x



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes ̈No  x



Total number of units outstanding as of November 14, 2005: 67,702



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##### Table of Contents

INDEX

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP



|           |  |                                                                                                       |  |         
|---------- |  | ----------------------------------------------------------------------------------------------------- |  | --------
|           |  |                                                                                                       |  | Page No.
|PART I     |  | FINANCIAL INFORMATION                                                                                 |  |         
|           |  |                                                                                                      
|Item 1.    |  | Consolidated Financial Statements of Rancon Realty Fund IV (Unaudited):                               |  |         
|           |  |                                                                                                      
|           |  | Consolidated Balance Sheets at September 30, 2005 and December 31, 2004                               |  | 3       
|           |  |                                                                                                      
|           |  | Consolidated Statements of Operations for the three and nine months ended September 30, 2005 and 2004 |  | 4       
|           |  |                                                                                                      
|           |  | Consolidated Statement of Partners Equity for the nine months ended September 30, 2005               |  | 5       
|           |  |                                                                                                      
|           |  | Consolidated Statements of Cash Flows for the nine months ended September 30, 2005 and 2004           |  | 6       
|           |  |                                                                                                      
|           |  | Notes to Consolidated Financial Statements                                                            |  | 7-13    
|           |  |                                                                                                      
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                 |  | 14-20   
|           |  |                                                                                                      
|Item 3.    |  | Qualitative and Quantitative Information About Market Risk                                            |  | 20      
|           |  |                                                                                                      
|Item 4.    |  | Controls and Procedures                                                                               |  | 20      
|           |  |                                                                                                      
|PART II    |  | OTHER INFORMATION                                                                                     |  |         
|           |  |                                                                                                      
|Item 1.    |  | Legal Proceedings                                                                                     |  | 21      
|           |  |                                                                                                      
|Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                                           |  | 21      
|           |  |                                                                                                      
|Item 3.    |  | Defaults Upon Senior Securities                                                                       |  | 21      
|           |  |                                                                                                      
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                   |  | 21      
|           |  |                                                                                                      
|Item 5.    |  | Other Information                                                                                     |  | 21      
|           |  |                                                                                                      
|Item 6.    |  | Exhibits                                                                                              |  | 21      
|           | 
|SIGNATURES |  | 22                                                                                                   



2



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##### 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 units outstanding)

(Unaudited)



|                                                                                                                                    |  |                   |         |   |                  |   |         |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                    |  | September 30,2005 |         |   | December 31,2004 |  
|Assets                                                                                                                              |  |                   |         |   |                  |   |         |  
|Investments in real estate:                                                                                                         |  |                   |         |   |                  |   |         |  
|Rental properties                                                                                                                   |  | $                 | 49,112  |   |                  | $ | 37,660  |  
|Accumulated depreciation                                                                                                            |  |                   | (11,081 | ) |                  |   | (10,922 | )
|                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Rental properties, net                                                                                                              |  |                   | 38,031  |   |                  |   | 26,738  |  
|                                                                                                                                    |  |                  
|Construction in progress                                                                                                            |  |                   |        |   |                  |   | 10,774  |  
|Land held for development                                                                                                           |  |                   | 321     |   |                  |   | 272     |  
|                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total real estate investments                                                                                                       |  |                   | 38,352  |   |                  |   | 37,784  |  
|                                                                                                                                    |  |                  
|Cash and cash equivalents                                                                                                           |  |                   | 3,399   |   |                  |   | 701     |  
|Accounts receivable                                                                                                                 |  |                   | 21      |   |                  |   | 78      |  
|Deferred costs, net of accumulated amortization of $998 and $1,137 at September 30, 2005 and December 31, 2004,
respectively        |  |                   | 1,673   |   |                  |   | 1,026   |  
|Prepaid expenses and other assets                                                                                                   |  |                   | 1,334   |   |                  |   | 971     |  
|                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total assets                                                                                                                        |  | $                 | 44,779  |   |                  | $ | 40,560  |  
|                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Liabilities and Partners Equity                                                                                                    |  |                   |         |   |                  |   |         |  
|Liabilities:                                                                                                                        |  |                   |         |   |                  |   |         |  
|Notes payable and line of credit                                                                                                    |  | $                 | 15,481  |   |                  | $ | 13,236  |  
|Accounts payable and other liabilities                                                                                              |  |                   | 680     |   |                  |   | 484     |  
|Construction costs payable                                                                                                          |  |                   |        |   |                  |   | 12      |  
|Prepaid rent                                                                                                                        |  |                   | 212     |   |                  |   | 35      |  
|                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total liabilities                                                                                                                   |  |                   | 16,373  |   |                  |   | 13,767  |  
|                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Commitments and contingent liabilities (Note 6)                                                                                     |  |                   |         |   |                  |   |         |  
|                                                                                                                                    |  |                  
|Partners Equity :                                                                                                                  |  |                   |         |   |                  |   |         |  
|General partner                                                                                                                     |  |                   | (396    | ) |                  |   | (583    | )
|Limited partners, 67,848 and 68,954 limited partnership units outstanding at September 30, 2005 and December 31, 2004,
respectively |  |                   | 28,802  |   |                  |   | 27,376  |  
|                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total partners equity                                                                                                              |  |                   | 28,406  |   |                  |   | 26,793  |  
|                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total liabilities and partners equity                                                                                              |  | $                 | 44,779  |   |                  | $ | 40,560  |  
|                                                                                                                                    |  |                   |         |   |                  |   |         |  



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



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RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP



Consolidated Statements of Operations

(in thousands, except per unit amounts and units outstanding)

(Unaudited)



|                                                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                                                              |  | Three months endedSeptember 30, |        |   | Nine months endedSeptember 30, |  
|                                                                                                                              |  | 2005                            |        |   | 2004                           |   |        | 2005 |  |   | 2004   |  
|Operating Revenue Rental income                                                                                              |  | $                               | 1,895  |   |                                | $ | 1,691  |      |  | $ | 5,284  |   |  | $ | 4,911  |  
|                                                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Operating Expenses                                                                                                            |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Property operating                                                                                                            |  |                                 | 771    |   |                                |   | 624    |      |  |   | 2,034  |   |  |   | 1,742  |  
|Depreciation and amortization                                                                                                 |  |                                 | 456    |   |                                |   | 388    |      |  |   | 1,327  |   |  |   | 1,108  |  
|Expenses associated with undeveloped land                                                                                     |  |                                 | 34     |   |                                |   | 37     |      |  |   | 102    |   |  |   | 174    |  
|General and administrative                                                                                                    |  |                                 | 286    |   |                                |   | 312    |      |  |   | 764    |   |  |   | 926    |  
|                                                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Total operating expenses                                                                                                      |  |                                 | 1,547  |   |                                |   | 1,361  |      |  |   | 4,227  |   |  |   | 3,950  |  
|                                                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Operating income                                                                                                              |  |                                 | 348    |   |                                |   | 330    |      |  |   | 1,057  |   |  |   | 961    |  
|                                                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Gain on sale of land held for development                                                                                     |  |                                 |       |   |                                |   |       |      |  |   |       |   |  |   | 1,347  |  
|Interest and other income                                                                                                     |  |                                 | 6      |   |                                |   | 3      |      |  |   | 8      |   |  |   | 12     |  
|Interest expense                                                                                                              |  |                                 | (178   | ) |                                |   | (117   | )    |  |   | (321   | ) |  |   | (374   | )
|                                                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Income before discontinued operations                                                                                         |  |                                 | 176    |   |                                |   | 216    |      |  |   | 744    |   |  |   | 1,946  |  
|                                                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Income from discontinued operations (including gain on sale of real estate of $2,075 in nine months ended September 30, 2005) |  |                                 |       |   |                                |   | 35     |      |  |   | 2,164  |   |  |   | 123    |  
|                                                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Net income                                                                                                                    |  | $                               | 176    |   |                                | $ | 251    |      |  | $ | 2,908  |   |  | $ | 2,069  |  
|                                                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Basic and diluted net income per limited partnership unit                                                                     |  | $                               | 2.33   |   |                                | $ | 3.24   |      |  | $ | 39.81  |   |  | $ | 27.66  |  
|                                                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Weighted average number of limited partnership units outstanding during each period                                           |  |                                 | 67,946 |   |                                |   | 69,479 |      |  |   | 68,346 |   |  |   | 69,729 |  
|                                                                                                                              |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  



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



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RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP



Consolidated Statement of Partners Equity

For the nine months ended September 30, 2005

(in thousands)

(Unaudited)



|                                                    |  |                 |      |   |                 |   |        |       |  |   |        |  
|--------------------------------------------------- |  | --------------- | ---- | - | --------------- | - | ------ | ----- |  | - | ------ | -
|                                                    |  | GeneralPartners |      |   | LimitedPartners |   |        | Total | 
|Balance (deficit) at December 31, 2004              |  | $               | (583 | ) |                 | $ | 27,376 |       |  | $ | 26,793 |  
|Redemption of limited partnership units             |  |                 |     |   |                 |   | (585   | )     |  |   | (585   | )
|Net income                                          |  |                 | 187  |   |                 |   | 2,721  |       |  |   | 2,908  |  
|Distributions ($10.36 per limited partnership unit) |  |                 |     |   |                 |   | (710   | )     |  |   | (710   | )
|                                                    |  |                 |      |   |                 |   |        |       |  |   |        |  
|Balance (deficit) at September 30, 2005             |  | $               | (396 | ) |                 | $ | 28,802 |       |  | $ | 28,406 |  
|                                                    |  |                 |      |   |                 |   |        |       |  |   |        |  



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



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RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP



Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)



|                                                                                                                                         |  |                                |        |   |      |   |        |  
|---------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ------ | - | ---- | - | ------ | -
|                                                                                                                                         |  | Nine months endedSeptember 30, |       
|                                                                                                                                         |  | 2005                           |        |   | 2004 |  
|Cash flows from operating activities:                                                                                                    |  |                                |        |   |      |   |        |  
|Net income                                                                                                                               |  | $                              | 2,908  |   |      | $ | 2,069  |  
|Adjustments to reconcile net income to net cash provided by operating activities:                                                        |  |                                |        |   |      |   |        |  
|Gain on sale of real estate and land held for development                                                                                |  |                                | (2,075 | ) |      |   | (1,347 | )
|Depreciation and amortization (including discontinued operations)                                                                        |  |                                | 1,346  |   |      |   | 1,166  |  
|Amortization of loan fees (included in interest expense)                                                                                 |  |                                | 81     |   |      |   | 79     |  
|Changes in certain assets and liabilities:                                                                                               |  |                                |        |   |      |   |        |  
|Accounts receivable                                                                                                                      |  |                                | 57     |   |      |   | 61     |  
|Deferred costs                                                                                                                           |  |                                | (924   | ) |      |   | (149   | )
|Prepaid expenses and other assets                                                                                                        |  |                                | (426   | ) |      |   | (114   | )
|Accounts payable and other liabilities                                                                                                   |  |                                | 196    |   |      |   | 434    |  
|Prepaid rent                                                                                                                             |  |                                | 177    |   |      |   | 65     |  
|                                                                                                                                         |  |                                |        |   |      |   |        |  
|Net cash provided by operating activities                                                                                                |  |                                | 1,340  |   |      |   | 2,264  |  
|                                                                                                                                         |  |                                |        |   |      |   |        |  
|Cash flows from investing activities:                                                                                                    |  |                                |        |   |      |   |        |  
|Net proceeds from sales of land held for development                                                                                     |  |                                | 4,097  |   |      |   | 1,778  |  
|Net additions to real estate investments                                                                                                 |  |                                | (3,660 | ) |      |   | (8,969 | )
|                                                                                                                                         |  |                                |        |   |      |   |        |  
|Net cash provided by (used for) investing activities                                                                                     |  |                                | 437    |   |      |   | (7,191 | )
|                                                                                                                                         |  |                                |        |   |      |   |        |  
|Cash flows from financing activities:                                                                                                    |  |                                |        |   |      |   |        |  
|Line of credit draws                                                                                                                     |  |                                | 2,363  |   |      |   | 6,950  |  
|Notes payable principal payments                                                                                                         |  |                                | (118   | ) |      |   | (147   | )
|Loan fees for line of credit                                                                                                             |  |                                | (29    | ) |      |   | (217   | )
|Redemption of limited partnership units                                                                                                  |  |                                | (585   | ) |      |   | (331   | )
|Distributions to limited partner                                                                                                         |  |                                | (710   | ) |      |   | (679   | )
|Distributions to General partner                                                                                                         |  |                                |       |   |      |   | (72    | )
|                                                                                                                                         |  |                                |        |   |      |   |        |  
|Net cash provided by financing activities                                                                                                |  |                                | 921    |   |      |   | 5,504  |  
|                                                                                                                                         |  |                                |        |   |      |   |        |  
|Net increase in cash and cash equivalents                                                                                                |  |                                | 2,698  |   |      |   | 577    |  
|                                                                                                                                         |  |                               
|Cash and cash equivalents at beginning of period                                                                                         |  |                                | 701    |   |      |   | 3,312  |  
|                                                                                                                                         |  |                                |        |   |      |   |        |  
|Cash and cash equivalents at end of period                                                                                               |  | $                              | 3,399  |   |      | $ | 3,889  |  
|                                                                                                                                         |  |                                |        |   |      |   |        |  
|Supplemental disclosure of cash flow information:                                                                                        |  |                                |        |   |      |   |        |  
|Cash paid for interest (excluding capitalized interest of $475 and $295 for the periods ended September 30, 2005 and 2004,
respectively) |  | $                              | 300    |   |      | $ | 295    |  
|                                                                                                                                         |  |                                |        |   |      |   |        |  
|Supplemental disclosure of non-cash investing activities:                                                                                |  |                                |        |   |      |   |        |  
|Completed real estate investment transferred out of construction in progress to rental property                                          |  | $                              | 11,532 |   |      | $ |       |  
|                                                                                                                                         |  |                                |        |   |      |   |        |  
|Supplemental disclosure of non-cash-financing activities:                                                                                |  |                                |        |   |      |   |        |  
|Redemption of limited partnership units                                                                                                  |  | $                              | 82     |   |      | $ | 65     |  
|Redemption payable                                                                                                                       |  |                                | (82    | ) |      |   | (65    | )
|                                                                                                                                         |  |                                |        |   |      |   |        |  
|Total                                                                                                                                    |  | $                              |       |   |      | $ |       |  
|                                                                                                                                         |  |                                |        |   |      |   |        |  
|Supplemental disclosure of non-cash operating activities:                                                                                |  |                                |        |   |      |   |        |  
|Write-off of fully depreciated rental property assets                                                                                    |  | $                              | 605    |   |      | $ | 5,712  |  
|                                                                                                                                         |  |                                |        |   |      |   |        |  
|Write-off of fully amortized deferred costs                                                                                              |  | $                              | 308    |   |      | $ | 464    |  
|                                                                                                                                         |  |                                |        |   |      |   |        |  



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



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RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP



Notes to Consolidated Financial Statements

(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 selling real
property. The Partnership was organized in 1984 and reached final funding in July 1987. The general partners of the Partnership are Daniel L. Stephenson (DLS) and Rancon Financial Corporation (RFC), hereinafter collectively
referred to as the General Partner. RFC is wholly owned by DLS. The Partnership has no employees.



In April 1996, the Partnership formed RRF 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 RRF 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 Partnership considers all assets owned by RRF IV,
Inc. and RRF IV Tri-City to be owned by the Partnership.



During the nine
months ended September 30, 2005, a total of 1,106 Units of limited partnership interest (the Units) were redeemed at an average price of $529. As of September 30, 2005, there were 67,848 Units outstanding.



In the opinion of the General Partner, 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, 2005 and December 31, 2004, and the related consolidated
statements of operations for the three and nine months ended September 30, 2005 and 2004, partners equity for the nine months ended September 30, 2005, and cash flows for the nine months ended September 30, 2005 and 2004. The
results for the nine months ended September 30, 2005 are not necessarily indicative of the results, which may occur for the year ended December 31, 2005.



Allocation of Net Income and Net Loss



Allocations 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 Partner. Net losses from operations are allocated 99% to the limited partners and 1% to the General Partner 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 Partner 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 Unitholders original invested capital; (ii) second, to the limited partners in proportion to and to the extent of the amounts 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 account 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 Partner into the ratio of 4 to 1; and (iv) the balance, if
any, 80% to the limited partners and 20% to the General Partner. In no event shall the General Partner 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 Partner.



The terms of the Partnership Agreement call for the General Partner to restore any deficit 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.



Distribution
of Cash



The Partnership shall make annual or more frequent
distributions of substantially all cash available to be distributed to partners as determined by the General Partner, subject to the following: (i) distributions may be restricted or suspended for limited periods when the General Partner
determines in its absolute discretion that it is in the best interest of the Partnership; and (ii) all distributions are subject to the payments of partnership expenses and maintenance of reasonable reserves for debt service, alterations and
improvements, maintenance, replacement of furniture and fixtures, working capital and contingent liabilities.



All excess cash from operations shall be distributed 90 percent to the limited partners and 10 percent to the General Partner. In May 2005, the limited partners received a partial year distribution from the
Partnership.



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RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP



Notes to Consolidated Financial Statements

(Unaudited)



All cash from sales or refinancing and any other cash determined by the General Partner to be available for distribution other than cash
from operations shall be distributed in the following order of priority: (i) first, 1 percent to the General Partner and 99 percent to the limited partners in proportion to the outstanding positive amounts of Adjusted Invested Capital (as
defined in the Partnership Agreement) for each of their Units until Adjusted Invested Capital (as defined in the Partnership Agreement) for each Unit is reduced to zero; (ii) second, 1 percent to the General Partner and 99 percent to the
limited partners until each of the limited partners has received an amount which, including cash from operations previously distributed to the limited partners, equals a 12 percent annual cumulative non-compounded return on the Adjusted Invested
Capital (as defined in the Partnership Agreement) of their Units plus such limited partners Limited Incremental Preferential Return (as defined in the Partnership Agreement), if any, with respect to each such Unit, on the Adjusted Investment
Capital (as defined in the Partnership Agreement) of such Units for the twelve month period following the date upon which such Unit was purchased from the Partnership and following the admission of such limited partner; (for limited partners
admitted to the Partnership before March 31, 1985, there are additional cumulative non-compounded returns of 9 percent, 6 percent, or 3 percent depending on purchase date, through October 31, 1985); (iii) third, 99 percent to the
General Partner and 1 percent to the limited partners, until the General Partner has received an amount equal to 20 percent of all distributions of cash from sales or refinancing; and (iv) the balance, 80 percent to the limited partners, pro
rata in proportion to the number of Units held by each, and 20 percent to the General Partner.



Management Agreement



In January
1995, Glenborough Corporation (GC) entered into a ten-year agreement with the Partnership to manage the Partnerships assets and properties. In October 2000, GC merged into Glenborough Realty Trust Incorporated
(Glenborough). During the ten years ended December 31, 2004, the Partnership paid Glenborough for its services as follows: (i) a specified asset administration fee ($497,000 for the nine months ended September 30, 2004);
(ii) a sales fees of 2% for improved properties and 4% for land ($77,000 for the nine months ended September 30, 2004); (iii) a refinancing fee of 1% ($113,000 for the nine months ended September 30, 2004) and (iv) a
management fee of 5% of gross rental receipts. Glenborough is not an affiliate of RFC or the Partnership.



In July 2004, the Partnership extended its management relationship with Glenborough through December 31, 2006. Commencing on January 1, 2005 and ending December 31, 2006, the Partnership has engaged
Glenborough to perform services for the following fees: (i) a property management fee of 3% of gross rental revenue; (ii) a construction services fee per certain schedules ($69,000 for the nine months ended September 30, 2005);
(iii) a specified asset and Partnership management fee of $300,000 per year with reimbursements of certain expenses and consulting service fees ($223,000 for the nine months ended September 30, 2005); (iv) a leasing services fee
($312,000 for the nine months ended September 30, 2005); (v) a sales fee of 2% for improved properties ($87,000 for the nine months ended September 30, 2005) and 4% for unimproved properties; (vi) a financing services fee of 1%
of gross loan amount; and (vii) a development fee equal to 5% of the hard costs of the development project ($51,000 for the nine months ended September 30, 2005). The hard costs exclude the cost of the land. The development fee and the
general contractors fee shall not exceed 11.5%, in the aggregate, of the hard costs of the development project.



The new management agreement represents an annual reduction of $363,000 for the asset and Partnership services fee in 2005 and 2006, compared to the asset and Partnership
management fee paid in 2004, as well as a reduction of 2% in the property management fee from 5% in 2004 to 3% in 2005 and 2006, respectively.



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 in accordance with Generally Accepted Accounting Principles in the United States of America (U.S.
GAAP). They include the accounts of certain wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.



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##### Table of Contents

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP



Notes to Consolidated Financial Statements

(Unaudited)



Use of Estimates



The preparation of financial statements in conformity with U.S. GAAP 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.



Consolidation



In April 1996, the Partnership formed RRF 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 RRF 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 intercompany balances and transactions have been eliminated in the consolidation.



Rental Properties



Rental properties, including the related land, are stated at depreciated cost unless events
or circumstances indicate that such amount 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 applied to annualized net operating 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. Rental properties are reviewed for impairment whenever there is a triggering event and at least annually.



Depreciation is provided using the straight-line method over the useful lives of the respective assets. The useful lives are as follows:



|                          |  |                                                                                           
|------------------------- |  | ------------------------------------------------------------------------------------------
|Building and improvements |  | 5 to 40 years                                                                             
|Tenant improvements       |  | Lesser of the initial term of the related lease, or the estimated useful life of the asset
|Furniture and equipment   |  | 5 to 7 years                                                                              



Construction in Progress and
Land Held for Development



Construction in
progress and land held for development are 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 for further development. Construction in progress and land held for development are reviewed for impairment whenever there is a triggering event and at least annually.



The pre-development costs for a new project include survey fees and consulting fees.
Interest, property taxes and insurance related to the new project are capitalized during periods that activities that are necessary to get the project ready for its intended use are in progress. The capitalization ends when the construction is
substantially completed and the project is ready for its intended use.



Cash and Cash Equivalents



The Partnership considers
money market funds and certificates of deposit with original maturities of less than ninety days when purchased to be cash equivalents. As of September 30, 2005, the Partnership does not own any certificates of deposit.



Fair Value of Financial Instruments



For certain financial instruments, including cash and cash equivalents, accounts receivable,
accounts payable, other liabilities, construction costs payable, and line of credit payable, 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 and other terms, the estimated fair value of the Partnerships secured note payable as of September 30, 2005 and December 31, 2004 was approximately $5,456,000 and $6,010,000, respectively.



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##### Table of Contents

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP



Notes to Consolidated Financial Statements

(Unaudited)



Deferred Costs



Deferred loan fees are amortized on a straight-line basis, which approximates the interest method, over the life of the related loan and deferred lease commissions are
amortized on a straight-line basis over the initial fixed term of the related lease agreements.



Revenues



The Partnership
recognizes rental revenue on a straight-line basis over the term of the leases. 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. The reimbursements from tenants for real estate taxes are recognized as revenue in the period the expenses are incurred. Other recoverable operating expenses are recognized as revenue on an estimated basis, and
the differences between estimated and actual amounts are recognized as revenue in the subsequent year when the amounts are collected. However, where actual expenses are significantly different from estimates, the Partnership will accrue the
differences in the same period.



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.



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s 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 21% and 22% of rental income for the
nine months ended September 30, 2005 and 2004, respectively.



Reclassifications



Certain prior year balances
have been reclassified to conform to the current year presentation.



Reference to 2004 audited consolidated financial statements



These unaudited consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements included in the 2004 audited consolidated financial statements on Form 10-K.



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##### Table of Contents

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP



Notes to Consolidated Financial Statements

(Unaudited)



Note 3. RENTAL PROPERTIES



Rental properties consisted of the following at September 30, 2005 and December 31, 2004 (in thousands):



|                                 |  |      |         |   |      |   |         |  
|-------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                 |  | 2005 |         |   | 2004 |  
|Land                             |  | $    | 4,471   |   |      | $ | 4,236   |  
|Buildings                        |  |      | 36,861  |   |      |   | 28,375  |  
|Building and tenant improvements |  |      | 7,780   |   |      |   | 5,049   |  
|                                 |  |      |         |   |      |   |         |  
|                                 |  |      | 49,112  |   |      |   | 37,660  |  
|Less: accumulated depreciation   |  |      | (11,081 | ) |      |   | (10,922 | )
|                                 |  |      |         |   |      |   |         |  
|Total rental properties, net     |  | $    | 38,031  |   |      | $ | 26,738  |  
|                                 |  |      |         |   |      |   |         |  



As of September 30, 2005, the
Partnerships rental properties included four office/industrial buildings and seven retail buildings.



Vanderbilt Plaza started construction in September 2003. The property is a four-story office building with approximately 114,000 square feet. The construction cost of the Vanderbilt Plaza was transferred from
construction to land and building when the core and shell was substantially completed and the first tenant moved in during February 2005.



The Partnership entered into a contract to sell the property leased to Office Max for a price of $4,350,000 in April 2005. On June 3, 2005, the sale closed and
generated net proceeds of approximately $4,097,000 and a gain on sale of approximately $2,075,000. The proceeds were added to the Partnerships cash reserves.



In accordance with SFAS 144 Accounting for the Impairment or Disposal of Long Lived Assets, net income and gain or loss on sales
of real estate for properties sold or classified as held for sale are reflected in the consolidated statements of operations as Discontinued operations for all periods presented.



Below is a summary of the results of operations of the property leased to Office Max through
its disposition date (dollars in thousands):



|                                          |  |                                  |   |                                 |   |          |  |      |       |  |   |    
|----------------------------------------- |  | -------------------------------- | - | ------------------------------- | - | -------- |  | ---- | ----- |  | - | ---
|                                          |  | Three months ended September 30, |   | Nine months ended September 30,
|                                          |  | 2005 (1)                         |   | 2004                            |   | 2005 (1) |  | 2004
|Operating Revenue  rental income         |  | $                                |  |                                 | $ | 85       |  | $    | 172   |  | $ | 278
|                                          |  |                                  |   |                                 |   |          |  |      |       |  |   |    
|Property operating                        |  |                                  |  |                                 |   | 31       |  |      | 64    |  |   | 97 
|Depreciation and amortization             |  |                                  |  |                                 |   | 19       |  |      | 19    |  |   | 58 
|                                          |  |                                  |   |                                 |   |          |  |      |       |  |   |    
|Total operating expenses                  |  |                                  |  |                                 |   | 50       |  |      | 83    |  |   | 155
|                                          |  |                                  |   |                                 |   |          |  |      |       |  |   |    
|Income before gain on sale of real estate |  |                                  |  |                                 |   | 35       |  |      | 89    |  |   | 123
|Gain on sale of real estate               |  |                                  |  |                                 |   |         |  |      | 2,075 |  |   |   
|                                          |  |                                  |   |                                 |   |          |  |      |       |  |   |    
|Income from discontinued operations       |  | $                                |  |                                 | $ | 35       |  | $    | 2,164 |  | $ | 123
|                                          |  |                                  |   |                                 |   |          |  |      |       |  |   |    

---

|(1) | Reflects 2005 operations through date of sale.
|--- | ----------------------------------------------



Note 4. CONSTRUCTION IN PROGRESS AND LAND HELD FOR DEVELOPMENT



Construction in progress consisted of the following at September 30, 2005 and December 31, 2004 (in thousands):



|                                                                                                               |  |      |   |      |   |       
|-------------------------------------------------------------------------------------------------------------- |  | ---- | - | ---- | - | ------
|                                                                                                               |  | 2005 |   | 2004
|Tri-City, San Bernardino, CA (approximately 1 acre of land with a cost basis of $511,000 at December 31, 2004) |  | $    |  |      | $ | 10,774
|                                                                                                               |  |      |   |      |   |       



Vanderbilt Plaza was transferred to
land and building from construction in progress when the core and shell of the building was substantially completed and the first tenant moved in during February 2005 (See Note 3 for discussion).



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##### Table of Contents

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP



Notes to Consolidated Financial Statements

(Unaudited)



Land held for development consisted of the following at September 30, 2005 and December 31, 2004 (in thousands):



|                                                                                                                |  |      |     |      |   |    
|--------------------------------------------------------------------------------------------------------------- |  | ---- | --- | ---- | - | ---
|                                                                                                                |  | 2005 |     | 2004
|Tri-City, San Bernardino, CA (approximately 16 acres at September 30, 2005 and December 31, 2004, respectively) |  | $    | 321 |      | $ | 272
|                                                                                                                |  |      |     |      |   |    



As of September 30, 2005, the
Partnership owned approximately 16 acres of undeveloped land. A conceptual plan for a specification building is currently being designed on an approximate one-acre site. The plan includes a three-story multi-tenant building with an estimate of
75,000 gross square feet of office space. Recently, the City approved the development of this project.



The remaining 15 acres are part of a landfill-monitoring program managed by the City of San Bernardino (as discussed in Note 6 below). At this time, the Partnership believes that development of this land is not
practical.



Note 5. NOTE PAYABLE AND LINE OF CREDIT



Note payable and line of credit as of September 30, 2005 and December 31,
2004 were as follows (in thousands):



|                                                                                                                                                                                                                                                                                                                                                                                                       |  |      |        |      |   |       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ------ | ---- | - | ------
|                                                                                                                                                                                                                                                                                                                                                                                                       |  | 2005 |        | 2004
|Note payable collateralized by first deeds of trust on Service Retail Center, Promotional Retail Center and Carnegie Business Center I
buildings. The note, which matures May 1, 2006, is a 10-year, 8.74% fixed rate loan with a 25-year amortization requiring monthly payments of principal and interest totaling $53.                                                                              |  | $    | 5,458  |      | $ | 5,576 
|                                                                                                                                                                                                                                                                                                                                                                                                       |  |     
|Line of credit with a total availability of $11.4 million as of September 30, 2005 and December 31, 2004, collateralized by first
deeds of trust on IRC, Circuit City and TGI Fridays buildings, with a variable interest rate of Prime Rate (6.5% and 5.25% as of September 30, 2005 and December 31, 2004, respectively), monthly, interest-only payments,
and a maturity date of April 15, 2007. |  |      | 10,023 |      |   | 7,660 
|                                                                                                                                                                                                                                                                                                                                                                                                       |  |      |        |      |   |       
|Total                                                                                                                                                                                                                                                                                                                                                                                                  |  | $    | 15,481 |      | $ | 13,236
|                                                                                                                                                                                                                                                                                                                                                                                                       |  |      |        |      |   |       



The note payable may be prepaid with a
penalty based on a yield maintenance formula. There are no prepayment penalties if the note is repaid within nine months of the maturity date. The Partnership intends to pay off this note when the prepayment penalty period ends on November 1,
2005 (as discussed below).



The Partnership intends to refinance the above
fixed-rate loan and the line of credit. In the third quarter of 2005, a loan application was submitted and withdrawn due to disagreement on the loan terms and conditions between the Partnership and the proposed lender. In October 2005, a loan
application was submitted to a different lender. This assumable loan would total $24.1 million, would bear interest at a lower fixed rate of 5.46% with a 10-year term, and would be collateralized by eight properties. This loan would also provide a
one-time loan assumption and a release provision for an individual asset. This loan is estimated to close in the fourth quarter of 2005. No assurance can be made that circumstances will not arise which could impact the closing of the refinance to
repay the above note at maturity.



The annual maturities on the
Partnerships note payable and line of credit subsequent to September 30, 2005, are as follows (in thousands):



|      |  |   |       
|----- |  | - | ------
|2005  |  | $ | 41    
|2006  |  |   | 5,417 
|2007  |  |   | 10,023
|      |  |   |       
|Total |  | $ | 15,481
|      |  |   |       



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##### Table of Contents

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP



Notes to Consolidated Financial Statements

(Unaudited)



Note 6. 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 financial position, results of operations or cash flows. 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 land owned by the Partnership was part of a landfill operated by the City of San Bernardino (the City) from
approximately 1950 to 1960. The City is responsible for the landfill and the gas-monitoring program as prescribed by the Santa Ana Regional Water Quality Control Board (RWQCB). Under a Limited Access Agreement with the Partnership,
methane monitoring is handled directly by the City. Although there is no requirement by the RWQCB or the County of San Bernardino (the County) for Clean Closure, which would include removal of all landfill, the City is required to place
both a Cover Improvement System and a Gas Extraction System at the site. The City started the installation of the Cover Improvement System in October 2004. The completion of the Cover Improvement System has been delayed and
was completed in the third quarter of 2005. A plan was submitted by the City to the County for review and approval for the Gas Extraction System. The plan was approved and the City is now installing the Gas Extraction System at the site. No
assurance can be made that circumstances will not arise which could impact the Partnerships responsibility related to the land. At this time, the Partnership believes that development of this land is not practical.



General Uninsured Losses



The Partnership carries property and liability insurance with respect to the properties.
This coverage has policy specification and insured limits customarily carried for similar properties. However, certain types of losses (such as from earthquakes and floods) may be either uninsurable or not economically insurable. Should the
properties sustain damage as a result of an earthquake or flood, the Partnership may incur losses due to insurance deductibles, co-payments on insured losses or uninsured losses. Additionally, the Partnership has elected to obtain insurance coverage
for certified acts of terrorism as defined in the Terrorism Risk Insurance Act of 2002; however, our insurance policies may not provide coverage for other acts of terrorism. Any losses from such other acts of terrorism might be
uninsured. Should an uninsured loss occur, the Partnership could lose some or all of its capital investment, cash flow and anticipated profits related to the properties.



Other Matters



The Partnership is contingently liable for subordinated real estate commissions payable to the General Partner in the aggregate amount of $643,000 at September 30,
2005, 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
12% per annum on their adjusted invested capital. Since the conditions under which these commissions would be payable have not been achieved, the liability has not been recognized in the accompanying consolidated financial statements; however,
the amount will be recorded when and if it becomes payable.



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##### Table of Contents

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



Background



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 selling real property. The Partnership was organized in 1984 and reached final funding in July 1987. The general partners of the Partnership are Daniel L. Stephenson (DLS) and Rancon Financial Corporation
(RFC), hereinafter collectively referred to as the General Partner. RFC is wholly owned by DLS. The Partnership has no employees.



In April 1996, the Partnership formed RRF 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 RRF 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
Partnership considers all assets owned by RRF IV, Inc. and RRF IV Tri-City to be owned by the Partnership.



Overview



The Partnerships
initial acquisition of property between December 1984 and August 1985 consisted of approximately 76.56 acres of partially developed and unimproved land located in San Bernardino, California. The property is part of a master-planned development of
153 acres known as Tri-City (Tri-City) and is zoned for mixed commercial, office, hotel, transportation-related, and light industrial uses and all of the parcels thereof are separately owned by the Partnership and Rancon Realty Fund V
(Fund V), a partnership sponsored by the General Partner of the Partnership. Since the acquisition of the land, the Partnership constructed thirteen projects at Tri-City consisting of four office buildings, one industrial building, and
eight retail buildings. One office building and one retail building were sold in 2002 and 2005, respectively. The Partnerships properties are more fully described below.



As of September 30, 2005, the Partnership owned eleven rental properties, and approximately 16 acres of unimproved land in the Tri-City
master-planned development in San Bernardino, California.



Tri-City



Between 1984 and 1985, the Partnership acquired a total of 76.56
acres of partially developed land in Tri-City for an aggregate purchase price of $9,917,000. During that time, Fund V acquired the remaining 76.21 acres within Tri-City.



Tri-City is located at the northeastern quadrant of the intersection of Interstate 10 (San Bernardino Freeway) and Waterman Avenue in the
southernmost part of the City of San Bernardino, and is in the heart of the Inland Empire, the most densely populated area of San Bernardino and Riverside Counties.



The Inland Empire is generally broken down into two major markets, Inland Empire East and Inland Empire West. Tri-City is located within the
Inland Empire East market, which consists of approximately 12.6 million square feet of office space and an overall vacancy rate of approximately 10.6% as of September 30, 2005, according to a study conducted by an independent broker.



As of September 30, 2005, the Partnership has approximately 269,000
square feet of office space with an average vacancy rate of 21%, approximately 155,000 square feet of retail space with no vacancy, and approximately 62,000 square feet of industrial space with an average vacancy rate of 54% (vacancy rate should be
decreased in the fourth quarter of 2005-see below for further discussion).



Tri-City Properties



The Partnerships rental properties are as follows:



|                           |  |                                    |  |            
|-------------------------- |  | ---------------------------------- |  | -----------
|Property                   |  | Type                               |  | Square Feet
|One Vanderbilt             |  | Four story office building         |  | 73,729     
|Carnegie Business Center I |  | Two industrial buildings           |  | 62,540     
|Service Retail Center      |  | Two retail buildings               |  | 20,780     
|Promotional Retail Center  |  | Four strip center retail buildings |  | 66,244     
|Inland Regional Center     |  | Two story office building          |  | 81,079     
|TGI Fridays               |  | Restaurant                         |  | 9,386      
|Circuit City               |  | Retail building                    |  | 39,123     
|Mimis Café                |  | Restaurant                         |  | 6,455      
|Palm Court Retail #1       |  | Retail building                    |  | 5,022      
|Palm Court Retail #2       |  | Retail building                    |  | 7,433      
|Vanderbilt Plaza           |  | Four story office building         |  | 114,170    



These eleven operating properties
total approximately 486,000 square feet and offer a wide range of office, retail and industrial products to the market.



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##### Table of Contents

Occupancy rates at the Partnerships rental properties as of September 30, 2005 and 2004 were as follows:



|                                            |  |      |   |  |      |  
|------------------------------------------- |  | ---- | - |  | ---- | -
|                                            |  | 2005 |   |  | 2004 |  
|One Vanderbilt                              |  | 97   | % |  | 100  | %
|Service Retail Center                       |  | 100  | % |  | 93   | %
|Carnegie Business Center I                  |  | 46   | % |  | 100  | %
|Promotional Retail Center                   |  | 100  | % |  | 100  | %
|Inland Regional Center                      |  | 100  | % |  | 100  | %
|TGI Fridays                                |  | 100  | % |  | 100  | %
|Circuit City                                |  | 100  | % |  | 100  | %
|Mimis Café                                 |  | 100  | % |  | 100  | %
|Palm Court Retail #1                        |  | 100  | % |  | 100  | %
|Palm Court Retail #2                        |  | 100  | % |  | 100  | %
|Vanderbilt Plaza (commencing February 2005) |  | 48   | % |  | N/A  |  
|                                            |  |     
|Weighted average occupancy                  |  | 81   | % |  | 99   | %



Weighted average occupancy decreased
primarily as a result of the increase in vacancy at Carnegie Business Center I and at a newly constructed property, Vanderbilt Plaza (as discussed below).



Occupancy decreased 54% from September 30, 2004 to September 30, 2005 at Carnegie Business Center I, primarily due to the lease expiration of ITT Education
Center (ITT). ITT purchased two unimproved lots known as Brier Business Center I and Brier Plaza from the Partnership in 2004. After the expiration of their lease at the end of December 2004, ITT moved to their new building constructed
on the land purchased from the Partnership.



A new lease with a ten-year term
for the office space previously occupied by ITT, at Carnegie Business Center I was signed in the second quarter of 2005. This new lease started in October 2005, and increased the occupancy rate to 89% for Carnegie Business Center I in the fourth
quarter of 2005.



Vanderbilt Plaza commenced operation in February 2005.
Construction started at Vanderbilt Plaza in September 2003, and the cost was transferred to land and building when the core and shell of the property was substantially completed and the first tenant moved in during February 2005. The property is a
four-story office building with approximately 114,000 square feet. A tenant relocated from One Parkside (owned and managed by Rancon Realty Fund V  a partnership sponsored by the General Partner of the Partnership) to Vanderbilt Plaza in
February 2005, and occupies approximately 23,000 square feet of office space in the building. In addition, an existing tenant at One Vanderbilt expanded and leased approximately 32,000 square feet of additional office space at Vanderbilt Plaza. This
tenant occupied their space in August 2005. Two new leases with a total of approximately 20,000 square feet and five-year lease terms were signed during the second quarter of 2005. These two leases increased the occupancy rate to 66% in the fourth
quarter of 2005 when the tenants occupied their spaces in October 2005. One new lease with an approximately 8,200 square feet and a five-year lease term was signed during the third quarter of 2005. This lease will increase the occupancy rate to 73%
when the tenant occupies their space in January 2006. Management is actively marketing the remaining vacant spaces for this new building.



On April 18, 2005, the Partnership entered into a contract to sell the property leased to Office Max for a price of $4,350,000. On June 3, 2005, the sale closed
and generated net proceeds of approximately $4,097,000 and a gain on sale of approximately $2,075,000. The proceeds were added to the Partnerships cash reserves.



As of September 30, 2005, tenants at Tri-City occupying substantial portions of leased rental space included: (i) Countrywide Home
Loan with a lease through August 2008; (ii) CompUSA with a lease through August 2008; (iii) Fidelity National Title with a lease through August 2008; (iv) PetsMart with a lease through January 2009; (v) Inland Regional Center
with a lease through July 2009; (vi) The University of Phoenix, Inc. with two leases through May 2012; (vii) New York Life with a lease through March 2015; and (viii) Circuit City with a lease through January 2018. These eight
tenants, in the aggregate, occupied approximately 285,000 square feet of the 486,000 total leasable square feet at Tri-City and accounted for approximately 68% of the rental income of the Partnership during the nine months ended September 30,
2005.



The Partnerships Tri-City Properties are owned by the Partnership,
subject to the following note and line of credit as of September 30, 2005:



|                    |  |                                                                              |  |                                
|------------------- |  | ---------------------------------------------------------------------------- |  | -------------------------------
|Security            |  | Service Retail Center, Carnegie Business Center I, Promotional Retail
Center |  | IRC, Circuit City, TGI Fridays
|Form of debt        |  | Note payable                                                                 |  | Line of credit                 
|Outstanding balance |  | $5,458,000                                                                   |  | $10,023,000                    
|Interest Rate       |  | 8.74%                                                                        |  | Prime rate (6.5%)              
|Monthly payment     |  | $53,413                                                                      |  | Interest only                  
|Maturity date       |  | 5/1/06                                                                       |  | 4/15/07                        



15



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##### Table of Contents

The note payable may be prepaid with a penalty based on a yield maintenance formula. There are no prepayment penalties if
this note is repaid within nine months of the maturity date. The Partnership intends to pay off this note with the proceeds from the pending refinance (as discussed below) after the prepayment penalty period ends on November 1, 2005.



The Partnership intends to refinance the above fixed-rate loan and the line of
credit. In the third quarter of 2005, a loan application was submitted and withdrawn due to disagreement on the loan terms and conditions between the Partnership and the lender. In October 2005, a loan application was submitted to a different
lender. This assumable loan would total $24.1 million, would bear interest at a lower fixed rate of 5.46% with a 10-year term, and would be collateralized by eight properties. This loan would also provide a one-time loan assumption and a release
provision for an individual asset. This loan is estimated to close in the fourth quarter of 2005. No assurance can be made that circumstances will not arise which could impact the closing of the refinance to repay the above note at maturity.



Tri-City Land



As of September 30, 2005, the Partnership owned approximately 16 acres of undeveloped
land. A conceptual plan for a specification building is currently being designed on an approximate one-acre land. The plan includes a three-story multi-tenant building with an estimate of 75,000 gross square feet of office space. Recently, the City
approved the development of this project. The Partnership intends to develop this one-acre site to generate more operating income for the Partnership in this fast-growing market.



The remaining 15 acres of land was part of a landfill operated by the City of San Bernardino (the City) from approximately 1950
to 1960. The City is responsible for the landfill and the gas-monitoring program as prescribed by the Santa Ana Regional Water Quality Control Board (RWQCB). Under a Limited Access Agreement with the Partnership, methane monitoring is
handled directly by the City. Although there is no requirement by the RWQCB or the County of San Bernardino (the County) for Clean Closure, which would include removal of all landfill, the City is required to place both a Cover
Improvement System and a Gas Extraction System at the site. The City started the installation of the Cover Improvement System in October 2004. The completion of the Cover Improvement System has been delayed and was completed in the
third quarter of 2005. A plan was submitted by the City to the County for review and approval for the Gas Extraction System. The plan was approved and the City is now installing the Gas Extraction System at the site. No assurance can be made that
circumstances will not arise which could impact the Partnerships responsibility related to the land. At this time, the Partnership believes that development of this land is not practical.



Results of Operations



Comparison of the three months ended September 30, 2005 to the three months ended
September 30, 2004.



Revenue



Rental income for the three months ended September 30, 2005 increased $201,000, or 12%,
compared to the three months ended September 30, 2004, primarily due to an increase in occupancy at Vanderbilt Plaza, which commenced operations in February 2005, offset by a decrease in occupancy at Carnegie Business Center I, as a result of a
tenant, ITT Education Center, vacating their space at the end of 2004 (as discussed above).



Expenses



Operating expenses increased
$147,000, or 24%, for the three months ended September 30, 2005, compared to the three months ended September 30, 2004, primarily due to the commencement of operations at Vanderbilt Plaza in February 2005, offset by a reduction in property
management fees from 5% in 2004 to 3% in 2005.



Depreciation and amortization
increased $68,000, or 18%, for the three months ended September 30, 2005, compared to the three months ended September 30, 2004, primarily due to depreciation commencing at Vanderbilt Plaza and additions of lease commissions.



Expenses associated with undeveloped land decreased $3,000, or 8%, for the three months
ended September 30, 2005, compared to the three months ended September 30, 2004, primarily due to a decrease in expenses related to Vanderbilt Plaza. The expenses are classified under property operating expenses after construction was
completed.



General and administrative expenses decreased $26,000, or 8%, for
the three months ended September 30, 2005, compared to the three months ended September 30, 2004, primarily due to a reduction in asset and Partnership management fees in 2005, offset by an increase in the expenses related to the refinance
which was withdrawn in the third quarter of 2005.



Non-operating income /
expenses



Interest expense increased $61,000, or 53%, for the three months
ended September 30, 2005, compared to the three months ended September 30, 2004, primarily due to an increase in interest expense as a result of the increase in line of credit balance, as well as the increase in interest rate, offset by a
decrease in interest and loan expenses capitalized at Vanderbilt Plaza.



16



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##### Table of Contents

Comparison of the nine months ended September 30, 2005 to the nine months ended September 30, 2004



Revenue



Rental income for the nine months ended September 30, 2005 increased $373,000, or 8%,
compared to the nine months ended September 30, 2004, primarily due to an increase in occupancy at Vanderbilt Plaza, which commenced operation in February 2005, offset by a decrease in occupancy at Carnegie Business Center I, as a result of a
tenant, ITT Education Center, vacating their space at end of 2004 (as discussed above).



Expenses



Operating expenses increased $292,000, or 17%, for
the nine months ended September 30, 2005, compared to the nine months ended September 30, 2004, primarily due to the commencement of operations at Vanderbilt Plaza in February 2005, offset by a reduction in the property management fees
from 5% in 2004 to 3% in 2005.



Depreciation and amortization increased
$219,000, or 20%, for the nine months ended September 30, 2005, compared to the nine months ended September 30, 2004, primarily due to depreciation commencing at Vanderbilt Plaza and additions of lease commissions.



Expenses associated with undeveloped land decreased $72,000, or 41%, for the nine months
ended September 30, 2005, compared to the nine months ended September 30, 2004, primarily due to a decrease in expenses related to Vanderbilt Plaza. The expenses are classified under property operating expenses after construction was
completed.



General and administrative expenses decreased $162,000, or 17%, for
the nine months ended September 30, 2005, compared to the nine months ended September 30, 2004, primarily due to a reduction in asset and Partnership management fees in 2005, offset by an increase in the expenses related to the refinance
which was withdrawn in the third quarter of 2005.



Non-operating income /
expenses



The gain on sale of land held for development of $1,347,000
during the nine months ended September 30, 2004, resulted from the sale of two lots known as Brier Business Center I and Brier Plaza in April 2004.



Interest expense decreased $53,000, or 14%, for the nine months ended September 30, 2005, compared to the nine months ended September 30, 2004, primarily due to
interest and loan expenses capitalized at Vanderbilt Plaza, offset by an increase in interest expense as a result of the increase in line of credit balance, as well as the increase in interest rate.



Income from discontinued operations during the three and nine months ended September 30,
2005, resulted from the sale of the property leased to Office Max in June 2005, as well as the net operating income from the sold property. Income from discontinued operations during the three and nine months ended September 30, 2004, reflected
the net operating income from the sold property (As discussed below).



Liquidity and Capital Resources



The following
discussion should be read in conjunction with the Partnerships December 31, 2004 audited consolidated financial statements and the notes thereto.



As of September 30, 2005, the Partnership had cash and cash equivalents of $3,399,000.



The Partnership entered into a contract to sell the property leased to Office Max for a price of $4,350,000 in April 2005. On June 3,
2005, the sale closed and generated net proceeds of approximately $4,097,000 and a gain on sale of approximately $2,075,000. The proceeds were added to the Partnerships cash reserves.



The Partnerships primary liabilities at September 30, 2005 included a note payable
and a line of credit, totaling approximately $15,481,000 collateralized by properties with an aggregate net book value of approximately $17,626,000 and with maturity dates of May 1, 2006 and April 15, 2007, respectively. The note requires
monthly principal and interest payments of $53,000, and bears a fixed interest rate of 8.74%. The line of credit requires monthly interest-only payments, bears interest at Prime Rate (6.5% and 5.25% as of September 30, 2005 and
December 31, 2004, respectively), and had an outstanding balance of $10,023,000 and $7,660,000 at September 30, 2005 and December 31, 2004, respectively. In October 2004, the Partnership used its existing cash reserves primarily from
sales of land held for development in 2004 to repay the note secured by One Vanderbilt in full. The note was paid off at the end of the loan term and the balance of the note was $2,600,000. There was no prepayment penalty incurred at the time of
payoff.



The Partnership intends to refinance the above fixed-rate loan and the
line of credit. In the third quarter of 2005, a loan application was submitted and withdrawn due to disagreement on the loan terms and conditions between the Partnership and the lender. In October 2005, a loan application was submitted to a
different lender. This assumable loan would total $24.1 million, would bear interest at a lower fixed rate of 5.46% with a 10-year term, and would be collateralized by eight properties. This loan would also provide a one-time loan assumption and a
release provision for an individual asset. This loan is estimated to close in the fourth quarter of 2005. No assurance can be made that circumstances will not arise which could impact the closing of the refinance to repay the above note at maturity.



17



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##### Table of Contents

The Partnership is contingently liable for subordinated real estate commissions payable to the General Partner in the
aggregate amount of $643,000 at September 30, 2005, 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 12% per annum on their adjusted invested capital. Since the conditions under which these commissions would be payable have not been achieved, 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 and interest income on money market funds. 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.



Contractual Obligations



As of September 30, 2005, the Partnership had
contractual obligations as follows (in thousands):



|                            |  |                 |     |              |   |              |  |                  |   |       |   |   |  |   |       
|--------------------------- |  | --------------- | --- | ------------ | - | ------------ |  | ---------------- | - | ----- | - | - |  | - | ------
|                            |  | Less than 1year |     | 1 to 3 years |   | 3 to 5 years |  | More than 5years |   | Total
|Secured mortgage loans      |  | $               | 41  |              | $ | 5,417        |  | $                |  |       | $ |  |  | $ | 5,458 
|Secured bank line of credit |  |                 |    |              |   | 10,023       |  |                  |  |       |   |  |  |   | 10,023
|Interest on indebtedness(1) |  |                 | 285 |              |   | 1,047        |  |                  |  |       |   |  |  |   | 1,332 
|                            |  |                 |     |              |   |              |  |                  |   |       |   |   |  |   |       
|Total                       |  | $               | 326 |              | $ | 16,487       |  | $                |  |       | $ |  |  | $ | 16,813
|                            |  |                 |     |              |   |              |  |                  |   |       |   |   |  |   |       

---

|(1) | For variable rate loans, this represents estimated interest expense based on outstanding
balances and interest rates at September 30, 2005.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------



Management expects that the Partnerships cash and cash equivalents as of September 30, 2005, 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 affect 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, 2005, the Partnerships cash provided
by operating activities totaled $1,340,000.



The $57,000 decrease in accounts
receivable at September 30, 2005, compared to December 31, 2004, was primarily due to collections of tenant rents.



The $924,000 increase in deferred costs at September 30, 2005, compared to December 31, 2004, was primarily due to increases in lease commission paid for new
leases at Vanderbilt Plaza and Carnegie Business Center I (as discussed above).



The $426,000 increase in prepaid expenses and other assets at September 30, 2005, compared to December 31, 2004, was primarily due to increases in straight line rent receivables, prepaid insurance and impound accounts related to
the note payable.



The $196,000 increase in accounts payable and other
liabilities at September 30, 2005, compared to December 31, 2004, was primarily due to increases in accruals for property taxes, units redemption and investor service expenses, offset by payment of distribution to the General Partner,
which was accrued in 2004.



The $177,000 increase in prepaid rents at
September 30, 2005, compared to December 31, 2004, was due to the receipt of October 2005 rents in September 2005, offset by the receipt of January 2005 rents in December 2004.



Investing Activities



During the nine months ended September 30, 2005, the Partnerships cash provided by investing activities totaled $437,000 which consisted of $3,660,000
primarily used for building and tenant improvements at Vanderbilt Plaza and pre-design cost at North River Place, offset by $4,097,000 from proceeds from the sale of the property leased to Office Max.



18



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##### Table of Contents

Financing Activities



During the nine months ended September 30, 2005, the Partnerships cash provided by financing activities totaled $921,000, which consisted of $2,363,000 from
draws on line of credit, offset by $118,000 for principal payments on the note payable, $29,000 for payment of annual loan fee for the line of credit, $585,000 for payment of redemption of 1,106 limited partnership Units, and $710,000 for payment of
distributions to the limited partners.



Cash Flows



For the nine months ended September 30, 2005, cash provided by operating activities was
$1,340,000, as compared to $2,264,000 for the same period in 2004. The change was primarily due to an increase in net operating income, offset by a decrease in cash paid for lease commissions. For the nine months ended September 30, 2005, cash
provided by investing activities was $437,000, as compared to cash used for investing activities of $7,192,000 for the same period in 2004. The change was primarily due to cash paid for construction costs at Vanderbilt Plaza which was completed in
February 2005, offset by higher proceeds from a property sale which was leased to Office Max, compared to the land sales in 2004. For the nine months ended September 30, 2005, cash provided by financing activities was $921,000, as compared to
$5,504,000 for the same period in 2004. The change was primarily due to a decrease in borrowings from the line of credit in 2005.



Forward Looking Statements; Factors That May Affect Operating Results



This Report on Form 10-Q contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, including statements regarding the Partnerships expectations, hopes, intentions, beliefs and strategies regarding the future. These forward looking statements include statements relating
to:



| |  | The Partnerships expectation to make annual or more frequent cash distributions to partners;
|- |  | ---------------------------------------------------------------------------------------------



| |  | The Partnerships intent to refinance existing debt and pay off a note after the prepayment penalty period expires;
|- |  | -------------------------------------------------------------------------------------------------------------------



| |  | The Partnerships intent to develop one or more properties to generate more operating income;
|- |  | ---------------------------------------------------------------------------------------------



| |  | The Partnerships belief that its cash and cash generated by its operations, sales and financing will be sufficient to meet its operating requirements in both the short and the
long-term;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Partnerships expectation that changes in market interest rates will not have a material impact on the performance or the fair value of its portfolio; and
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Partnerships belief that certain claims and lawsuits which have arisen against it in the normal course of business will not have a material adverse effect on its financial
position, cash flow or results of operations.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



All
forward-looking statements included in this document are based on information available to the Partnership on the date hereof. Because these forward looking statements involve risk and uncertainty, there are important factors that could cause our
actual results to differ materially from those stated or implied in the forward-looking statements. Those important factors include:



| |  | market fluctuations in rental rates and occupancy;
|- |  | --------------------------------------------------



| |  | reduced demand for rental space;
|- |  | --------------------------------



| |  | availability and credit worthiness of prospective tenants;
|- |  | ----------------------------------------------------------



| |  | defaults or non-renewal of leases by customers;
|- |  | -----------------------------------------------



| |  | differing interpretations of lease provisions regarding recovery of expenses;
|- |  | -----------------------------------------------------------------------------



| |  | increased operating costs;
|- |  | --------------------------



| |  | unanticipated inability to close financing that currently is in process in the amount expected on or before the date expected;
|- |  | ------------------------------------------------------------------------------------------------------------------------------



| |  | changes in interest rates and availability of financing that may render the sale or financing of a property difficult or unattractive;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  | the Partnerships failure to obtain necessary outside financing;
|- |  | ----------------------------------------------------------------



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##### Table of Contents

| |  | risks and uncertainties affecting property development and construction (including construction delays, cost overruns, our inability to obtain necessary permits and public
opposition to these activities); and
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the unpredictability of both the frequency and final outcome of litigation.
|- |  | ---------------------------------------------------------------------------



The forward-looking statements in this Quarterly Report on Form 10-Q are subject to additional risks and uncertainties further discussed below under Risk Factors. The
Partnership assumes no obligation to update or supplement any forward looking-statement.



Item 3. Qualitative and Quantitative Information About Market Risk



Interest Rates



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



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



|                           |  |                        |      |   |      |   |       |      |  |   |        |   |  |            |        |   |  |   |       
|-------------------------- |  | ---------------------- | ---- | - | ---- | - | ----- | ---- |  | - | ------ | - |  | ---------- | ------ | - |  | - | ------
|                           |  | Expected Maturity Date |      |   |     
|                           |  | 2005                   |      |   | 2006 |   |       | 2007 |  |   | Total  |   |  | Fair Value
|                           |  | (in thousands)         |      |   |      |   |       |     
|Secured Fixed Rate Debt    |  | $                      | 41   |   |      | $ | 5,417 |      |  | $ |       |   |  | $          | 5,458  |   |  | $ | 5,456 
|Average interest rate      |  |                        | 8.74 | % |      |   | 8.74  | %    |  |   |       |   |  |            | 8.74   | % |  |   |       
|                           |  |                        |      |   |     
|Secured Variable Rate Debt |  | $                      |     |   |      | $ |      |      |  | $ | 10,023 |   |  | $          | 10,023 |   |  | $ | 10,023
|Average interest rate      |  |                        |     |   |      |   |      |      |  |   | 6.5    | % |  |            | 6.5    | % |  |   |       



A change of 1/8% in the index rate to
which the Partnerships variable rate debt is tied would change the annual interest the Partnership incurred by approximately $13,000, based upon the balances outstanding on variable rate instruments at September 30, 2005.



As of September 30, 2005, the Partnership had $3,078,000 in interest-bearing money
market funds. The Partnership does not own any derivative instruments.



Item 4. Controls and Procedures



As of the
end of the period covered by this report, we carried out an evaluation, under the supervision of the General Partners Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on this evaluation, the General Partners Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in alerting him on a timely basis to material
information required to be included in this report. There has been no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected or is reasonably likely to materially
affect our internal control over financial reporting.



20



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##### Table of Contents

PART II. OTHER INFORMATION



Item 1. Legal Proceedings



Certain claims and lawsuits have arisen against the Partnership in its normal course of business. The Partnership believes that such claims and lawsuits will not have a material adverse effect on the Partnerships financial position,
cash flow or results of operations.



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds



None.



Item 3. Defaults Upon Senior Securities



None.



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



None.



Item 5. Other information



None.



Item 6. Exhibits



| | 31.1 | Section 302 Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of General Partnership.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------



| | 32.1 | Section 906 Certification of Daniel L. Stephenson, Chief Executive Officer and Chief Financial Officer of General Partnership.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------



21



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##### 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 14, 2005 |  |                                  |  | By:                                   |  | /s/ Daniel L. Stephenson       
|                        |  |                                  |  |                                       |  | Daniel L. Stephenson, President
|                        |  |                                 
|Date: November 14, 2005 |  | By:                              |  | /s/ Daniel L. Stephenson             
|                        |  |                                  |  | Daniel L. Stephenson, General Partner



22