-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rtf3nbIr7kfaCxdnPwsAcUWwCdb9TEkLvqvIjNAEYCfOIZAofYzm1x1trc+s9Jcy gb5uK0PRDcx7qfqG68AVRQ== 0000810663-96-000022.txt : 19961210 0000810663-96-000022.hdr.sgml : 19961210 ACCESSION NUMBER: 0000810663-96-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L P IV CENTRAL INDEX KEY: 0000845035 STANDARD INDUSTRIAL CLASSIFICATION: 6513 IRS NUMBER: 043044617 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19765 FILM NUMBER: 96663085 BUSINESS ADDRESS: STREET 1: 101 ARCH ST 16TH FLR CITY: BOSTON STATE: MA ZIP: 02110-1106 BUSINESS PHONE: 6174393911 MAIL ADDRESS: STREET 2: 101 ARCH STREET 16TH FL CITY: BOSTON STATE: MA ZIP: 021101106 10-Q 1 Q2 1996 November 13, 1996 Securities and Exchange Commission Filer Support, Edgar Operation Center, Stop 0-7 6432 General Green Way Alexandria, VA 22312 Re: Boston Financial Qualified Housing Tax Credits L.P. IV Report on Form 10-Q Edgar for Quarter Ended September 30, 1996 File No. 0-19765 Dear Sir/Madam: Pursuant to the requirements of Rule 901(d) of Regulation S-T, enclosed is one copy of subject report. Very truly yours, /s/Marie D. Reynolds Marie D. Reynolds Assistant Controller QH4-10Q2.DOC UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 ------------------------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to For the Quarter ended September 30, 1996 Commission file number 0-19765 Boston Financial Qualified Housing Tax Credits L.P. IV (Exact name of registrant as specified in its charter) Massachusetts 04-3044617 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 101 Arch Street, Boston, Massachusetts 02110-1106 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (617) 439-3911 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 . BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Page No. - - ------------------------------ -------- Item 1. Combined Financial Statements Combined Balance Sheets - September 30, 1996 (Unaudited) and March 31, 1996 1 Combined Statements of Operations (Unaudited) - For the Three and Six Months Ended September 30, 1996 and 1995 2 Combined Statement of Changes in Partners' Equity (Deficiency) (Unaudited) - For the Six Months Ended September 30, 1996 3 Combined Statements of Cash Flows (Unaudited) - For the Six Months Ended September 30, 1996 and 1995 4 Notes to Combined Financial Statements (Unaudited) 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 PART II - OTHER INFORMATION Items 1-6 16 SIGNATURE 17 BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) COMBINED BALANCE SHEETS - September 30, 1996 and March 31, 1996
September 30, March 31, 1996 1996 (Unaudited) Assets Current assets: Cash and cash equivalents $ 144,274 $ 414,451 Accounts receivable, net 123,901 39,646 Tenant security deposits 95,971 109,969 Mortgagee escrow deposits 94,328 113,368 Other current assets 41,726 35,465 -------------- ------------- Total current assets 500,200 712,899 Investments in Local Limited Partnerships, net of reserve for valuation of $949,906 and $913,047, respectively (Note 2) 21,528,795 22,748,929 Marketable securities, at fair value (Note 1) 1,180,073 1,428,765 Rental property at cost, net of accumulated depreciation 16,338,789 16,628,572 Deferred charges, net of $150,985 and $140,931 of accumulated amortization, respectively 214,859 224,913 -------------- ------------- Total Assets $ 39,762,716 $ 41,744,078 ============== ============= Liabilities and Partners' Equity (Deficiency) Current liabilities: Accounts payable to affiliates $ 261,583 $ 126,151 Accounts payable and accrued expenses 295,117 409,693 Current portion of mortgage notes payable 3,615,467 3,707,570 Interest payable 532,758 218,437 Tenant security deposits payable 92,730 85,705 -------------- ------------- Total current liabilities 4,797,655 4,547,556 Mortgage notes payable 7,496,377 7,521,294 Payable to affiliated Developer 2,482,000 2,482,000 -------------- ------------- Total Liabilities 14,776,032 14,550,850 -------------- ------------- Minority interest in Local Limited Partnerships 377,452 421,420 -------------- ------------- General, Initial and Investor Limited Partners' Equity 24,612,185 26,771,540 Net unrealized gains (losses) on marketable securities (2,953) 268 -------------- ------------- Total Partners' Equity 24,609,232 26,771,808 -------------- ------------- Total Liabilities and Partners' Equity $ 39,762,716 $ 41,744,078 ============== =============
The accompanying notes are an integral part of the combined financial statements. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) COMBINED STATEMENTS OF OPERATIONS (Unaudited) For the Three and Six Months Ended September 30, 1996 and 1995
Three Months Ended Six Months Ended September 30, September 30, September 30, September 30, 1996 1995 1996 1995 ------------- ------------- ------------- --------- Revenue: Rental $ 446,852 $ 604,117 $ 890,572 $ 1,201,702 Investment 17,625 27,631 46,574 61,488 Other 67,321 12,815 81,022 33,663 ------------- --------------- ------------- -------------- Total Revenue 531,798 644,563 1,018,168 1,296,853 ------------- --------------- ------------- -------------- Expenses: Asset management fee, related party 64,343 62,752 128,686 125,504 General and administrative, includes reimbursements to an affiliate in the amounts of $70,051 and $69,795 in 1996 and 1995, respectively 108,460 96,014 168,854 278,386 Bad debt expense 44,779 - 245,173 - Rental operations, exclusive of depreciation 260,084 485,544 534,619 791,370 Property management fee, related party 46,561 8,311 65,300 35,768 Interest 269,574 305,487 539,952 650,969 Depreciation 201,330 191,536 379,195 390,344 Amortization 25,380 33,105 58,058 66,204 ------------- --------------- ------------- -------------- Total Expenses 1,020,511 1,182,749 2,119,837 2,338,545 ------------- --------------- ------------- -------------- Loss before equity in losses of Local Limited Partnerships (488,713) (538,186) (1,101,669) (1,041,692) Minority interest in losses of Local Limited Partnerships 20,937 24,519 43,968 45,736 Equity in losses of Local Limited Partnerships (523,395) (939,104) (1,101,654) (1,624,333) ------------- --------------- ------------- -------------- Net Loss $ (991,171) $ (1,452,771) $ (2,159,355) $ (2,620,289) ============= =============== ============= ============== Net Loss allocated: To General Partners $ (9,912) $ (14,528) $ (21,594) $ (26,203) To Limited Partners (981,259) (1,438,243) (2,137,761) (2,594,086) ------------- --------------- ------------- -------------- $ (991,171) $ (1,452,771) $ (2,159,355) $ (2,620,289) ============= =============== ============= ============== Net Loss per Limited Partnership Unit (68,043 Units) $ (14.42) $ (21.14) $ (31.42) $ (38.12) ======== ========= ========= ========
The accompanying notes are an integral part of the combined financial statements. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) COMBINED STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY) (Unaudited) For the Six Months Ended September 30, 1996
Net Initial Investor Unrealized General Limited Limited Gains Partners Partners Partners (Losses) Total Balance at March 31, 1996 $ (323,370) $ 5,000 $ 27,089,910 $ 268 $ 26,771,808 Net change in net unrealized gains on marketable securities available for sale - - - (3,221) (3,221) Net Loss (21,594) - (2,137,761) - (2,159,355) ---------- ------- ------------ --------- ------------ Balance at September 30, 1996 $ (344,964) $ 5,000 $ 24,952,149 $ (2,953) $ 24,609,232 ========== ======= ============ ========= ============
The accompanying notes are an integral part of the combined financial statements. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) COMBINED STATEMENTS OF CASH FLOWS (Unaudited) For the Six Months Ended September 30, 1996 and 1995
1996 1995 ------------ --------- Net cash used for operating activities $ (418,531) $ (509,453) ------------ ------------- Cash flows from investing activities: Investment in Local Limited Partnership 3,331 - Purchases of marketable securities (437,069) (1,094,075) Proceeds from sales and maturities of marketable securities 721,379 1,444,817 Cash distributions received from Local Limited Partnerships 67,145 2,013 Purchase of rental property (89,412) (10,903) ------------ ------------- Net cash provided by investing activities 265,374 341,852 ------------ ------------- Cash flows from financing activities: Payment of mortgage principal (117,020) (27,441) ------------ ------------- Net cash used for financing activities (117,020) (27,441) ------------ ------------- Net decrease in cash and cash equivalents (270,177) (195,042) Cash and cash equivalents, beginning 414,451 532,287 ------------ ------------- Cash and cash equivalents, ending $ 144,274 $ 337,245 ============ ============= Supplemental disclosure of cash flow activity: Cash paid for interest $ 225,631 $ 585,726 ============ =============
The accompanying notes are an integral part of the combined financial statements. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) Notes to Combined Financial Statements (Unaudited) The unaudited financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the financial statements and notes thereto included with the Partnership's 10-K for the year ended March 31, 1996. In the opinion of management, these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Partnership's financial position and results of operations. The results of operations for the period may not be indicative of the results to be expected for the year. 1. Marketable Securities A summary of marketable securities is as follows:
Gross Gross Unrealized Unrealized Fair Cost Gains Losses Value Debt securities issued by the US Treasury and other US Government agencies $ 918,838 $ 3,761 $ (6,901) $ 915,698 Mortgage backed securities 228,727 1,729 (1,261) 229,195 Other debt securities 35,461 - (281) 35,180 ----------- -------- -------- ----------- Marketable securities at September 30, 1996 $ 1,183,026 $ 5,490 $ (8,443) $ 1,180,073 =========== ======== ========= =========== Debt securities issued by the US Treasury and other US Government agencies $ 945,321 $ 280 $ (4,773) $ 940,828 Mortgage backed securities 164,815 2,200 (1,046) 165,969 Other debt securities 318,361 3,979 (372) 321,968 ----------- -------- -------- ----------- Marketable securities at March 31, 1996 $ 1,428,497 $ 6,459 $ (6,191) $ 1,428,765 =========== ======== ======== ===========
The contractual maturities at September 30, 1996 are as follows:
Fair Cost Value Due in one year or less $ 194,072 $ 197,809 Due in one to five years 760,227 753,069 Mortgage backed securities 228,727 229,195 ----------- ----------- $ 1,183,026 $ 1,180,073 =========== ===========
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) Notes to Combined Financial Statements (continued) (Unaudited) 1. Marketable Securities (continued) Actual maturities may differ from contractual maturities because some borrowers have the right to call or prepay obligations. Proceeds from the sale of fixed maturity securities were approximately $721,000 and $1,445,000 for the six months ended September 30, 1996 and 1995, respectively. Included in investment income are gross gains of $44,191 and $5,165 and gross losses of $5,352 and $14,700 that were realized on these sales for the six months ended September 30, 1996 and 1995, respectively. 2. Investments in Local Limited Partnerships The Partnership uses the equity method to account for its limited partnership interests in twenty-seven Local Limited Partnerships (excluding the Combined Entities) which own and operate multi-family housing complexes, most of which are government-assisted. The Partnership, as Investor Limited Partner pursuant to the various Local Limited Partnership Agreements which contain certain operating and distribution restrictions, has generally acquired a 99% interest in the profits, losses, tax credits and cash flows from operations of each of the Local Limited Partnerships. Upon dissolution, proceeds will be distributed according to each respective partnership agreement. The following is a summary of investments in Local Limited Partnerships, excluding the Combined Entities, at September 30, 1996:
Capital contributions paid to Local Limited Partnerships and purchase price paid to withdrawing partners of Local Limited Partnerships $ 43,420,777 Cumulative equity in losses of Local Limited Partnerships (22,925,530) Cash distributions received from Local Limited Partnerships (1,224,985) ---------- Investments in Local Limited Partnerships before adjustment 19,270,262 Excess of investment cost over the underlying net assets acquired: Acquisition fees and expenses 3,912,561 Accumulated amortization of acquisition fees and expenses (704,122) ---------- Investments in Local Limited Partnerships 22,478,701 Reserve for valuation of investments in Local Limited Partnerships (949,906) ------------ $ 21,528,795 ===========
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) Notes to Combined Financial Statements (continued) (Unaudited) 2. Investments in Local Limited Partnerships (continued) Summarized financial information from the financial statements of all Local Limited Partnerships (excluding the Combined Entities) in which the Partnership has invested is as follows: Summarized Balance Sheets - at June 30, 1996
Assets: Rental property, net $ 121,736,552 Current assets 6,227,698 Other assets, net 11,649,759 --------------- Total Assets $ 139,614,009 =============== Liabilities and Partners' Equity: Current liabilities $ 5,694,877 Mortgages payable, net of current portion 101,810,359 Other liabilities 7,881,723 --------------- Total Liabilities 115,386,959 Partners' Equity 24,227,050 --------------- Total Liabilities and Partners' Equity $ 139,614,009 ===============
Summarized Income Statements - For the six months ended June 30, 1996
Rental and other income $ 9,860,528 --------------- Expenses: Operating expenses 4,952,172 Interest expense 3,671,341 Depreciation and amortization 2,419,015 --------------- Total Expenses 11,042,528 Net Loss $ (1,182,000) =============== Partnership's share of net loss $ (1,170,182) =============== Other Partners' share of net loss $ (11,818) ===============
For the six months ended September 30, 1996, the Partnership has not recognized $68,528 of equity in losses relating to three Local Limited Partnerships where cumulative equity in losses exceed its total investment in these Local Limited Partnerships. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) Notes to Combined Financial Statements (continued) (Unaudited) 3. Transactions with Affiliates Boston Financial Property Management ("BFPM"), an affiliate of the Managing General Partner, currently manages Oakview Square, a Local Limited Partnership in which the Partnership has invested. BF Lansing Limited Partnership ("BF Lansing"), an affiliate of the Managing General Partner, currently manages three Local Limited Partnerships in which the Partnership has invested: Whitehills II Apartments Company Limited Partnership ("Whitehills II"); Gobles Limited Dividend Housing Association ("Orchard View"); and Milan Apartments Company Limited Partnership ("Canfield Crossing"). Included in operating expenses in the summarized income statements in Note 2 to the Combined Financial Statements is $37,973 of fees earned by BFPM and BF Lansing for the six months ended June 30, 1996. BF Lansing is also the management agent for Pinewood Terrace, Gateway Village, Justin Place, Pine Manor and Valley View, properties in which the Partnership has invested. Additionally, BFPM currently manages Leawood Manor, a property in which the Partnership has invested. Included in the Combined Statements of Operations for the six months ended September 30, 1996 is $65,300 of fees earned by BFPM and BF Lansing during the six months ended June 30, 1996. 4. Liquidation of Interests in Local Limited Partnerships The Managing General Partner has transferred or is in the process of transferring all of the assets of five of the Texas Partnerships subject to their liabilities to unaffiliated entities. The transfers of Grandview Terrace Apartments, Pecan Hills Apartments, Seagraves Garden Apartments and Hilltop Apartments were effective February 21, 1996, February 29, 1996, March 8, 1996 and June 6, 1996, respectively. Bent Tree Apartments is being transferred to a new owner effective after September 30, 1996. As previously reported, Nocona Terrace Apartments and Royal Creste Apartments were in the process of being transferred to an unaffiliated entity. This transaction is not expected to take place. The Managing General Partner is currently seeking alternative options for the transfer of these properties. The Partnership will retain its interest in Gateway Village. The Managing General Partner of the Partnership has executed an agreement to sell the general partner interests in the four remaining Texas Partnerships (Justin Place Apartments, Pine Manor Apartments, Pinewood Terrace Apartments and Valley View Apartments) to an unaffiliated buyer. These properties will be restructured into a new partnership in which the Partnership will retain a limited partner interest for a period of at least twelve months. During this period, investors will continue to receive tax credits from these properties. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) Notes to Combined Financial Statements (continued) (Unaudited) 5. Supplemental Combining Schedules Balance Sheets
Boston Financial Qualified Housing Tax Credits Combined L.P. IV (A) Entities (B) Eliminations Combined Assets Current assets: Cash and cash equivalents $ 70,095 $ 74,179 $ - $ 144,274 Accounts receivable, net 469,518 20,680 (366,297) 123,901 Tenant security deposits - 95,971 - 95,971 Mortgagee escrow deposits - 94,328 - 94,328 Other current assets 15,207 26,519 - 41,726 --------------- --------------- ------------- ------------ Total current assets 554,820 311,677 (366,297) 500,200 Investments in Local Limited Partnerships, net 23,124,926 - (1,596,131) 21,528,795 Marketable securities, at fair value 1,180,073 - - 1,180,073 Rental property at cost, net of accumulated depreciation - 16,338,789 - 16,338,789 Deferred charges, net - 214,859 - 214,859 --------------- --------------- ------------- ------------ Total Assets $ 24,859,819 $ 16,865,325 $ (1,962,428) $ 39,762,716 =============== =============== ============= ============ Liabilities and Partners' Equity (Deficiency) Current liabilities: Accounts payable to affiliates $ 204,003 $ 423,877 $ (366,297) $ 261,583 Accounts payable and accrued expenses 46,584 248,533 - 295,117 Current portion of mortgage notes payable - 3,615,467 - 3,615,467 Interest payable - 532,758 - 532,758 Tenant security deposits payable - 92,730 - 92,730 --------------- --------------- ------------- ------------ Total current liabilities 250,587 4,913,365 (366,297) 4,797,655 Mortgage notes payable - 7,496,377 - 7,496,377 Payable to affiliated Developer - 2,482,000 - 2,482,000 --------------- --------------- ------------- ------------ Total Liabilities 250,587 14,891,742 (366,297) 14,776,032 --------------- --------------- ------------- ------------ Minority interest in Local Limited Partnerships - - 377,452 377,452 --------------- --------------- ------------- ------------ General, Initial and Investor Limited Partners' Equity 24,612,185 1,973,583 (1,973,583) 24,612,185 Net unrealized losses on marketable securities (2,953) - - (2,953) --------------- --------------- ------------- ------------- Total Partners' Equity 24,609,232 1,973,583 (1,973,583) 24,609,232 --------------- --------------- -------------- ------------ Total Liabilities and Partners' Equity $ 24,859,819 $ 16,865,325 $ (1,962,428) $ 39,762,716 =============== =============== ============== ============
(A) As of September 30, 1996. (B) As of June 30, 1996. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) Notes to Combined Financial Statements (continued) (Unaudited) 5. Supplemental Combining Schedules (continued) Statements of Operations For the Three Months Ended September 30, 1996
Boston Financial Qualified Housing Tax Credits Combined L.P. IV (A) Entities (B) Eliminations Combined Revenue: Rental $ - $ 446,852 $ - $ 446,852 Investment 14,269 3,356 - 17,625 Other 54,799 12,522 - 67,321 --------------- --------------- ------------- ------------ Total Revenue 69,068 462,730 - 531,798 --------------- --------------- ------------- ------------ Expenses: Asset management fees, related party 64,343 - - 64,343 General and administrative 108,460 - - 108,460 Bad debt expense 44,779 - - 44,779 Rental operations, exclusive of depreciation - 260,084 - 260,084 Property management fee, related party - 46,561 - 46,561 Interest - 269,574 - 269,574 Depreciation - 201,330 - 201,330 Amortization 20,353 5,027 - 25,380 --------------- --------------- ------------- ------------ Total Expenses 237,935 782,576 - 1,020,511 --------------- --------------- ------------- ------------ Loss before equity in losses of Local Limited Partnerships (168,867) (319,846) - (488,713) Minority interest in losses of Local Limited Partnerships - - 20,937 20,937 Equity in losses of Local Limited Partnerships (822,304) - 298,909 (523,395) --------------- --------------- ------------- ------------ Net Loss $ (991,171) $ (319,846) $ 319,846 $ (991,171) =============== =============== ============= ============
(A) For the three months ended September 30, 1996. (B) For the three months ended June 30, 1996. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) Notes to Combined Financial Statements (continued) (Unaudited) 5. Supplemental Combining Schedules (continued) Statements of Operations For the Six Months Ended September 30, 1996
Boston Financial Qualified Housing Tax Credits Combined L.P. IV (A) Entities (B) Eliminations Combined Revenue: Rental $ - $ 890,572 $ - $ 890,572 Investment 40,399 6,175 - 46,574 Other 56,949 24,073 - 81,022 --------------- --------------- ------------- ------------ Total Revenue 97,348 920,820 - 1,018,168 --------------- --------------- ------------- ------------ Expenses: Asset management fees, related party 128,686 - - 128,686 General and administrative 168,854 - - 168,854 Bad debt expense 245,173 - - 245,173 Rental operations, exclusive of depreciation - 534,619 - 534,619 Property management fee, related party - 65,300 - 65,300 Interest - 539,952 - 539,952 Depreciation - 379,195 - 379,195 Amortization 48,004 10,054 - 58,058 --------------- --------------- ------------- ------------ Total Expenses 590,717 1,529,120 - 2,119,837 --------------- --------------- ------------- ------------ Loss before equity in losses of Local Limited Partnerships (493,369) (608,300) - (1,101,669) Minority interest in losses of Local Limited Partnerships - - 43,968 43,968 Equity in losses of Local Limited Partnerships (1,665,986) - 564,332 (1,101,654) --------------- --------------- ------------- ------------ Net Loss $ (2,159,355) $ (608,300) $ 608,300 $ (2,159,355) =============== =============== ============= ============
(A) For the six months ended September 30, 1996. (B) For the six months ended June 30, 1996. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) Notes to Combined Financial Statements (continued) (Unaudited) 5. Supplemental Combining Schedules (continued) Statements of Cash Flows
Boston Financial Qualified Housing Tax Credits Combined L.P. IV (A) Entities (B) Eliminations Combined Net cash provided by (used for) operating activities $ (591,597) $ 173,066 $ - $ (418,531) ------------ ------------ ------------ ------------- Cash flows from investing activities: Investment in Local Limited Partnership 3,331 - - 3,331 Purchases of marketable securities (437,069) - - (437,069) Proceeds from sales and maturities of marketable securities 721,379 - - 721,379 Cash distributions received from Local Limited Partnerships 67,145 - - 67,145 Purchase of rental property - (89,412) - (89,412) ----------- ------------- ------------ ------------- Net cash provided by (used for) investing activities 354,786 (89,412) - 265,374 ----------- ------------- ------------ ------------ Cash flows from financing activities: Payment of mortgage principal - (117,020) - (117,020) ----------- ------------- ------------ ------------- Net cash used for financing activities - (117,020) - (117,020) ----------- ------------- ------------ ------------- Net decrease in cash and cash equivalents (236,811) (33,366) - (270,177) Cash and cash equivalents, beginning 306,906 107,545 - 414,451 ----------- ------------ ------------ ------------ Cash and cash equivalents, ending $ 70,095 $ 74,179 $ - $ 144,274 =========== ============ ============ ============
(A) For the six months ended September 30, 1996. (B) For the six months ended June 30, 1996. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources The Partnership (including the Combined Entities) had a decrease in cash and cash equivalents of $270,177 from $414,451 at March 31, 1996 to $144,274 at September 30, 1996. The decrease is attributable to cash used for operations, repayment of mortgage principal and purchase of rental property by the Combined Entities. These decreases were offset by proceeds from sales and maturities of marketable securities in excess of purchases of marketable securities and cash distributions received from Local Limited Partnerships in which the Partnership invested. The Managing General Partner initially designated 4% of the Gross Proceeds as Reserves. The Reserves were established to be used for working capital of the Partnership and contingencies related to the ownership of Local Limited Partnership interests. Funds totaling approximately $971,000 have been withdrawn from the Reserve account to pay legal fees and other expenses relating to various property issues. This amount includes approximately $917,000 for the Texas Partnerships. To date, Reserve funds in the amount of approximately $304,000 have been used to make additional capital contributions to a Local Limited Partnership. To date, the Partnership has used approximately $754,000 of operating funds to replenish Reserves. At September 30, 1996, approximately $1,316,000 of cash, cash equivalents and marketable securities has been designated as Reserves. Management believes that the investment income earned on the Reserves, along with cash distributions received from Local Limited Partnerships, to the extent available, will be sufficient to fund the Partnership's ongoing operations. Reserves may be used to fund Partnership operating deficits, if the Managing General Partner deems funding appropriate. If Reserves are not adequate to cover the Partnership's operations, the Partnership will seek other financing sources including, but not limited to, the deferral of Asset Management Fees to an affiliate of the Managing General Partner or working with Local Limited Partnerships to increase cash distributions. Since the Partnership invests as a limited partner, the Partnership has no contractual obligation to provide additional funds to Local Limited Partnerships beyond its specified investment. Thus, at September 30, 1996, the Partnership had no contractual or other obligation to any Local Limited Partnership which had not been paid or provided for. In the event a Local Limited Partnership encounters operating difficulties requiring additional funds, the Partnership's management might deem it in its best interests to voluntarily provide such funds in order to protect its investment. To date, in addition to the $917,000 noted above, the Partnership has also advanced approximately $577,000 to the Texas Partnerships to fund operating deficits. Approximately $308,000 has also been advanced to two other Local Limited Partnerships. Cash Distributions No cash distributions were made during the six months ended September 30, 1996. Results of Operations The Partnership's results of operations for the three and six months ended September 30, 1996 resulted in a net loss of $991,171 and $2,159,355, respectively, as compared to a net loss of $1,452,771 and $2,620,289, respectively, for the same periods in 1995. The decrease in net loss is primarily attributable to decreases in equity in losses of Local Limited Partnerships and decreases in general and administrative, rental operations and interest expense items. These decreases are offset by a decrease in rental revenue and an increase in bad debt expense. The decrease in equity in losses of Local Limited Partnerships is caused by more efficient property operations during the first half of 1996 as compared to the corresponding 1995 period and the elimination of losses incurred by the four Texas Partnerships which were disposed of. The decrease in general and administrative expenses is the result of a decrease in the expenses paid on behalf of the Texas Partnerships by the Partnership. The decrease in rental revenue and rental operation and interest expenses is due to the exclusion of seven of the Texas Partnerships' operations which were previously combined. Four of these Texas Partnerships were disposed of and three are now being accounted BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations (continued) for under the equity method of accounting. Please refer to the section entitled "Property Discussions" for additional information. The increase in bad debt expense is the result of a reserve for advances made to one Local Limited Partnership. Property Discussions Prior to the transfer of four of the Texas Partnerships, Limited Partnership interests had been acquired in thirty-seven Local Limited Partnerships which are located in thirteen states, Washington, D.C. and Puerto Rico. Fifteen of the properties with 1,440 apartments were newly constructed, and twenty-two of the properties with 2,061 apartments were rehabilitated. Most of the Local Limited Partnerships have stable operations. The majority of these properties are operating at break-even or generating operating cash flow. A few properties are experiencing operating difficulties and cash flow deficits due to a variety of reasons. The Local General Partners of those properties have funded operating deficits through project expense loans, subordinated loans or payments from operating escrows. In instances where the Local General Partners have stopped funding deficits because their obligation to do so has expired or otherwise, the Managing General Partner is working with the Local General Partners to increase operating income, reduce expenses or refinance the debt at lower interest rates in order to improve cash flow. The Managing General Partner has transferred or is in the process of transferring all of the assets of five of the Texas Partnerships subject to their liabilities to unaffiliated entities. The transfers of Grandview Terrace Apartments, Pecan Hills Apartments, Seagraves Garden Apartments and Hilltop Apartments were effective February 21, 1996, February 29, 1996, March 8, 1996 and June 6, 1996, respectively. Bent Tree Apartments is being transferred to a new owner effective after September 30, 1996. As previously reported, Nocona Terrace Apartments and Royal Creste Apartments were in the process of being transferred to an unaffiliated entity. This transaction is not expected to take place. The Managing General Partner is currently seeking alternative options for the transfer of these properties. The Partnership will retain its interest in Gateway Village. The Managing General Partner of the Partnership has executed an agreement to sell the general partner interests in the four remaining Texas Partnerships (Justin Place Apartments, Pine Manor Apartments, Pinewood Terrace Apartments and Valley View Apartments) to an unaffiliated buyer. These properties will be restructured into a new partnership in which the Partnership will retain a limited partner interest for a period estimated to be about twelve months. During this period, investors will continue to receive tax credits from these properties. For tax purposes, these events will result in both Section 1231 Gain and cancellation of indebtedness income. In addition, the transfer of ownership will result in a nominal amount of recapture of tax credits, since the Texas Partnerships represent only 3% of the Partnership's tax credits. As previously reported, Bentley Court, located in Columbia, South Carolina, defaulted on its mortgage in August 1994 and was threatened with foreclosure by the lender. The Local General Partner began pursuing a GNMA security reissuance to achieve a reduction in debt service. The default was cured, and as a part of the plan to remedy the default, an affiliate of the Managing General Partner was, subject to lender consent, admitted as an additional General Partner with the right to take over control of the property in certain circumstances. The HUD Inspector General's office audited the property in October 1994 and ruled that certain fees could not be charged to tenants. The Local General Partner has complied with this ruling, which will reduce property income, and has reinstated the Local General Partner's obligation to fund any resulting deficits. On July 18, 1996, the Local General Partner reached an agreement on a GNMA security reissuance which achieved a reduction in debt service through an interest rate reduction to current market levels. The agreement stipulates that if the Local Limited Partnership defaults on the BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Property Discussions (continued) agreement the lender has the right to remove the management company. An affiliate of the Managing General Partner has been approved as a substitute management company and has the right to replace the Local General Partner in the event of a default. Findlay Market, located in Cincinnati, Ohio, has been affected by occupancy problems because 45% of the property's units were damaged by a fire. The reconstruction was initially delayed because of insufficient funds from the insurance proceeds to satisfy lender requirements. In March 1996, an affiliate of the Managing General Partner became actively involved in discussions with the Local General Partner, the lender and the City of Cincinnati to provide additional funding sources needed to reconstruct the units. As part of the agreement, the Partnership will advance $345,000 from Partnership reserves to help cover the shortfall of funds. As of September 30, 1996, approximately $245,000 has been advanced. The Local General Partner currently estimates that reconstruction, which commenced in May 1996, will be complete by November 1996. The low-income housing tax credits continue to be earned on the units to be reconstructed. Audobon Apartments, located in Massachusetts, is operating below break-even primarily due to decreased rental subsidy assistance, increased operating expenses and adverse market conditions. The Managing General Partner is negotiating with the Local General Partner and the local housing authority to replace the management agent with an affiliate of the Managing General Partner and to obtain additional operating subsidies from the state in order to help stabilize property operations. It is likely that these transactions will require advances from Partnership Reserves. One other property in which the Partnership has invested, BK Apartments, continues to experience cash flow deficits as a result of high vacancy. A number of units were damaged by flooding in 1993 and have been rebuilt. In January 1996, property operations were insufficient to cover the full bond payment which resulted in a technical default on the bonds. The General Partner reached an agreement with the trustee, whereby he would make February, March and April payments in a timely manner and cure the delinquent bond payment by May 1, 1996. At this time, the Local General Partner has not satisfied his obligation, and the lender has threatened further action. As a result of the default, the General Partner has transferred management of the property to an unaffiliated property management company. The new management agent is in the process of determining the cost of capital improvements required to stabilize the property's operations. These costs may require the use of Partnership reserves. The Managing General Partner has requested debt service relief in proportion to the amount of additional capital the Partnership must invest in order to complete the capital improvements. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) PART II OTHER INFORMATION Items 1-5 Not applicable Item 6 Exhibits and reports on Form 8-K (a)Exhibits - None (b)Reports on Form 8-K - No reports on Form 8-K were filed during the quarter ended September 30, 1996. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DATED: November 13, 1996 BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV By: Arch Street IV, Inc., its Managing General Partner /s/Georgia Murray Georgia Murray A Managing Director, Treasurer and Chief Financial Officer EX-27 2 QH4 FINANCIAL DATA SCHEDULE FOR FY 1997 Q2
5 6-MOS MAR-31-1997 SEP-30-1996 144,274 1,180,073 123,901 000 000 232,025 16,338,789 000 39,762,716 4,797,655 000 0 0 000 24,609,232 39,762,716 000 1,018,168 000 000 1,579,885 000 539,952 000 000 000 000 000 000 (2,159,355) (31.42) 000 Included in current assets: Mortgagee escrow deposits $94,328, Tenant security deposits $95,971 and Other current assets $41,726. Included in total assets: Investments in Local Limited Partnerships $21,528,795, Deferred charges, net $214,859. Included in Current Liabilities: Accounts payable to affiliates $261,583, Accounts payable and accrued expenses $295,117, Current portion of debt $3,615,467, Interest payable of $532,758 and Tenant security deposits payable of $92,730. Included in Total Liabilities and Equity:Payable to affiliated developer $2,482,000, $7,496,377 of long-term debt and Minority interest in Local Limited Partnerships $377,452. Total revenue includes: Rental $890,572, Investment $46,574, Other $81,022. Included in Other Expenses: Asset management fees $128,686, General and administrative $168,854, Bad debt $245,173, Property management fees $65,300, Rental operations, exclusive of depreciation $534,619, Depreciation $379,195 and Amortization $58,058. Net loss reflects: Equity in losses of Local Limited Partnerships of $1,101,654 and Minority interest in losses of Local Limited Partnerships $43,968.
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