<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 DECEMBER 31, 1995
Commission File Number
2-84816
REAL ESTATE ASSOCIATES LIMITED VII
A CALIFORNIA LIMITED PARTNERSHIP
I.R.S. Employer Identification No. 95-3290316
9090 WILSHIRE BLVD., SUITE 201, BEVERLY HILLS, CALIFORNIA 90211
Registrant's Telephone Number, Including Area Code (310) 278-2191
Securities Registered Pursuant to Section 12(b) or 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed with the Commission by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve months (or 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_______________
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
<PAGE> 2
PART I.
ITEM 1. BUSINESS
Real Estate Associates Limited VII ("REAL VII" or the "Partnership") is a
limited partnership which was formed under the laws of the State of California
on May 24, 1983. On February 1, 1984, the Partnership offered 2,600 units
consisting of 10,400 limited partnership interests and warrants to purchase a
maximum of 5,200 additional limited partnership interests through a public
offering managed by Lehman Brothers Inc.
The general partners of the Partnership are National Partnership Investments
Corp. ("NAPICO"), a California Corporation (the "Corporate General Partner"),
and National Partnership Investments Associates II ("NAPIA II"). NAPIA II is a
limited partnership formed under the California Limited Partnership Act and
consists of Mr. Charles H. Boxenbaum and an unrelated individual as limited
partners and NAPICO as general partner. The business of the Partnership is
conducted primarily by its general partners as the Partnership has no employees
of its own.
Casden Investment Corporation ("CIC") owns 100 percent of NAPICO's stock. The
current members of NAPICO's Board of Directors are Charles H. Boxenbaum, Bruce
E. Nelson, Alan I. Casden, Henry C. Casden and Brian D. Goldberg.
The Partnership holds limited partnership interests in thirty-two local limited
partnerships as of December 31, 1995. The Partnership also holds a general
partner interest in Real Estate Associates IV ("REA IV") which, in turn, holds
limited partnership interests in sixteen additional local limited partnerships;
therefore, the Partnership holds interests, either directly or indirectly
through REA IV, in forty-eight local limited partnerships. The other general
partner of REA IV is NAPICO. Each of the local partnerships owns a low income
housing project which is subsidized and/or has a mortgage note payable to or is
insured by agencies of the federal or local government.
In order to stimulate private investment in low income housing, the federal
government and certain state and local agencies have provided significant
ownership incentives, including among others, interest subsidies, rent
supplements, and mortgage insurance, with the intent of reducing certain market
risks and providing investors with certain tax benefits, plus limited cash
distributions and the possibility of long-term capital gains. There remain,
however, significant risks. The long-term nature of investments in government
assisted housing limits the ability of the Partnership to vary its portfolio in
response to changing economic, financial, and investment conditions. Such
investments are also subject to changes in local economic circumstances and
housing patterns, as well as rising operating costs, vacancies, rent collection
difficulties, energy shortages, and other factors which have an impact on real
estate values. These projects also require greater management expertise and
may have higher operating expenses than conventional housing projects.
The partnerships in which the Partnership has invested are principally existing
local limited partnerships. The Partnership became the limited partner in
these local limited partnerships pursuant to arm's-length negotiations with the
local partnership's general partners who are often the original project
developers. In certain other cases, the Partnership invested in newly formed
local partnerships which, in turn, acquired the projects. As a limited
partner, the Partnership's liability for obligations of the local limited
partnership is limited to its investment. The local general partner of the
local limited partnership retains the responsibility of maintaining, operating
and managing the project. Under certain circumstances, the Partnership has the
right to replace the general partner of the local limited partnerships.
<PAGE> 3
Although each of the partnerships in which the Partnership has invested will
generally own a project which must compete in the market place for tenants,
interest subsidies and rent supplements from governmental agencies make it
possible to offer these dwelling units to eligible "low income" tenants at a
cost significantly below the market rate for comparable conventionally financed
dwelling units in the area.
During 1995, all of the projects in which the Partnership had invested were
substantially rented. The following is a schedule of the status, as of
December 31, 1995, of the projects owned by local partnerships in which the
Partnership, either directly or indirectly through REA IV, has invested.
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VII HAS AN INVESTMENT
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Units Authorized
For Rental
Assistance Under
Section 8 or
Other Rent
No. of Supplement Units Percentage of
Name & Location Units Program Occupied Total Units
- --------------- ----- ----------------- -------- -------------
<S> <C> <C> <C> <C>
Anthracite Apts. 121 121/ 0 121 100%
Pittston, PA
Aristocrat Manor 113 113/ 0 88 78%
Hot Springs, AR
Arkansas City Apts. 16 4/ 7 12 75%
Arkansas City, AR
Arrowsmith Apts. 70 70/ 0 70 100%
Corpus Christi, TX
Ashland Manor 189 189/ 0 187 99%
Toledo, OH
Bangor House 121 121/ 0 121 100%
Bangor, ME
Bellair Manor Apts. 68 7/ 7 68 100%
Niles, OH
Birch Manor Apts. I 60 12/ 0 57 95%
Medina, OH
Birch Manor Apts II 60 6/ 0 59 98%
Medina, OH
Bluewater Apts. 116 None 112 97%
Port Huron, MI
</TABLE>
<PAGE> 4
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VII HAS AN INVESTMENT
DECEMBER 31, 1995
(CONTINUED)
<TABLE>
<CAPTION>
Units Authorized
For Rental
Assistance Under
Section 8 or
Other Rent
No. of Supplement Units Percentage of
Name & Location Units Program Occupied Total Units
- --------------- ----- ----------------- -------- -------------
<S> <C> <C> <C> <C>
Center City 176 175/ 0 176 100%
Hazelton, PA
Clarkwood Apts. I 72 24/ 0 71 99%
Elyria, OH
Clarkwood Apts. II 120 39/ 0 117 98%
Elyria, OH
Cleveland Apts. I 50 50/ 0 49 98%
Hayti, MO
Cleveland Apts. II 50 50/ 0 50 100%
Hayti, MO
Cleveland Apts. III 21 21/ 0 21 100%
Hayti, MO
Danbury Park Manor 151 85/ 0 139 92%
Superior Township, MI
Desoto Apts. 42 42/ 0 42 100%
Desoto, MO
Dexter Apts. 50 50/ 0 47 94%
Dexter, MO
Edgewood Terrace II 258 103/ 0 253 98%
Washington, DC
Goodlette Arms Apts. 250 None 249 100%
Naples, FL
Hampshire House 150 150/ 0 149 99%
Warren, OH
Henrico Arms 232 232/ 0 232 100%
Richmond, VA
</TABLE>
<PAGE> 5
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VII HAS AN INVESTMENT
DECEMBER 31, 1995
(CONTINUED)
<TABLE>
<CAPTION>
Units Authorized
For Rental
Assistance Under
Section 8 or
Other Rent
No. of Supplement Units Percentage of
Name & Location Units Program Occupied Total Units
- --------------- ----- ----------------- -------- -------------
<S> <C> <C> <C> <C>
Ivywood Apts. 124 75/ 0 119 96%
Columbus, OH
Jasper County Prop. 24 None 24 100%
Heidelberg, MS
King Towers 68 14/ 0 67 99%
Cincinnati, OH
Meherrin Landings 42 None 35 83%
Emporia, VA
Nantucket Apts. 60 59/ 0 59 98%
Alliance, OH
Newton Apts. 36 None 30 83%
Newton, MS
Oak Hill Apts. 120 82/ 0 117 98%
Franklin, PA
Oakview Apts. 32 None 28 88%
Monticello, AR
Oakwood Park I Apts 50 None 49 98%
Lorain, OH
Oakwood Park II Apts 78 None 75 96%
Lorain, OH
Pachuta Apartments 16 None 15 94%
Pachuta, MS
Parkway Towers Apt 104 103/ 0 104 100%
E. Providence, RI
Pebbleshire Apts. 120 24/ 0 114 95%
Vernon Hills, IL
</TABLE>
<PAGE> 6
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VII HAS AN INVESTMENT
DECEMBER 31, 1995
(CONTINUED)
<TABLE>
<CAPTION>
Units Authorized
For Rental
Assistance Under
Section 8 or
Other Rent
No. of Supplement Units Percentage of
Name & Location Units Program Occupied Total Units
- --------------- ----- ----------------- -------- -------------
<S> <C> <C> <C> <C>
Pinebrook Apts. 136 109/ 0 128 94%
Lansing, MI
Rand Grove Village 212 212/ 0 186 88%
Palatine, IL
Richards Park Apts. 60 24/ 0 60 100%
Elyria, OH
Ridgewood Towers 140 140/ 0 137 98%
Moline, IL
Shubuta Properties 16 None 14 88%
Shubuta, MS
South Glen Apts. 159 27/ 0 158 99%
Trenton, MI
South Park Apts. 138 138/ 0 130 94%
Elyria, OH
Sunland Terrace 80 80/ 0 80 100%
Phoenix, AZ
Tradewinds East 150 None 144 96%
Essexville, MI
Warren Heights Apts II 88 87/ 0 86 98%
Warren, OH
White Cliff Apts. 72 72/ 0 70 97%
Cincinnati, OH
Yorkview Estates 50 50/ 0 48 96%
Massillon, OH
----- --------- -----
TOTAL 4,731 2,960/ 14 4,567 97%
===== ========= =====
</TABLE>
<PAGE> 7
ITEM 2. PROPERTIES
Through its participation in local limited and general partnerships, the
Partnership holds interests in real estate properties. See Item 1 and Schedule
XI for information pertaining to these properties.
ITEM 3. LEGAL PROCEEDINGS
As of December 31, 1995, the Partnership's Corporate General Partner was a
plaintiff or defendant in several lawsuits, In addition, the Partnership is
involved in the following lawsuits. In the opinion of management and the
Corporate General Partner, the claims will not result in any material liability
to the Partnership.
John Mitchell v. Oakwood Apartments, NAPICO et al., Case No. 94CV112108, Court
of Common Pleas, Lorain County, Ohio. On March 31, 1994, the Plaintiff filed a
lawsuit alleging that on May 5, 1992, while returning to his apartment (Oakwood
Apartments, Lorain, Ohio) he tripped and sustained mental and physical
injuries. The Plaintiff voluntarily dismissed his action and a Notice of
Voluntary Dismissal without prejudice was filed. The Plaintiff, however,
refiled the action which remains pending.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS AND RELATED
SECURITY HOLDER MATTERS.
The Limited Partnership Interests are not traded on a public exchange but were
sold through a public offering managed by Lehman Brothers, Inc. It is not
anticipated that any public market will develop for the purchase and sale of
any partnership interest. Limited Partnership Interests may be transferred
only if certain requirements are satisfied. At December 31, 1995, there were
3,666 registered holders of units in the Partnership. No distributions have
been made from the inception of the Partnership to December 31, 1995. The
Partnership has invested in certain government assisted projects under programs
which in many instances restrict the cash return available to project owners.
The Partnership was not designed to provide cash distributions to investors in
circumstances other than refinancing or disposition of its investments in
limited partnerships.
<PAGE> 8
ITEM 6. SELECTED FINANCIAL DATA:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Loss From Partnership
Operations $ (3,234,086) $ (3,225,472) $ (3,245,333) $ (3,244,612) $ (3,136,606)
Distributions From
Limited Partnerships
Recognized as Income 19,632 249,371 190,767 124,966 96,384
Equity in Loss of Limited
Partnerships and
Amortization of
Acquisition Costs (511,033) (1,074,503) (1,325,646) (1,014,151) (949,827)
------------ ------------ ------------ ------------ ------------
Net Loss $ (3,725,487) $ (4,050,604) $ (4,380,212) $ (4,133,797) $ (3,990,049)
============ ============ ============ ============ ============
Net Loss per Limited
Partnership Interest $ (179) $ (193) $ (211) $ (197) $ (190)
============ ============ ============ ============ ============
Total assets $ 19,183,742 $ 20,411,116 $ 22,203,347 $ 24,129,351 $ 25,662,180
============ ============ ============ ============ ============
Investments in Limited
Partnerships $ 18,600,961 $ 19,757,594 $ 21,590,427 $ 23,573,755 $ 25,235,991
============ ============ ============ ============ ============
Notes Payable $ 24,869,501 $ 24,869,501 $ 24,869,501 $ 24,869,501 $ 24,869,501
============ ============ ============ ============ ============
Fees and Expenses Due to
General Partner $ 2,630,214 $ 2,041,574 $ 1,597,934 $ 1,054,294 $ 410,654
============ ============ ============ ============ ============
</TABLE>
<PAGE> 9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY
The Partnership's primary sources of funds include interest income on money
market funds and certificates of deposit and distributions from local
partnerships in which the Partnership has invested. It is not expected that
any of the local partnerships in which the Partnership has invested will
generate cash flow sufficient to provide for distributions to the Partnership's
limited partners in any material amount.
CAPITAL RESOURCES
The Partnership received $39,000,000 in subscriptions for units of limited
partnership interests (at $5,000 per unit) during the period March 7, 1984 to
June 11, 1985, pursuant to a registration statement on Form S-11.
RESULTS OF OPERATIONS
The Partnership was formed to provide various benefits to its partners as
discussed in Item 1. It is anticipated that the local partnerships in which
the Partnership has invested could produce tax losses for as long as 20 years.
The Partnership will seek to defer income taxes from sale by not selling any
projects or project interests within 10 years, except to qualified tenant
cooperatives, or when proceeds of the sale would supply sufficient cash to
enable the Partners to pay applicable taxes.
Tax benefits will decline over time as the advantages of accelerated
depreciation are greatest in the earlier years, as deductions for interest
expense decrease as mortgage principal is amortized, and as the Tax Reform Act
of 1986 limits the deductions available.
The Partnership accounts for its investments in the local limited partnerships
on the equity method, thereby adjusting its investment balance by its
proportionate share of the income or loss of the local limited partnerships.
Losses incurred after the limited partnership investment account is reduced to
zero are not recognized.
Distributions received from limited partnerships are recognized as return of
capital until the investment balance has been reduced to zero or to a negative
amount equal to future capital contributions required. Subsequent
distributions received are recognized as income.
Except for certificates of deposit and money market funds, the Partnership's
investments are entirely interests in other limited and general partnerships
owning government assisted projects. Available cash is invested in money
market funds and certificates of deposit which provide interest income as
reflected in the statement of operations. These temporary investments can be
easily converted to cash to meet obligations as they arise. The Partnership
intends to continue investing available funds in this manner.
A recurring Partnership expense is the management fee. The fee is payable
monthly to the corporate general partner of the Partnership and is calculated
as a percentage of the Partnership's invested assets. The fee is payable
beginning with the month following the Partnership's initial investment in a
local partnership.
General and administrative expenses of the Partnership consist substantially of
professional fees or services rendered to the Partnership.
<PAGE> 10
Interest expense did not vary significantly in the years presented.
The Partnership, as a limited partner in the local partnerships in which it has
invested, is subject to the risks incident to the construction, management and
ownership of improved real estate. The Partnership investments are also
subject to adverse general economic conditions and, accordingly, the status of
the national economy, including substantial unemployment and concurrent
inflation, could increase vacancy levels, rental payment defaults and operating
expenses, which in turn, could substantially increase the risk of operating
losses for the projects.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements and Supplementary Data are listed under Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
<PAGE> 11
REAL ESTATE ASSOCIATES LIMITED VII
(A California limited partnership)
FINANCIAL STATEMENTS,
FINANCIAL STATEMENT SCHEDULES
AND INDEPENDENT PUBLIC ACCOUNTANTS' REPORT
DECEMBER 31, 1995
<PAGE> 12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Real Estate Associates Limited VII
(A California limited partnership)
We have audited the accompanying balance sheets of Real Estate Associates
Limited VII (a California limited partnership) as of December 31, 1995 and
1994, and the related statements of operations, partners' deficiency and cash
flows for each of the three years in the period ended December 31, 1995. Our
audits also included the financial statement schedules listed in the index at
item 14. These financial statements and financial statement schedules are the
responsibility of the management of the Partnership. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits. We did not audit the financial statements of
certain limited partnerships, the investments in which are reflected in the
accompanying financial statements using the equity method of accounting. The
investments in these limited partnerships represent 31 percent and 36 percent
of total assets as of December 31, 1995 and 1994, respectively, and the equity
in loss of these limited partnerships represents 21 percent, 14 percent and 28
percent of the total net loss of the Partnership for the years ended December
31, 1995, 1994 and 1993, respectively, and represent a substantial portion of
the investee information in Note 2 and the financial statement schedules. The
financial statements of these limited partnerships are audited by other
auditors. Their reports have been furnished to us and our opinion, insofar as
it relates to the amounts included for these limited partnerships, is based
solely on 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 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 our audits and the reports of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material
respects, the financial position of Real Estate Associates Limited VII as of
December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles. Also, in our
opinion, based on our audits and the reports of other auditors, such financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
Los Angeles, California
March 29, 1996
1
<PAGE> 13
REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
INVESTMENTS IN LIMITED PARTNERSHIPS (Note 2) $ 18,600,961 $ 19,757,594
CASH 352,652 498,954
SHORT TERM INVESTMENTS (Note 1) 125,000 125,000
OTHER ASSETS 105,129 29,568
------------ ------------
TOTAL ASSETS $ 19,183,742 $ 20,411,116
============ ============
LIABILITIES AND PARTNERS' DEFICIENCY
LIABILITIES:
Notes payable (Note 3) $ 24,869,501 $ 24,869,501
Accrued interest payable (Note 3) 22,427,527 20,514,472
Accrued fees and expenses
due general partner (Note 4) 2,630,214 2,041,574
Accounts payable and other liabilities 13,519 17,101
------------ ------------
49,940,761 47,442,648
------------ ------------
COMMITMENTS AND CONTINGENCIES
(Notes 4 and 5)
PARTNERS' (DEFICIENCY):
General partners (630,701) (593,446)
Limited partners (30,126,318) (26,438,086)
------------ ------------
(30,757,019) (27,031,532)
------------ ------------
TOTAL LIABILITIES AND PARTNERS'
DEFICIENCY $ 19,183,742 $ 20,411,116
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 14
REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ------------ -----------
<S> <C> <C> <C>
REVENUE:
Interest income $ 20,741 $ 16,409 $ 16,947
----------- ----------- -----------
OPERATING EXPENSES:
Interest (Note 3) 2,323,426 2,326,128 2,344,505
Management fees - general partner (Note 4) 743,640 743,640 743,640
General and administrative (Note 4) 106,227 98,197 98,219
Legal and accounting 81,534 73,916 75,916
----------- ----------- -----------
3,254,827 3,241,881 3,262,280
----------- ----------- -----------
LOSS FROM OPERATIONS (3,234,086) (3,225,472) (3,245,333)
DISTRIBUTIONS FROM LIMITED
PARTNERSHIP RECOGNIZED
AS INCOME (Note 2) 19,632 249,371 190,767
EQUITY IN LOSS OF LIMITED
PARTNERSHIPS AND AMORTIZATION
OF ADDITIONAL BASIS AND
ACQUISITION COSTS (Note 2) (511,033) (1,074,503) (1,325,646)
----------- ----------- -----------
NET LOSS $(3,725,487) $(4,050,604) $(4,380,212)
=========== =========== ===========
NET LOSS PER LIMITED PARTNERSHIP
INTEREST $ (179) $ (193) $ (211)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 15
REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)
STATEMENTS OF PARTNERS' DEFICIENCY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
---------- ------------ ------------
<S> <C> <C> <C>
DEFICIENCY, December 31, 1992 $(509,138) $(18,091,578) $(18,600,716)
Net loss for 1993 (43,802) (4,336,410) (4,380,212)
--------- ------------ ------------
DEFICIENCY, December 31, 1993 (552,940) (22,427,988) (22,980,928)
Net loss, 1994 (40,506) (4,010,098) (4,050,604)
--------- ------------ ------------
DEFICIENCY, December 31, 1994 (593,446) (26,438,086) (27,031,532)
Net loss, 1995 (37,255) (3,688,232) (3,725,487)
--------- ------------ ------------
DEFICIENCY, December 31, 1995 $(630,701) $(30,126,318) $(30,757,019)
========= ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 16
REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,725,487) $(4,050,604) $(4,380,212)
Adjustments to reconcile net loss to net cash
used in operating activities:
Equity in loss of limited partnerships
and amortization of additional basis
and acquisition costs 511,033 1,074,503 1,325,646
Decrease (increase) in other assets (75,561) (25,911) 249
Increase in accrued interest payable 1,913,055 1,803,220 1,929,282
Increase in accrued fees and expenses
due general partner 588,640 443,640 543,640
Increase (decrease) in accounts payable
and other liabilities (3,582) 11,513 (18,714)
----------- ----------- -----------
Net cash used in operating activities (791,902) (743,639) (600,109)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from limited partnerships recognized
as a return of capital 649,950 869,113 666,372
Capital contributions to limited partnerships (4,350) (110,783) (8,690)
----------- ----------- -----------
Net cash provided by investing activities 645,600 758,330 657,682
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH (146,302) 14,691 57,573
CASH, beginning of year 498,954 484,263 426,690
----------- ----------- -----------
CASH, end of year $ 352,652 $ 498,954 $ 484,263
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Cash paid during the year for interest $ 410,370 $ 522,908 $ 415,223
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 17
REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Real Estate Associates Limited VII (the "Partnership") was formed under
the California Limited Partnership Act on May 24, 1983. The Partnership
was formed to invest primarily in other limited partnerships or joint
ventures which own and operate primarily federal, state or local
government-assisted housing projects. The general partners are Coast
Housing Investments Associates, a limited partnership and National
Partnership Investments Corp. (NAPICO), the corporate general partner,
and National Partnership Investments Associates II (NAPIA II), a limited
partnership. Casden Investment Corporation owns 100 percent of NAPICO's
stock. The general partner of NAPIA II is NAPICO.
The Partnership issued 5,200 units of limited partnership interests
through a public offering. Each unit was comprised of two limited
partnership interests and two warrants granting the investor the right
to purchase two additional limited partnership interests. An additional
10,400 interests associated with warrants were exercised. The general
partners have a 1 percent interest in profits and losses of the
Partnership. The limited partners have the remaining 99 percent
interest in proportion to their respective investments.
The Partnership shall be dissolved only upon the expiration of 50
complete calendar years (December 31, 2033) from the date of the
formation of the Partnership or the occurrence of various other events
as specified in the Partnership agreement.
Upon total or partial liquidation of the Partnership or the disposition
or partial disposition of a project or project interest and distribution
of the proceeds, the general partners will be entitled to a liquidation
fee as stipulated in the Partnership agreement. The limited partners
will have a priority return equal to their invested capital attributable
to the project(s) or project interest(s) sold and shall receive from the
sale of the project(s) or project interest(s) an amount sufficient to
pay state and federal income taxes, if any, calculated at the maximum
rate then in effect. The general partners' fee may accrue but shall not
be paid until the limited partners have received distributions equal to
100 percent of their capital contributions.
USES OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
PRINCIPLES OF CONSOLIDATION
These financial statements include the accounts of Real Estate
Associates Limited VII and Real Estate Associates IV ("REA IV"), a
California general partnership in which the Partnership holds a 99
percent general partner interest. Losses in excess of the minority
interest is equity that would otherwise be attributed to the minority
interest are being allocated to the Partnership.
6
<PAGE> 18
REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
METHOD OF ACCOUNTING FOR INVESTMENTS IN LIMITED PARTNERSHIPS
The investments in limited partnerships are accounted for on the equity
method. Acquisition, selection and other costs related to the
acquisition of the projects have been capitalized as part of the
investment account and are being amortized on a straight line basis over
the estimated lives of the underlying assets, which is generally 30
years.
NET LOSS PER LIMITED PARTNERSHIP INTEREST
Net loss per limited partnership interest was computed by dividing the
limited partners' share of net loss by the number of limited partnership
interests outstanding during the year. The number of limited
partnership interests was 20,802 for all years presented.
SHORT TERM INVESTMENTS
Short term investments consist of bank certificates of deposit with
original maturities ranging from more than three months to twelve
months. The fair value of these securities, which have been classified
as held for sale, approximates their carrying value.
2. INVESTMENTS IN LIMITED PARTNERSHIPS
The Partnership holds limited partnership interests in 32 limited
partnerships. In addition, the Partnership holds a general partner
interest in REA IV, NAPICO is also the general partner in REA IV. REA
IV, in turn, holds limited partner interests in 16 additional limited
partnerships. In total, therefore, the Partnership holds interests,
either directly or indirectly through REA IV, in 48 partnerships all of
which own residential low income rental projects consisting of 4,731
apartment units. The mortgage loans of these projects are payable to or
insured by various governmental agencies.
The Partnership, as a limited partner, is entitled to between 93 percent
and 99 percent of the profits and losses in the limited partnerships it
has invested in directly. The Partnership is also entitled to 99
percent of the profits and losses of REA IV. REA IV holds a 99 percent
interest in each of the limited partnerships in which it has invested.
Equity in losses of limited partnerships is recognized in the financial
statements until the limited partnership investment account is reduced
to a zero balance. Losses incurred after the limited partnership
investment account is reduced to zero are not recognized. The
cumulative amount of the unrecognized equity in losses of certain
unconsolidated limited partnerships was approximately $6,359,000 and
$5,063,000 as of December 31, 1995 and 1994, respectively.
Distributions from the limited partnerships are accounted for as a
return of capital until the investment balance is reduced to zero.
Subsequent distributions received are recognized as income.
7
<PAGE> 19
REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
2. INVESTMENT IN LIMITED PARTNERSHIPS (CONTINUED)
The following is a summary of the investments in limited partnerships
and reconciliation to the limited partnership accounts:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Investment balance, beginning of year $19,757,594 $21,590,427
Cash distributions recognized as
a return of capital (649,950) (869,113)
Equity in loss of limited partnerships (309,810) (687,952)
Amortization of additional basis and
capitalized acquisition costs and fees (201,223) (386,551)
Capital contributions to limited partnerships 4,350 110,783
----------- -----------
Investment balance, end of year $18,600,961 $19,757,594
=========== ===========
</TABLE>
The difference between the investment per the accompanying balance
sheets at December 31, 1995 and 1994, and the equity per the limited
partnerships' combined financial statements is due primarily to
cumulative unrecognized equity in losses of certain limited
partnerships, additional basis and costs capitalized to the investment
account and cumulative distributions recognized as income.
Selected financial information from the combined financial statements at
December 31, 1995 and 1994 and for each of the three years in the period
ended December 31, 1995, of the limited partnerships in which the
Partnership has invested directly or indirectly, is as follows:
<TABLE>
<CAPTION>
Balance Sheets
--------------
1995 1994
-------- --------
(in thousands)
<S> <C> <C>
Land and buildings, net $ 83,427 $ 89,204
======== ========
Total assets $ 99,949 $103,240
======== ========
Mortgages loan payable $ 77,936 $ 79,494
======== ========
Total liabilities $ 95,863 $ 96,859
======== ========
Equity of Real Estate Associates Limited VII $ 4,793 $ 7,042
========= ========
Deficiency of other partners $ (707) $ (661)
========= ========
</TABLE>
8
<PAGE> 20
REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
2. INVESTMENT IN LIMITED PARTNERSHIPS (CONTINUED)
Statements of Operations
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Total revenue $27,145 $26,507 $26,244
======= ======= =======
Interest expense $ 3,503 $ 3,871 $ 4,298
======= ======= =======
Depreciation $ 6,596 $ 5,867 $ 5,352
======= ======= =======
Total expenses $28,768 $29,209 $28,282
======= ======= =======
Net loss $(1,623) $(2,702) $(2,038)
======= ======= =======
Net loss allocable to the Partnership $(1,606) $(1,835) $(1,593)
======= ======= =======
</TABLE>
Land and buildings above have been adjusted for the amount by which the
investments in the limited partnerships exceed the Partnership's share
of the net book value of the underlying net assets of the investee which
are recorded at historical costs. Depreciation on the adjustment is
provided for over the estimated remaining useful lives of the
properties.
An affiliate of NAPICO is the general partner in 26 of the limited
partnerships included above, and another affiliate receives property
management fees of approximately 5 to 6 percent of the revenue from
three of these partnerships. The affiliate received property management
fees of $116,175, $107,237 and $107,173 in 1995, 1994 and 1993
respectively. The following sets forth the significant data for these
partnerships in which an affiliate of NAPICO was the general partner,
reflected in the accompanying financial statements using the equity
method of accounting:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Total assets $42,346 $44,526
======= =======
Total liabilities $50,676 $50,822
======= =======
Deficiency of Real Estate Associates Limited VII $(8,047) $(6,026)
======= =======
Deficiency of other partners $ (283) $ (270)
======= =======
Total revenue $12,311 $11,934 $10,120
======= ======= =======
Net loss $(1,262) $(1,934) $(1,664)
======= ======= =======
</TABLE>
9
<PAGE> 21
REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
3. NOTES PAYABLE
Certain of the Partnership's investments involved purchases of
partnership interests from partners who subsequently withdrew from the
operating partnership. The Partnership is obligated on non-recourse
notes payable of $24,869,501, bearing interest at 9 1/2 percent, to the
sellers of the partnership interests. The notes have principal maturity
dates ranging from August 1999 to December 2002 or upon sale or
refinancing of the underlying partnership properties. These obligations
and related interest are collateralized by the Partnership's investments
in the investee limited partnerships and are payable only out of cash
distributions from the investee partnerships, as defined in the notes.
Unpaid interest is due at maturity of the notes.
Maturity dates on the notes payable are as follows:
<TABLE>
<CAPTION>
Years Ending December 31,
-------------------------
<S> <C>
1996 $ -
1997 -
1998 -
1999 17,809,919
2000 -
Thereafter 7,059,582
-----------
$24,869,501
===========
</TABLE>
4. FEES AND EXPENSES DUE GENERAL PARTNER
Under the terms of the Restated Certificate and Agreement of Limited
Partnership, the Partnership is obligated to NAPICO for an annual
management fee equal to .5 percent of the original invested assets of the
partnerships. Invested assets is defined as the costs of acquiring
project interests, including the proportionate amount of the mortgage
loans related to the Partnership's interest in the capital accounts of
the respective partnerships.
As of December 31, 1995, the fees and expenses due the general partner
exceeded the Partnership's cash. The general partners, during the
forthcoming year, will not demand payment of amounts due in excess of
such cash or such that the Partnership would not have sufficient
operating cash.
The Partnership reimburses NAPICO for certain expenses. The
reimbursement to NAPICO was $39,900, $38,450 and $39,725 in 1995, 1994
and 1993, respectively, and is included in operating expenses.
10
<PAGE> 22
REAL ESTATE ASSOCIATES LIMITED VII
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
5. CONTINGENCIES
The corporate general partner of the Partnership and the Partnership are
involved in various lawsuits arising from transactions in the ordinary
course of business. In the opinion of management and the corporate
general partner, the claims will not result in any material liability to
the Partnership.
6. INCOME TAXES
No provision has been made for income taxes in the accompanying
financial statements since such taxes, if any, are the liability of the
individual partners. The major differences in tax and financial
reporting result from the use of different bases and depreciation
methods for the properties held by the limited partnerships.
Differences in tax and financial reporting also arise as losses are not
recognized for financial reporting purposes when the investment balance
has been reduced to zero.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosure about
Fair Value of Financial Instruments," requires disclosure of fair value
information about financial instruments, when it is practicable to
estimate that value. The notes payable are collateralized by the
Partnership's investments in investee limited partnerships and are
payable only out of cash distributions from the investee partnerships.
The operations generated by the investee limited partnerships, which
account for the Partnership's primary source of revenues, are subject to
various government rules, regulations and restrictions which make it
impracticable to estimate the fair value of the notes payable and
related accrued interest and amounts due general partner. The carrying
amount of other assets and liabilities reported on the balance sheets
that require such disclosure approximates fair value due to their
short-term maturity.
8. FOURTH-QUARTER ADJUSTMENT
The Partnership's policy is to record its equity in the loss of limited
partnerships on a quarterly basis, using estimated financial information
furnished by the various local operating general partners. The equity
in loss of limited partnerships reflected in the accompanying annual
financial statements is based primarily upon audited financial
statements of the investee limited partnerships. The decrease of
approximately $164,000 between the estimated nine-month equity in loss
and the actual 1995 year end equity in loss has been recorded in the
fourth quarter.
11
<PAGE> 23
SCHEDULE
REAL ESTATE ASSOCIATES LIMITED VII
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Year Ended December 31, 1995
---------------------------------------------------------------------------
Cash Equity
Balance Distri- in Balance
January Capital butions Income December
Limited Partnerships 1, 1995 Contributions Received (Loss) 31, 1995
- -------------------- ------------ ------------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Anthracite Apts. $ 1,037,867 $ $ (25,948) $ 45,114 $ 1,057,033
Aristocrat Manor 660,098 (113,078) 547,020
Arkansas City Apts.
Arrowsmith Apts. 469,332 (14,850) (71,663) 382,819
Ashland Manor
Bangor House 1,609,060 (101,136) 105,152 1,613,076
Bellair Manor Apts. 305,068 (4,882) (17,714) 282,472
Birch Manor I 581 (581)
Birch Manor II 3,244 (3,244)
Bluewater Apts. 1,797,663 (27,003) 25,340 1,796,000
Center CIty Apts. 2,033,873 (36,470) 192,689 2,190,092
Clarkwood Apts. I 1,061 (1,061)
Clarkwood Apts. II
Cleveland I 133,418 (33,240) 7,960 108,138
Cleveland II 166,434 (18,230) (11,946) 136,258
Cleveland III 30,597 (1,734) (3,922) 24,941
Danbury Park Manor
Desoto Apts. 178,452 (18,253) (20,011) 140,188
Dexter Apts. 149,359 (5,623) (31,614) 112,122
Edgewood Terrace II 934,508 (30,738) (135,205) 768,565
Goodlette Arms Apts. 2,543,290 (1,485) (21,709) 2,520,096
Hampshire House Apts.
Henrico Arms (9,865) 9,865
Ivywood Apts. 411,136 (4,015) (47,488) 359,633
Jasper County
King Towers 337,383 (40,680) 296,703
Meherrin Landings
Nantucket Apts. 274,141 (18,516) 255,625
Newton Apts.
Oak Hill I 241,932 (52,786) 189,146
Oakview Apts.
Oakwood Park I 1,640 (1,640)
Oakwood Park II 864 (864)
Pachuta Apts.
Parkway Towers 1,558,737 (15,590) 164,843 1,707,990
Pebbleshire Apts. 9,840 (9,840)
Pinebrook Apts. 679,155 49,671 728,826
Rand Grove Village 822,741 (24,284) (279,606) 518,851
Richards Park Apts. 1,022 (1,022)
Ridgewood Towers 721,120 (224,604) 120,236 616,752
Shubuta Properties
South Glen Apts. 323,984 (15,000) (23,763) (275,916) 9,305
South Park Apts. 1,098 (1,098)
Sunland Terrace
Tradewinds East Apts. 1,634,847 (24,471) 1,610,376
Warren Heights Apts. II 308,241 (3,915) (20,250) 284,076
White Cliffs Apts. 246,471 (1,031) (35,051) 210,389
Yorkview Estates 148,687 (3,941) (10,277) 134,469
------------ ------------- ---------- ------------- ------------
$ 19,757,594 $ 4,350 $ (649,950) $ (511,033) $ 18,600,961
============ ============ ========== ============= ============
</TABLE>
<PAGE> 24
SCHEDULE
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED VII
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Year Ended December 31, 1994
-------------------------------------------------------------------------
Cash Equity
Balance Distri- in Balance
January Capital butions Income December
Limited Partnerships 1, 1994 Contributions Received (Loss) 31, 1994
- -------------------- ------- ------------- -------- ------ --------
<S> <C> <C> <C> <C>
Anthracite Apts. $ 1,082,364 $ $(25,948) $ (18,549) $ 1,037,867
Aristocrat Manor 711,571 (51,473) 660,098
Arkansas City Apts.
Arrowsmith Apts. 499,723 - (30,391) 469,332
Ashland Manor 15,276 (15,276)
Bangor House 1,552,706 (33,006) 89,360 1,609,060
Bellair Manor Apts. 335,256 (9,693) (20,495) 305,068
Birch Manor I 10,154 (10,154)
Birch Manor II 3,288 (3,288)
Bluewater Apts. 1,764,963 (13,502) 46,202 1,797,663
Center City Apts. 1,965,002 (36,470) 105,341 2,033,873
Clarkwood Apts. I 6,543 (6,543)
Clarkwood Apts. II 7,613 (7,613)
Cleveland I 198,885 (77,743) 12,276 133,418
Cleveland II 188,636 (26,191) 3,989 166,434
Cleveland III 45,999 (8,437) (6,965) 30,597
Danbury Park Manor
Desoto Apts. 209,309 (27,077) (3,780) 178,452
Dexter Apts. 212,500 (17,987) (45,154) 149,359
Edgewood Terrace II 1,138,047 (32,298) (171,241) 934,508
Goodlette Arms Apts. 2,603,418 (1,485) (58,643) 2,543,290
Hampshire House Apts.
Henrico Arms 214,044 (22,021) (192,023) -
Ivywood Apts. 491,855 (17,327) (63,392) 411,136
Jasper County
King Towers 409,865 (4,871) (67,611) 337,383
</TABLE>
<PAGE> 25
SCHEDULE
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED VII
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Year Ended December 31, 1994
------------------------------------------------------------------------
Cash Equity
Balance Distri- in Balance
January Capital butions Income December
Limited Partnerships 1, 1994 Contributions Received (Loss) 31, 1994
- -------------------- ------- ------------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
Meherrin Landings $ $ $ $ $
Nantucket Apts. 299,135 (10,403) (14,591) 274,141
Newton Apts.
Oak Hill I 358,228 (10,426) (105,870) 241,932
Oakview Apts.
Oakwood Park I 8,137 (8,137)
Oakwood Park II 7,239 (7,239)
Pachuta Apts.
Parkway Towers 1,523,261 (16,131) 51,607 1,558,737
Pebbleshire Apts. 25,838 (25,838)
Pinebrook Apts. 983,052 (303,897) 679,155
Rand Grove Village 955,840 (24,284) (108,815) 822,741
Richards Park Apts. 7,576 (7,576)
Ridgewood Towers 880,227 (267,282) 108,175 721,120
Shubuta Properties
South Glen Apts. 454,860 (23,763) (107,113) 323,984
South Park Apts. 19,119 (19,119)
Sunland Terrace
Tradewinds East Apts. 1,681,237 (19,388) (27,002) 1,634,847
Warren Heights Apts. II 350,469 (9,929) (32,299) 308,241
White Cliffs Apts. 298,180 (4,993) (46,716) 246,471
Yorkview Estates 181,795 (17,675) (15,433) 148,687
----------- --------- ---------- ----------- -----------
$21,590,427 $ 110,783 $ (869,113) $(1,074,503) $19,757,594
=========== ========= ========== =========== ===========
</TABLE>
<PAGE> 26
SCHEDULE
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED VII
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Year Ended December 31, 1993
------------------------------------------------------------------------
Cash Equity
Balance Distri- in Balance
January Capital butions Income December
Limited Partnerships 1, 1993 Contributions Received (Loss) 31, 1993
- -------------------- ------- ------------- -------- ------ --------
<S> <C> <C> <C> <C>
Anthracite Apts. $ 1,092,595 $ $(25,948) $ 15,717 $ 1,082,364
Aristocrat Manor 1,363,726 (652,155) 711,571
Arkansas City Apts.
Arrowsmith Apts. 590,907 (32,237) (58,947) 499,723
Ashland Manor
Bangor House 1,485,216 (55,000) 122,490 1,552,706
Bellair Manor Apts. 356,961 (21,705) 335,256
Birch Manor I 190 (190)
Birch Manor II 3,288 (3,288)
Bluewater Apts. 1,708,765 (13,502) 69,700 1,764,963
Center City Apts. 1,879,365 (36,470) 122,107 1,965,002
Clarkwood Apts. I 2,622 (2,622)
Clarkwood Apts. II
Cleveland I 175,936 (23,563) 46,512 198,885
Cleveland II 161,353 (25,461) 52,744 188,636
Cleveland III 61,186 (8,029) (7,158) 45,999
Danbury Park Manor
Desoto Apts. 147,741 (30,359) 91,927 209,309
Dexter Apts. 203,745 (17,115) 25,870 212,500
Edgewood Terrace II 1,398,550 (49,249) (211,254) 1,138,047
Goodlette Arms Apts. 2,804,128 (1,485) (199,225) 2,603,418
Hampshire House Apts.
Henrico Arms 410,501 (39,200) (157,257) 214,044
Ivywood Apts. 556,425 (7,289) (57,281) 491,855
Jasper County
King Towers 455,083 (2,826) (42,392) 409,865
</TABLE>
<PAGE> 27
SCHEDULE
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED VII
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Year Ended December 31, 1993
-------------------------------------------------------------------
Cash in Equity
Balance Distri- Balance
January Capital butions Income December
Limited Partnerships 1, 1993 Contributions Received (Loss) 31, 1993
- -------------------- ------- ------------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
Meherrin Landings $ $ $ $ $
Nantucket Apts. 336,016 (4,330) (32,551) 299,135
Newton Apts.
Oak Hill I 459,303 (13,633) (87,442) 358,228
Oakview Apts.
Oakwood Park I 1,068 (1,068)
Oakwood Park II 1,522 (1,522)
Pachuta Apts.
Parkway Towers 1,449,840 (16,109) 89,530 1,523,261
Pebbleshire Apts.
Pinebrook Apts. 1,208,077 (225,025) 983,052
Rand Grove Village 1,019,653 (24,284) (39,529) 955,840
Richards Park Apts.
Ridgewood Towers 992,318 (170,158) 58,067 880,227
Shubuta Properties
South Glen Apts. 560,623 (23,763) (82,000) 454,860
South Park Apts.
Sunland Terrace
Tradewinds East Apts. 1,724,884 (19,388) (24,259) 1,681,237
Warren Heights Apts. II 432,926 (10,806) (71,651) 350,469
White Cliffs Apts. 340,638 (7,478) (34,980) 298,180
Yorkview Estates 197,294 - (15,499) 181,795
----------- ------- --------- ----------- -----------
$23,573,755 $ 8,690 $(666,372) $(1,325,646) $21,590,427
=========== ======= ========= =========== ===========
</TABLE>
<PAGE> 28
SCHEDULE
(Continued)
REAL ESTATE ASSOCIATES LIMITED VII
INVESTMENTS IN, EQUITY IN EARNINGS OF AND DIVIDENDS RECEIVED FROM
AFFILIATES AND OTHER PERSONS
FOR THE YEARS ENDED
DECEMBER 31, 1995, 1994 AND 1993
NOTES: 1. Equity in income (losses) of the limited partnerships
represents the Partnership's allocable share of the net
results of operations from the limited partnerships for the
year. Equity in losses of the limited partnerships will be
recognized until the investment balance is reduced to zero or
below zero to an amount equal to future capital contributions
to be made by the Partnership.
2. Cash distributions from the limited partnerships will be
treated as a return of the investment and will reduce the
investment balance until such time as the investment is
reduced to an amount equal to additional contributions.
Distributions subsequently received will be recognized as
income.
<PAGE> 29
SCHEDULE III
REAL ESTATE ASSOCIATES LIMITED VII
REAL ESTATE AND ACCUMULATED DEPRECIATION
OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VII HAS INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Buildings, Furnishings
Number Outstanding & Equipment
of Mortgage Amount Carried Accumulated
Partnership/Location Units Loan Land at close of period Total Depreciation
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Anthracite Apartments 121 $3,523,673 $120,375 $4,193,703 $4,314,078 $1,501,762
Pittston, PA
Aristocrat Manor 113 1,807,809 265,158 3,004,365 3,269,523 1,081,283
Hot Springs, AR
Arkansas City Apartments 16 501,255 22,416 504,920 527,336 132,724
Arkansas City, AR
Bangor House 121 3,939,302 125,277 6,325,601 6,450,878 2,110,801
Bangor, ME
Bluewater Apartments 116 1,828,069 130,163 3,715,886 3,846,049 1,501,785
Port Huron, MI
Center City Apartments 176 5,015,387 157,315 6,116,391 6,273,706 2,195,512
Hazelton, PA
Cleveland Apartments I 50 832,245 60,000 1,397,376 1,457,376 688,358
Hayti, MO
Cleveland Apartments II 50 821,424 50,000 1,427,920 1,477,920 681,039
Hayti, MO
Cleveland Apartments III 21 365,044 25,000 604,465 629,465 301,598
Hayti, MO
Danbury Park Manor 151 1,996,177 183,752 4,239,666 4,423,418 1,602,120
Superior Township, MI
Desoto Apartments 42 689,537 50,000 1,223,646 1,273,646 570,232
Desoto, MO
Dexter Apartments 50 830,131 50,000 1,522,911 1,572,911 728,369
Dexter, MO
Goodlette Arms Apartments 250 3,181,463 500,000 6,930,905 7,430,905 2,737,335
Naples, FL
Henrico Arms 232 3,027,678 206,980 3,752,662 3,959,642 3,341,423
Richmond, VA
Jasper County Prop. 24 666,274 33,000 756,218 789,218 622,175
Heidelberg, MS
Meherrin Landings 42 1,256,766 105,000 1,281,083 1,386,083 712,852
Emporia, VA
Newton Apartments 36 959,959 55,017 1,051,674 1,106,691 891,707
Newton, MS
Oakview Apartments 32 1,115,413 75,000 1,153,487 1,228,487 287,691
Monticello, AR
Pachuta Apartments 16 446,965 20,680 484,754 505,434 404,743
Pachuta, MS
Parkway Towers Apartments 104 1,608,380 271,419 4,077,524 4,348,943 3,015,182
East Providence, RI
Rand Grove Village 212 2,919,561 491,000 6,026,792 6,517,792 3,535,987
Palatine, IL
Shubuta Properties 16 448,513 23,179 521,086 544,265 411,648
Shubuta, MS
South Glen Apartments 159 2,918,396 298,089 4,779,323 5,077,412 3,086,260
Trenton, MI
Sunland Terrace 80 2,352,979 55,500 2,980,337 3,035,837 1,400,740
Phoenix, AZ
Tradewinds East Apartments 150 2,406,763 117,692 5,056,058 5,173,750 2,013,480
Essexville, MI
Arrowsmith Apartments 70 1,307,427 252,480 2,312,151 2,564,631 1,006,076
Corpus Christi, TX
Ashland Manor 189 2,370,726 91,530 4,484,942 4,576,472 2,028,597
Toledo, OH
Bellair Manor Apartments 68 952,767 152,995 1,597,944 1,750,939 643,997
Niles, OH
Birch Manor Apartments I 60 637,785 60,889 1,373,175 1,434,064 557,357
Medina, OH
Birch Manor Apartments II 60 799,162 50,284 1,432,405 1,482,689 577,459
Medina, OH
</TABLE>
<PAGE> 30
REAL ESTATE ASSOCIATES LIMITED VII
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
(CONTINUED)
OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VII HAS INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Buildings, Furnishings
Number Outstanding & Equipment
of Mortgage Amount Carried Accumulated
Partnership/Location Units Loan Land at close of period Total Depreciation
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Clarkwood Apartments I 72 702,065 68,841 1,592,455 1,661,296 647,644
Elyria, OH
Clarkwood Apartments II 120 1,273,595 92,510 2,730,574 2,823,084 1,109,744
Elyria, OH
Hampshire House Apartments 150 3,036,226 101,163 4,062,821 4,163,984 1,629,844
Warren, OH
Ivywood Apartments 124 1,760,518 200,184 3,020,686 3,220,870 1,215,285
Columbus, OH
King Towers 68 807,585 97,919 1,532,422 1,630,341 614,766
Cincinnati, OH
Nantucket Apartments 60 677,006 34,676 1,344,874 1,379,550 543,811
Alliance, OH
Oak Hill Apartments 120 1,960,346 75,834 3,173,971 3,249,805 1,272,189
Franklin, PA
Oakwood Park I Apartments 50 278,893 63,123 889,197 952,320 363,985
Lorain, OH
Oakwood Park II Apartments 78 497,934 102,202 1,437,489 1,539,691 587,109
Lorain, OH
Richards Park Apartments 60 773,786 52,416 1,448,588 1,501,004 583,039
Elyria, OH
South Park Apartments 138 1,119,536 135,579 2,852,592 2,988,171 1,157,314
Elyria, OH
Warren Heights Apartments II 88 1,252,484 21,803 2,268,950 2,290,753 910,468
Warren, OH
White Cliff Apartments 72 1,189,568 62,911 1,966,523 2,029,434 787,137
Cincinnati, OH
Yorkview Estates 50 696,089 22,049 1,240,379 1,262,428 498,604
Massillon, OH
Edgewood Terrace II 258 4,107,312 525,000 9,636,726 10,161,726 5,670,749
Washington, DC
Pebbleshire Apartments 120 2,008,898 359,943 4,311,798 4,671,741 1,662,391
Vernon Hills, IL
Pinebrook Apartments 136 1,594,847 265,172 3,465,357 3,730,529 1,386,834
Lansing, MI
Ridgewood Towers 140 2,671,992 88,658 6,358,401 6,447,059 3,573,387
Moline, IL
Additional basis of real
estate due to capital
contribution to investee
limited partnership 332,570 8,022,823 8,355,393 4,477,537
----- ----------- ---------- ------------ ------------ -----------
TOTAL 4,731 $77,935,710 $6,802,743 $145,685,996 $152,488,739 $69,062,129
===== =========== ========== ============ ============ ===========
</TABLE>
<PAGE> 31
SCHEDULE III
(Continued)
REAL ESTATE ASSOCIATES LIMITED VII
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VII HAS INVESTMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTES: 1. Each local limited partnership has developed, owns and
operates the housing project. Substantially all project
costs, including construction period interest expense, were
capitalized by the limited partnerships.
2. Depreciation is provided for by various methods over the
estimated useful lives of the projects. The estimated
composite useful lives of the buildings are from 25 to 40
years.
3. Investments in property and equipment:
<TABLE>
<CAPTION>
Buildings,
Furnishings,
And
Land Equipment Total
---- ---------- -----
<S> <C> <C> <C>
Balance, December 31, 1992 $6,735,343 $143,257,008 $149,992,351
Net additions - 1993 - 596,553 596,553
---------- ------------ ------------
Balance, December 31, 1993 6,735,343 143,853,561 150,588,904
Net additions - 1994 36,000 1,077,123 1,113,123
---------- ------------ ------------
Balance, December 31, 1994 6,771,343 144,930,684 151,702,027
Net additions - 1995 31,400 755,312 786,712
---------- ------------ ------------
Balance, December 31, 1995 $6,802,743 $145,685,996 $152,488,739
========== ============ ============
</TABLE>
<PAGE> 32
SCHEDULE III
(Continued)
REAL ESTATE ASSOCIATES LIMITED VII
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VII HAS INVESTMENTS
DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Buildings,
Furnishings
And
Equipment
--------------
ACCUMULATED DEPRECIATION:
- ------------------------
<S> <C>
Balance, January 1, 1993 $51,460,199
Net additions, 1993 5,306,968
-----------
Balance, December 31, 1993 56,767,167
Net additions, 1994 5,731,210
-----------
Balance, December 31, 1994 62,498,377
Net additions, 1995 6,563,752
------------
Balance, December 31, 1995 $69,062,129
===========
</TABLE>
<PAGE> 33
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
REAL ESTATE ASSOCIATES LIMITED VII (the "Partnership") has no directors or
executive officers of its own.
National Partnership Investment Corp. ("NAPICO" or "the Managing General
Partner") is a wholly-owned subsidiary of Casden Investment Company, an
affiliate of The Casden Company. The following biographical information is
presented for the directors and executive officers of NAPICO with principal
responsibility for the Partnership's affairs.
CHARLES H. BOXENBAUM, 66, Chairman of the Board of Directors and Chief
Executive Officer of NAPICO.
Mr. Boxenbaum has been associated with NAPICO since its inception. He has been
active in the real estate industry since 1960, and prior to joining NAPICO was
a real estate broker with the Beverly Hills firm of Carl Rhodes Company.
Mr. Boxenbaum has been a guest lecturer at national and state realty
conventions, certified properties exchanger's seminars, Los Angeles Town Hall,
National Association of Home Builders, International Council of Shopping
Centers, Society of Conventional Appraisers, California Real Estate
Association, National Institute of Real Estate Brokers, Appraisal Institute,
various mortgage banking seminars, and the North American Property Forum held
in London, England. In 1963, he was the winner of the Snyder Award, the
highest annual award offered by the National Association of Real Estate Boards
for Best Exchange. He is one of the founders and a past director of the First
Los Angeles Bank, organized in November 1974. Mr. Boxenbaum was a member of
the Board of Directors of the National Housing Council. Mr. Boxenbaum received
his Bachelor of Arts degree from the University of Chicago.
BRUCE E. NELSON, 44, President and a director of NAPICO.
Mr. Nelson joined NAPICO in 1980 and became President in February 1989. He is
responsible for the operations of all NAPICO sponsored limited partnerships.
Prior to that he was primarily responsible for the securities aspects of the
publicly offered real estate investment programs. Mr. Nelson is also involved
in the identification, analysis, and negotiation of real estate investments.
From February 1979 to October 1980, Mr. Nelson held the position of Associate
General Counsel at Western Consulting Group, Inc., private residential and
commercial real estate syndicators. Prior to that time Mr. Nelson was engaged
in the private practice of law in Los Angeles. Mr. Nelson received his
Bachelor of Arts degree from the University of Wisconsin and is a graduate of
the University of Colorado School of Law. He is a member of the State Bar of
California and is a licensed real estate broker in California and Texas.
ALAN I. CASDEN, 50, Chairman of The Casden Company, an affiliate of Casden
Properties (formerly CoastFed Properties), a director and member of the audit
committee of NAPICO, and chairman of the Executive Committee of NAPICO.
Mr. Casden is Chairman of the Board, Chief Executive Officer and sole
shareholder of The Casden Company and Casden Investment Company. Prior to
that, he was the president and chairman of Mayer Group, Inc., which he joined
in 1975. He is also chairman of Mayer Management, Inc., a real estate
management firm. Mr. Casden has been involved in approximately $3 billion of
real estate financings and sales and has been responsible for the development
and construction of more than 12,000 apartment units and 5,000 single-family
homes and condominiums.
<PAGE> 34
Mr. Casden is a member of the American Institute of Certified Public
Accountants and of the California Society of Certified Public Accountants. Mr.
Casden is a member of the advisory board of the National Multi-Family Housing
Conference, the Multi-Family Housing Council, and the President's Council of
the California Building Industry Association. He also serves on the advisory
board to the School of Accounting of the University of Southern California. He
holds a Bachelor of Science and a Masters in Business Administration degree
from the University of Southern California.
HENRY C. CASDEN, 52, President, Chief Operating Officer and Secretary of The
Casden Company and a director and secretary of NAPICO.
Mr. Casden has been President and Chief Operating Officer of The Casden
Company, as well as a director of NAPICO since February 1988. He became
secretary of both companies in late 1994. From 1982 to 1988, Mr. Casden was of
counsel and a partner in the Los Angeles law firm of Troy, Casden & Gould.
From 1978 to 1981, he was of counsel and a partner in the Los Angeles law firm
of Loeb & Loeb. From 1972 to 1978, Mr. Casden was a member of the Beverly
Hills law firm of Fink & Casden, Professional Corporation.
Mr. Casden received his Bachelor of Arts degree from the University of
California at Los Angeles, and is a graduate of the University of San Diego Law
School. Mr. Casden is a member of the State Bar of California and has numerous
professional affiliations.
BRIAN D. GOLDBERG, 32, Chief Financial Officer of The Casden Company and a
director of NAPICO.
Mr. Goldberg joined The Casden Company in 1990 as Vice President of Finance and
became Chief Financial Officer in March 1991. Prior to joining The Casden
Company, Mr. Goldberg was with Arthur Andersen & Co., an international public
accounting firm, from August 1985 until July 1990 in their Los Angeles office.
He received his bachelor of science degree in Accounting from the University of
Denver. Mr. Goldberg is a member of the American Institute of Certified Public
Accountants and the California Society of Certified Public Accountants.
SHAWN HORWITZ, 36, Executive Vice President and Chief Financial Officer.
Mr. Horwitz joined NAPICO in 1990 and is responsible for the financial affairs
of NAPICO and the limited partnerships sponsored by NAPICO. Prior to joining
NAPICO, Mr. Horwitz was President of Star Sub Shops, Inc., a corporation
engaged in the business of selling fast food franchises, for approximately one
year, was an audit manager in the real estate industry group for Altschuler,
Melvin & Glasser for six years, and was an auditor with Arthur Young & Co. for
3 years.
Mr. Horwitz received his Bachelor of Commerce degree in accounting from Rhodes
University in South Africa and is a member of the Illinois Society of Certified
Public Accountants, the American Institute of Certified Public Accountants and
the South African Institute of Chartered Accountants.
BOB SCHAFER, 54, Vice President and Corporate Controller.
Mr. Schafer joined NAPICO in 1984 and is the Corporate Controller responsible
for the financial reporting function of the Company. Prior to this, he was a
Group and Division Controller at Bergen Brunswig for over eight years,
Controller at a Flintkote subsidiary for over four years, and Assistant
Controller at an electronics subsidiary of General Electric for two years.
Mr. Schafer is a member of the California Society of Certified Public
Accountants. He holds a Bachelor of Science degree in accounting from Woodbury
University, Los Angeles.
<PAGE> 35
PATRICIA W. TOY, 66, Senior Vice President - Communications and Assistant
Secretary.
Mrs. Toy joined NAPICO in 1977, following her receipt of an MBA from the
Graduate School of Management, UCLA. From 1952 to 1956, Mrs. Toy served as a
U.S. Naval Officer in communications and personnel assignments. She holds a
Bachelor of Arts Degree from the University of Nebraska.
MARK L. WALTHER, 35, Executive Vice President, General Counsel and Assistant
Secretary.
Mr. Walther joined NAPICO in 1987 and is responsible for the legal affairs of
the NAPICO sponsored limited partnerships. Prior to joining NAPICO, Mr.
Walther worked in the San Francisco law firm of Browne and Kahn which
specialized in construction litigation. Mr. Walther received his Bachelor of
Arts Degree in Political Science from the University of California, Santa
Barbara and is a graduate of the University of California, Davis, School of
Law. He is a member of the State Bar of Hawaii.
<PAGE> 36
ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS
Real Estate Associates Limited VII has no officers, directors or employees.
However, under the terms of the Restated Certificate and Agreement of Limited
Partnership, the Partnership is obligated to pay the Corporate General Partner
an annual management fee. The annual management fee is approximately equal to
.5 percent of the invested assets, including the Partnership's allocable share
of the mortgages related to the real estate properties held by local limited
partnerships. The fee is earned beginning in the month the Partnership makes
its initial contribution to the local partnership. In addition, the
Partnership reimburses the Corporate General Partner for certain expenses.
An affiliate of the General Partner is responsible for the on-site property
management for certain properties owned by the limited partnerships in which
the Partnership has invested.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
The General Partners own all of the outstanding general partnership
interests of REAL VII; no person is known to own beneficially in
excess of 5 percent of the outstanding limited partnership interests.
(b) With the exception of the initial limited partner, Bruce Nelson, who
is an officer of the Corporate General Partner, none of the officers
or directors of the Corporate General Partner own directly or
beneficially any limited partnership interests in REAL VII.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership has no officers, directors or employees of its own. All of its
affairs are managed by the Corporate General Partner, National Partnership
Investments Corp. The transactions with the Corporate General Partner are
primarily in the form of fees paid by the Partnership to the general partner
for services rendered to the Partnership, as discussed in Item 11 and in the
accompanying notes to the financial statements.
<PAGE> 37
ITEM 14. FINANCIAL STATEMENTS, SCHEDULES, EXHIBITS AND REPORT ON FORM
8-K
FINANCIAL STATEMENTS
Report of Independent Public Accountants.
Balance Sheets as of December 31, 1995 and 1994.
Statements of Operations for the years ended December 31, 1995, 1994 and 1993.
Statements of Partners' Deficiency for the years ended December 31, 1995, 1994
and 1993.
Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993.
Notes to Financial Statements.
FINANCIAL STATEMENT SCHEDULES
APPLICABLE TO REAL ESTATE ASSOCIATES LIMITED VII, REAL ESTATE ASSOCIATES IV AND
THE LIMITED PARTNERSHIPS IN WHICH REAL ESTATE ASSOCIATES LIMITED VII AND REAL
ESTATE ASSOCIATES IV HAVE INVESTMENTS.
Schedule - Investments in Limited Partnerships, December 31, 1995, 1994 and
1993.
Schedule III - Real Estate and Accumulated Depreciation, December 31, 1995.
The remaining schedules are omitted because the required information is
included in the financial statements and notes thereto or they are not
applicable or not required.
EXHIBITS
(3) Articles of incorporation and bylaws: The registrant is not
incorporated. The Partnership Agreement was filed with Form S-11
#2-84816 which is incorporated herein by reference.
(10) Material contracts: The registrant is not party to any material
contracts, other than the Restated Certificate and Agreement of
Limited Partnership dated May 24, 1983 and the forty-eight contracts
representing the partnership investment in local limited partnership's
as previously filed at the Securities Exchange Commission, File
#2-84816 which is hereby incorporated by reference.
(13) Annual report to security holders: Pages ____ to ____.
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the year ended December 31, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
PARTNERSHIP'S STATEMENTS OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 352,652
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 477,652
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,183,742
<CURRENT-LIABILITIES> 13,519
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (30,757,019)
<TOTAL-LIABILITY-AND-EQUITY> 19,183,742
<SALES> 0
<TOTAL-REVENUES> 40,373
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,442,434
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,323,426
<INCOME-PRETAX> (3,725,487)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,725,487)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,725,487)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
