-----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, GWNYQARMecCG8NPLZNrtOfc959uI+Ry1aDoXQYCsqC7yn9MQfMCadqsGzgNsYPQ8 bd7UDh3Fx+jlEFYETKLfcA== 0000810663-98-000002.txt : 19980217 0000810663-98-000002.hdr.sgml : 19980217 ACCESSION NUMBER: 0000810663-98-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980212 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L P IV CENTRAL INDEX KEY: 0000845035 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 043044617 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19765 FILM NUMBER: 98533925 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 Q3 98 February 13, 1998 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 for Quarter Ended December 31, 1997 File No. 0-19765 Gentlemen: Pursuant to the requirements of section 15(d) of the Securities Exchange Act of 1934, there is filed herewith a copy of subject report. Very truly yours, /s/George Fondulis George Fondulis Assistant Controller QH4-10Q3DOC 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, 1997 ------------------------------------------ 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, 1997 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, 1997 (Unaudited) and March 31, 1997 1 Combined Statements of Operations (Unaudited) - For the Three and Nine Months Ended December 31, 1997 and 1996 2 Combined Statement of Changes in Partners' Equity (Deficiency) (Unaudited) - For the Nine Months Ended December 31, 1997 4 Combined Statements of Cash Flows (Unaudited) - For the Nine Months Ended December 31, 1997 and 1996 5 Notes to Combined Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 PART II - OTHER INFORMATION Items 1-6 15 SIGNATURE 16 BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) COMBINED BALANCE SHEETS - December 31, 1997 and March 31, 1997
December 31, March 31, 1997 1997 (Unaudited) Assets Cash and cash equivalents $ 207,993 $ 288,153 Marketable securities, at fair value 1,030,270 1,056,590 Accounts receivable, net of allowance for bad debt of $314,837 and $337,793, respectively 9,087 23,778 Tenant security deposits 101,071 98,963 Investments in Local Limited Partnerships, net of reserve for valuation of $844,000 and $945,277, respectively (Note 1) 18,329,831 19,593,420 Rental property at cost, net of accumulated depreciation and reserve for valuation of $5,134,142 and $5,670,590, respectively 14,124,348 15,217,196 Mortgagee escrow deposits 144,165 106,501 Deferred charges, net of $171,741 and $156,662 of accumulated amortization, respectively 194,103 209,182 Other assets 35,467 38,270 ------------- ------------ Total Assets $ 34,176,335 $ 36,632,053 ============= ============ Liabilities and Partners' Equity Mortgage notes payable $ 9,743,875 $11,111,888 Accounts payable to affiliates 538,820 390,926 Accounts payable and accrued expenses 350,802 366,076 Interest payable 552,869 507,457 Tenant security deposits payable 85,567 89,709 Payable to affiliated Developer 2,482,000 2,482,000 ------------- ------------ Total Liabilities 13,753,933 14,948,056 ------------- ------------ Minority interest in Local Limited Partnerships 448,601 421,489 ------------- ------------ General, Initial and Investor Limited Partners' Equity 19,972,137 21,267,760 Net unrealized gains (losses) on marketable securities 1,664 (5,252) ------------- ------------ Total Partners' Equity 19,973,801 21,262,508 ------------- ------------ Total Liabilities and Partners' Equity $ 34,176,335 $ 36,632,053 ============= ============
The accompanying notes are an integral part of these 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, 1997 and 1996
Three Months Ended Nine Months Ended December 31, December 31, December 31, December 31, 1997 1996 1997 1996 ------------- ------------- ------------- --------- Revenue: Rental $ 443,542 $ 444,241 $ 1,351,191 $ 1,334,813 Investment 37,895 25,362 83,904 71,936 Other 17,625 39,637 106,916 120,659 ------------- --------------- ------------- -------------- Total Revenue 499,062 509,240 1,542,011 1,527,408 ------------- --------------- ------------- -------------- Expenses: Asset management fee, related party 57,480 64,343 172,440 193,029 General and administrative, includes reimbursements to an affiliate in the amounts of $112,064 and $91,887 in 1997 and 1996, respectively 102,800 92,200 273,472 261,054 Bad debt expense 88,710 9,158 239,249 254,331 Rental operations, exclusive of depreciation 235,800 289,167 749,203 823,786 Property management fee, related party 29,895 31,769 94,922 97,069 Interest 252,405 263,672 766,879 803,624 Depreciation 152,656 189,595 526,037 568,790 Amortization 27,024 29,030 82,770 87,088 ------------- --------------- ------------- -------------- Total Expenses 946,770 968,934 2,904,972 3,088,771 ------------- --------------- ------------- -------------- Loss before equity in losses of Local Limited Partnerships, minority interest, loss on liquidation of interests in Local Limited Partnerships and extraordinary item (447,708) (459,694) (1,362,961) (1,561,363) Equity in losses of Local Limited Partnerships (518,946) (505,019) (1,047,830) (1,606,673) Minority interest in losses of Local Limited Partnerships 26,531 23,824 65,109 67,792 Loss on liquidation of interests in Local Limited Partnerships (Note 2) (1,384) - (3,922) - ------ ------ ------------ ------- Net Loss before extraordinary item (941,507) (940,889) (2,349,604) (3,100,244) Extraordinary gain on cancellation of indebtedness (Note 2) 600,104 - 1,053,981 - ------------- --------------- ------------- -------------- Net Loss $ (341,403) $ (940,889) $ (1,295,623) $ (3,100,244) ============= =============== ============= ============== Net Loss allocated: To General Partners $ (3,414) $ (9,408) $ (12,956) $ (31,002) To Limited Partners (337,989) (931,481) (1,282,667) (3,069,242) ------------- --------------- ------------- -------------- $ (341,403) $ (940,889) $ (1,295,623) $ (3,100,244) ============= =============== ============= ==============
The accompanying notes are an integral part of these combined financial statements. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) COMBINED STATEMENTS OF OPERATIONS (continued) (Unaudited) For the Three and Nine Months Ended December 31, 1997 and 1996
Three Months Ended Nine Months Ended December 31, December 31, December 31, December 31, 1997 1996 1997 1996 ------------- ------------- ------------- --------- Net Loss before extraordinary item per Limited Partnership Unit (68,043 Units) $ (13.71) $ (13.69) $ (34.19) $ (45.11) ============ =============== ============= ============= Extraordinary item per Limited Partnership Unit (68,043 Units) $ 8.74 $ - $ 15.34 $ - =============== =========== ================ ====== Net Loss per Limited Partnership Unit (68,043 Units) $ (4.97) $ (13.69) $ (18.85) $ (45.11) ============ =============== ============= =============
The accompanying notes are an integral part of these 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, 1997
Net Initial Investor Unrealized General Limited Limited Gains Partners Partners Partners (Losses) Total Balance at March 31, 1997 $ (378,408) $ 5,000 $ 21,641,168 $ (5,252) $ 21,262,508 Net change in net unrealized losses on marketable securities available for sale - - - 6,916 6,916 Net Loss (12,956) - (1,282,667) - (1,295,623) ---------- ------- ------------ --------- ------------- Balance at December 31, 1997 $ (391,364) $ 5,000 $ 20,358,501 $ 1,664 $ 19,973,801 ========== ======= ============ ========= =============
The accompanying notes are an integral part of these 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, 1997 and 1996
1997 1996 ------------ ------- Net cash used for operating activities $ (275,720) $ (59,962) ----------- ----------- Cash flows from investing activities: Investments in Local Limited Partnerships - 3,331 Purchases of marketable securities (373,664) (487,098) Proceeds from sales and maturities of marketable securities 405,899 837,233 Cash distributions received from Local Limited Partnerships 208,180 204,867 Advances to Local Limited Partnerships (33,974) (291,290) Purchase of rental property and equipment (45,806) (141,708) ----------- ----------- Net cash provided by investing activities 160,635 125,335 ----------- ----------- Cash flows from financing activities: Payment of mortgage principal (91,652) (153,237) Advances from affiliate 34,356 51,982 Capital contributions received 92,221 - ----------- ----------- Net cash provided by (used for) financing activities 34,925 (101,255) ----------- ----------- Net decrease in cash and cash equivalents (80,160) (35,882) Cash and cash equivalents, beginning 288,153 414,451 ----------- ----------- Cash and cash equivalents, ending $ 207,993 $ 378,569 =========== =========== Supplemental disclosure: Cash paid for interest $ 660,951 $ 401,250 =========== ===========
The accompanying notes are an integral part of these 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, 1997. 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 periods may not be indicative of the results to be expected for the year. Certain amounts in prior year financial statements have been restated herein to conform to current year presentation. The Managing General Partner has elected to report results of the Local Limited Partnerships on a 90 day lag basis, because the Local Limited Partnerships report their results on a calendar year basis. Accordingly, the financial information about the Local Limited Partnerships that is included in the accompanying combined financial statements is as of September 30, 1997 and 1996. 1. Investments in Local Limited Partnerships The Partnership uses the equity method to account for its limited partnership interests in twenty-three 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, 1997:
Capital contributions paid to Local Limited Partnerships and purchase price paid to withdrawing partners of Local Limited Partnerships $ 43,001,951 Cumulative equity in losses of Local Limited Partnerships (includes cumulative unrecognized losses of $1,855,403) (25,215,795) Cash distributions received from Local Limited Partnerships (1,698,459) Investments in Local Limited Partnerships before adjustment 16,087,697 Excess of investment cost over the underlying net assets acquired: Acquisition fees and expenses 3,899,388 Accumulated amortization of acquisition fees and expenses (813,254) Investments in Local Limited Partnerships 19,173,831 Reserve for valuation of investments in Local Limited Partnerships (844,000) $ 18,329,831
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) Notes to Combined Financial Statements (continued) (Unaudited) 1. Investments in Local Limited Partnerships (continued) The Partnership's share of the net losses of the Local Limited Partnerships, excluding the Combined Entities, for the nine months ended December 31, 1997 is $1,943,324. For the nine months ended December 31, 1997, the Partnership has not recognized $959,530 of equity in losses relating to nine Local Limited Partnerships where cumulative equity in losses and cumulative distributions exceeded its total investments in these Local Limited Partnerships. 2. Liquidation of Interests in Local Limited Partnerships The Managing General Partner has transferred all of the assets of ten 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. Justin Place Apartments and Valley View Apartments were transferred July 9, 1997, Nacona Terrace Apartments and Royal Creste Apartments were transferred August 6, 1997, and Pine Manor Apartments was transferred on October 28, 1997. Transfer of one of the remaining two Texas Partnerships is expected to take place in the first quarter of 1998. The Partnership will retain its interest in Gateway Village. For financial reporting purposes, loss on liquidation of interests in Local Limited Partnerships of $3,922 and extraordinary gain on cancellation of indebtedness of $1,053,981 were recognized in the period ended December 31, 1997 as a result of the transfer of Justin Place Apartments, Valley View Apartments and Pine Manor Apartments. The loss on the transfers of Nacona Terrace Apartments and Royal Creste Apartments had previously been reserved for in the provision for valuation of investment in Local Limited Partnerships. 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) Notes to Combined Financial Statements (continued) (Unaudited) 3. Supplemental Combining Schedules Balance Sheets
Boston Financial Qualified Housing Tax Credits Combined Combined L.P. IV (A) Entities (B) Eliminations (A) Assets Cash and cash equivalents $ 100,084 $ 107,909 $ - $ 207,993 Marketable securities, at fair value 1,030,270 - - 1,030,270 Accounts receivable, net 340,507 9,087 (340,507) 9,087 Tenant security deposits - 101,071 - 101,071 Investments in Local Limited Partnerships, net 19,062,482 - (732,651) 18,329,831 Rental property at cost, net - 14,124,348 - 14,124,348 Mortgagee escrow deposits - 144,165 - 144,165 Deferred charges, net - 194,103 - 194,103 Other assets 15,095 20,372 - 35,467 --------------- --------------- ------------- ------------ Total Assets $ 20,548,438 $ 14,701,055 $ (1,073,158) $ 34,176,335 =============== =============== ============= ============ Liabilities and Partners' Equity Mortgage notes payable $ - $ 9,743,875 $ - $ 9,743,875 Accounts payable to affiliates 498,092 381,235 (340,507) 538,820 Accounts payable and accrued expenses 76,545 274,257 - 350,802 Interest payable - 552,869 - 552,869 Tenant security deposits payable - 85,567 - 85,567 Payable to affiliated Developer - 2,482,000 - 2,482,000 --------------- --------------- ------------- ------------ Total Liabilities 574,637 13,519,803 (340,507) 13,753,933 --------------- --------------- ------------- ------------ Minority interest in Local Limited Partnerships - - 448,601 448,601 --------------- --------------- ------------- ------------ General, Initial and Investor Limited Partners' Equity 19,972,137 1,181,252 (1,181,252) 19,972,137 Net unrealized losses on marketable securities 1,664 - - 1,664 --------------- --------------- ------------- ------------ Total Partners' Equity 19,973,801 1,181,252 (1,181,252) 19,973,801 --------------- --------------- ------------- ------------ Total Liabilities and Partners' Equity $ 20,548,438 $ 14,701,055 $ (1,073,158) $ 34,176,335 =============== =============== ============= ============
(A) As of December 31, 1997. (B) As of September 30, 1997. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) Notes to Combined Financial Statements (continued) (Unaudited) 3. Supplemental Combining Schedules (continued) Statements of Operations For the Three Months Ended December 31, 1997
Boston Financial Qualified Housing Tax Credits Combined Combined L.P. IV (A) Entities (B) Eliminations (A) Revenue: Rental $ - $ 443,542 $ - $ 443,542 Investment 17,104 20,791 - 37,895 Other 4,385 13,240 - 17,625 --------------- --------------- ------------- ------------ Total Revenue 21,489 477,573 - 499,062 --------------- --------------- ------------- ------------ Expenses: Asset management fee, related party 57,480 - - 57,480 General and administrative 102,800 - - 102,800 Bad debt expense 88,710 - - 88,710 Rental operations, exclusive of depreciation - 235,800 - 235,800 Property management fee, related party - 29,895 - 29,895 Interest - 252,405 - 252,405 Depreciation - 152,656 - 152,656 Amortization 21,998 5,026 - 27,024 --------------- --------------- ------------- ------------ Total Expenses 270,988 675,782 - 946,770 --------------- --------------- ------------- ------------ Loss before equity in losses of Local Limited Partnerships, minority interest, loss on liquidation of interests in Local Limited Partnerships and extraordinary item (249,499) (198,209) - (447,708) Equity in losses of Local Limited Partnerships (90,520) - (428,426) (518,946) Minority interest in losses of Local Limited Partnerships - - 26,531 26,531 Loss on liquidation of interests in Local Limited Partnerships (1,384) - - (1,384) --------------- --------------- ------------- ------------ Net Loss before extraordinary item (341,403) (198,209) (401,895) (941,507) Extraordinary gain on cancellation of indebtedness - 600,104 - 600,104 --------------- --------------- ------------- ------------ Net Income (Loss) $ (341,403) $ 401,895 $ (401,895) $ (341,403) =============== =============== ============= ============
(A) For the three months ended December 31, 1997. (B) For the three months ended September 30, 1997. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) Notes to Combined Financial Statements (continued) (Unaudited) 3. Supplemental Combining Schedules (continued) Statements of Operations For the Nine Months Ended December 31, 1997
Boston Financial Qualified Housing Tax Credits Combined Combined L.P. IV (A) Entities (B) Eliminations (A) Revenue: Rental $ - $ 1,351,191 $ - $ 1,351,191 Investment 56,662 27,242 - 83,904 Other 71,924 34,992 - 106,916 --------------- --------------- ------------- ------------ Total Revenue 128,586 1,413,425 - 1,542,011 --------------- --------------- ------------- ------------ Expenses: Asset management fee, related party 172,440 - - 172,440 General and administrative 273,472 - - 273,472 Bad debt expense 239,249 - - 239,249 Rental operations, exclusive of depreciation - 749,203 - 749,203 Property management fee, related party - 94,922 - 94,922 Interest - 766,879 - 766,879 Depreciation - 526,037 - 526,037 Amortization 67,691 15,079 - 82,770 --------------- --------------- ------------- ------------ Total Expenses 752,852 2,152,120 - 2,904,972 --------------- --------------- ------------- ------------ Loss before equity in losses of Local Limited Partnerships, minority interest, loss on liquidation of interests in Local Limited Partnerships and extraordinary item (624,266) (738,695) - (1,362,961) Equity in losses of Local Limited Partnerships (667,435) - (380,395) (1,047,830) Minority interest in losses of Local Limited Partnerships - - 65,109 65,109 Loss on liquidation of interests in Local Limited Partnerships (3,922) - - (3,922) --------------- --------------- ------------- ------------ Net Loss before extraordinary item (1,295,623) (738,695) (315,286) (2,349,604) Extraordinary gain on cancellation of indebtedness - 1,053,981 - 1,053,981 --------------- --------------- ------------- ------------ Net Income (Loss) $ (1,295,623) $ 315,286 $ (315,286) $ (1,295,623) =============== =============== ============= ============
(A) For the nine months ended December 31, 1997. (B) For the nine months ended September 30, 1997. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV (A Limited Partnership) Notes to Combined Financial Statements (continued) (Unaudited) 3. Supplemental Combining Schedules (continued) Statements of Cash Flows For the Nine Months Ended December 31, 1997
Boston Financial Qualified Housing Tax Credits Combined Combined L.P. IV (A) Entities (B) Eliminations (A) Net cash used for operating activities $ (217,643) $ (58,077) $ - $ (275,720) ------------ ------------ ------------ ------------ Cash flows from investing activities: Purchases of marketable securities (373,664) - - (373,664) Proceeds from sales and maturities of marketable securities 405,899 - - 405,899 Cash distributions received from Local Limited Partnerships 208,180 - - 208,180 Advances to Local Limited Partnerships (139,415) - 105,441 (33,974) Purchase of rental property and equipment - (45,806) - (45,806) ----------- ------------ ------------ ------------ Net cash provided by (used for) investing activities 101,000 (45,806) 105,441 160,635 ----------- ------------ ------------ ------------ Cash flows from financing activities: Payment of mortgage principal - (91,652) - (91,652) Advances from affiliate - 139,797 (105,441) 34,356 Capital contributions received - 92,221 - 92,221 ----------- ------------ ------------ ------------ Net cash provided by financing activities - 140,366 (105,441) 34,925 ----------- ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents (116,643) 36,483 - (80,160) Cash and cash equivalents, beginning 216,727 71,426 - 288,153 ----------- ------------ ------------ ------------ Cash and cash equivalents, ending $ 100,084 $ 107,909 $ - $ 207,993 =========== ============ ============ ============
(A) For the nine months ended December 31, 1997. (B) For the nine months ended September 30, 1997. 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 $80,160 from $288,153 at March 31, 1997 to $207,993 at December 31, 1997. The decrease is mainly attributable to cash used for operations, repayment of mortgage principal and purchase of rental property by the Combined Entities. These decreases are 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. 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 $1,152,000 have been withdrawn from the reserve account to pay legal fees relating to various property issues. This amount includes approximately $1,087,000 for the Texas Partnerships. To date, Reserve funds in the amount of $304,000 have been used to make additional capital contributions to a Local Limited Partnership. To date, the Partnership has used approximately $1,038,000 of operating funds to replenish reserves. At December 31, 1997, approximately $1,149,000 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. 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 $1,152,000 noted above, the Partnership has also advanced approximately $794,000 to the Texas Partnerships to fund operating deficits. Approximately $360,000 has also been advanced to two other Local Limited Partnerships. 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, 1997, the Partnership had no contractual or other obligation to any Local Limited Partnership which had not been paid or provided for. Cash Distributions No cash distributions were made during the nine months ended December 31, 1997. Results of Operations The Partnership's results of operations for the three and nine months ended December 31, 1997 resulted in net losses of $341,403 and $1,295,623 as compared to net losses of $940,889 and $3,100,244 for the same periods in 1996. The decrease in net loss is primarily attributable to the recognition of extraordinary gain on cancellation of indebtedness for three of the Texas Partnerships and a decrease in equity in losses of Local Limited Partnerships for the nine month period. The decrease in equity in losses of Local Limited Partnerships is due to an increase in losses not recognized by the Partnership for Local Limited Partnerships whose cumulative equity in losses and cumulative distributions exceeded its total investment in those partnerships. The decrease in Equity in Losses of Local Limited Partnerships is expected to continue. The expected transfer of Pinewood Terrace Apartments in the first quarter of 1998 will result in additional extraordinary gain on cancellation of indebtedness. 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 Prior to the transfer of ten 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 SHARP mortgage subsidy has been an important part of the property's annual income. However, effective October 1, 1997, the Massachusetts Housing Finance Agency (MHFA) which provided the SHARP subsidies, withdrew future SHARP mortgage subsidies from its portfolio of 77 SHARP subsidized properties. The Managing General Partner joined a group of interested parties and is working with MHFA to find a solution to the problems that will arise as a result of withdrawn subsidies. Given the dependence on the mortgage subsidy, it is possible that the property will default on its mortgage obligation during the first quarter of 1998. It is possible that Partnership Reserves will be used to support the property until these issues can be resolved. The Local General Partner has also obtained preliminary approval for releases from lender escrows to fund certain cash deficits. In addition to the SHARP issues, the Managing General Partner continues to work with the lender to develop a satisfactory workout. It is likely that a workout would require an advance from Partnership Reserves. As previously reported, BK Apartments, located in Jamestown, North Dakota, has been generating operating deficits despite improved occupancy. The lender issued a default notice and threatened to foreclose. A workout agreement was negotiated and completed on November 10, 1997. The Managing General Partner will closely monitor the workout plan with the Local General Partner. Furthermore, the Managing General Partner consummated a transfer of 50% of its interest in capital and profits of BK Apartments Limited Partnership to an affiliate of the Local General Partner. Included in this transfer is a Put Agreement option. The Put Agreement option grants the Managing General Partner the right to Put their remaining interest to the Local General Partner any time after one year has elapsed. Bentley Court, located in Columbia, South Carolina, continues to generate significant deficits despite the July 1996 debt refinancing. As previously reported, an agreement was set up with the lender which enabled an affiliate of the Managing General Partner to become an additional General Partner and substitute management agent, subject to lender approval, with the right to take control of the property if it becomes necessary. 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 will continue to monitor property operations closely. Operating deficits are currently being funded by the Local General Partner. 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) At Findlay Market (Cincinnati, Ohio), reconstruction of the property units damaged by fire was completed in December 1996, and lease-up continues. As previously reported, in order to reconstruct the units, the Partnership agreed to advance up to $345,000 to help cover the funding shortfall between the insurance proceeds, lender funding and a City grant. To date, the Partnership has advanced approximately $297,000 of this amount. However, the property continues to generate operating deficits which caused the default of the first mortgage. At this juncture, the lender is not amenable to a cure of the mortgage and is expected to exercise its right to foreclose on the mortgage. Despite these indications, the Managing and Local General Partners continue to negotiate with the lender in hopes of averting a foreclosure. A foreclosure of this property will result in recapture of tax credits and the allocation of taxable income to the Partnership. As previously reported, the Managing General Partner transferred all of the assets of five of the Texas Partnerships, subject to their liabilities, to unaffiliated entities in 1996. In 1997, the Managing General Partner transferred all of the assets on five of the remaining seven Texas Partnerships, subject to their liabilities, to unaffiliated entities. An additional transfer of one of the remaining two Texas Partnerships is expected to take place in the first quarter of 1998. The Partnership will retain its interest in Gateway Village. 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, 1997. 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: February 13, 1998 BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV By: Arch Street IV, Inc., its Managing General Partner /s/William E. Haynsworth William E. Haynsworth Managing Director, Vice President and Chief Operating Officer EX-27 2 QH4 FINANCIAL DATA SCHEDULE FOR FY 98 Q3
5 9-MOS MAR-31-1998 DEC-31-1997 207,993 1,030,270 9,087 000 000 000 14,124,348 000 34,176,335 000 000 000 000 000 19,973,801 34,176,335 000 1,542,011 000 000 2,138,093 000 766,879 000 000 000 000 000 000 (1,295,623) (18.85) 000 Included in total assets: Investments in Local Limited Partnerships of $18,329,831, Deferred charges, net $194,103, Tenant security deposits $101,071, Mortgagee escrow deposits $144,165 and other assets $35,467. Included in Total Liabilities and Equity: Mortgage notes payable of $9,743,875, Accounts payable to affiliates of $538,820, Accounts payable and accrued expenses of $350,802, Interest payable of $552,869, Tenant security deposits payable of $85,567, Payable to affiliated developer of $2,482,000 and Minority interest in Local Limited Partnerships of $448,601. Total revenue includes: Rental of $1,351,191, Investment of $83,904 and Other of $106,916. Included in Other Expenses: Asset management fees of $172,440, General and administrative of $273,472, Rental operations, exclusive of depreciation of $749,203, Bad debt of $239,249, Property management fees of $94,922, Depreciation of $526,037 and Amortization of $82,770. Net loss reflects: Equity in losses of Local Limited Partnerships of $1,047,830, Minority interest in losses of Local Limited Partnerships of $65,109, loss on liquidation of interests in Local Limited Partnerships of $3,922 and gain on transfer and liquidation of real estate of $1,053,981.
-----END PRIVACY-ENHANCED MESSAGE-----