February 13, 1998
Securities and Exchange Commission
Filer Support, Edgar
Operation Center, Stop 0-7
6432 General Green Way
Alexandria, VA 22312
Re: Boston Financial Qualified Housing Tax Credits Limited Partnership
Report on Form 10-Q for Quarter Ended December 31, 1997
File No. 0-16796
Dear Sir/Madam:
Pursuant to the requirements of Section 15(d) of the Securities Exchange Act
of 1934, filed herewith is a copy of subject report.
Very truly yours,
/s/George Fondulis
George Fondulis
Assistant Controller
QH1-10Q3.DOC
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
(Mark One)
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended December 31, 1997 Commission file number 0-16796
----------------- ----------------
Boston Financial Qualified Housing Limited Partnership
(Exact name of registrant as specified in its charter)
Delaware 04-2947737
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Arch Street, Boston, Massachusetts 02110-1106
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617)439-3911
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page No.
- ------------------------------ --------
Item 1. Financial Statements
Combined Balance Sheets - December 31, 1997 (Unaudited)
and March 31, 1997 1
Combined Statements of Operations (Unaudited) - For the Three and Nine
Months Ended December 31, 1997 and 1996 2
Statement of Changes in Partners' Equity (Deficiency) (Unaudited) -
For the Nine Months Ended December 31, 1997 3
Combined Statements of Cash Flows (Unaudited) - For the Nine
Months Ended December 31, 1997 and 1996 4
Notes to the Combined Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II - OTHER INFORMATION
Items 1-6 12
SIGNATURE 13
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
1997 1997
(Unaudited)
<S> <C> <C>
Assets
Cash and cash equivalents $ 302,931 $ 453,264
Tenant security deposits 3,293 4,709
Marketable securities, at fair value 1,991,013 1,923,032
Mortgagee escrow deposits 6,690 10,230
Replacement reserve escrow 6,092 6,092
Bond trusts 124,676 86,209
Investments in Local Limited Partnerships,
net of reserve for valuation of
$647,315 and $650,453, respectively (Note 1) 2,999,668 4,645,508
Deferred charges, net of accumulated
amortization of $34,663 and $32,245, respectively 45,951 48,369
Rental property at cost, net of accumulated
depreciation of $418,924 and $388,378, respectively 1,127,699 1,158,106
Other assets 28,169 33,588
------------ ------------
Total Assets $ 6,636,182 $ 8,369,107
============ ============
Liabilities and Partners' Equity
Accounts payable to affiliates $ 11,058 $ 34,790
Accounts payable and accrued expenses 25,975 46,346
Accrued interest 98,313 68,819
Tenant security deposits payable 4,306 4,617
Bonds payable 1,210,000 1,210,000
------------ ------------
Total Liabilities 1,349,652 1,364,572
------------ ------------
Minority interest in Local Limited Partnership 58,632 58,847
------------ ------------
General, Initial and Investor Limited Partners' Equity 5,224,039 6,958,668
Net unrealized gains (losses) on marketable securities 3,859 (12,980)
------------ ------------
Total Partners' Equity 5,227,898 6,945,688
------------ ------------
Total Liabilities and Partners' Equity $ 6,636,182 $ 8,369,107
============ ============
</TABLE>
the accompanying notes are an integral part of these combined
financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
COMBINED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended December 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31, December 31, December 31,
1997 1996 1997 1996
-------------- -------------- ------------- ---------
(Note 2) (Note 2)
<S> <C> <C> <C> <C>
Revenues:
Rental $ 57,934 $ 58,028 $ 172,266 $ 162,452
Investment 35,467 32,949 107,755 100,812
Other 2,929 2,094 29,311 7,765
------------- ------------- ------------- -------------
Total Revenue 96,330 93,071 309,332 271,029
------------- ------------- ------------- -------------
Expenses:
General and administrative
(includes reimbursements to
affiliates in the amounts of
$119,312 and $94,050 in 1997
and 1996, respectively) 73,898 50,350 204,655 132,131
Bad debt expense 52,665 - 52,665 -
Rental operations, exclusive
of depreciation 25,312 18,259 77,914 73,695
Interest 29,498 35,432 88,554 100,671
Depreciation 10,182 10,182 30,546 30,546
Amortization 20,923 23,673 62,769 71,049
Adjustment to provision for
valuation of investments
in Local Limited Partnerships - (70,916) (55,803) (235,518)
------------- ------------- ------------- -------------
Total Expenses 212,478 66,980 461,300 172,574
------------- ------------- ------------- -------------
Income (loss) before minority
interest and equity in losses of
Local Limited Partnerships (116,148) 26,091 (151,968) 98,455
Minority interest in loss of
Local Limited Partnership 63 66 215 413
Equity in losses of
Local Limited Partnerships (576,523) (577,318) (1,582,876) (1,778,344)
------------- ------------- ------------- -------------
Net Loss $ (692,608) $ (551,161) $ (1,734,629) $ (1,679,476)
============= ============= ============= =============
Net Loss allocated:
To General Partners $ (6,926) $ (5,512) $ (17,346) $ (16,795)
To Limited Partners (685,682) (545,649) (1,717,283) (1,662,681)
------------- ------------- ------------- -------------
$ (692,608) $ (551,161) $ (1,734,629) $ (1,679,476)
============= ============= ============= =============
Net Loss per Limited
Partnership Unit (50,000 Units) $ (13.72) $ (10.91) $ (34.35) $ (33.25)
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these combined
financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
(Unaudited)
For the Nine Months Ended December 31, 1997
<TABLE>
<CAPTION>
Net
Initial Investor Unrealized
General Limited Limited Gains
Partners Partners Partners (Losses) Total
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1997 $ (364,910) $ 4,648 $ 7,318,930 $ (12,980) $ 6,945,688
Net change in net unrealized losses
on marketable securities
available for sale - - - 16,839 16,839
Net Loss (17,346) - (1,717,283) - (1,734,629)
----------- ------- ----------- ---------- ------------
Balance at December 31, 1997 $ (382,256) $ 4,648 $ 5,601,647 $ 3,859 $ 5,227,898
=========== ======= =========== ========== ============
</TABLE>
The accompanying notes are an integral part of these combined
financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
------------ --------
<S> <C> <C>
Net cash used for operating activities $ (126,154) $ (93,020)
----------- -----------
Cash flows from investing activities:
Purchases of marketable securities (1,892,652) (885,036)
Proceeds from sales and maturities of marketable securities 1,842,880 1,004,618
Cash distributions received from Local Limited Partnerships 25,732 33,531
Capital contribution to Local Limited Partnership - (3,000)
Advances to affiliates - (318,651)
Purchase of rental property and equipment (139) (55,557)
----------- -----------
Net cash used for investing activities (24,179) (224,095)
----------- -----------
Net decrease in cash and cash
equivalents (150,333) (317,115)
Cash and cash equivalents, beginning 453,264 678,567
----------- -----------
Cash and cash equivalents, ending $ 302,931 $ 361,452
=========== ===========
Supplemental disclosure:
Cash paid for interest $ 59,060 $ 100,671
=========== ===========
</TABLE>
The accompanying notes are an integral part of these combined
financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS
(Unaudited)
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the financial
statements and notes thereto included with the Partnership's 10-K for the year
ended March 31, 1997. In the opinion of management, these financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the Partnership's financial position and results of
operations. The results of operations for the periods may not be indicative of
the results to be expected for the year. Certain reclassifications have been
made to prior period financial statements to conform to current period
classifications.
The Managing General Partner has elected to report results of the Local Limited
Partnerships on a 90 day lag basis, because the Local Limited Partnerships
report their results on a calendar year basis. Accordingly, the financial
information about the Local Limited Partnerships that is included in the
accompanying combined financial statements is as of September 30, 1997 and 1996.
1. Investments in Local Limited Partnerships
The Partnership has acquired interests in thirty-three Local Limited
Partnerships, excluding Hughes Apartments Ltd. ("Hughes"), which own and operate
multi-family housing complexes, all of which are government-assisted. The
Partnership, as Investor Limited Partner pursuant to the various Local Limited
Partnership Agreements, has generally acquired a 99% interest in the profits,
losses, tax credits and cash flows from operations of each of the Local Limited
Partnerships. Upon dissolution, proceeds will be distributed according to each
respective partnership agreement.
A summary of Investments in Local Limited Partnerships, excluding Hughes, at
December 31, 1997, is as follows:
<TABLE>
<CAPTION>
<S> <C>
Capital contributions to Local Limited Partnerships and purchase
price paid to withdrawing partners of Local Limited Partnerships $ 36,256,165
Cumulative equity in losses of Local Limited Partnerships
(excluding cumulative unrecognized losses of $15,096,126) (35,024,736)
Cumulative cash distributions received from Local Limited Partnerships (1,598,165)
----------------
Investments in Local Limited Partnerships before adjustment (366,736)
Excess of investment cost over the underlying net assets acquired:
Acquisition fees and expenses 4,770,577
Accumulated amortization of acquisition fees and expenses (1,131,173)
----------------
Investments in Local Limited Partnerships 3,272,668
Reserve for Valuation of Investments in
Local Limited Partnerships (273,000)
-----------------
$ 2,999,668
=================
</TABLE>
The Partnership's share of net losses of the Local Limited Partnerships for the
nine months ended December 31, 1997 is $4,143,716.
For the nine months ended December 31, 1997, the Partnership has not recognized
$2,580,818 of equity in losses relating to nineteen Local Limited Partnerships
where cumulative equity in losses and cumulative distributions from Local
Limited Partnerships exceeded its total investments in these Local Limited
Partnerships.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Supplemental Combining Schedules
Balance Sheets
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing Hughes
Tax Credits Apartments
L.P. (A) Ltd.(B) Eliminations Combined
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 301,740 $ 1,191 $ - $ 302,931
Tenant security deposits - 3,293 - 3,293
Marketable securities, at fair value 1,991,013 - - 1,991,013
Accounts receivable, affiliate 53,490 - (53,490) -
Mortgagee escrow deposits - 6,690 - 6,690
Replacement reserve escrow - 6,092 - 6,092
Bond trusts - 124,676 - 124,676
Investments in Local Limited
Partnerships, net 2,883,322 - 116,346 2,999,668
Deferred charges, net - 45,951 - 45,951
Rental property at cost, net - 1,127,699 - 1,127,699
Other assets 26,366 1,803 - 28,169
------------ ------------ -------- -------------
Total Assets $ 5,255,931 $ 1,317,395 $ 62,856 $ 6,636,182
============ ============ ======== =============
Liabilities and Partners' Equity (Deficiency)
Accounts payable to affiliates $ 11,058 $ 53,490 $(53,490) $ 11,058
Accounts payable and accrued
expenses 16,975 9,000 - 25,975
Accrued interest - 98,313 - 98,313
Tenant security deposits payable - 4,306 - 4,306
Bonds payable - 1,210,000 - 1,210,000
------------ ------------ -------- -------------
Total Liabilities 28,033 1,375,109 (53,490) 1,349,652
------------ ------------ -------- -------------
Minority interest in Local Limited
Partnership - - 58,632 58,632
------------ ------------ -------- -------------
General, Initial and Investor
Limited Partners' Equity (Deficiency) 5,224,039 (57,714) 57,714 5,224,039
Net unrealized gain on
marketable securities 3,859 - - 3,859
------------ ------------ -------- -------------
Total Partners' Equity (Deficiency) 5,227,898 (57,714) 57,714 5,227,898
------------ ------------ -------- -------------
Total Liabilities and
Partners' Equity (Deficiency) $ 5,255,931 $ 1,317,395 $ 62,856 $ 6,636,182
============ ============ ======== =============
</TABLE>
(A) As of December 31, 1997. (B) As of September 30, 1997.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Supplemental Combining Schedules (continued)
Statements of Operations
For the Three Months Ended December 31, 1997
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing Hughes
Tax Credits Apartments
L.P. (A) Ltd.(B) Eliminations Combined
<S> <C> <C> <C> <C>
Revenue:
Rental $ - $ 57,934 $ - $ 57,934
Investment 35,467 - - 35,467
Other 1,375 1,554 - 2,929
------------- ------------ --------- ------------
Total Revenue 36,842 59,488 - 96,330
------------- ------------ --------- ------------
Expenses:
General and administrative 73,898 - - 73,898
Bad debt expense 52,665 - - 52,665
Rental operations, exclusive
of depreciation - 25,312 - 25,312
Interest - 29,498 - 29,498
Depreciation - 10,182 - 10,182
Amortization 20,117 806 - 20,923
------------- ------------ --------- ------------
Total Expenses 146,680 65,798 - 212,478
------------- ------------ --------- ------------
Loss before minority interest
and equity in losses of Local Limited
Partnerships (109,838) (6,310) - (116,148)
Minority interest in loss of
Local Limited Partnership - - 63 63
Equity in losses of Local
Limited Partnerships (582,770) - 6,247 (576,523)
------------- ------------ --------- ------------
Net Loss $ (692,608) $ (6,310) $ 6,310 $ (692,608)
============= ============ ========= ============
</TABLE>
(A) For the three months ended December 31, 1997.
(B) For the three months ended September 30, 1997.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Supplemental Combining Schedules (continued)
Statements of Operations
For the Nine Months Ended December 31, 1997
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing Hughes
Tax Credits Apartments
L.P. (A) Ltd.(B) Eliminations Combined
<S> <C> <C> <C> <C>
Revenue:
Rental $ - $ 172,266 $ - $ 172,266
Investment 107,599 156 - 107,755
Other 23,756 5,555 - 29,311
------------- ------------ --------- ------------
Total Revenue 131,355 177,977 - 309,332
------------- ------------ --------- ------------
Expenses:
General and administrative 204,655 - - 204,655
Bad debt expense 52,665 - - 52,665
Rental operations, exclusive
of depreciation - 77,914 - 77,914
Interest - 88,554 - 88,554
Depreciation - 30,546 - 30,546
Amortization 60,351 2,418 - 62,769
Adjustment to provision
for valuation of
investments in Local
Limited Partnerships (55,803) - - (55,803)
------------- ------------ --------- ------------
Total Expenses 261,868 199,432 - 461,300
------------- ------------ --------- ------------
Loss before minority interest
and equity in losses of
Local Limited Partnerships (130,513) (21,455) - (151,968)
Minority interest in loss of
Local Limited Partnership - - 215 215
Equity in losses of Local
Limited Partnerships (1,604,116) - 21,240 (1,582,876)
------------- ------------ --------- ------------
Net Loss $ (1,734,629) $ (21,455) $ 21,455 $ (1,734,629)
============= ============ ========= ============
</TABLE>
(A) For the nine months ended December 31, 1997.
(B) For the nine months ended September 30, 1997.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Supplemental Combining Schedules (continued)
Statements of Cash Flows
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing Hughes
Tax Credits Apartments
L.P. (A) Ltd.(B) Eliminations Combined
<S> <C> <C> <C> <C>
Net cash used for
operating activities $ (124,940) $ (1,214) $ - $ (126,154)
----------- ---------- --------- ------------
Cash flows from investing activities:
Purchases of marketable securities (1,892,652) - - (1,892,652)
Proceeds from sales and maturities
of marketable securities 1,842,880 - - 1,842,880
Cash distributions received from
Local Limited Partnerships 25,732 - - 25,732
Purchase of rental property and
equipment - (139) - (139)
----------- ---------- --------- ------------
Net cash used for
investing activities (24,040) (139) - (24,179)
----------- ---------- --------- ------------
Net decrease in cash and
cash equivalents (148,980) (1,353) - (150,333)
Cash and cash equivalents, beginning 450,720 2,544 - 453,264
----------- ---------- --------- ------------
Cash and cash equivalents, ending $ 301,740 $ 1,191 $ - $ 302,931
=========== ========== ========= ============
</TABLE>
(A) For the nine months ended December 31, 1997.
(B) For the nine months ended September 30, 1997.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At December 31, 1997, the Partnership, including the combined entity (Hughes
Apartments Ltd.), had cash and cash equivalents of $302,931 compared with
$453,264 at March 31, 1997. The decrease is attributable to purchases of
marketable securities in excess of proceeds from sales and maturities of
marketable securities and cash used for operations. These decreases to cash are
offset by cash distributions received from Local Limited Partnerships.
At December 31, 1997, approximately $1,679,000 of cash, cash equivalents and
marketable securities has been designated as Reserves. The Reserves were
established to be used for working capital of the Partnership and contingencies
related to the ownership of Local Limited Partnership interests. Reserves may be
used to fund Partnership operating deficits, if the Managing General Partner
deems funding appropriate.
Since the Partnership invests as a limited partner, the Partnership has no
contractual duty to provide additional funds to Local Limited Partnerships
beyond its specified investment. Thus, at December 31, 1997, the Partnership had
no contractual or other obligation to any Local Limited Partnership which had
not been paid or provided for.
In the event a Local Limited Partnership encounters operating difficulties
requiring additional funds, the Partnership's management might deem it in its
best interest to provide such funds, voluntarily, in order to protect its
investment.
Cash Distributions
No cash distributions were made during the nine months ended December 31, 1997.
Results of Operations
The Partnership's results of operations for the three and nine months ended
December 31, 1997 resulted in a net loss of $692,608 and $1,734,629, as compared
to net losses of $551,161 and $1,679,476 for the same periods in 1996. The
increase in net loss is primarily attributable to a decrease in the adjustment
to the reserve for valuation of investments in a Local Limited Partnership as
the limitation has been reached at June 30, 1997. The increase in net loss is
also attributable to bad debt expense recognized for one Local Limited
Partnership for uncollectible accounts receivable, and an increase in general
and administrative expenses. General and administrative expenses were low in
1996 due to a reclassification of Hughes' expenses to accounts receivable due to
the combination of Hughes. These increase in net loss are offset by a decrease
in equity in losses of Local Limited Partnerships due to an increase in losses
not recognized by the Partnership for Local Limited Partnerships whose
cumulative equity in losses and cumulative distributions exceeded its total
investment in these partnerships.
Property Discussions
Limited Partnership interests have been acquired in thirty-four Local Limited
Partnerships which own and operate rental properties located in nineteen states.
Fourteen of the properties with 774 apartments were newly constructed and twenty
of the properties with 2,091 apartments were rehabilitated.
Most of the thirty-four Local Limited Partnerships have stabilized operations.
The majority of these stabilized properties are operating at break-even or
generating operating cash flow.
A number of properties are experiencing operating difficulties and cash flow
deficits due to a variety of reasons. The Local General Partners of those
properties have funded operating deficits through project expense loans,
subordinated loans or payments from operating escrows. In certain instances
where the Local General Partners have stopped funding deficits because their
obligation to do so has expired or otherwise, the Managing General Partner is
working with the Local General Partners to increase operating income, reduce
expenses or refinance the debt at lower interest rates in order to improve cash
flow.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Property Discussions (continued)
As previously reported, the Managing General Partner was successful in reaching
a one year workout agreement with HUD on Pebble Creek, located in Arlington,
Texas effective June 1, 1997. The property had been experiencing significant
operating problems which resulted in a mortgage default and subsequent mortgage
assignment to HUD. The workout included provisions for substantial capital
improvements. These capital improvements were completed on time and in
accordance with the workout. Currently, the Managing General Partner is
negotiating with HUD to extend and/or modify the existing workout agreement
which expires in the second quarter of 1998. Also, the Managing General Partner
is involved in negotiations for the appointment of a replacement Local General
Partner.
Occupancy is currently 95%.
As previously reported, Cass House and Verdean Gardens, Massachusetts properties
which share a common Local General Partner, continue to operate below break-even
in a slow rental market. Both properties, as well as Bittersweet Apartments,
have received SHARP subsidies in the past which have been an important part of
their annual income. Effective October 1, 1997, the Massachusetts Housing
Finance Agency (MHFA) which provided the SHARP subsidies, withdrew future SHARP
mortgage subsidies from its portfolio of 77 SHARP subsidized properties. The
Managing General Partner has joined a group of interested parties and is working
with MHFA to find a solution to the problems that will result as a result of
withdrawn subsidies. Given existing operating deficits and the dependence on
these subsidies by Cass House and Verdean Gardens, it is likely that both
properties will default on their mortgage obligations by the first quarter of
1998. Bittersweet is also dependent upon these subsidies and default is a
possibility. It is possible that Partnership Reserves will be used to support
these properties until these issues can be resolved. The carrying value of the
Partnership's investment in these Local Limited Partnerships is zero at December
31, 1997.
Hughes Apartments, located in Mandan, North Dakota, continues to generate
operating deficits despite increased occupancy of 98%. As we previously
reported, the Managing General Partner negotiated a forbearance agreement with
the lender which included an infusion of additional capital to cure the mortgage
default and fund capital repairs. A portion of the capital repairs is being
funded from Partnership Reserves. The Managing General Partner continues to
monitor property operations closely.
The Local General Partner for Brentwood Manor II, in Nashua, New Hampshire,
filed for protection under the provisions of the Chapter 7 bankruptcy laws. The
Managing General Partner's request to replace the Local General Partner with a
substitute general partner was denied by the lender. The Managing General
Partner has replaced the former Local General Partner as management agent of the
property with an affiliated third-party management agent. As noted previously,
although full mortgage payments are being made at this time, partial mortgage
payments were made earlier in the year prior to the former Local General Partner
declaring bankruptcy. The lender requires that the small deficit generated by
the deficient payments be cured immediately. The Managing General Partner is
negotiating with both the lender and the former Local General Partner to develop
a plan for the payment of this amount. It is possible that Partnership Reserves
will be used to pay this deficit.
Boulevard Common, located in Chicago, Illinois, is expected to generate a small
operating deficit in 1997. Although occupancy is currently 91%, expenses are
higher than expected due to increasing maintenance and capital needs, security
issues and high turnover at the property. The Local General Partner is
requesting that the Managing General Partner assist in funding capital
improvements. The Managing General Partner is reviewing this request and has
requested that the Local General Partner provide a workout plan detailing where
and how these funds will be used.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Property Discussions (continued)
Sierra Pointe, located in California, is experiencing operating deficits due to
low occupancy. The current occupancy is at 74%. The Managing General Partner and
Local General Partner are working with the Housing Authority to fill vacant
units. Further, the Managing General Partner and Local General Partner are
currently negotiating a replacement for the current management agent.
600 Dakota, Graver Inn and Barrington Manor, located in North Dakota, and
Duluth, located in South Dakota, which have the same Local General Partner, have
been performing satisfactorily. However, affiliates of the Managing General
Partner have been working with the Local General Partner whom has raised some
concerns over the long-term financial health of the properties. In an effort to
reduce possible future risk, the Managing General Partner recently consummated
the transfer of 50% of the Partnership's capital and profits in the properties
to an affiliate of the Local General Partner. The Managing General Partner has
the right to transfer the Partnership's remaining interest to the Local General
Partner any time after one year has elapsed.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K
(a)Exhibits - None
(b)Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended December 31, 1997.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DATED: February 13, 1998 BOSTON FINANCIAL QUALIFIED HOUSING
LIMITED PARTNERSHIP
By: 29 Franklin Street, Inc.,
its Managing General Partner
/s/William E. Haynsworth
William E. Haynsworth
Managing Director, Vice President and
Chief Operating Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> DEC-31-1997
<CASH> 302,931
<SECURITIES> 1,991,013
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 1,127,699
<DEPRECIATION> 000
<TOTAL-ASSETS> 6,636,182<F1>
<CURRENT-LIABILITIES> 000
<BONDS> 1,210,000
000
000
<COMMON> 000
<OTHER-SE> 5,227,898
<TOTAL-LIABILITY-AND-EQUITY> 6,636,182<F2>
<SALES> 000
<TOTAL-REVENUES> 309,332<F3>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 372,746<F4>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 88,554
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (1,734,629)<F5>
<EPS-PRIMARY> (34.35)
<EPS-DILUTED> 000
<FN>
<F1>Included in total assets is $3,293 of tenant security deposits, Investments
in Local Limited Partnerships of $2,999,668, deferred charges, net $45,951, bond
trusts of $124,676, mortgagee escrow deposits of $6,690, replacement reserve
escrow of $6,092 and other assets of $28,169. <F2>Included in total liability
and equity is accounts payable to affiliates $11,058, accounts payable and
accrued expenses of $25,975, accrued interest of $98,313, tenant security
deposits payable of $4,306, and $58,632 of minority interest in Local Limited
Partnership. <F3>Total revenue includes rental of $172,266, investment of
$107,755 and other of $29,311. <F4>Included in other expenses is an adjustment
to the provision for valuation of investments in Local Limited Partnerships of
$(55,803), general and administrative of $204,655, bad debt expense of $52,665,
rental operations, exclusive of depreciation of $77,914, depreciation of $30,546
and amortization of $62,769. <F5>Net loss reflects equity in losses of Local
Limited Partnerships of $(1,582,876) and minority interest in loss of Local
Limited Partnership of $215.
</FN>
</TABLE>
