-----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, EfutSussnn0T8ZVpgERWoQxyOgvsQeDJXLVya++XI0kPLEAMzJoh72ddbbz9G8T3 utHiLMgWOQ7bt+F5/FZhHQ== 0000810663-97-000009.txt : 19970401 0000810663-97-000009.hdr.sgml : 19970401 ACCESSION NUMBER: 0000810663-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970213 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: 97528741 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 QH4 Q3 February 12, 1997 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 December 31, 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/Veronica J. Curioso Veronica J. Curioso 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 December 31, 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 Quarter Ended December 31, 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 - December 31, 1996 (Unaudited) and March 31, 1996 1 Combined Statements of Operations (Unaudited) - For the Three and Nine Months Ended December 31, 1996 and 1995 2 Combined Statement of Changes in Partners' Equity (Deficiency) (Unaudited) - For the Nine Months Ended December 31, 1996 3 Combined Statements of Cash Flows (Unaudited) - For the Nine Months Ended December 31, 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 - December 31, 1996 and March 31, 1996
December 31, March 31, 1996 1996 (Unaudited) Assets Current assets: Cash and cash equivalents $ 378,569 $ 414,451 Accounts receivable, net 23,259 39,646 Tenant security deposits 89,406 109,969 Mortgagee escrow deposits 135,965 113,368 Other current assets 42,780 35,465 ------------- ------------- Total current assets 669,979 712,899 Investments in Local Limited Partnerships, net of reserve for valuation of $949,906 and $913,047, respectively (Note 2) 20,862,051 22,748,929 Marketable securities, at fair value (Note 1) 1,079,478 1,428,765 Rental property at cost, net of accumulated depreciation 16,201,490 16,628,572 Deferred charges, net of $156,012 and $140,931 of accumulated amortization, respectively 209,832 224,913 ------------- ------------- Total Assets $ 39,022,830 $ 41,744,078 ============= ============= Liabilities and Partners' Equity (Deficiency) Current liabilities: Accounts payable to affiliates $ 293,746 $ 126,151 Accounts payable and accrued expenses 433,401 409,693 Current portion of mortgage notes payable 3,591,709 3,707,570 Interest payable 620,811 218,437 Tenant security deposits payable 90,022 85,705 ------------- ------------- Total current liabilities 5,029,689 4,547,556 Mortgage notes payable 7,483,918 7,521,294 Payable to affiliated Developer 2,482,000 2,482,000 ------------- ------------- Total Liabilities 14,995,607 14,550,850 ------------- ------------- Minority interest in Local Limited Partnerships 353,628 421,420 ------------- ------------- General, Initial and Investor Limited Partners' Equity (Deficiency) 23,671,296 26,771,540 Net unrealized gains on marketable securities 2,299 268 ------------- ------------- Total Partners' Equity (Deficiency) 23,673,595 26,771,808 ------------- ------------- Total Liabilities and Partners' Equity (Deficiency) $ 39,022,830 $ 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 Nine Months Ended December 31, 1996 and 1995
Three Months Ended Nine Months Ended December 31, December 31, December 31, December 31, 1996 1995 1996 1995 ------------- ------------- ------------- --------- Revenue: Rental $ 444,241 $ 589,949 $ 1,334,813 $ 1,791,651 Investment 25,362 33,828 71,936 88,065 Other 39,637 19,999 120,659 60,913 ------------- --------------- ------------- -------------- Total Revenue 509,240 643,776 1,527,408 1,940,629 ------------- --------------- ------------- -------------- Expenses: Asset management fee, related party 64,343 62,752 193,029 188,256 General and administrative, includes reimbursements to an affiliate in the amounts of $91,887 and $104,255 in 1996 and 1995, respectively 92,200 160,120 261,054 438,506 Bad debt 9,158 46,519 254,331 46,519 Rental operations, exclusive of depreciation 289,167 444,246 823,786 1,235,616 Property management fee, related party 31,769 18,261 97,069 54,029 Interest 263,672 327,885 803,624 978,854 Depreciation 189,595 191,546 568,790 581,890 Amortization 29,030 33,102 87,088 99,306 ------------- --------------- ------------- -------------- Total Expenses 968,934 1,284,431 3,088,771 3,622,976 ------------- --------------- ------------- -------------- Loss before equity in losses of Local Limited Partnerships (459,694) (640,655) (1,561,363) (1,682,347) Minority interest in losses of Local Limited Partnerships 23,824 24,210 67,792 69,946 Equity in losses of Local Limited Partnerships (505,019) (599,260) (1,606,673) (2,223,593) ------------- --------------- ------------- -------------- Net Loss $ (940,889) $ (1,215,705) $ (3,100,244) $ (3,835,994) ============= =============== ============= ============== Net Loss allocated: To General Partners $ (9,408) $ (12,157) $ (31,002) $ (38,360) To Limited Partners (931,481) (1,203,548) (3,069,242) (3,797,634) ------------- --------------- ------------- -------------- $ (940,889) $ (1,215,705) $ (3,100,244) $ (3,835,994) ============= =============== ============= ============== Net Loss per Limited Partnership Unit (68,043 Units) $ (13.69) $ (17.69) $ (45.11) $ (55.81) ============= ============== ============= ==============
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 Nine Months Ended December 31, 1996
Initial Investor Net General Limited Limited Unrealized Partners Partners Partners Gains 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 - - - 2,031 2,031 Net Loss (31,002) - (3,069,242) - (3,100,244) ----------- -------- ------------ --------- ------------ Balance at December 31, 1996 $ (354,372) $ 5,000 $ 24,020,668 $ 2,299 $ 23,673,595 ========== ======== ============ ========= ============
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 Nine Months Ended December 31, 1996 and 1995
1996 1995 ------------ --------- Net cash used for operating activities $ (360,024) $ (693,109) ------------ ------------- Cash flows from investing activities: Investments in Local Limited Partnerships 3,331 - Purchases of marketable securities (487,098) (1,466,927) Proceeds from sales and maturities of marketable securities 897,987 1,995,707 Cash distributions received from Local Limited Partnerships 204,867 121,905 Purchase of rental property and equipment (141,708) (65,212) ------------ ------------- Net cash provided by investing activities 477,379 585,473 ------------ ------------- Cash flows from financing activities: Payment of mortgage principal (153,237) (37,439) ------------ ------------- Net cash used for financing activities (153,237) (37,439) ------------ ------------- Net decrease in cash and cash equivalents (35,882) (145,075) Cash and cash equivalents, beginning 414,451 532,287 ------------ ------------- Cash and cash equivalents, ending $ 378,569 $ 387,212 ============ ============= Supplemental disclosure of cash flow activity: Cash paid for interest $ 401,250 $ 579,785 ============ =============
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 $ 754,966 $ 3,055 $ (2,558) $ 755,463 Mortgage backed securities 310,265 2,032 (234) 312,063 Other debt securities 11,948 4 - 11,952 ----------- -------- -------- ----------- Marketable securities at December 31, 1996 $ 1,077,179 $ 5,091 $ (2,792) $ 1,079,478 =========== ======== ========= =========== 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 December 31, 1996 are as follows:
Fair Cost Value Due in one year or less $ 121,244 $ 124,009 Due in one to five years 645,670 643,406 Mortgage backed securities 310,265 312,063 ----------- ----------- $ 1,077,179 $ 1,079,478 =========== ===========
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 $898,000 and $1,996,000 for the nine months ended December 31, 1996 and 1995, respectively. Included in investment income are gross gains of $65,161 and $12,497 and gross losses of $5,590 and $15,443 that were realized on these sales for the nine months ended December 31, 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 December 31, 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 (23,430,549) Cash distributions received from Local Limited Partnerships (1,362,707) ----------- Investments in Local Limited Partnerships before adjustment 18,627,521 Excess of investment cost over the underlying net assets acquired: Acquisition fees and expenses 3,912,561 Accumulated amortization of acquisition fees and expenses (728,125) --------- Investments in Local Limited Partnerships 21,811,957 Reserve for valuation of investments in Local Limited Partnerships (949,906) --------- $ 20,862,051 ============
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 September 30, 1996
Assets: Rental property, net $ 121,691,813 Current assets 6,944,363 Other assets, net 11,578,464 --------------- Total Assets $ 140,214,640 =============== Liabilities and Partners' Equity: Current liabilities $ 6,238,917 Mortgages payable, net of current portion 101,336,557 Other liabilities 8,095,693 --------------- Total Liabilities 115,671,167 Partners' Equity 24,543,473 --------------- Total Liabilities and Partners' Equity $ 140,214,640 =============== Summarized Income Statements - For the nine months ended September 30, 1996 Rental and other income $ 14,831,932 --------------- Expenses: Operating expenses 7,522,399 Interest expense 5,563,092 Depreciation and amortization 3,678,775 --------------- Total Expenses 16,764,266 Net Loss $ (1,932,334) =============== Partnership's share of net loss $ (1,913,009) =============== Other Partners' share of net loss $ (19,325) ===============
For the nine months ended December 31, 1996, the Partnership has not recognized $306,336 of equity in losses relating to four 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. Liquidation of Interests in Local Limited Partnerships The Managing General Partner has transferred 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, Hilltop Apartments and Bent Tree Housing were effective February 21, 1996, February 29, 1996, March 8, 1996, June 6, 1996 and November 20, 1996, respectively. The transfers of Nocona Terrace Apartments and Royal Creste Apartments are expected to take place in 1997. The Partnership has retained its interest in Gateway Village. The Managing General Partner of the Partnership is working 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. In the meantime, investors will continue to receive tax credits for these properties. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) Notes to Combined Financial Statements (continued) (Unaudited) 4. 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 $ 308,195 $ 70,374 $ - $ 378,569 Accounts receivable, net 403,744 23,259 (403,744) 23,259 Tenant security deposits - 89,406 - 89,406 Mortgagee escrow deposits - 135,965 - 135,965 Other current assets 13,959 28,821 - 42,780 --------------- --------------- ------------- ------------ Total current assets 725,898 347,825 (403,744) 669,979 Investments in Local Limited Partnerships, net 22,180,011 - (1,317,960) 20,862,051 Marketable securities, at fair value 1,079,478 - - 1,079,478 Rental property at cost, net of accumulated depreciation - 16,201,490 - 16,201,490 Deferred charges, net - 209,832 - 209,832 --------------- --------------- ------------- ------------ Total Assets $ 23,985,387 $ 16,759,147 $ (1,721,704) $ 39,022,830 =============== =============== ============== ============ Liabilities and Partners' Equity (Deficiency) Current liabilities: Accounts payable to affiliates $ 257,372 $ 440,118 $ (403,744) $ 293,746 Accounts payable and accrued expenses 54,420 378,981 - 433,401 Current portion of mortgage notes payable - 3,591,709 - 3,591,709 Interest payable - 620,811 - 620,811 Tenant security deposits payable - 90,022 - 90,022 --------------- --------------- ------------- ------------ Total current liabilities 311,792 5,121,641 (403,744) 5,029,689 Mortgage notes payable - 7,483,918 - 7,483,918 Payable to affiliated Developer - 2,482,000 - 2,482,000 --------------- --------------- ------------- ------------ Total Liabilities 311,792 15,087,559 (403,744) 14,995,607 --------------- --------------- -------------- ------------ Minority interest in Local Limited Partnerships - - 353,628 353,628 --------------- --------------- ------------- ------------ General, Initial and Investor Limited Partners' Equity (Deficiency) 23,671,296 1,671,588 (1,671,588) 23,671,296 Net unrealized gains on marketable securities 2,299 - - 2,299 --------------- --------------- ------------- ------------ Total Partners' Equity (Deficiency) 23,673,595 1,671,588 (1,671,588) 23,673,595 --------------- --------------- -------------- ------------ Total Liabilities and Partners' Equity (Deficiency) $ 23,985,387 $ 16,759,147 $ (1,721,704) $ 39,022,830 =============== =============== ============== ============
(A) As of December 31, 1996. (B) As of September 30, 1996. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) Notes to Combined Financial Statements (continued) (Unaudited) 4. Supplemental Combining Schedules (continued) Statements of Operations For the Three Months Ended December 31, 1996
Boston Financial Qualified Housing Tax Credits Combined L.P. IV (A) Entities (B) Eliminations Combined Revenue: Rental $ - $ 444,241 $ - $ 444,241 Investment 22,251 3,111 - 25,362 Other 9,754 29,883 - 39,637 --------------- --------------- ------------- ------------ Total Revenue 32,005 477,235 - 509,240 --------------- --------------- ------------- ------------ Expenses: Asset management fees, related party 64,343 - - 64,343 General and administrative 92,200 - - 92,200 Bad debt 9,158 - - 9,158 Rental operations, exclusive of depreciation - 289,167 - 289,167 Property management fee, related party - 31,769 - 31,769 Interest - 263,672 - 263,672 Depreciation - 189,595 - 189,595 Amortization 24,003 5,027 - 29,030 --------------- --------------- ------------- ------------ Total Expenses 189,704 779,230 - 968,934 --------------- --------------- ------------- ------------ Loss before equity in losses of Local Limited Partnerships (157,699) (301,995) - (459,694) Minority interest in losses of Local Limited Partnerships - - 23,824 23,824 Equity in losses of Local Limited Partnerships (783,190) - 278,171 (505,019) --------------- --------------- ------------- ------------ Net Loss $ (940,889) $ (301,995) $ 301,995 $ (940,889) =============== =============== ============= ============
(A) For the three months ended December 31, 1996. (B) For the three months ended September 30, 1996. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) Notes to Combined Financial Statements (continued) (Unaudited) 4. Supplemental Combining Schedules (continued) Statements of Operations For the Nine Months Ended December 31, 1996
Boston Financial Qualified Housing Tax Credits Combined L.P. IV (A) Entities (B) Eliminations Combined Revenue: Rental $ - $ 1,334,813 $ - $ 1,334,813 Investment 62,650 9,286 - 71,936 Other 66,703 53,956 - 120,659 --------------- --------------- ------------- ------------ Total Revenue 129,353 1,398,055 - 1,527,408 --------------- --------------- ------------- ------------ Expenses: Asset management fees, related party 193,029 - - 193,029 General and administrative 261,054 - - 261,054 Bad debt expense 254,331 - - 254,331 Rental operations, exclusive of depreciation - 823,786 - 823,786 Property management fee, related party - 97,069 - 97,069 Interest - 803,624 - 803,624 Depreciation - 568,790 - 568,790 Amortization 72,007 15,081 - 87,088 --------------- --------------- ------------- ------------ Total Expenses 780,421 2,308,350 - 3,088,771 --------------- --------------- ------------- ------------ Loss before equity in losses of Local Limited Partnerships (651,068) (910,295) - (1,561,363) Minority interest in losses of Local Limited Partnerships - - 67,792 67,792 Equity in losses of Local Limited Partnerships (2,449,176) - 842,503 (1,606,673) --------------- --------------- ------------- ------------ Net Loss $ (3,100,244) $ (910,295) $ 910,295 $ (3,100,244) =============== =============== ============= ============
(A) For the nine months ended December 31, 1996. (B) For the nine months ended September 30, 1996. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) Notes to Combined Financial Statements (continued) (Unaudited) 4. 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 $ (617,798) $ 257,774 $ - $ (360,024) ----------- ------------ ------------ ------------ Cash flows from investing activities: Investment in Local Limited Partnership 3,331 - - 3,331 Purchases of marketable securities (487,098) - - (487,098) Proceeds from sales and maturities of marketable securities 897,987 - - 897,987 Cash distributions received from Local Limited Partnerships 204,867 - - 204,867 Purchase of rental property and equipment - (141,708) - (141,708) ----------- ------------ ------------ ------------ Net cash provided by (used for) investing activities 619,087 (141,708) - 477,379 ----------- ------------ ------------ ------------ Cash flows from financing activities: Payment of mortgage principal - (153,237) - (153,237) ----------- ------------- ------------ ------------- Net cash used for financing activities - (153,237) - (153,237) ----------- ------------- ------------ ------------ Net increase (decrease) in cash and cash equivalents 1,289 (37,171) - (35,882) Cash and cash equivalents, beginning 306,906 107,545 - 414,451 ----------- ------------ ------------ ------------ Cash and cash equivalents, ending $ 308,195 $ 70,374 $ - $ 378,569 =========== ============ ============ ============
(A) For the nine months ended December 31, 1996. (B) For the nine months ended September 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 $35,882 from $414,451 at March 31, 1996 to $378,569 at December 31, 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 $988,000 have been withdrawn from the Reserve account to pay legal fees and other expenses relating to various property issues. This amount includes approximately $933,000 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 $889,000 of operating funds to replenish Reserves. At December 31, 1996, approximately $1,361,000 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 December 31, 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 interest to voluntarily provide such funds in order to protect its investment. To date, in addition to the $933,000 noted above, the Partnership has also advanced approximately $613,000 to the Texas Partnerships to fund operating deficits. Approximately $345,000 has also been advanced to two other Local Limited Partnerships. Cash Distributions No cash distributions were made during the nine months ended December 31, 1996. Results of Operations The Partnership's results of operations for the three and nine months ended December 31, 1996 resulted in a net loss of $940,889 and $3,100,244, respectively, as compared to a net loss of $1,215,705 and $3,835,994, respectively, for the same periods in 1995. The decreases in net loss are 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 for the nine month period. The decrease in equity in losses of Local Limited Partnerships is caused by more efficient property operations during the first nine months 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 decreases in rental revenue and rental operation and interest expenses are 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 for under the equity method of accounting. Please refer to the section entitled 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) "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 five 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, 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. 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 has reached a tentative agreement with the Local General Partner and the local housing authority to replace the management agent with an unaffiliated firm. The Local General Partner has also obtained preliminary approval for additional operating subsidies from the state. It is likely that this transaction will require an advance from Partnership reserves. Despite improving occupancy at BK Apartments, located in Jamestown, North Dakota, the property continues to generate operating deficits. The lender recently issued a default notice and is threatening to foreclose. Affiliates of the Managing General Partner are negotiating with the Local General Partner and lender to cure the mortgage default and complete required capital repairs. These actions may require the use of Partnership reserves. Bentley Court, located in Columbia, South Carolina, continues to generate significant deficits despite the July 1996 debt refinancing. As we previously reported, the workout agreement with the lender resulted in the admission of a Managing General Partner affiliate as an additional General Partner and as a substitute management agent, subject to lender approval, with the right to take control of the property under certain circumstances. In addition, the agreement stipulates that if the Local Limited Partnership defaults on the agreement the lender has the right to remove the management company. The Managing General Partner is continue to monitor property operations closely. Operating deficits are currently being funded by the Local General Partner. At Findlay Market (Cincinnati, Ohio), reconstruction of the property units damaged by fire was completed in December 1996, and lease-up is currently underway. As previously reported, in order to reconstruct the units, the Partnership advanced $345,000 to help cover the funding shortfall between the insurance proceeds, lender funding and a City grant. However, the property continues to generate operating deficits and faces adverse market conditions which may threaten its viability over the long-term. The Managing General Partner is actively monitoring this situation and is working closely with the Local General Partner to address these difficulties. The Managing General Partner has transferred 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, Hilltop Apartments and Bent Tree Housing were effective February 21, 1996, February 29, 1996, March 8, 1996, June 6, 1996 and November 20, 1996, respectively. The transfers of Nocona 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) Terrace Apartments and Royal Creste Apartments are expected to take place in 1997. The Partnership has retained its interest in Gateway Village. The Managing General Partner of the Partnership is working 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. In the meantime, investors will continue to receive tax credits for these properties. Operating deficits are currently being funded from Partnership reserves. 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. 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 December 31, 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: Febuary 12, 1997 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 FY 97 Q3
5 9-MOS MAR-31-1997 DEC-31-1996 378,569 1,079,478 23,259 000 000 268,151 16,201,490 000 39,022,830 5,029,689 000 000 000 000 23,673,595 39,022,830 000 1,527,408 000 000 2,285,147 000 803,624 000 000 000 000 000 000 (3,100,244) (45.11) 000 Included in current assets: Mortgagee escrow deposits $135,965, Tenant security deposits $89,406 and Other current assets $42,780. Included in total assets: Investments in Local Limited Partnerships $20,862,051, Deferred charges, net $209,832. Included in Current Liabilities: Accounts payable to affiliates $293,746, Accounts payable and accrued expenses $433,401, Current portion of debt $3,591,709, Interest payable of $620,811 and Tenant security deposits payable of $90,022. Included in Total Liabilities and Equity: Payable to affiliated developer $2,482,000, $7,483,918 of long-term debt and Minority interest in Local Limited Partnerships $353,628. Total revenue includes: Rental $1,334,813, Investment $71,936, Other $120,659. Included in Other Expenses: Asset management fees, related party $193,029, General and administrative $261,054, Bad debt $254,331, Property management fees $97,069, Rental operations, exclusive of depreciation $823,786, Depreciation $568,790 and Amortization $87,088. Net loss reflects: Equity in losses of Local Limited Partnerships of $1,606,673 and Minority interest in losses of Local Limited Partnerships $67,792.
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