March 31, 1998
Securities and Exchange Commission
Filer Support, Edgar
Operation Center, Stop 0-7
6432 General Green Way
Alexandria, VA 22312
Re: Boston Financial Apartments Associates, L.P.
Report on Form 10-K for Year Ended December 31, 1997
File No. 0-10057
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/Patricia Olsen-Goldberg
Patricia Olsen-Goldberg
Controller
BFA10K-K.DOC
<PAGE>
The total number of pages contained in this report and any exhibits or
attachments hereto is ___. Index for Exhibits appears on Page ___.
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended Commission file
December 31, 1997 number
0-10057
BOSTON FINANCIAL APARTMENTS ASSOCIATES, L.P.
(Exact name of registrant as specified in its charter)
Delaware 04-2734133
(State of organization) (I.R.S. Employer
Identification No.)
101 Arch Street, 16th Floor
Boston, Massachusetts 02110-1106
(Address of Principal executive office) (Zip Code)
Registrant's telephone number, including area code 617/439-3911
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class)
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
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
Boston Financial Apartments Associates, L.P.
(A Limited Partnership)
1997 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PART I
Item 1 Business K-2
Item 2 Properties K-5
Item 3 Legal Proceedings K-6
Item 4 Submission of Matters to a
Vote of Security Holders K-6
PART II
Item 5 Market for the Registrant's Units
and Related Security Holder Matters K-7
Item 6 Selected Financial Data K-7
Item 7 Management's Discussion and Analysis
of Financial Condition and Results
of Operations K-10
Item 8 Financial Statements and Supplementary Data K-11
Item 9 Disagreements on Accounting and Financial
Disclosure K-11
PART III
Item 10 Directors and Executive Officers of the
Registrant K-12
Item 11 Management Remuneration K-13
Item 12 Security Ownership of Certain Beneficial
Owners and Management K-13
Item 13 Certain Relationships and Related Transactions K-13
PART IV
Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K K-14
SIGNATURES K-16
<PAGE>
PART I
Item 1. Business
Boston Financial Apartments Associates, L.P. (the "Partnership") is a limited
partnership formed on July 21, 1981 under the Uniform Limited Partnership Act of
the State of Delaware. The Partnership raised $21,910,000 of equity ("Gross
Proceeds") through the sale of limited partnership interests of $1,000 per unit
with a minimum purchase of five units. Such amounts exclude five unregistered
units previously acquired for $1,000 each by the initial limited partner, an
affiliate of the general partners.
The Partnership is engaged solely in the business of real estate investment.
Therefore, the Partnership's business is considered one segment and is presented
in that manner.
The Partnership has invested as a limited partner in other limited partnerships
("Local Limited Partnerships") which own and operate multi-family residential
properties ("Properties") which are assisted by federal, state or local
government agencies pursuant to programs which do not significantly restrict
distributions to owners or the rate of return on investments in such Properties.
The investment objectives of the Partnership include the following: (i) to
preserve and protect the Partnership's capital; (ii) to provide capital
appreciation through appreciation in value of the Properties; (iii) to provide
"tax losses" during the early years of the Partnership's operations which the
Limited Partner may use to offset income from other sources; (iv) to provide
annual cash distributions to Partners derived from distributions to the
Partnership from Local Limited Partnerships; and (v) to build additional equity
through reduction of mortgage loans of the Local Limited Partnerships. There can
be no assurance that the Partnership will attain any or all of these investment
objectives.
After completing its program of investment in Local Limited Partnerships during
1983, the Partnership purchased interests in 15 Local Limited Partnerships, each
of which owned a Property with first mortgage financing provided under the
Section 221(d)(4) insurance program of the United States Department of Housing
and Urban Development ("HUD"). The original cost of real estate owned by Local
Limited Partnerships, inclusive of equity payments by the Partnership, was
$86,660,000.
On December 31, 1993, the Partnership transferred its interest in Captain's
Landing Associates, Ltd. to an unrelated party for a nominal amount. Also, on
January 12, 1994, Oakwood Terrace Associates, Ltd. was sold in a foreclosure
auction conducted by HUD. As a result of the foreclosure, the Partnership
disposed of its interest in the property. The Managing General Partner of
Overland Station Investment Company sold the property on January 12, 1995. From
the sale, the Partnership received $1,274,833 which was used to pay down an
acquisition note payable and make a distribution. In addition, on March 24,
1996, the Local General Partner of Mountain View, Ltd. and Woodmeade South, Ltd.
placed both of the properties into Chapter 11 bankruptcy, which resulted in the
Partnership relinquishing its interests in these Local Limited Partnerships. On
June 3, 1997, the mortgagee for Oakdale Manor foreclosed on the property which
resulted in the Partnership relinquishing its equity interest in this Local
Limited Partnership. A more detailed discussion of the transactions is contained
under Property Dispositions in Item 2 of this Report on Form 10-K.
Table A on the following page lists the Local Limited Partnerships in which the
Partnership invested. Other significant information with respect to such Local
Limited Partnerships can be found in Item 2 of this Report on Form 10-K.
Although the Partnership's investments in Local Limited Partnerships are not
subject to seasonal fluctuations, the Partnership's equity in loss of Local
Limited Partnerships, to the extent it reflects the operations of individual
properties, may vary from fiscal quarter to fiscal quarter based upon changes in
occupancy and operating expenses as a result of seasonal factors.
<PAGE>
<TABLE>
<CAPTION>
Table A
PARTNERSHIP DATA
(UNAUDITED)
Total
Original Equity % Total
Date Property and Debt -- Original
Local Limited Property Interest Completion Occupancy Number of Local Limited Equity
Partnerships (A) Location Acquired Date at 12/31/97 (B) Apt. Units Partnerships (C) and Debt
- ---------------- -------- -------- ---- -------------- ---------- ---------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Bear Creek Asheville, NC 08/25/83 1974 98% 140 $ 3,089,000 3.56%
Buttonwood Tree Wichita, KS 03/29/82 1982 99% 216 8,341,000 9.62%
Captain's Landing (D) Galveston, TX 10/14/82 1984 n/a 174 5,392,000 6.22%
Chelsea Village Indianapolis, IN 07/02/82 1983 97% 246 9,179,000 10.59%
Mountain View (D) Johnson City, TN 12/08/82 1983 n/a 60 2,249,000 2.60%
Oakdale Manor (D) Beaumont, TX 05/05/83 1981 n/a 152 4,905,000 5.66%
Oakwood Terrace (D) Chattanooga, TN 08/13/82 1983 n/a 100 3,254,000 3.75%
Overland Station (D) Boise, ID 02/24/82 1978 n/a 160 4,480,000 5.17%
Park Hill Lexington, KY 04/22/82 1980 93% 132 3,935,000 4.54%
Pheasant Ridge Moline, IL 07/07/82 1978 98% 216 5,526,000 6.38%
The Woods of Castleton Indianapolis, IN 05/28/82 1983 94% 260 9,824,000 11.34%
Westpark Plaza Chico, CA 04/05/82 1979 93% 240 7,519,000 8.68%
Woodbridge Bloomington, IN 07/09/82 1983 91% 140 5,321,000 6.14%
Woodmeade South (D) Knoxville, TN 04/07/82 1983 n/a 242 8,619,000 9.95%
Youngstoun Hagerstown, MD 02/18/83 1984 92% 120 5,027,000 5.80%
----- ----------- -------
2,598 $86,660,000 100.00%
===== =========== =======
</TABLE>
(A) The Partnership's interest in profits and losses of each Local Limited
Partnership arising from normal operations is approximately 99%, except
for Youngstoun and Oakdale Manor, for which the percentages are
approximately 97% and 90%, respectively. Profits and losses arising from
certain capital transactions are allocated in accordance with the
respective Local Limited Partnership Agreements.
(B) Property Occupancy is shown as of each Local Limited Partnership's
respective fiscal year end, which is December 31, 1997.
(C) Includes equity contributed to the Local Limited Partnership plus the
outstanding principal balance of its mortgage loan at the date of
purchase (or, in the case of new construction projects, at HUD Final
Endorsement) and any notes made by the Partnership as part of its
original purchase.
(D) The Partnership no longer holds an investment interest in Captain's
Landing, Mountain View, Oakwood Terrace, Overland Station, Woodmeade
South and Oakdale Manor as of December 31, 1997.
<PAGE>
Approximately $1,022,000 of the Gross Proceeds was originally designated as
Reserves and invested in various securities to fund the ongoing operations of
the Partnership. The Reserves were established to be used for working capital of
the Partnership and contingencies related to the ownership of Local Limited
Partnership interests. As of December 31, 1997, the General Partner has
designated approximately $920,000 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.
The Partnership's primary source of working capital is income earned on the
Reserves. Additionally, the Partnership expects to receive distributions from
cash flows from operations of its Local Limited Partnership interests in future
years. It is expected that these sources of funds will provide adequate working
capital to the Partnership.
Each Local Limited Partnership has, as its general partners ("Local General
Partners"), one or more individuals or entities not affiliated with the
Partnership or its General Partners. In accordance with the partnership
agreements under which such entities are organized ("Local Limited Partnership
Agreements"), the Partnership depends on the Local General Partners for the
management of each Local Limited Partnership. Not more than 10% of the total
original investment of the Partnership in Local Limited Partnerships, exclusive
of disposed properties, is invested in Local Limited Partnerships having a
common Local General Partner or affiliated group of Local General Partners,
except that (i) the Castleton, Chelsea and Woodbridge Local Limited
Partnerships, representing 42.74% of the total original investment, exclusive of
disposed properties, have affiliates of Gene B. Glick Company, Inc. as Local
General Partners, (ii) the Buttonwood Tree Local Limited Partnership,
representing 12.24% of the total original investment, exclusive of disposed
properties, has Anderson Management Company as Local General Partner, (iii) the
Bear Creek and Youngstoun Apartments, Phase II Local Limited Partnerships,
representing 14.30% of the total original investment, exclusive of disposed
properties, have Alco Group Limited Partners as Local General Partners and (iv)
the Westpark Local Limited Partnership, representing 15.24% of the total
original investment, exclusive of disposed properties, has affiliates of Federal
Properties Investment Company as the Local General Partner. The Local General
Partners of the other Local Limited Partnerships were identified in the
Acquisition Reports. In the event of bankruptcy or default of the Local General
Partners, or other conditions as expressed in the Local Limited Partnership
Agreements, in certain cases, an affiliate of the Partnership's Managing General
Partner may elect to become an additional Local General Partner.
The Properties owned by Local Limited Partnerships in which the Partnership has
invested are, and will continue to be, subject to competition from existing and
future apartment complexes in the same areas. The success of the Partnership
will depend on many factors, most of which are beyond the control of the
Partnership and which cannot be predicted at this time. Such factors include
general economic and real estate market conditions, both on a national basis and
in those areas where the Properties are located, the availability and cost of
borrowed funds, real estate tax rates, operating expenses, energy costs and
government regulations. In addition, other risks inherent in real estate
investment may influence the ultimate success of the Partnership, including: (i)
possible reduction in rental income due to an inability to maintain high
occupancy levels or adequate rental levels; (ii) possible adverse changes in
general economic conditions and adverse local conditions, such as competitive
overbuilding, a decrease in employment or adverse changes in real estate laws,
including building codes; and (iii) possible future adoption of rent control
legislation which would not permit the full amount of increased costs to be
passed on to the tenants in the form of rent increases or which would suppress
the ability of the Local Limited Partnerships to generate operating cash flow.
In particular, changes in federal and state income tax laws affecting real
estate ownership or limited partnerships could have a material and adverse
effect on the business of the Partnership.
The Partnership has invested in highly leveraged Local Limited Partnerships.
Since debt service is a fixed expenditure as well as a significant portion of
the operating expenses of a property, changing economic forces cause large
fluctuations in cash flow from operations; that is, highly leveraged investments
<PAGE>
carry greater risk. As a result, break-even operations require higher revenues,
but cash flow from operations increases quickly as operations improve over
break-even. Conversely, deficits increase quickly as operations fall below
break-even.
The Partnership is managed by BFTG Residential Properties, Inc., the Managing
General Partner of the Partnership. To economize on direct and indirect payroll
costs, the Partnership, which does not have any employees, reimburses The Boston
Financial Group Limited Partnership ("Boston Financial"), an affiliate of the
General Partners, for certain expenses and overhead costs. A complete discussion
of the management of the Partnership is set forth in Item 10 of this Report on
Form 10-K.
Item 2. Properties
The Partnership owns limited partnership interests in nine Local Limited
Partnerships which own and operate multi-family residential properties. The
Partnership also owns investments in securities in which some of its Reserves
are held.
Four of the Local Limited Partnerships are operating at deficits (net loss
adjusted for depreciation, mortgage principal payments and replacement reserve
payments). In past years, the Local General Partners funded these deficits
either through non-interest bearing project expense loans or subordinated loans,
repayable only out of cash flow or proceeds from a sale or refinancing of the
given project. Once a project achieves break-even, substantial amounts of cash
flow derived from its operations will be used to repay project expense loans and
subordinated loans until the loans are repaid in full. To address current
deficits or other financial difficulties, Local General Partners are working to
increase rental income and reduce operating expenses, working with the lenders
to refinance property mortgages or seeking other sources of capital. Management
may make voluntary advances from the Partnership's Reserves to a Local Limited
Partnership encountering operating difficulties if it is deemed to be in the
best interest of the Partnership to provide such funds.
As discussed previously, Chelsea Village's mortgage was sold in the August 1996
HUD mortgage sale. The new lender has indicated that it expects full payment of
the current mortgage balance due or it will exercise its rights to foreclose on
the property. The Local General Partner continues to negotiate a satisfactory
arrangement with the mortgage buyer which may include a refinancing and
additional equity contribution. It is not expected that the refinancing will
generate taxable income to the Partnership. The Partnership's ability to retain
its interest in this Local Limited Partnership, currently carried at zero on the
Partnership's financial statements depends upon a satisfactory outcome to these
negotiations.
As previously reported, the Local General Partner of Woods of Castleton
successfully refinanced the mortgage during the third quarter. The Managing
General Partner completed negotiations with the Local General Partner and agreed
to a modification of the Partnership Agreement in conjunction with the
refinancing. This modification granted the Local General Partner the potential
cash and residual benefits from the property in exchange for their contribution
of the capital required to complete the refinancing transaction. The
modification also includes provisions which allow the Partnership to exit from
its interest in the Property at a time of its choosing. The Managing General
Partner believes that these concessions will have no material effect on the
Partnership in the future given the current value of the property.
As reported previously, the new mortgagee for Oakdale Manor foreclosed on the
property effective June 3, 1997. The only effect on the Partnership's financial
statements will be cancellation of indebtedness income because the Partnership
is a limited partner and the purchase note payable and the corresponding
interest accrued as of December 31, 1996 are collateralized only by the
Partnership's interest in Oakdale Manor which, at June 3, 1997, had a carrying
value of zero. Investors will incur a taxable gain estimated at $150 per unit as
a result of the disposal of this Local Limited Partnership. The total tax
liability will depend on the extent to which investors have used passive losses
from this investment.
<PAGE>
Property Dispositions
As previously reported, on December 31, 1993, the Partnership transferred its
interest in Captain's Landing to an unrelated purchaser for an amount equal to
the Partnership's costs associated with the transfer. The transfer of the
interest resulted in a capital gain which could be used by the investors to
offset passive losses, both current and suspended.
As previously reported, HUD foreclosed on Oakwood Terrace on January 12, 1994.
The disposition of this interest did not have any effect on income for financial
reporting purposes, as the net investment balance of the interest is zero.
However, for tax purposes, a consequence of the foreclosure is that the
Partnership received allocations of capital gain and cancellation of debt
income. At the individual investor level, the capital gain and cancellation of
debt income could be offset by passive losses, both current and suspended.
The managing general partner of Overland Station Investment Company sold the
property on January 12, 1995. From the sale, the Partnership has recognized
$2,067,424 of equity in income. This amount was offset by the recognition of
$18,627 of previously unrecognized equity in losses. Also, as a result of the
sale, the Partnership recognized a loss on the sale of Overland Station in the
amount of $773,964. This amount represented the remaining carrying value of the
Partnership's investment in the Local Limited Partnership.
The Partnership received proceeds from the Overland sale in the amount of
$1,274,833. The Partnership used a portion of the sales proceeds to pay down
$624,833 of an acquisition note payable and accrued interest which totaled
$685,833. The $61,000 balance of these obligations was canceled and was recorded
as income on the Partnership's financial statements. The Partnership distributed
the balance of the sales proceeds plus accrued interest in the amount of
$657,450.
Bankruptcy plans for Woodmeade South Apartments and Mountain View Apartments
became effective on March 24, 1996. In order for the Partnership to retain an
equity interest in these properties, the bankruptcy plan required that the
Partnership make additional contributions. Management of the Partnership decided
that additional contributions would not be in the best interest of the
Partnership. Consequently, the Partnership relinquished its equity interest in
these two Local Limited Partnerships. These bankruptcies did not have an effect
on the Partnership for financial reporting purposes since the Partnership is a
limited partner and the two Local Limited Partnerships had a carrying value of
zero. However, the Partnership was precluded from realizing any residual value
of the properties upon liquidation.
The new mortgagee for Oakdale Manor foreclosed on the property on June 3, 1997.
The only effect on the Partnership was cancellation of indebtedness income
related to a purchase note payable and its associated accrued interest. No
obligation was due on the purchase note payable as the note was collateralized
only by the Partnership's interest in Oakdale Manor, which, at June 3, 1997, had
a carrying value of zero. For tax purposes, the consequence of the foreclosure
is that investors may have a capital and/or ordinary gain and resulting taxable
income as a result of the disposal of this Local Limited Partnership.
Item 3. Legal Proceedings
The Partnership is not a party to any pending legal or administrative
proceeding, and to the best of its knowledge, no legal or administrative
proceeding is threatened or contemplated against it.
Item 4. Submission of Matters to a Vote of Security Holders
None.
<PAGE>
PART II
Item 5. Market for the Registrant's Units and Related Security Holder Matters
There is no public market for the Units, and it is not expected that any public
market will develop.
The Partnership Agreement does not impose on the Partnership or its General
Partners any obligation to obtain periodic appraisals of assets or to provide
Limited Partners with any estimates of the current value of Units, and the
Partnership does not currently obtain such appraisals or provide such estimates
of value.
The Second Amended and Restated Agreement and Certificate of Limited Partnership
of the Partnership, as amended (the "Partnership Agreement"), imposes certain
restrictions on the transfer of Units. For example, a transfer will not be
permitted if: (i) counsel for the Partnership is of the opinion that such
transfer would result, when considered with all other transfers within the
previous twelve months, in the Partnership's being considered to have been
terminated within the meaning of Section 708 of the Internal Revenue Code of
1986, as amended, or would result in the Partnership's being treated as a
corporation for Federal income tax purposes; (ii) counsel for the Partnership
shall determine that such transfer would violate any applicable federal or state
securities laws (including those pertaining to investor suitability standards);
or (iii) transferor or the transferee would thereafter hold less than five
Units, except for transfers by gift or inheritance, inter-family transfers,
transfers resulting from family dissolutions and certain other transactions. The
Partnership need not recognize any transfer of Units unless an instrument of
assignment complying with certain requirements set forth in the Partnership
Agreement is filed with the Partnership and recorded on the Partnership's books,
and the transferring parties reimburse the Partnership for any expenses incurred
by it in connection with the transfer. Limited Partners seeking to transfer
Units may also be subject to the securities laws of the state in which the
transfer is to take place, in that certain states have imposed restrictions on
the transfer of Units in the Partnership. For the years ended December 31, 1997,
1996 and 1995, a total of 30, 35 and 82 Units, respectively, were transferred on
the resale market. There were 2,300, 2,324 and 2,331 record holders of Units of
the Partnership at December 31, 1997, 1996 and 1995, respectively.
Cash distributions, when made, are paid annually. Cash available for
distribution has been and, in the future, will be derived almost exclusively
from distributions of cash flow from operations of the Local Limited
Partnerships. Such cash is not expected to be significant in 1998, and the
return on investment to Limited Partners will consist primarily of net losses
for federal income tax purposes used to offset Limited Partner passive income
from the Partnership and other sources. Information concerning the actual
distributions made in the current year and prior years is included in Item 6 of
this Report on Form 10-K.
Item 6. Selected Financial Data
The table on the following page sets forth selected financial information
regarding the Partnership's financial position and operating results. This
information should be used in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations and the Financial
Statements and Notes thereto, which are included in this Report on Form 10-K.
<PAGE>
Item 6. Selected Financial Data (continued)
<TABLE>
<CAPTION>
Periods Ended December 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Investment and other income $ 60,347 $ 55,115 $ 76,539 $ 21,053 $ 65,009
Distribution income 201,749 132,277 255,227 80,872 180,106
Equity in income (losses) of Local Limited Partnerships - - 1,985,647 (112,456) 29,479
Extraordinary Gain on cancellation of indebtedness 1,247,144 - 61,000 - -
Net income (loss) 1,350,580 (3,906) 1,404,655 (233,134) 57,589
Per Limited Partnership Unit (A) 58.55 (.17) 59.48 (10.11) 2.50
Cash and cash equivalents 142,840 124,878 121,361 350,435 70,103
Investment in Local Limited Partnerships - - - 68,515 176,082
Total assets (B) 974,549 863,468 1,143,482 1,458,924 1,289,125
Notes payable and accrued interest - 1,223,750 1,168,750 1,799,583 1,714,583
Other Data:
Passive loss (C) (794,853) (1,969,635) (2,225,407) (4,156,915) (3,885,226)
Per Limited Partnership Unit (A) (34.46) (85.39) (96.47) (180.20) (101.35)
Cancellation of debt income (C) 331,332 68,723 61,000 - -
Per Limited Partnership Unit (A) 14.36 2.98 2.64 - -
Gain on transfer of Captain's Landing interest(C) - - - - 4,017,691
Per Limited Partnership Unit (A) - - - - 174.16
Gain (loss) on foreclosure of Oakwood Terrace (C) - - (4,430) 3,974,017 -
Per Limited Partnership Unit (A) - - (.20) 179.59 -
Loss on sale of Overland Station (C) - - (44,402) - -
Per Limited Partnership Unit - - (2.01) - -
Section 1231 Gain (C) 3,255,306 - 3,369,129 - -
Per Limited Partnership Unit (A) 141.12 - 152.19 - -
Gain on abandonment of Mountain View (C) - 2,207,706 - - -
Per Limited Partnership Unit (A) - 95.71 - - -
Gain on abandonment of Woodmeade South (C) - 6,804,142 - - -
Per Limited Partnership Unit (A) - 294.96 - - -
Portfolio income (C) 155,636 139,248 169,540 65,658 115,456
Per Limited Partnership Unit (A) 6.75 6.04 7.35 2.85 5.00
Cash distribution (D) 17,301 328,725 657,450 115,342 115,342
Per Limited Partnership Unit (A) - 15.00 30.00 5.00 5.00
Local Limited Partnership interests
owned at end of period 9 10 12 13 14
</TABLE>
<PAGE>
(A) Per Limited Partnership Unit data is based upon a 95% share of income and
losses, except the gain on foreclosure of Oakwood Terrace and the loss on
the sale of Overland Station which is based upon a 99% share of gain
resulting from the transaction, and the number of Units outstanding at
the end of each year (21,915).
(B) Total assets does not represent the current value of the Partnership's
investment in Local Limited Partnerships.
(C) Each Partner's taxable income or loss from the Partnership is equal to
his allocable share of taxable income or loss in the Partnership, without
regard to the cash generated or distributed by the Partnership.
(D) Cash distributions in 1992 through 1994 represent cash flow generated in
the year previous to that presented. In 1995, the cash distribution is
from the proceeds from the sale of Overland Station. Cash distributions
in 1997 and 1996 represent cash flow generated in 1994 and 1995. Since
the inception of the Partnership, distributions have represented a return
of capital.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
At December 31, 1997, the Partnership had cash and cash equivalents of $142,840
compared with $124,878 at December 31, 1996. The increase in cash and cash
equivalents is a result of cash distributions received from Local Limited
Partnerships and the proceeds from the sale and maturities of marketable
securities. These increases are offset by net cash used by operations, the
purchase of marketable securities and cash distributions paid to the limited
partners.
At December 31, 1997, approximately $920,000 has been reserved and is partially
invested in various securities. The Reserves, as defined in the Partnership
Agreement, were established to be used for working capital of the Partnership
and contingencies related to the ownership of Local Limited Partnership
interests. Reserves may be used to fund Partnership operating deficits if the
Managing General Partner deems funding appropriate in order to protect its
investment.
As of December 31, 1997, investment in Local Limited Partnerships remained at
zero from December 31, 1996.
Since April 1, 1985, the Partnership had been obligated to pay interest from its
own funds on the Oakdale note. The Partnership negotiated with the seller of
Oakdale to defer these payments, and as such, since October 1, 1986 interest had
been accrued but not paid. The note was due on April 1, 1995. During 1996, the
local general partner of Oakdale Manor filed chapter 11 bankruptcy. On June 3,
1997, the new mortgagee for Oakdale manor foreclosed on the property, and the
Partnership relinquished its interest in the Local Limited Partnership. The only
effect on the Partnership's financial statements is cancellation of indebtedness
income, since the Partnership is a limited partner and the note and interest are
collateralized only by the Partnership's interest in Oakdale Manor, which, at
June 3, 1997, had a carrying value of zero. For tax purposes, the consequence of
the foreclosure is that investors may have a capital and/or ordinary gain and
resulting taxable income as a result of the disposal of this Local Limited
Partnership.
Since the Partnership has invested as a limited partner, it has no contractual
duty to provide additional funds to Local Limited Partnerships beyond its
specified investment. The Partnership's contractual obligations have been fully
met. Thus, at December 31, 1997, 1996 and 1995, it did not have any contractual
or other obligation to any Local Limited Partnership which had not been paid or
provided for.
Future cash distributions will be derived almost exclusively from distributions
of net cash provided by operations of the Local Limited Partnerships. Such cash
is not expected to be significant in 1997, and therefore, there is no assurance
that adequate cash will be available to warrant cash distributions in future
years.
Results of Operations
1997 versus 1996
The Partnership's results of operations for the year ended December 31, 1997
resulted in net income of $1,350,580, as compared to a net loss of $3,906 in
1996. The net income position in 1997 is primarily due to cancellation of
indebtedness income of $1,247,144 resulting from the foreclosure of Oakdale
Manor on June 3, 1997. Please refer to Item 2 - Properties for more detail. In
addition, there was an increase in distribution income received from Local
Limited Partnerships.
<PAGE>
1996 versus 1995
The Partnership's results of operations for the year ended December 31, 1996
resulted in a net loss of $3,906, as compared to a net income of $1,404,655 in
1995. The net income position in 1996 is due to equity in income of Local
Limited Partnerships generated by the sale of Overland Station as discussed in
Item 2, above. Distribution income also decreased in 1996 due to decreased cash
flows from property operations.
Inflation and Other Economic Factors
Inflation had no material impact on the operations or financial condition of the
Partnerships for the three years ended December 31, 1997.
Item 8. Financial Statements and Supplementary Data
Information required under this Item is submitted as a separate section of this
Report on Form 10-K. See Index to Financial Statements and Schedules on page
F-1 hereof.
Item 9. Disagreements on Accounting and Financial Disclosure
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
The managing general partner of the Partnership is BFTG Residential Properties,
Inc., a Massachusetts corporation (the "Managing General Partner" or "BFTG"),
and is an affiliate of The Boston Financial Group Limited Partnership ("Boston
Financial"), a Massachusetts limited partnership. The names, positions and ages
of the executive officers and directors of BFTG are set forth below:
Name Position Age
James D. Hart Chief Financial Officer 40
Vincent J. Constantini President and Chief Operating
Officer 41
Michael H. Gladstone Director and Clerk 41
The other general partner of the Partnership is Milk Street Housing Associates,
L.P., a Massachusetts limited partnership ("Milk Street"). Milk Street was
originally formed as Franklin Housing Associates, but its name was changed on
December 8, 1981 to enable it to qualify to do business in Delaware. Messrs.
A. Harold Howell and Fred N. Pratt, Jr. are general partners of Milk Street.
The Partnership is a party to an agreement with Boston Financial, pursuant to
which Boston Financial will provide day-to-day management services for the
Partnership's investments in Local Limited Partnerships. Boston Financial
receives certain compensation for these services as discussed in Item 13 of this
Report.
There is no family relationship between any of the persons listed in this
section.
The business experience of each of the persons listed above is described below:
James D. Hart, age 40, earned his Bachelor of Arts degree from Trinity College
and his Masters of Business Administration from the Amos Tuck School at
Dartmouth College. Mr. Hart serves as Chief Financial Officer and is a member of
the Senior Leadership Team. Prior to joining Boston Financial, Mr. Hart was
engaged in venture capital management on behalf of institutional investors,
including the negotiation and structuring of private equity and mezzanine
transactions as a Vice President of Interfid Ltd., and later in the operational
management of a venture-backed software company, as Managing Director and Chief
Financial Officer of Bitstream Inc. Mr. Hart has also served on the Board of
Directors of several investee companies, including those that went on to
complete initial public offerings.
Vincent J. Costantini, age 41, is a graduate of St. Joseph's University (B.S.
1978). Mr. Costantini serves as Chief Operating Officer and is a member of the
firm's Senior Leadership Team, as well as the Board of Directors. Formerly, he
served as Senior Vice President at General Investment and Development Co. and
President of its affiliate, Windsor Realty Advisors, Inc. In this capacity, he
was responsible for implementing strategy, sourcing pension fund capital for the
firm, and overseeing acquisition and asset management activities. Prior to
joining General Investment and Development Co., Mr. Costantini was responsible
for negotiating trade finance and foreign exchange positions, managing the
international banking relationships, tax accounting, and the financial
operations departments of Monaco-based Tampimex International Ltd., a subsidiary
of the Ingram Group. Mr. Costantini began his career at Price Waterhouse and
Co., where he was a Senior Auditor and Consultant. Mr. Costantini is a Director
of the National Multi Housing Council (NMHC), a board member of the Greater
Boston Real Estate Finance Association, and a member of both the Urban Land
Institute (ULI) and the Pension Real Estate Association (PREA).
Michael H. Gladstone, age 41, graduated from Emory University (B.A. 1978) and
Cornell University (J.D., MBA 1982). He joined Boston Financial in 1985, and
currently serves as Vice President and as the company's General Counsel. Prior
to joining Boston Financial, Mr. Gladstone was associated with the law firm of
Herrick & Smith. Mr. Gladstone is a member of the National Realty Committee and
serves on the advisory board to the Housing and Development Reporter, a national
publication on housing issues.
A. Harold Howell, age 56, graduated from Harvard College and the Amos Tuck
School of Business Administration at Dartmouth College. He has been employed by
Boston Financial since 1970. For most of this time, he has been active in the
overall administration of Boston Financial and its affiliates but has also been
involved in other areas of its business. Mr. Howell has served as head of Boston
Financial's Property Management Division and also as its Chief Financial Officer
and Chief Executive Officer. He currently is a Senior Vice President and is in
charge of a program being developed for properties managed by Boston Financial
whereby heads-of-households who want to further their education can enroll in a
program on-site which teaches economic self sufficiency, computer and internet
skills, problem solving skills and related real-world skills. Mr. Howell
recently spent a two-year sabbatical from Boston Financial as a Visiting
Professor at the Instituto de Estudios Superiores de la Empresa, an
International M.B.A. program in Barcelona, Spain.
Fred N. Pratt, Jr., age 53, graduated from Tufts University and the Amos Tuck
School of Business Administration at Dartmouth College. Mr. Pratt was one of
the original employees of Boston Financial when it was founded in late 1969. He
currently serves as Boston Financial's Chief Executive Officer and Chairman of
the Board of the General Partner of Boston Financial.
Item 11. Management Remuneration
Neither the directors and officers of BFTG nor any other individual with
significant involvement in the business of the Partnership receives any current
or proposed remuneration from the Partnership.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The equity securities registered by the Partnership under Section 12(g) of the
Act consist of 22,000 Units, of which 21,910 were sold to the public. Holders of
Units are permitted to vote on matters affecting the Partnership only in certain
unusual circumstances and do not generally have the right to vote on the
operation or management of the Partnership. No limited partner is known to the
Partnership to be the beneficial owner of more than 5% of the outstanding Units.
BFTG Property Ventures, Inc., an affiliate of the General Partners, owns five
(unregistered) Units.
Except as described in the preceding paragraph, neither BFTG, Milk Street,
Boston Financial nor any of their executive officers, directors, partners or
affiliates is the beneficial owner of any Units. None of the foregoing persons
possesses a right to acquire beneficial ownership of Units.
There exists no arrangement known to the Partnership, the operation of which may
at a subsequent date result in a change in control of the Partnership.
Item 13. Certain Relationships and Related Transactions
Information required under this Item is contained in Note 7 to the Financial
Statements included in this Report on Form 10-K. The affiliates of the Managing
General Partner which have received or may receive fee payments and expense
reimbursements from the Partnership are described below:
The Partnership is permitted to enter into transactions involving affiliates of
the Managing General Partner, subject to certain limitations established in the
Partnership Agreement.
Under an agreement between the Partnership and Boston Financial (as successor by
merger to Fund Service Corporation), Boston Financial provides day-to-day
management services in connection with the Partnership's investments in Local
Limited Partnerships and receives certain reimbursements for such services.
Currently, Boston Financial receives an annual fee (the "Management Fee") equal
to 10% of the Partnership's share of cash flow from Local Limited Partnerships.
However, the Management Fee is subject to certain limitations and to reduction
under certain circumstances and is non-cumulative and payable only out of
available Partnership funds. Since inception, Management Fees amounting to
$161,646 have been paid to Boston Financial.
Information concerning cash distributions and other fees paid or payable to the
Managing General Partner and its affiliates and expenses reimbursed or
reimbursable to Boston Financial and its affiliates during each of the three
years ended December 31, 1997 is presented below and in Note 7 to the Financial
Statements included in Item 8 of this Report on Form 10-K.
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash distributions to General Partners $17,301 $ - $ -
Salaries and benefits expense reimbursement 71,931 71,368 68,722
Management Fees 20,175 13,228 26,059
</TABLE>
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) and (a)(2) Documents filed as a part of this Report
In response to this portion of Item 14, the financial statements, financial
statement schedule and auditor's report relating thereto are submitted as a
separate section of this Report on Form 10-K. See Index to Financial Statements
and Schedules on page F-1 hereof.
The reports of other auditors relating to the audits of the financial statements
of Local Limited Partnerships, which were referred to and relied upon in the
report of independent certified public accountants and in the Partnership's
financial statements and financial statement schedule, appear in Exhibit (28)(a)
of this report.
All other financial statement schedules and exhibits for which provision is made
in the applicable accounting regulation of the Securities and Exchange
Commission are not required under related instructions or are inapplicable and
therefore have been omitted.
(a)(3) and (c) Exhibits
<PAGE>
Page Number or
Number and Description in Accordance with Incorporation
Item 601 of Regulation S-K by Reference to
4. Instruments defining the rights of security
holders, including indentures
4.1 Second Amended and Restated Agreement Exhibit C to Report
and Certificate of Limited Partner- on Form 10-K for 1981
ship dated as of February 1, 1982
10.1.1 Management Agreement between Boston Exhibit 10A to Regis-
Financial Apartments Associates, L.P., tration Statement on
and Fund Service Corporation dated as Form S-11 [File No.
of August 31, 1981 2-73448] dated
August 31, 1981
10.1.2 Amendment No. 1, dated January 1 Exhibit 10A to
1982, to Management Agreement with Amendment No. 1 to
Fund Service Corporation dated as Registration State-
of August 31, 1981 ment on Form S-11
[File No. 2-73448]
dated October 14,
1981
28. Additional Exhibits
(a) 28.1 Reports of Other Auditors
(b) Audited financial statements of Investee Local Limited
Partnerships
None
(c) Reports on Form 8-K
No Reports on Form 8-K were filed during the fourth quarter ended
December 31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Partnership has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BOSTON FINANCIAL APARTMENTS ASSOCIATES, L.P.
By: BFTG Residential Properties, Inc.,
its Managing General Partner
By: /s/Michael H. Gladstone Date: March 31, 1998
-------------------------------
Michael H. Gladstone
Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
By: /s/Fred N. Pratt, Jr. Date: March 31, 1998
------------------------------------
Fred N. Pratt, Jr.
Chief Executive Officer of Boston
Financial Group Limited Partnership
By: BFTG Residential Properties, Inc.,
its Managing General Partner
By: /s/Michael H. Gladstone Date: March 31, 1998
-------------------------------
Michael H. Gladstone
Director
<PAGE>
Item 14 (a). Financial Statements and Supplementary Data
BOSTON FINANCIAL APARTMENTS ASSOCIATES, L.P.
(A Limited Partnership)
1997 FORM 10-K ANNUAL REPORT
INDEX
Sequential
Page No. Page No.
Report of Independent Accountants F-2
Financial Statements:
Balance Sheets - December 31, 1997 and 1996 F-3
Statements of Operations - For the Years Ended
December 31, 1997, 1996 and 1995 F-4
Statements of Partners' Equity (Deficiency) -
For the Years Ended December 31, 1997, 1996,
and 1995 F-5
Statements of Cash Flows - For the Years
Ended December 31, 1997, 1996 and 1995 F-6
Notes to the Financial Statements F-7
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated
Depreciation F-14
All other schedules are omitted as they are not applicable or not required, or
the information is provided in the financial statements or the notes thereto.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Boston Financial Apartments Associates, L.P.
(A Limited Partnership)
We have audited the balance sheets of Boston Financial Apartments Associates,
L.P. (a limited partnership) ("the Partnership") as of December 31, 1997 and
1996 and the related statements of operations, partners' equity (deficiency),
and cash flows and the financial statement schedule listed in Item 14 (a) of
this Report on Form 10-K for each of the three years in the period ended
December 31, 1997. These financial statements and financial statement schedule
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits. The Partnership accounts for its investments in
Local Limited Partnerships, as discussed in Note 2 of the notes to the financial
statements, using the equity method of accounting. In the year ended December
31, 1995, 100 percent of equity in income (losses), reflected in the financial
statements of the Partnership, relates to investments in Local Limited
Partnerships for which we did not audit the financial statements. The financial
statements of these Local Limited Partnerships were audited by other auditors
whose reports have been furnished to us, and our opinion, insofar as it relates
to those investments in Local Limited Partnerships in 1995, is based solely upon
the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits, and as to the year ended December 31, 1995,
the reports of other auditors, the financial statements referred to above
present fairly, in all material respects, the financial position of the
Partnership at December 31, 1997 and 1996, and the results of its operations and
its cash flows for each of the three years in the period ended December 31, 1997
in conformity with generally accepted accounting principles. In addition, in our
opinion, the financial statement schedule referred to above, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information required to be included therein.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
March 31, 1998
<PAGE>
BOSTON FINANCIAL APARTMENTS ASSOCIATES, L.P.
(A Limited Partnership)
BALANCE SHEETS
December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
------------- -------
<S> <C> <C>
Assets
Cash and cash equivalents $ 142,840 $ 124,878
Interest receivable 13,193 11,175
Marketable securities, at fair value (Note 3) 816,990 723,855
Other assets 1,526 3,560
Investment in Local Limited Partnerships (Note 4) - -
----------- -----------
Total Assets $ 974,549 $ 863,468
=========== ===========
Liabilities and Partners' Equity (Deficiency)
Liabilities:
Accounts payable to affiliate (Note 7) $ 5,110 $ 17,641
Accounts payable and accrued expenses 34,875 21,114
Notes payable and accrued interest (Note 5) - 1,223,750
----------- -----------
Total Liabilities 39,985 1,262,505
Partners' Equity (Deficiency) 934,564 (399,037)
----------- -----------
Total Liabilities and Partners' Equity (Deficiency) $ 974,549 $ 863,468
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BOSTON FINANCIAL APARTMENTS ASSOCIATES, L.P.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- -------
<S> <C> <C> <C>
Revenue:
Distribution income (Note 2) $ 201,749 $ 132,277 $ 255,227
Investment 57,347 53,765 72,139
Other 3,000 1,350 4,400
------------- ------------ ------------
Total Revenue 262,096 187,392 331,766
----------- ----------- -----------
Expenses:
General and administrative expense (includes
reimbursement to affiliates in the amounts of
$71,931, $71,368 and $68,722) (Note 7) 115,091 123,070 118,735
Interest expense (Note 5) 23,394 55,000 55,000
Management Fees, related party (Note 7) 20,175 13,228 26,059
----------- ----------- -----------
Total Expenses 158,660 191,298 199,794
----------- ----------- -----------
Income (loss) before loss on liquidation
of interest in Local Limited
Partnership, equity in income
of Local Limited Partnerships and
cancellation of indebtedness 103,436 (3,906) 131,972
Loss on liquidation of interest in Local
Limited Partnership (Note 8) - - (773,964)
Equity in income of Local Limited
Partnerships (Note 4) - - 1,985,647
----------- ----------- -----------
Income (loss) before extraordinary item 103,436 (3,906) 1,343,655
Extraordinary gain on cancellation
of indebtedness (Note 8) 1,247,144 - 61,000
----------- ----------- -----------
Net Income (Loss) $ 1,350,580 $ (3,906) $ 1,404,655
=========== =========== ===========
Net Income (Loss) allocated:
To the General Partners $ 67,529 $ (195) $ 101,191
To the Limited Partners 1,283,051 (3,711) 1,303,464
----------- ----------- -----------
$ 1,350,580 $ (3,906) $ 1,404,655
=========== =========== ===========
Income (loss) before extraordinary item allocated
to the Limited Partners per Limited Partnership
Unit (21,915 Units) $ 4.49 $ (.17) $ 56.83
========== =========== ==========
Extraordinary gain on cancellation of indebtedness
allocated to the Limited Partners per Limited
Partnership Unit (21,915 Units) $ 54.06 $ - $ 2.65
=========== =========== ==========
Net Income (Loss) per Limited Partnership
Unit (21,915 Units) $ 58.55 $ (.17) $ 59.48
=========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BOSTON FINANCIAL APARTMENTS ASSOCIATES, L.P.
(A Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
For the Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
Unrealized
General Limited Gains
Partners Partners (Losses) Total
<S> <C> <C> <C> <C>
Balance at December 31, 1994 $ (1,008,976) $ 195,362 $ (25,188) $ (838,802)
Cash distributions (Note 8) - (657,450) - (657,450)
Unrealized gain on marketable
securities available for sale - - 36,690 36,690
Net income 101,191 1,303,464 - 1,404,655
------------ ------------ ----------- ------------
Balance at December 31, 1995 (907,785) 841,376 11,502 (54,907)
Cash distributions - (328,725) - (328,725)
Unrealized loss on marketable
securities available for sale - - (11,499) (11,499)
Net loss (195) (3,711) - (3,906)
------------ ------------ ----------- ------------
Balance at December 31, 1996 (907,980) 508,940 3 (399,037)
Cash distributions (17,301) - - (17,301)
Unrealized gain on marketable
securities available for sale - - 322 322
Net income 67,529 1,283,051 - 1,350,580
------------ ------------ ----------- ------------
Balance at December 31, 1997 $ (857,752) $ 1,791,991 $ 325 $ 934,564
============ ============ =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BOSTON FINANCIAL APARTMENTS ASSOCIATES, L.P.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
------------ ---------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,350,580 $ (3,906) $ 1,404,655
Adjustments to reconcile net income (loss)
to net cash used for operating activities:
Loss on liquidation of interest in
Local Limited Partnership - - 773,964
Distribution income included in cash distributions
received from Local Limited Partnerships (201,749) (132,277) (255,227)
Equity in income of Local Limited Partnerships - - (1,985,647)
Extraordinary item:
Cancellation of indebtedness (1,247,144) - (61,000)
(Gain) loss on sale of marketable securities 484 (1,563) (3,241)
Increase (decrease) in cash arising from changes in operating assets and
liabilities:
Interest receivable (2,018) 7,269 (7,144)
Other current assets 2,034 2,034 (1,076)
Accounts payable to affiliates (12,531) 8,669 (5,261)
Accounts payable and accrued expenses 13,761 447 (13,243)
Notes payable and accrued interest 23,394 55,000 55,000
------------ --------- -----------
Net cash used for operating activities (73,189) (64,327) (98,220)
------------ --------- -----------
Cash flows from investing activities:
Purchases of marketable securities (418,751) (326,034) (1,343,590)
Proceeds from sales and maturities of
marketable securities 325,454 590,326 1,409,594
Cash distributions received from Local
Limited Partnerships 201,749 132,277 1,085,425
------------ --------- -----------
Net cash provided by investing activities 108,452 396,569 1,151,429
------------ --------- -----------
Cash flows from financing activities:
Cash distributions (17,301) (328,725) (657,450)
Payment of note payable and accrued interest - - (624,833)
------------ --------- -----------
Net cash used for financing activities (17,301) (328,725) (1,282,283)
------------ ----------- -----------
Net increase (decrease) in cash and cash equivalents 17,962 3,517 (229,074)
Cash and cash equivalents, beginning of the year 124,878 121,361 350,435
------------ --------- -----------
Cash and cash equivalents, end of the year $ 142,840 $ 124,878 $ 121,361
============ ========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BOSTON FINANCIAL APARTMENTS ASSOCIATES, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Organization
Boston Financial Apartment Associates, L.P. ("the Partnership") is a limited
partnership formed on July 21, 1981 under the Uniform Limited Partnership Act of
the State of Delaware. The Partnership was organized to invest, as a limited
partner, in other limited partnerships ("Local Limited Partnerships") which own
and operate multi-family residential properties.
BFTG Residential Properties, Inc.("the Managing General Partner")is an affiliate
of The Boston Financial Group Limited Partnership ("Boston Financial"). Milk
Street Housing Associates, L.P. (originally organized under the name Franklin
Housing Associates), the other general partner, is a limited partnership of
which the partners are employees or former employees of Boston Financial. The
initial limited partner is BFTG Property Ventures, Inc., an affiliate of
Boston Financial.
During 1981 and 1982, the Partnership sold limited partnership units producing
gross offering proceeds of $21,910,000. Such amounts exclude five unregistered
units previously acquired for $1,000 each by the initial limited partner.
Profits and losses are allocated 95% to the Limited Partners and 5% to the
General Partners. In the case of certain events defined in the Partnership
Agreement, the allocation of the related profits and losses would be different
from that described above. Profits and losses arising from a sale or refinancing
are generally allocated 99% to the Limited Partners and 1% to the General
Partners.
Cash Available for Distribution, as defined in the Partnership Agreement, is
allocated 95% to the Limited Partners and 5% to the General Partners.
Sale or Refinancing Proceeds, as defined in the Partnership Agreement, will be
allocated first to the Limited Partners in the amount of their Adjusted Capital
Contribution, as defined, and then 85% to the Limited Partners and 15% to the
General Partners, after adjustment for certain priority distributions.
At December 31, 1997, the General Partner has designated approximately $920,000
as Reserves. Such Reserves may be increased or decreased as deemed appropriate
from time to time by the Managing General Partner. Substantially all of these
Reserves are invested for the purpose of providing revenue to the Partnership
for ongoing operations and contingencies.
2. Significant Accounting Policies
The Partnership accounts for its investments in Local Limited Partnerships using
the equity method of accounting. Under the equity method, the investment is
carried at cost, adjusted for the Partnership's share of net income or loss and
for cash distributions from the Local Limited Partnerships; equity in income or
loss of the Local Limited Partnerships is included currently in the
Partnership's operations. Under the equity method, a Local Limited Partnership
investment will not be carried below zero. To the extent that equity in losses
are incurred when the Partnership's carrying value of the respective Local
Limited Partnership has been reduced to a zero balance, the losses will be
suspended and offset against future income. Income from Partnership investments
where cumulative equity in loss plus cumulative distributions have exceeded the
total investment in Local Limited Partnerships will not be recorded until all of
the related unrecorded losses have been offset. To the extent that a Local
Limited Partnership with a carrying value of zero distributes cash to the
Partnership, that distribution is recorded as income on the books of the
Partnership and is presented as "Distribution Income" in the accompanying
financial statements.
To the extent that the Partnership's investment in a Local Limited Partnership
exceeded the Partnership's share of fair value of net assets at the time of such
investment, such amounts are being amortized over the life of the principal
assets of the Local Limited Partnership (39 years). Such amortization is
included in the equity in loss of the Local Limited Partnership.
<PAGE>
BOSTON FINANCIAL APARTMENTS ASSOCIATES, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
2. Significant Accounting Policies (continued)
Cash and cash equivalents consist of short-term money market instruments with
maturities of ninety days or less at acquisition.
Marketable securities consists primarily of U.S. Treasury Notes, mortgage-backed
and various other asset-backed investment vehicles. The Partnership's marketable
securities are classified as "Available for Sale" securities and reported at
fair value as reported by the brokerage firm at which the securities are held.
All marketable securities have fixed maturities. Realized gains or losses from
the sales of securities are based on the specific identification method.
Unrealized gains and losses are excluded from earnings and reported as separate
components of partners' equity.
The Financial Accounting Standards Board recently issued Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income. The standard
requires that changes in comprehensive income be shown in a financial statement
that is displayed with the same prominence as other financial statements. The
standard will become effective for fiscal years beginning after December 15,
1997. The Partnership will adopt the new standard beginning in the first quarter
of the fiscal year ending December 31, 1998, but is not expected to have a
significant effect on financial position or results of operations.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
No provision for income taxes has been made as the liability for such taxes is
an obligation of the partners of the Partnership.
3. Marketable Securities
A summary of marketable securities at December 31, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Debt securities issued by the US
Treasury and other US government
agencies $ 646,226 $ 695 $ (1,478) $ 645,443
Mortgage backed securities 166,897 1,121 - 168,018
Other debt securities 3,542 - (13) 3,529
----------- --------- -------- -----------
Balance at December 31, 1997 $ 816,665 $ 1,816 $ (1,491) $ 816,990
=========== ========= ======== ===========
Debt securities issued by the US
Treasury and other US government
agencies $ 499,843 $ 1,970 $ (1,818) $ 499,995
Mortgage backed securities 204,498 79 (223) 204,354
Other debt securities 19,511 2 (7) 19,506
----------- --------- -------- -----------
Balance at December 31, 1996 $ 723,852 $ 2,051 $ (2,048) $ 723,855
=========== ========= ======== ===========
</TABLE>
<PAGE>
BOSTON FINANCIAL APARTMENTS ASSOCIATES, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
3. Marketable Securities (continued)
The contractual maturities at December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Fair
Cost Value
<S> <C> <C>
Due in less than one year $ 511,363 $ 510,177
Due in one year to five years 138,405 138,795
Mortgage backed securities 166,898 168,018
----------- -----------
$ 816,666 $ 816,990
=========== ===========
</TABLE>
Actual maturities for asset backed securities may differ from contractual
maturities because some borrowers have the right to call or prepay obligations.
Proceeds from the sales of marketable securities were approximately $325,000,
$590,000 and $1,410,000 during the years ended December 31, 1997, 1996 and 1995,
respectively. Included in investment income are gross gains of $1,116 and gross
losses of $1,600 that were realized on the sales in 1997, gross gains of $4,592
and gross losses of $3,029 that were realized on the sales in 1996 and gross
gains of $11,081 and gross losses of $7,840 that were realized on the sales in
1995.
4. Investment in Local Limited Partnerships
As of December 31, 1997 and 1996, the Partnership's Investment in Local Limited
Partnerships, at cost, was as follows:
<TABLE>
<CAPTION>
Capital Contribu- Net Equity Cash
tions and Related in Income Distributions
Local Limited Acquisition Costs (Losses) Received Net
Partnerships (Cumulative) (Cumulative) (Cumulative) (1) Investment
- ----------------------------- ----------------- ------------ ---------------- ---------------
<S> <C> <C> <C> <C>
Bear Creek $ 796,556 $ (77,551) $ (719,005) $ -
Buttonwood Tree 1,482,996 (1,468,085) (14,911) -
Captain's Landing 1,057,682 (1,057,682) - -
Chelsea Village 2,076,589 (2,076,589) - -
Mountain View 422,593 (422,593) - -
Oakdale Manor 1,522,621 (1,522,621) - -
Oakwood Terrace 614,643 (614,643) - -
Overland Station 1,232,286 816,511 (1,274,833) 773,964
Park Hill 825,501 (687,453) (138,048) -
Pheasant Ridge 1,050,237 (924,712) (125,525) -
The Woods of Castleton 2,025,681 (2,025,681) - -
Westpark Plaza 1,846,469 (1,115,914) (730,555) -
Woodbridge 1,077,161 (1,044,146) (33,015) -
Woodmeade South 1,619,452 (1,619,452) - -
Youngstoun 935,861 (935,861) - -
-------------- ------------- -------------- ------------
Subtotal 18,586,328 (14,776,472) (3,035,892) 773,964
Less dispositions:
Mountain View (422,593) 422,593 - -
Woodmeade South (1,619,452) 1,619,452 - -
Overland Station (1,232,286) (816,511) 1,274,833 (773,964)
Captain's Landing (1,057,682) 1,057,682 - -
Oakwood Terrace (614,643) 614,643 - -
Oakdale Manor (1,522,621) 1,522,621 - -
--------------- -------------- ------------- ------------
Balance at
December 31, 1997 $ 12,117,051 $(10,355,992) $ (1,761,059) $ -
============== ============ =============== ===========
</TABLE>
<PAGE>
BOSTON FINANCIAL APARTMENTS ASSOCIATES, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
4. Investment in Local Limited Partnerships (continued)
<TABLE>
<CAPTION>
Capital Contribu- Net Equity Cash
tions and Related in Income Distributions
Acquisition Costs (Losses) Received Net
(Cumulative) (Cumulative) (Cumulative) (1) Investment
<S> <C> <C> <C> <C>
Balance at
December 31, 1996 $ 13,639,672 $ (12,080,362) $ (1,559,310) $ -
============== ============= ============== ============
</TABLE>
(1) Included in cash distributions received is cumulative distribution income
of $1,143,889 which was received from six Local Limited Partnerships with
carrying values of zero.
Summarized financial information from the combined financial statements of all
Local Limited Partnerships in which the Partnership has invested at December 31,
1997, 1996 and 1995 is as follows:
Summarized Balance Sheets - as of December 31
<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------- --------------
<S> <C> <C> <C>
Assets:
Investment property, net $ 23,729,368 $ 27,415,931 $ 34,837,385
Current assets 2,216,507 1,761,831 2,367,475
Other assets 1,872,497 3,012,535 3,765,007
------------- ------------- --------------
Total Assets $ 27,818,372 $ 32,190,297 $ 40,969,867
============= ============= ==============
Liabilities and Partners' Equity Deficiency:
Long-term debt $ 41,133,036 $ 45,713,219 $ 54,829,483
Current liabilities 2,398,602 4,728,720 6,296,906
Other liabilities 4,716,175 2,947,260 5,474,160
------------- ------------- --------------
Total Liabilities 48,247,813 53,389,199 66,600,549
Partners' Deficiency (20,429,441) (21,198,902) (25,630,682)
------------- ------------- --------------
Total Liabilities and Partners' Deficiency $ 27,818,372 $ 32,190,297 $ 40,969,867
============= ============= ==============
Summarized Income Statements
For the Twelve Months Ended December 31
1997 1996 1995
------------- ------------- ---------
Rental and other income $ 10,543,952 $ 11,169,288 $ 12,073,102
------------- ------------- --------------
Expenses:
Operating expenses 5,907,595 6,203,316 6,804,825
Interest expense 3,558,194 4,095,012 4,750,487
Depreciation and amortization 1,863,700 1,658,450 1,917,922
------------- ------------- --------------
Total Expenses 11,329,489 11,956,778 13,473,234
------------- ------------- --------------
Net Loss $ (785,537) $ (787,490) $ (1,400,132)
============== ============= ==============
Partnership's share of net loss $ (771,008) $ (758,388) $ (1,364,397)
============== ============= ==============
Other partners' share of net loss $ (14,529) $ (29,102) $ (35,735)
============== ============= ==============
</TABLE>
<PAGE>
BOSTON FINANCIAL APARTMENTS ASSOCIATES, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
4. Investment in Local Limited Partnerships (continued)
As discussed in Note 8, the managing general partner of Overland Station
Investment Company, a Local Limited Partnership in which the Partnership has
invested, sold the property on January 12, 1995. From the sale, the Partnership
has recognized $2,067,424 of equity in income. This amount was offset by the
recognition of $18,627 of previously unrecognized equity in losses.
As discussed in Notes 5 and 8, the mortgagor for Oakdale Manor initiated
foreclosure proceedings. The foreclosure proceedings for Oakdale Manor were
finalized on June 3, 1997. As the Partnership's carrying value of the Local
Limited Partnership was zero and the Partnership received no proceeds from the
disposal, the only financial statement effect was cancellation of indebtedness
income of $1,247,144 on a purchase note payable and its accrued interest. (See
Note 5)
The Partnership has not recognized equity losses of $972,757, $890,665 and
$1,556,474 in the years ended December 31, 1997, 1996 and 1995, respectively.
These unrecognized losses relate to Local Limited Partnerships whose cumulative
equity in losses and cumulative distributions have exceeded their total
investment.
5. Notes Payable and Accrued Interest
Purchase Notes, bearing interest at 10%, had been issued by the Partnership with
respect to its investments in certain Local Limited Partnerships. Subject to
conditions of the note agreements, interest is payable principally from cash
distributions received from the respective Local Limited Partnerships. The
principal amounts, together with any accrued but unpaid interest, will be due at
maturity or earlier upon sale of the Local Limited Partnership's assets. The
notes and interest are collateralized by the Partnership's interest in the Local
Limited Partnership, with recourse limited to such collateral.
Since April 1, 1985, the Partnership had been obligated to pay interest from its
own funds on the Oakdale purchase note. The Partnership negotiated with the
seller of Oakdale to defer these payments, and as such, since October 1, 1986
interest has been accrued but not paid. The note was due on April 1, 1995.
During 1996, the local general partner of Oakdale Manor filed chapter 11
bankruptcy. On June 3, 1997, the new mortgagee foreclosed on the property and
the Partnership relinquished its interest in Oakdale. The only effect on the
Partnership was cancellation of indebtedness income since the Partnership is a
limited partner and the note and interest are collateralized only by the
Partnership's interest in Oakdale Manor, which, at June 3, 1997, had a carrying
value of zero. For tax purposes, the consequence of this foreclosure is that
investors may have a capital and/or ordinary gain and resulting taxable income
as a result of the disposal of this Local Limited Partnership. The balance of
notes payable and accrued interest at December 31, 1996 was $550,000 and
$673,750, respectively.
As discussed in Note 8, the managing general partner of Overland Station
Investment Company, a Local Limited Partnership in which the Partnership has
invested, sold the property on January 12, 1995. The Partnership received sales
proceeds in the amount of $1,274,833. The Partnership used a portion of the
sales proceeds to pay down $624,833 of an acquisition note payable and accrued
interest which totaled $685,833. The $61,000 balance of these obligations has
been canceled and is recorded as such on the Partnership's financial statements.
<PAGE>
BOSTON FINANCIAL APARTMENTS ASSOCIATES, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
6. Federal Income Taxes
The following schedule reconciles the reported financial statement income or
loss to the income or loss reported on Form 1065, US. Partnership Return of
Income:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ------------ --------
<S> <C> <C> <C>
Income (loss) per financial statements $ 1,350,580 $ (3,906) $ 1,404,655
Distribution income recognized for
book purposes (201,749) (132,277) (255,227)
Equity in losses not recognized
currently for book purposes (771,008) (758,388) (1,301,247)
Gain on Abandonment of
Woodmeade South for tax purposes - 6,804,142 -
Gain on Abandonment of
Mountain View for tax purposes - 2,207,706 -
Gain (Loss) on disposition of Oakwood
Terrace for tax purposes - - (4,430)
Gain on disposition of Overland
Station for tax purposes in
excess of gain for book purposes - - 2,049,977
Gain on disposition of Oakdale for tax purposes
in excess of gain for book purposes 2,008,162 - -
Additional depreciation and
amortization for tax purposes 569,797 (871,102) (900,664)
Other differences, net (8,361) 4,009 332,366
------------ ------------ ------------
Income per tax return $ 2,947,421 $ 7,250,184 $ 1,325,430
============ ============ ============
</TABLE>
The carrying value of the Partnership's Investment in Local Limited Partnerships
for financial reporting purposes was approximately $34,268,000 and $37,120,000
greater than the carrying value of such assets for tax purposes in 1997 and
1996, respectively. The differences were partially a result of the fact that,
for financial reporting purposes, the Partnership does not recognize equity
losses from a Local Limited Partnership once a Local Limited Partnership's
carrying value has been reduced to zero. Such unrecognized losses totaled
approximately $15,900,000 at December 31, 1997 and 1996. The remaining
differences were mainly due to accelerated depreciation taken for tax purposes.
The carrying value of all other assets and liabilities was the same for
financial reporting and tax purposes.
7. Transactions with Affiliates
Included in general and administrative expenses are amounts that the Partnership
has paid or are payable to an affiliate of the Managing General Partner for
reimbursement of salaries and benefits.
In accordance with the Partnership Agreement, Boston Financial currently
receives a Management Fee equal to 10% of the Partnership's share of Cash Flow
from Local Limited Partnerships. However, the fee is subject to certain
limitation and to reduction under certain circumstances. The fee is
non-cumulative and is payable only from available Partnership funds. Management
Fees totaling $20,175, $13,228 and $26,059 were incurred during 1997, 1996 and
1995, respectively, which relate to cash distributions received in those years.
<PAGE>
BOSTON FINANCIAL APARTMENTS ASSOCIATES, L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
8. Disposition of Investments in Local Limited Partnership
The new mortgagee for Oakdale Manor foreclosed on this property on June 3, 1997.
The only effect on the Partnership was cancellation of indebtedness income of
$1,247,144 related to a purchase note payable and its associated accrued
interest. No obligation was due on the purchase note payable as the note was
collateralized only by the Partnership's interest in Oakdale Manor, which, at
June 3, 1997, had a carrying value of zero. For tax purposes, the consequence of
the foreclosure is that investors may have a capital and/or ordinary gain and
resulting taxable income as a result of the disposal of this Local Limited
Partnership.
Bankruptcy plans for Woodmeade South Apartments and Mountain View Apartments
became effective on March 24, 1996. In order for the Partnership to retain an
equity interest in these properties, the bankruptcy plan required that the
Partnership make additional contributions. Management of the Partnership decided
that additional contributions would not be in the best interest of the
Partnership. Consequently, the Partnership relinquished its equity interest in
these two Local Limited Partnerships. These bankruptcies did not have an effect
on the Partnership for financial reporting purposes since the Partnership is a
limited partner and the two Local Limited Partnerships had a carrying value of
zero. However, the Partnership was precluded from realizing any residual value
of the properties upon liquidation.
The managing general partner of Overland Station Investment Company sold the
property on January 12, 1995. From the sale, the Partnership recognized
$2,067,424 of equity in income. This amount was offset by the recognition of
$18,627 of previously unrecognized equity in losses. Also, as a result of the
sale, the Partnership recognized a loss on the sale of Overland Station in the
amount of $773,964. This amount represented the remaining carrying value of the
partnership's investment in the Local Limited Partnership.
The Partnership received proceeds from the Overland sale in the amount of
$1,274,833, $450,000 of which was received in 1994. The Partnership used a
portion of the sales proceeds to pay down $624,833 of an acquisition note
payable and accrued interest which totaled $685,833. The $61,000 balance of
these obligations was canceled and was recorded as such on the Partnership's
financial statements. The Partnership distributed the balance of the sales
proceeds plus accrued interest in the amount of $657,450.
On January 12, 1994, the United States Department of Housing and Urban
Development held a foreclosure auction to dispose of the property owned by
Oakwood Terrace Associates, Ltd. The property sold for $1,790,000, all of which
was remitted to HUD to repay a portion of the mortgage. The disposition of this
interest did not have any effect on income of the Partnership for financial
reporting purposes, as the net investment balance of the interest was zero.
<PAGE>
BOSTON FINANCIAL APARTMENT ASSOCIATES, L.P.
(A Limited Partnership)
Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1997
<TABLE>
<CAPTION>
Initial cost to company Costs
capitalized
-----------------------------
Buildings and subsequent to
Description Encumbrances * Land Improvements acquisition
- ----------------------------------------------------------------------------------------------------------
Multi-family residential property:
<S> <C> <C> <C> <C>
Bear Creek, Asheville, North Carolina $2,451,781 $149,000 $2,819,071 $432,142
Buttonwood Tree, Wichita, Kansas 6,228,292 318,406 6,193,995 373,220
Chelsea Village, Indianapolis, Indiana 7,200,000 1,360,775 6,404,143 100,808
Park Hill, Lexington, Kentucky 2,620,601 300,000 3,510,411 381,152
Pheasant Ridge, Moline, Illinois 3,775,902 265,000 5,173,010 269,274
The Woods of Castleton, Indianapolis, 6,372,305 1,634,440 6,774,231 49,797
Indiana
Westpark Plaza, Chico, California 4,965,970 292,739 4,396,626 138,591
Woodbridge, Bloomington, Indiana 4,225,931 905,377 3,775,429 (286,051)
Youngstoun, Hagerstown, Maryland 3,777,673 291,000 4,159,801 177,598
===================================================================
$41,618,455 $5,516,737 $43,206,717 $1,636,531
===================================================================
</TABLE>
<PAGE>
BOSTON FINANCIAL APARTMENT ASSOCIATES, L.P.
(A Limited Partnership)
Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1997
<TABLE>
<CAPTION>
Gross amounts at which carried Depreciation
in
at close of period (a) latest
income
--------------------------------------------------------------
Building and Accumulated Date of Date statement
is
Description Land Improvements Total Depreciation Construction Acquired computed
- ----------------------------------------------------------------------------------------------------------------------------
Multi-family residential
property:
<S> <C> <C> <C> <C> <C> <C> <C>
Bear Creek, Asheville, North $149,000 $3,251,213 $3,400,213 $1,679,515 1982 8/25/83 5-40 years
Carolina
Buttonwood Tree, Wichita, 327,879 6,557,742 6,885,621 2,845,219 1980 2/24/82 5-40 years
Kansas
Chelsea Village, 1,380,680 6,485,046 7,865,726 4,170,414 1982 7/2/82 5-40 years
Indianapolis, Indiana
Park Hill, Lexington, 300,000 3,891,563 4,191,563 2,211,644 1982 4/22/82 5-40 years
Kentucky
Pheasant Ridge, Moline, 275,962 5,431,322 5,707,284 2,131,348 1982 7/30/82 5-40 years
Illinois
The Woods of Castleton, 1,634,440 6,824,028 8,458,468 4,419,530 1982 5/28/82 5-40 years
Indianapolis, Indiana
Westpark Plaza, Chico, 292,739 4,535,217 4,827,956 4,419,797 1982 4/5/82 5-40 years
California
Woodbridge, Bloomington, 905,377 3,489,378 4,394,755 2,181,056 1982 7/9/82 5-40 years
Indiana
Youngstoun, Hagerstown, 534,695 4,093,704 4,628,399 2,572,094 1982 2/18/83 5-40 years
Maryland
----------------
==============================================================
$5,800,772 $44,559,213 $50,359,985 $26,630,617
==============================================================
</TABLE>
<PAGE>
BOSTON FINANCIAL APARTMENT ASSOCIATES, L.P.
(A Limited Partnership)
Schedule III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1997
<TABLE>
<CAPTION>
Real estate investments
- ---------------------------------------
1997 1996 1995
-------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of period $54,026,614 $63,282,078 $66,652,259
Additions during period 261,801 287,242 454,659
Less retirements during period (3,928,430) (9,542,706) (3,824,840)
=================================================
Balance at close of period $50,359,985 $54,026,614 $63,282,078
=================================================
Accumulated depreciation
- ---------------------------------------
Balance at beginning of period $26,610,683 $28,444,693 $28,345,507
Depreciation 1,449,689 1,608,417 1,851,643
Less retirements (1,429,755) (3,442,427) (1,752,457)
=================================================
Balance at close of period $26,630,617 $26,610,683 $28,444,693
=================================================
</TABLE>
(a) There is no difference between the aggregate cost for Federal income tax
purposes and the aggregate cost at which the assets are carried on the books
at the close of the period.
* Mortgage notes payable represent non-recourse financing of low-income housing
projects payable with terms of up to 40 years with interest payable at rates
ranging from 7.1% to 9.75%. The Partnership has not guaranteed any of these
mortgage notes payable.
<PAGE>
KPMG Peat Marwick
Memphis TN 38103
Independent Auditors' Report
The Partners
Bear Creek Apartments Associates:
We have audited the accompanying balance sheet of Bear Creek Apartments
Associates (a Limited Partnership), FHA Project No. 053-35071-PM as of December
31, 1995, and the related statements of profit and loss (HUD Form 92410),
changes in partners' capital (deficit), and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bear Creek Apartments
Associates as of December 31, 1995, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards, we have also issue a report
dated February 2, 1996, on our consideration of Bear Creek Apartments
Associate's internal control structure, and a report dated February 2, 1996, on
its compliance with laws and regulations.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
Schedules 1 through 4 is presented for the purpose of additional analysis and is
not a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statement, and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
February 2, 1996
KPMG - Peat Marwick LLP
<PAGE>
Grant Thornton
Wichita, KS 67202
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The General Partner
Buttonwood Tree Apartments, Ltd.
We have audited the accompanying balance sheet of Buttonwood Tree Apartments
Ltd., HUD Project No. 102-35166-L8-PM as of December 31, 1995, and the related
statements of profit and loss, changes in partners' deficit, and cash flows for
the year then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Buttonwood Tree Apartments
Ltd., HUD Project No. 102-35166-L8-PM as of December 31, 1995, and the results
of its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issue a report
dated January 11, 1996, on our consideration of Buttonwood Tree Apartments,
Ltd., HUD Project No. 102-35166-L8-PM's internal control structure, and reports
dated January 11, 1996, on its compliance with specific requirements applicable
to major HUD programs and specific requirements.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information (shown on
pages 12 to 17) is presented for the purpose of additional analysis and are not
a required part of the basic financial statements of Buttonwood Tree Apartments,
Ltd. Such information has been subjected to the auditing procedures applied in
the audit of the basic financial statement, and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken as
a whole.
Grant Thorton LLP
Wichita, Kansas
January 11, 1996
<PAGE>
Ernst & Young
Indianapolis, Indiana 46204
Report of Independent Auditors
To the Partners
Chelsea Village, L.P.
We have audited the accompanying balance sheet of Chelsea Village, a limited
Partnership -- Project No. 073-35437-PM as of December 31, 1995, and the related
statements of profit and loss, changes in partners' capital deficit and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Chelsea Village at December 31,
1995, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issue a report
entitled "Independent Auditors' Report on Internal Control Based on an Audit of
the Financial Statements in Accordance with Government Auditing Standards" dated
January 22, 1996 on our consideration of the Partnership's internal control
structure, and a report entitled "Independent Auditors' Report on Compliance
with Laws and Regulations in Accordance with Government Auditing Standards"
dated January 22, 1996, on its compliance with applicable laws and regulations.
As discussed in Note 2 to financial statements, the Partnership's recurring
deficiencies in cash flow raise substantial doubt about its ability to continue
as a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supporting data listed on the contents page is
presented for the purpose of additional analysis and is not a required part of
the financial statements of the Partnership. Such data has been subjected to the
auditing procedures applied in our audit of the financial statements, and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
Ernst & Young LLP
January 22, 1996
<PAGE>
Funchess, Mills, White & Co.
Beaumont, TX 77702-1207
Independent Auditors' Report
To the Partners HUD Field Office Director
Oakdale Manor, Ltd. Houston, Texas
We have audited the accompanying balance sheets of Oakdale Manor, Ltd. (a Texas
limited partnership), HUD Project No. 114-3526-PM as of December 31, 1995, and
the related statements of operations and changes in partners' capital (deficit),
and cash flows for the years then ended. These financial statements are the
responsibility of the partners. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Oakdale Manor, Ltd. as of
December 31, 1995, and the results of its operations and its cash flows and its
changes in partners' capital (deficit), and cash flows for the year then ended,
in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 19, 1996, on our
consideration of Oakdale Manor, Ltd.'s internal control structure, and reports
dated February 19, 1996, on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to Affirmative Fair
Housing and specific requirements applicable to nonmajor HUD program
transactions.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental information
shown on pages 9 to 15 is presented for the purpose of additional analysis and
are not a required part of the basic financial statements the Partnership. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements, and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
The accompanying financial statements have been prepared assuming the Project
will continue as a going concern. As shown in the financial statements, the
Project incurred a net loss of $211,258 during the year ended December 31, 1995,
and, as of that date, the Project's total liabilities exceeded its total assets
by $1,681,353. The Project defaulted on the mortgage in 1987 and the mortgage
was placed with HUD for collection. These factors, among others, raise
substantial doubt about the Project's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Funchess, Mills, White & Co.
February 19, 1996
<PAGE>
Price Waterhouse LLP
Sacramento, CA 95814
Report of Independent Accountants
January 22, 1996
To the Partners of
Overland Station Investment Company
We have audited the accompanying statement of net assets in liquidation of the
Overland Station Investment Company as of October 31, 1995, and the related
statements of changes in net assets in liquidation for the period January 1,
1995 to October 31, 1995. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
As described in Note 2 the Partnership received final payment on the sale of the
Project on January 30, 1995 and commenced liquidation shortly thereafter. As a
result, the Partnership has changed its basis of accounting for periods
subsequent to December 31, 1994 from the going concern basis to a liquidation
basis.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of the Partnership as of
October 31, 1995 and the changes in its net assets in liquidation for the period
from January 1, 1995 to October 31, 1995 in conformity with generally accepted
accounting principles applied on the basis described in the preceding paragraph.
Price Waterhouse LLP
<PAGE>
M & A
McCurry & Associates, CPA, PC
Johnson City, TN 37601
Independent Auditors' Report - Unqualified Opinion
January 24, 1996
Park Hill Associates
Lexington, Kentucky
We have audited the accompanying balance sheet of Park Hill Associates, HUD
Project No. 083-35147-PM (a limited partnership), as of December 31, 1995, and
the related statements of income, partners' equity, and cash flows for the year
then ended. These financial statements are the responsibility of the Project's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Park Hill Associates, at
December 31, 1995, and the results of its operations, changes in partner's
capital and cash flows for the year then ended in conformity with generally
accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 24, 1996, on our
consideration of Park Hill Associates' internal control structure, and reports
dated January 24, 1996, on its compliance with specific requirements applicable
to major HUD programs and specific requirements applicable to Affirmative Fair
Housing.
McCurry & Associates, CPA, PC
<PAGE>
Haran & Associates Ltd
Wilmette, Illnois 60091
INDEPENDENT AUDITORS' REPORT
To the Partners of HUD Field Office Director
PHEASANT RIDGE LIMITED PARTNERSHIP Chicago, Illinois
Moline, Illinois
We have audited the accompanying balance sheet of PHEASANT RIDGE LIMITED
PARTNERSHIP, Project No. 071-35240 as of December 31, 1995, and the related
statements of profit and loss, changes in partners' equity and statement of cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to in the first paragraph
present fairly, in all material respects, the financial position of PHEASANT
RIDGE LIMITED PARTNERSHIP as of December 31, 1995, and its profit and loss,
changes in partners' equity, and its cash flows for the year then ended then
ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated January 8, 1996, on our consideration of PHEASANT RIDGE LIMITED
PARTNERSHIP'S internal control structure, and reports dated January 8, 1996, on
its compliance with specific requirements applicable to major HUD programs and
specific requirements applicable to Nonmajor HUD Programs.
The accompanying supplementary information (shown on pages 12 to 17), is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statement, and,
in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
Haran & Associates, Ltd
January 8, 1996
<PAGE>
Price Waterhouse LLP
Sacramento, CA 95814
Report of Independent Accountants
February 19, 1997
To the Partners of Westpark Plaza Investors
We have audited the accompanying balance sheet of the Westpark Plaza Investors
(FHA Project No. 136-35581-PM) as of December 31, 1996 and 1995 and the related
statements of operations and partners' deficit and cash flows for the years then
ended. These financial statements are the responsibility of the Westpark Plaza
Investors' management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Westpark Plaza Investors as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards we have also issue a report
dated February 19, 1997 on our consideration of Westpark Plaza Investors'
internal control structure and reports dated February 19, 1997 on its compliance
with specific requirements applicable to major HUD programs and Affirmative Fair
Housing.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
this report (shown on Schedules 1 through 7) is presented for the purposes of
additional analysis and is not a required part of the basic financial statements
of Westpark Plaza Investors. Such information has been subjected to the auditing
procedures applied in the audit of the financial statements and, in our opinion,
is fairly stated in all material respects in relation to the financial
statements taken as a whole.
Price Waterhouse LLP
<PAGE>
Ernst & Young LLP
Indianapolis, Indiana 46204
Report of Independent Auditors
To the Partners of
Woodbridge Apts. of Bloomington II, L.P.
We have audited the accompanying balance sheet of Woodbridge Apartments of
Bloomington, II L.P.--Project No. 073-35520-PM as of December 31, 1995, and the
related statements of profit and loss, partners' capital deficit and cash flows
for the year then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Woodbridge Apts. of Bloomington
II, L.P. at December 31, 1995, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards, we have issue a report
entitled "Independent Auditors' Report on Internal Control Based on an Audit of
the Financial Statements in Accordance with Government Auditing Standards" dated
January 22, 1996 on our consideration of the Partnership's internal control
structure, and a report entitled "Independent Auditors' Report on Compliance
with Laws and Regulations in Accordance with Government Auditing Standards"
dated January 22, 1996, on its compliance with applicable laws and regulations.
Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data listed on the contents page is
presented for the purpose of additional analysis and is not a required part of
the financial statements of the Partnership. Such data has been subjected to the
auditing procedures applied in the audit of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
January 22, 1996
Ernst & Young LLP
<PAGE>
Ernst & Young LLP
Indianapolis, Indiana 46204
Report of Independent Auditors
To the Partners
The Woods of Castleton
We have audited the accompanying balance sheet of The Woods of Castleton, a
limited partnership--Project Number 073-35402-PM, as of December 31, 1995, and
the related statements of profits and loss, partners' capital deficit, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Woods of Castleton at
December 31, 1995, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issue a report
entitled "Independent Auditors' Report on Internal Control Based on an Audit of
the Financial Statements in Accordance with Government Auditing Standards" dated
January 22, 1996, on our consideration of the Partnership's internal control
structure, and a report entitled "Independent Auditors' Report on Compliance
with Laws and Regulations in Accordance with Government Auditing Standards"
dated January 22, 1996, on its compliance with applicable laws and regulations.
As discussed in Note 2 to financial statements, the Partnership's recurring
deficiencies in cash flow raise substantial doubt about its ability to continue
as a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data listed on the contents page is
presented for the purpose of additional analysis and is not a required part of
the financial statements of the Partnership. Such data has been subjected to the
auditing procedures applied in the audit of the financial statements, and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
Ernst & Young LLP
January 22, 1996
<PAGE>
KPMG Peat Marwick
Memphis, TN 38103
February 2, 1996
Independent Auditors' Report
The Partners
Youngstoun Apartments, Phase II:
We have audited the accompanying balance sheet of Youngstoun Apartments, Phase
II (a Limited Partnership), FHA Project No. 052-35323-PM-L8 as of December 31,
1995, and the related statements of profit and loss (HUD Form 92410), changes in
partners' deficit, and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Youngstoun Apartments, Phase II
as of December 31, 1995, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards, we have also issued a report
dated February 2, 1996, on our consideration of Youngstoun Apartments, Phase
II's internal control structure, and a report dated February 2, 1996, on its
compliance with laws and regulations.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included in
Schedules 1 through 4 is presented for the purpose of additional analysis and is
not a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements, and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
KPMG - Peat Marwick LLP
February 2, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 142,840
<SECURITIES> 816,990
<RECEIVABLES> 13,193
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 974,549<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 934,564
<TOTAL-LIABILITY-AND-EQUITY> 974,549<F2>
<SALES> 0
<TOTAL-REVENUES> 262,096<F3>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 135,266<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,394
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 1,247,144
<CHANGES> 0
<NET-INCOME> 1,350,580
<EPS-PRIMARY> 58.55
<EPS-DILUTED> 0
<FN>
<F1>Includes other assets of $1,526.
<F2>Includes Accounts payable to an affiliate of $5,110 and Accounts payable and
accrued expenses of $34,875.
<F3>Represents Distribution income of $201,749, Investment income of $57,347 and
other income of $3,000.
<F4>Includes General and administrative expenses of $115,091 and Management fees
of $20,175.
</FN>
</TABLE>
