-----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, Oz1zNrdG13puZoaGtQigqfHNbfc+WutPIGSrbeTSw3JS/jlk7tYkkwd6fBYEuZmH Z+BJNkl18f9Z9RVI1jJeBQ== 0000845035-96-000004.txt : 19960918 0000845035-96-000004.hdr.sgml : 19960918 ACCESSION NUMBER: 0000845035-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 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: 96610404 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 Q1 1996 August 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 for Quarter Ended June 30, 1996 File No. 0-19765 Gentlemen: 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 QH4-10Q1.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 June 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 Quarter Ended June 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 - June 30, 1996 (Unaudited) and March 31, 1996 1 Combined Statements of Operations (Unaudited) - For the Three Months Ended June 30, 1996 and 1995 2 Combined Statement of Changes in Partners' Equity (Deficiency) (Unaudited) - For the Three Months Ended June 30, 1996 3 Combined Statements of Cash Flows (Unaudited) - For the Three Months Ended June 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 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 - June 30, 1996 and March 31, 1996
June 30, March 31, 1996 1996 (Unaudited) Assets Current assets: Cash and cash equivalents $ 323,676 $ 414,451 Accounts receivable, net 19,572 39,646 Tenant security deposits 88,668 109,969 Mortgagee escrow deposits 142,419 113,368 Other current assets 21,713 35,465 ------------- ------------ Total current assets 596,048 712,899 Investments in Local Limited Partnerships, net of reserve for valuation of $949,906 and $913,047, respectively (Note 2) 22,078,215 22,748,929 Marketable securities, at fair value (Note 1) 1,264,523 1,428,765 Rental property at cost, net of accumulated depreciation 16,489,741 16,628,572 Deferred charges, net of $145,958 and $140,931 of accumulated amortization, respectively 219,886 224,913 ------------- ------------ Total Assets $ 40,648,413 $ 41,744,078 ============= ============ Liabilities and Partners' Equity (Deficiency) Current liabilities: Accounts payable to affiliates $ 190,500 $126,151 Accounts payable and accrued expenses 299,046 409,693 Current portion of mortgage notes payable 3,646,615 3,707,570 Interest payable 439,233 218,437 Tenant security deposits payable 88,078 85,705 ------------- ------------ Total current liabilities 4,663,472 4,547,556 Mortgage notes payable 7,508,835 7,521,294 Payable to affiliated Developer 2,482,000 2,482,000 ------------- ------------ Total Liabilities 14,654,307 14,550,850 ------------- ------------ Minority interest in Local Limited Partnerships 398,389 421,420 ------------- ------------ General, Initial and Investor Limited Partners' Equity 25,603,356 26,771,540 Net unrealized gains (losses) on marketable securities (7,639) 268 ------------- ------------ Total Partners' Equity 25,595,717 26,771,808 ------------- ------------ Total Liabilities and Partners' Equity $ 40,648,413 $ 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 Months Ended June 30, 1996 and 1995
1996 1995 ------------ ------- Revenue: Rental $ 443,720 $ 597,585 Investment 28,949 33,857 Other 13,701 20,848 ------------ ------------ Total Revenue 486,370 652,290 ------------ ------------ Expenses: Asset management fee, related party 64,343 62,752 General and administrative (includes reimbursements to an affiliate in the amounts of $37,026 and $39,736, respectively) 60,394 182,372 Bad debt expense 200,394 - Rental operations, exclusive of depreciation 274,535 305,826 Property management fee, related party 18,739 27,457 Interest 270,378 345,482 Depreciation 177,865 198,808 Amortization 32,678 33,099 ------------ ------------ Total Expenses 1,099,326 1,155,796 ------------ ------------ Loss before equity in losses of Local Limited Partnerships (612,956) (503,506) Minority interest in losses of Local Limited Partnership 23,031 21,217 Equity in losses of Local Limited Partnerships (578,259) (685,229) ------------- ------------ Net Loss $ (1,168,184) $ (1,167,518) ============= ============ Net Loss allocated: To General Partners $ (11,682) $ (11,675) To Limited Partners (1,156,502) (1,155,843) ------------- ------------ $ (1,168,184) $ (1,167,518) ============= ============ Net Loss per Limited Partnership Unit (68,043 Units) $ (17.00) $ (16.99) ============= ============
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 Three Months Ended June 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 - - - (7,907) (7,907) Net Loss (11,682) - (1,156,502) - (1,168,184) ---------- ------- ------------ --------- ------------ Balance at June 30, 1996 $ (335,052) $ 5,000 $ 25,933,408 $ (7,639) $ 25,595,717 ========== ======= ============ ========= ============
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 Three Months Ended June 30, 1996 and 1995
1996 1995 ------------ ------- Net cash used for operating activities $ (224,514) $ (135,255) ----------- ----------- Cash flows from investing activities: Purchases of marketable securities (437,069) (100,375) Proceeds from sales and maturities of marketable securities 618,452 166,111 Cash distributions received from Local Limited Partnerships 64,804 - Purchase of rental property (39,034) (6,905) ------------ ----------- Net cash provided by investing activities 207,153 58,831 ----------- ----------- Cash flows from financing activities: Payment of mortgage principal (73,414) (17,725) ----------- ----------- Net cash used for financing activities (73,414) (17,725) ------------ ----------- Net decrease in cash and cash equivalents (90,775) (94,149) Cash and cash equivalents, beginning 414,451 532,287 ----------- ----------- Cash and cash equivalents, ending $ 323,676 $ 438,138 =========== =========== Supplemental disclosure: Cash paid for interest $ 49,582 $ 260,431 =========== ===========
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 $ 877,199 $ 1,997 $ (6,743) $ 872,453 Mortgage backed securities 344,237 1,790 (4,323) 341,704 Other debt securities 50,726 - (360) 50,366 ----------- -------- -------- ----------- Marketable securities at June 30, 1996 $ 1,272,162 $ 3,787 $(11,426) $ 1,264,523 =========== ======== ======== =========== 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 June 30, 1996 are as follows:
Fair Cost Value Due in one year or less $ 243,477 $ 245,474 Due in one to five year 684,448 677,345 Mortgage backed securities 344,237 341,704 ----------- ----------- $ 1,272,162 $ 1,264,523 =========== ===========
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 $618,000 and $166,000 for the three months ended June 30, 1996 and 1995, respectively. Included in investment income are gross gains of $29,324 and $446 and gross losses of $4,276 and $861 that were realized on these sales for the three months ended June 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 June 30, 1996:
Capital contributions paid to Local Limited Partnerships and purchase price paid to withdrawing partners of Local Limited Partnerships $ 43,424,108 Cumulative equity in losses of Local Limited Partnerships (22,402,135) Cash distributions received from Local Limited Partnerships (1,222,644) Investments in Local Limited Partnerships before adjustment 19,799,329 Excess of investment cost over the underlying net assets acquired: Acquisition fees and expenses 3,912,561 Accumulated amortization of acquisition fees and expenses (683,769) Investments in Local Limited Partnerships 23,028,121 Reserve for valuation of investments in Local Limited Partnerships (949,906) $ 22,078,215
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 March 31, 1996 Assets: Rental property, net $ 124,250,005 Current assets 6,766,546 Other assets, net 12,187,315 --------------- Total Assets $ 143,203,866 =============== Liabilities and Partners' Equity: Current liabilities $ 6,847,016 Mortgages payable, net of current portion 101,813,146 Other liabilities 8,224,026 --------------- Total Liabilities 116,884,188 Partners' Equity 26,319,678 --------------- Total Liabilities and Partners' Equity $ 143,203,866 =============== Summarized Income Statements - For the Three Months Ended March 31, 1996 Rental and other income $ 5,064,050 --------------- Expenses: Operating expenses 2,585,319 Interest expense 1,887,756 Depreciation and amortization 1,205,947 --------------- Total Expenses 5,679,022 Net Loss $ (614,972) =============== Partnership's share of net loss $ (596,893) =============== Other Partners' share of net loss $ (18,079) ===============
For the three months ended June 30, 1996, the Partnership has not recognized $18,634 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 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 $18,051 and $11,899 of fees earned by BFPM and BF Lansing for the three months ended June 30, 1996 and 1995. 4. Liquidation of Interests in Local Limited Partnerships As previously reported, the Managing General Partner has transferred or is in the process of transferring all of the assets of seven 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. The remaining properties (Bent Tree Apartments, Nocona Terrace Apartments and Royal Creste Apartments) are being transferred to new owners effective after June 30, 1996. The Partnership will retain 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 $ 213,040 $ 110,636 $ - $ 323,676 Accounts receivable, net 331,104 19,572 (331,104) 19,572 Tenant security deposits - 88,668 - 88,668 Mortgagee escrow deposits - 142,419 - 142,419 Other current assets 17,347 4,366 - 21,713 --------------- --------------- ------------- ------------ Total current assets 561,491 365,661 (331,104) 596,048 Investments in Local Limited Partnerships, net 23,973,255 - (1,895,040) 22,078,215 Marketable securities, at fair value 1,264,523 - - 1,264,523 Rental property at cost, net of accumulated depreciation - 16,489,741 - 16,489,741 Deferred charges, net - 219,886 - 219,886 --------------- --------------- ------------- ------------ Total Assets $ 25,799,269 $ 17,075,288 $ (2,226,144) $ 40,648,413 =============== =============== ============= ============ Liabilities and Partners' Equity (Deficiency) Current liabilities: Accounts payable to affiliates $ 150,764 $ 370,840 $ (331,104) $ 190,500 Accounts payable and accrued expenses 52,788 246,258 - 299,046 Current portion of mortgage notes payable- 3,646,615 - 3,646,615 Interest payable - 439,233 - 439,233 Tenant security deposits payable - 88,078 - 88,078 --------------- --------------- ------------- ------------ Total current liabilities 203,552 4,791,024 (331,104) 4,663,472 Mortgage notes payable - 7,508,835 - 7,508,835 Payable to affiliated Developer - 2,482,000 - 2,482,000 --------------- --------------- ------------- ------------ Total Liabilities 203,552 14,781,859 (331,104) 14,654,307 Minority interest in Local Limited Partnerships - - 398,389 398,389 General, Initial, and Investor Limited Partners' Equity 25,603,356 2,293,429 (2,293,429) 25,603,356 Net unrealized losses on marketable securities (7,639) - - (7,639) ---------------- --------------- ------------- ------------- Total Partners' Equity 25,595,717 2,293,429 (2,293,429) 25,595,717 --------------- --------------- -------------- ------------ Total Liabilities and Partners' Equity $ 25,799,269 $ 17,075,288 $ _(2,226,144) $ 40,648,413 =============== =============== ============== ============
(A) As of June 30, 1996. (B) As of March 31, 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
Boston Financial Qualified Housing Tax Credits Combined L.P. IV (A) Entities (B) Eliminations Combined Revenue: Rental $ - $ 443,720 $ - $ 443,720 Investment 26,130 2,819 - 28,949 Other 2,150 11,551 - 13,701 --------------- --------------- ------------- ------------ Total Revenue 28,280 458,090 - 486,370 --------------- --------------- ------------- ------------ Expenses: Asset management fees, related party 64,343 - - 64,343 General and administrative 60,394 - - 60,394 Bad debt expense 200,394 - - 200,394 Rental operations, exclusive of depreciation - 274,535 - 274,535 Property management fee, related party - 18,739 - 18,739 Interest - 270,378 - 270,378 Depreciation - 177,865 - 177,865 Amortization 27,651 5,027 - 32,678 --------------- --------------- ------------- ------------ Total Expenses 352,782 746,544 - 1,099,326 --------------- --------------- ------------- ------------ Loss before equity in losses of Local Limited Partnerships (324,502) (288,454) - (612,956) Minority interest in losses of Local Limited Partnerships - - 23,031 23,031 Equity in losses of Local Limited Partnerships (843,682) - 265,423 (578,259) --------------- --------------- ------------- ------------ Net Loss $ (1,168,184) $ (288,454) $ 288,454 $ (1,168,184) ================ ================ ============= ============= (A) For the three months ended June 30, 1996. (B) For the three months ended March 31, 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 $ (340,053) $ 115,539 $ - $ (224,514) ----------- ------------ ------------ ------------- Cash flows from investing activities: Purchases of marketable securities (437,069) - - (437,069) Proceeds from sales and maturities of marketable securities 618,452 - - 618,452 Cash distributions received from Local Limited Partnerships 64,804 - - 64,804 Purchase of rental property - (39,034) - (39,034) ----------- ------------ ------------ ------------- Net cash provided by (used for) investing activities 246,187 (39,034) - 207,153 ----------- ------------ ------------ ------------ Cash flows from financing activities: Payment of mortgage principal - (73,414) - (73,414) ----------- ------------- ------------ ------------- Net cash used for financing activities - (73,414) - (73,414) ----------- ------------- ------------ ------------- Net increase (decrease) in cash and cash equivalents (93,866) 3,091 - (90,775) Cash and cash equivalents, beginning 306,906 107,545 - 414,451 ----------- ------------ ------------ ------------ Cash and cash equivalents, ending $ 213,040 $ 110,636 $ - $ 323,676 =========== ============ ============ ============ (A) For the three months ended June 30, 1996. (B) For the three months ended March 31, 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 $90,775 from $414,451 at March 31, 1996 to $323,676 at June 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 $918,000 have been withdrawn from the reserve account to pay legal fees relating to various property issues. This amount includes approximately $876,000 for the Texas Partnerships. At June 30, 1996, approximately $1,274,000 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 June 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 $876,000 noted above, the Partnership has also advanced approximately $534,000 to the Texas Partnerships to fund operating deficits. Cash Distributions No cash distributions were made in the three months ended June 30, 1996. Results of Operations The Partnership's results of operations for the three months ended June 30, 1996 resulted in a net loss of $1,168,184 as compared to a net loss of $1,167,518 for the same period in 1995. The slight change in the net loss position is primarily attributable to a decrease in rental revenue and an increase in bad debt expense. These increases are partially offset by a decrease in equity in losses of Local Limited Partnerships and decreases in general and administrative, rental operations and interest expense items. 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 for on 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. The decrease in general and administrative expenses is caused by a decrease in the expenses paid on behalf of the Texas Partnerships. The decrease in equity in losses of Local Limited Partnerships is caused by more efficient property operations during the first quarter of 1996 as compared to the corresponding 1995 period. 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 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. As previously reported, the Managing General Partner has transferred or is in the process of transferring all of the assets of seven 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. The remaining properties (Bent Tree Apartments, Nocona Terrace Apartments and Royal Creste Apartments) are being transferred to new owners effective after June 30, 1996. The Partnership will retain 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 at least 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 nominal 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 as the Local General Partner was pursuing a GNMA security reissuance to achieve a reduction in debt service. However, the security reissuance was stalled due to the rise in interest rates. Although the monetary default was a nominal amount, the Local General Partner was advised that the lender intended to commence foreclosure proceedings. 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 he has assumed his 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 General Partner defaults on the 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. 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) 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 delayed because the lender initially insisted that the insurance proceeds be used to pay down the mortgage. The City of Cincinnati interceded and extended a grant to pay down the mortgage. 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 on additional funding sources needed to reconstruct the units. The Partnership will advance $345,000 of Partnership reserves to help cover the shortfall of funds and reconstruction commenced in May 1996. As of June 30, 1996, approximately $202,000 has been advanced. The Local General Partner currently estimates that reconstruction will be complete by November 1996. The low-income housing tax credits continue to be earned on the units to be reconstructed; however, a portion of the historic tax credits attached to the units received in 1991 and 1992 will be recaptured. The amount of recapture is estimated to be approximately $1.60 per investment unit. 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 recently 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 Goldmark Property Management ("Goldmark"). Goldmark 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. The amount of additional capital needed has not been determined at this time. 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 June 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: August 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 FISCAL 1997 Q1
5 3-MOS MAR-31-1997 JUN-30-1996 323,676 1,264,523 19,572 000 000 252,800 16,489,741 000 40,648,413 4,663,472 000 000 000 000 25,595,717 40,648,413 000 486,370 000 000 828,948 000 270,378 000 000 000 000 000 000 (1,168,184) (17.00) 000 Included in current assets: Mortgage escrow deposits $142,419, Tenant security deposits $88,668 and Other current assets $21,713. Included in total assets: Investments in Local Limited Partnerships $22,078,215, Deferred charges, net $219,886. Included in Total Liabilities and Equity: Payable to affiliated developer $2,482,000, $7,508,835 of long-term debt and Minority interest in Local Limited Partnerships $398,389. Total revenue includes: Rental $443,720, Investment $28,949, Other $13,701. Included in Other Expenses: Asset management fees $64,343, General and administrative $60,394, Bad debt $200,394, Property management fees $18,739, Rental operations, exclusive of depreciation $274,535, Depreciation $177,865 and Amortization $32,678. Net loss reflects: Equity in losses of Local Limited Partnerships of $578,259 and Minority interest in losses of Local Limited Partnerships 23,031.
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