November 9, 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 Limited Partnership
Report on Form 10-Q for Quarter Ended September 30, 1998
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/Stephen Guilmette
Stephen Guilmette
Assistant Controller
QH1-Q1.DOC
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
----------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------- -------------------------
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 - September 30, 1998 (Unaudited)
and March 31, 1998 1
Combined Statements of Operations (Unaudited) -
For the Three and Six Months Ended
September 30, 1998 and 1997 2
Combined Statement of Changes in Partners'
Equity (Deficiency) (Unaudited) -
For the Six Months Ended September 30, 1998 3
Combined Statements of Cash Flows (Unaudited) - For the Six
Months Ended September 30, 1998 and 1997 4
Notes to the Combined Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II - OTHER INFORMATION
Items 1-6 14
SIGNATURE 15
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, March 31,
1998 1998
(Unaudited)
<S> <C> <C>
Assets
Cash and cash equivalents $ 238,216 $ 243,723
Tenant security deposits 3,976 4,731
Accounts receivable, net 3,000 3,000
Marketable securities, at fair value 2,072,598 2,025,236
Mortgagee escrow deposits 4,993 6,020
Replacement reserve escrow 6,398 6,398
Bond trusts 107,572 107,572
Investments in Local Limited Partnerships,
net of reserve for valuation of
$685,201 (Note 1) 1,462,744 1,809,096
Deferred charges, net of accumulated
amortization of $37,081 and $35,469
in 1998 and 1997, respectively 43,533 45,145
Rental property, at cost, net of
accumulated depreciation 1,124,819 1,145,823
Other assets 34,267 32,193
------------- -------------
Total Assets $ 5,102,116 $ 5,428,937
============= =============
Liabilities and Partners' Equity
Accounts payable to affiliates $ 10,696 $ 22,773
Accounts payable and accrued expenses 19,722 27,577
Accrued interest 68,819 68,819
Tenant security deposits payable 3,973 4,731
Bonds payable 1,210,000 1,210,000
------------- -------------
Total Liabilities 1,313,210 1,333,900
------------- -------------
Minority interest in Local Limited Partnership 58,501 58,589
------------- -------------
General, Initial and Investor Limited Partners' Equity 3,699,164 4,031,390
Net unrealized gains on marketable securities 31,241 5,058
------------- -------------
Total Partners' Equity 3,730,405 4,036,448
------------- -------------
Total Liabilities and Partners' Equity $ 5,102,116 $ 5,428,937
============= =============
</TABLE>
The accompanying notes are integral part of these combined financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three and Six Months Ended September 30, 1998 and 1997
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30, September 30, September 30,
1998 1997 1998 1997
-------------- ------------- ------------- --------------
Revenues:
<S> <C> <C> <C> <C>
Rental $ 57,678 $ 55,948 $ 114,303 $ 114,332
Investment 28,909 34,597 60,500 72,288
Other 70,018 2,611 92,564 26,382
-------------- ------------- ------------- --------------
Total Revenue 156,605 93,156 267,367 213,002
-------------- ------------- ------------- --------------
Expenses:
General and administrative
(includes reimbursements to
affiliates in the amounts of
$62,113 and $83,647 in 1998
and 1997, respectively) 67,660 56,515 153,424 130,757
Rental operations, exclusive
of depreciation 23,131 20,879 42,556 52,602
Interest 32,031 20,778 62,035 59,056
Depreciation 10,182 10,182 20,364 20,364
Amortization 8,750 20,924 17,289 41,846
Adjustment to provision for
valuation of investments
in Local Limited Partnerships - - - (55,803)
-------------- ------------- ------------- --------------
Total Expenses 141,754 129,278 295,668 248,822
-------------- ------------- ------------- --------------
Income (loss) before minority
interest and equity in losses of
Local Limited Partnerships 14,851 (36,122) (28,301) (35,820)
Minority interest in loss (income) of
Local Limited Partnership 63 (49) 88 152
Equity in losses of
Local Limited Partnerships (45,275) (416,940) (304,013) (1,006,353)
-------------- ------------- ------------- --------------
Net Loss $ (30,361) $ (453,111) $ (332,226) $ (1,042,021)
============== ============= ============= ==============
Net Loss allocated:
To General Partners $ (303) $ (4,531) $ (3,322) $ (10,420)
To Limited Partners (30,058) (448,580) (328,904) (1,031,601)
-------------- ------------- ------------- --------------
$ (30,361) $ (453,111) $ (332,226) $ (1,042,021)
============== ============= ============= ==============
Net Loss per Limited
Partnership Unit (50,000 Units) $ (0.60) $ (8.97) $ (6.58) $ (20.63)
============== ============= ============= ==============
</TABLE>
The accompanying notes are integral part of these combined financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
COMBINED STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
(Unaudited)
For the Six Months Ended September 30, 1998
<TABLE>
<CAPTION>
Initial Investor Net
General Limited Limited Unrealized
Partners Partners Partners Gains Total
<S> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1998 $ (394,183) $ 4,648 $ 4,420,925 $ 5,058 $ 4,036,448
----------- ----------- ----------- ----------- -----------
Comprehensive Loss:
Net Loss (3,322) - (328,904) - (332,226)
Change in net unrealized gains
on marketable securities
available for sale - - - 26,183 26,183
----------- ----------- ----------- ----------- -----------
Comprehensive Loss (3,322) - (328,904) 26,183 (306,043)
----------- ----------- ----------- ----------- -----------
Balance at September 30, 1998 $ (397,505) $ 4,648 $ 4,092,021 $ 31,241 $ 3,730,405
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are 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 Six Months Ended September 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Net cash used for operating activities $ (97,006) $ (91,654)
------------- -------------
Cash flows from investing activities:
Purchases of marketable securities (795,150) (1,493,980)
Proceeds from sales and maturities of marketable securities 774,040 1,477,956
Cash distributions received from Local Limited Partnerships 112,609 25,732
Additions to of rental property and equipment - (139)
------------- -------------
Net cash provided by investing activities 91,499 9,569
------------- -------------
Net decrease in cash and cash equivalents (5,507) (82,085)
Cash and cash equivalents, beginning 243,723 453,264
------------- ------------
Cash and cash equivalents, ending $ 238,216 $ 371,179
============= =============
Supplemental disclosure:
Cash paid for interest $ 62,035 $ 59,056
============= =============
</TABLE>
The accompanying notes are 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, 1998. 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.
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 of the Local Limited Partnerships that is included in the
accompanying financial statements is as of June 30, 1998 and 1997.
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, generally owns a 99% interest in the profits, losses,
tax credits and cash flows from operations of each of the Local Limited
Partnerships, with the exception of Barrington Manor, Graver Inn, 600 Dakota and
Duluth which are 49.5%. Upon dissolution, proceeds will be distributed according
to each respective partnership agreement.
A summary of Investments in Local Limited Partnerships, excluding Hughes, at
September 30, 1998 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 $24,846,554) (35,981,012)
Cumulative cash distributions received from Local Limited Partnerships (1,715,158)
----------------
Investments in Local Limited Partnerships before adjustment (1,440,005)
Excess of investment cost over the underlying net assets acquired:
Acquisition fees and expenses 4,725,764
Accumulated amortization of acquisition fees and expenses (1,137,814)
----------------
Investments in Local Limited Partnerships 2,147,945
Reserve for Valuation of Investments in
Local Limited Partnerships (685,201)
----------------
$ 1,462,744
----------------
</TABLE>
The Partnership's share of net losses of the Local Limited Partnerships,
excluding Hughes, for the six months ended September 30, 1998 is $2,549,541. For
the six months ended September 30, 1998, the Partnership has not recognized
$2,330,835 of equity in losses relating to twenty-six 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. Effect of Recently Issued Accounting Standard
In June, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income". The
Statement, which is effective for fiscal years beginning after December 15,
1997, requires that the Partnership display an amount representing total
comprehensive income for the period in its financial statements. The Partnership
adopted the new standard effective April 1, 1998.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(Unaudited)
3. Supplemental Combining Schedules
<TABLE>
<CAPTION>
Balance Sheets
Boston Financial
Qualified Housing Hughes
Tax Credits Apartments Combined
L.P. (A) Ltd.(B) Eliminations (A)
Assets
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 235,604 $ 2,612 $ - $ 238,216
Tenant security deposits - 3,976 - 3,976
Accounts receivable, net 56,490 - (53,490) 3,000
Marketable securities, at fair value 2,072,598 - - 2,072,598
Mortgagee escrow deposits - 4,993 - 4,993
Replacement reserve escrow - 6,398 - 6,398
Bond trusts - 107,572 - 107,572
Investments in Local Limited
Partnerships, net 1,365,892 - 96,852 1,462,744
Deferred charges, net - 43,533 - 43,533
Rental property at cost, net - 1,092,283 32,536 1,124,819
Other assets 27,853 6,414 - 34,267
------------- ------------- ------------- -------------
Total Assets $ 3,758,437 $ 1,267,781 $ 75,898 $ 5,102,116
============= ============= ============= =============
Liabilities and Partners' Equity (Deficiency)
Accounts payable to affiliates $ 10,696 $ 53,490 $ (53,490) $ 10,696
Accounts payable and accrued
expenses 17,336 2,386 - 19,722
Accrued interest - 68,819 - 68,819
Tenant security deposits payable - 3,973 - 3,973
Bonds payable - 1,210,000 - 1,210,000
------------- ------------- ------------- -------------
Total Liabilities 28,032 1,338,668 (53,490) 1,313,210
------------- ------------- ------------- -------------
Minority interest in Local Limited
Partnership - - 58,501 58,501
------------- ------------ -------------- -------------
General, Initial and Investor
Limited Partners' Equity (Deficiency) 3,699,164 (70,887) 70,887 3,699,164
Net unrealized gains on marketable
securities 31,241 - - 31,241
------------- ------------- ------------- -------------
Total Partners' Equity (Deficiency) 3,730,405 (70,887) 70,887 3,730,405
------------- ------------- ------------- -------------
Total Liabilities and
Partners' Equity (Deficiency) $ 3,758,437 $ 1,267,781 $ 75,898 $ 5,102,116
============= ============= ============= =============
</TABLE>
(A) As of September 30, 1998.
(B) As of June 30, 1998.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(Unaudited)
3. Supplemental Combining Schedules (continued)
<TABLE>
<CAPTION>
Statements of Operations
For the Three Months Ended September 30, 1998
Boston Financial
Qualified Housing Hughes
Tax Credits Apartments Combined
L.P. (A) Ltd.(B) Eliminations (A)
Revenue:
<S> <C> <C> <C> <C>
Rental $ - $ 57,678 $ - $ 57,678
Investment 28,886 23 - 28,909
Other 67,907 2,111 - 70,018
------------- ------------- ------------- -------------
Total Revenue 96,793 59,812 - 156,605
------------- ------------- ------------- -------------
Expenses:
General and administrative 67,660 - - 67,660
Rental operations, exclusive
of depreciation - 23,131 - 23,131
Interest - 32,031 - 32,031
Depreciation - 10,182 - 10,182
Amortization 7,944 806 - 8,750
------------- ------------- ------------- -------------
Total Expenses 75,604 66,150 - 141,754
------------- ------------- ------------- -------------
Loss before minority interest in losses
of Local Limited Partnership and
equity in losses of Local Limited
Partnerships 21,189 (6,338) - 14,851
Minority interest in losses of
Local Limited Partnership - - 63 63
Equity in losses of Local
Limited Partnerships (51,550) - 6,275 (45,275)
------------- ------------- ------------- -------------
Net Loss $ (30,361) $ (6,338) $ 6,338 $ (30,361)
============= ============= ============= =============
</TABLE>
(A) For the three months ended September 30, 1998.
(B) For the three months ended June 30, 1998.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(Unaudited)
3. Supplemental Combining Schedules (continued)
<TABLE>
<CAPTION>
Statements of Operations
For the Six Months Ended September 30, 1998
Boston Financial
Qualified Housing Hughes
Tax Credits Apartments Combined
L.P. (A) Ltd.(B) Eliminations (A)
Revenue:
<S> <C> <C> <C> <C>
Rental $ - $ 114,303 $ - $ 114,303
Investment 60,364 136 - 60,500
Other 89,277 3,287 - 92,564
------------- ------------- ------------- -------------
Total Revenue 149,641 117,726 - 267,367
------------- ------------- ------------- -------------
Expenses:
General and administrative 153,424 - - 153,424
Rental operations, exclusive
of depreciation - 42,556 - 42,556
Interest - 62,035 - 62,035
Depreciation - 20,364 - 20,364
Amortization 15,677 1,612 - 17,289
------------- ------------- ------------- -------------
Total Expenses 169,101 126,567 - 295,668
------------- ------------- ------------- -------------
Loss before minority interest in losses
of Local Limited Partnership and
equity in losses of Local Limited
Partnerships (19,460) (8,841) - (28,301)
Minority interest in losses of
Local Limited Partnership - - 88 88
Equity in losses of Local
Limited Partnerships (312,766) - 8,753 (304,013)
------------- ------------- ------------- -------------
Net Loss $ (332,226) $ (8,841) $ 8,841 $ (332,226)
============= ============= ============= =============
</TABLE>
(A) For the six months ended September 30, 1998.
(B) For the six months ended June 30, 1998.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(Unaudited)
3. Supplemental Combining Schedules (continued)
<TABLE>
<CAPTION>
Statements of Cash Flows
Boston Financial
Qualified Housing Hughes
Tax Credits Apartments Combined
L.P. (A) Ltd.(B) Eliminations (A)
Net cash provided by (used for)
<S> <C> <C> <C> <C>
operating activities $ (97,154) $ 148 $ - $ (97,006)
------------- ------------- ------------- -------------
Cash flows from investing activities:
Purchases of marketable securities (795,150) - - (795,150)
Proceeds from sales and maturities
of marketable securities 774,040 - - 774,040
Cash distributions received from
Local Limited Partnerships 112,609 - - 112,609
------------- ------------- ------------- -------------
Net cash provided by investing
activities 91,499 - - 91,499
------------- ------------- ------------- -------------
Net increase (decrease) in cash and cash
equivalents (5,655) 148 - (5,507)
Cash and cash equivalents, beginning 241,259 2,464 - 243,723
------------- ------------- ------------- -------------
Cash and cash equivalents, ending $ 235,604 $ 2,612 $ - $ 238,216
============= ============= ============= =============
</TABLE>
(A) For the six months ended September 30, 1998.
(B) For the six months ended June 30, 1998.
<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 September 30, 1998, the Partnership, including the combined entity (Hughes
Apartments, Ltd.), has cash and cash equivalents of $238,216 as compared with
$243,723 at March 31, 1998. 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 in cash and
cash equivalents are offset by cash distributions received from Local Limited
Partnerships.
At September 30, 1998, approximately $1,665,000 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 September 30, 1998, the Partnership
had no contractual or other obligation to any Local Limited Partnership which
had not been paid or provided for. In the event a Local Limited Partnership
encounters operating difficulties requiring additional funds, the Partnership's
management might deem it in its best interests to provide such funds,
voluntarily, in order to protect its investment.
Cash Distributions
No cash distributions to Limited Partners were made during the six months ended
September 30, 1998. In the event that distributions are received from Local
Limited Partnerships, the Managing General Partner has decided that such amounts
will be used to increase Reserves. No assurance can be given as to the amounts
of future distributions from the Local Limited Partnerships since many of the
Properties benefit from some type of federal or state subsidy and, as a
consequence, are subject to restrictions on cash distributions. Therefore, it is
expected that only a limited amount of cash will be distributed to Limited
Partners from this source in the future.
Result of Operations
The Partnership's results of operations for the six months ended September 30,
1998 resulted in a net loss of $332,226 as compared to a net loss of $1,042,021
for the same period in 1997. The decrease is primarily attributable to 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.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 positive 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.
As previously reported, the Local General Partner of 600 Dakota, Graver Inn and
Barrington Manor, located in North Dakota, and Duluth, located in South Dakota,
expressed to the Managing General Partner some concerns over the long-term
financial health of the properties. In response to these concerns and to reduce
possible future risk, the Managing General Partner consummated the transfer of
50% of the Partnership's capital and profits in the properties to an affiliate
of the Local General Partner in November 1997. 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. The Managing General Partner
continues to monitor property operations closely. In addition, the Local General
Partner has the right to call the remaining interest after the tax credit period
has expired.
As previously reported, Boulevard Common, located in Chicago, Illinois, has been
experiencing operating deficits due to expenses increasing because of high
turnover at the property, security issues and increasing maintenance and capital
needs. As a result of these issues, Boulevard Common's mortgage went into
default. The Managing General Partner is working with the Local General Partners
and HUD to resolve these issues. Occupancy as of September 30, 1998 is 90%. In
October 1998, affiliates of the Managing General Partner effectuated a removal
of the Local General Partners and replaced them with a new non profit general
partner. The interest of the original Local General Partners was converted to a
special limited partner interest with no right to participate in the management
of the Partnership.
Delmar, located in Gillette, Wyoming, has been experiencing operating deficits.
In addition, a significant amount of capital improvements on the property need
to be completed in the very near future. In the past, deficits were being funded
by a combination of the accrual of property management fees and the Local
General Partner. Due to the Managing General Partner's concerns regarding the
long term viability of this property, negotiations with the Local General
Partner are underway to develop a plan that will ultimately transfer ownership
of the property to the Local General Partner. The plan includes provisions to
minimize the risk of recapture.
As previously reported, the Managing General Partner at Pebble Creek, located in
Arlington, Texas, is still negotiating with HUD to extend and/or modify the
existing workout agreement which expired May 31, 1998. In addition, the Managing
General Partner is involved in negotiations for the appointment of a replacement
Local General Partner.
Occupancy as of September 30, 1998 is 92%.
As previously reported, Cass House and Verdean Gardens, Massachusetts properties
which share a common Local General Partner, continue to operate below
break-even. Both properties, as well as Bittersweet Apartments, receive subsidy
through the State Housing Assistance Rental Program (SHARP), which is an
important part of their annual income. As originally conceived, the SHARP
subsidy was scheduled to decline over time to match expected
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Property Discussions (continued)
increases in net operating income. However, increases in net operating income
failed to keep pace with the decline in the SHARP subsidy. Many of the SHARP
properties (including Cass, Verdean and Bittersweet) structured workouts that
included additional subsidy in the form of Operating Deficit Loans (ODL's).
Effective October 1, 1997, the Massachusetts Housing Finance Agency (MHFA),
which provided the SHARP subsidies, withdrew funding of the ODL's from its
portfolio of 77 subsidized properties. Properties unable to make full debt
service payments were declared in default by the Agency. The Managing General
Partner has joined a group of SHARP property owners called the responsible SHARP
Owners, Inc. (RSO) and is negotiating with MHFA and the General Partners of
Cass, Verdean and Bittersweet to find a solution to the problems that will
result from the withdrawn subsidies. Due to the existing operating deficits and
the dependence on these subsidies, Cass and Verdean have defaulted on their
mortgage obligations, and it is likely that Bittersweet will default on its
mortgage obligation in the near future. On September 16, 1998, the Partnership
joined with the RSO and about 20 SHARP property owners and filed suit against
the MHFA (Mass. Sup. Court Civil Action #98-4720). Among other things, the suit
seeks to enforce the MHFA's previous financial commitments to the SHARP
properties. The lawsuit is complex and in its early stages, so no predications
can be made at this time as to the ultimate outcome. In the meantime, the
Managing General Partner intends to continue to participate in the RSO's efforts
to negotiate a resolution of this matter with MHFA.
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 unaffiliated 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 Local General Partner
declaring bankruptcy. The lender required that the small deficit generated by
the deficient payments be cured immediately. The Managing General Partner is
negotiating with both the lender and the 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.
Sierra Pointe, located in Las Vegas, Nevada, and Terrace, located in Oklahoma
City, Oklahoma, which share a common Local General Partner, are experiencing
operating deficits due to low occupancy. The September 30, 1998 occupancy for
Sierra Pointe is 89% and for Terrace is 96%. The Managing General Partner and
the Local General Partner are working with the local Housing Authorities in both
Nevada and Oklahoma to fill vacant units. Furthermore, the Managing General
Partner and Local General Partner negotiated a replacement for the current
management agent of Sierra Pointe. The new management agent for Sierra Pointe
started March 1, 1998. The Managing General Partner continues to work with the
Local General Partner and management agent in an effort to stabilize operations
and improve occupancy.
Impact of Year 2000
The Managing General Partner has assessed the Partnership's exposure to date
sensitive computer software programs that may not be operative subsequent to
1999 and has executed a requisite course of action to minimize Year 2000 risk
and ensure that neither significant costs nor disruption of normal business
operations are encountered. However, due to the inherent uncertainty that all
systems of outside vendors or other companies on which the Partnership and/or
Local Limited Partnerships rely will be compliant, the Partnership remains
susceptible to consequences of the Year 2000 issue.
<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 September 30, 1998.
<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: November 9, 1998 BOSTON FINANCIAL QUALIFIED HOUSING
LIMITED PARTNERSHIP
By: 29 Franklin Street, Inc.,
its Managing General Partner
/s/Randolph G. Hawthorne
Randolph G. Hawthorne
Managing Director, Vice President and
Chief Operating Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<CASH> 238,216
<SECURITIES> 2,072,598
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 1,124,819
<DEPRECIATION> 000
<TOTAL-ASSETS> 5,102,116<F1>
<CURRENT-LIABILITIES> 000
<BONDS> 1,210,000
000
000
<COMMON> 000
<OTHER-SE> 3,730,405
<TOTAL-LIABILITY-AND-EQUITY> 5,102,116<F2>
<SALES> 000
<TOTAL-REVENUES> 267,367<F3>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 233,633 <F4>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 62,035
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (332,226) <F5>
<EPS-PRIMARY> (6.58)
<EPS-DILUTED> 000
<FN>
<F1>Included in total assets is $3,976 of Tenant security deposits, Investments
in Local Limited Partnerships, net of $1,462,744, Deferred charges, net $43,533,
Bond trusts of $107,572, Mortgagee escrow deposits of $4,993, Replacement
reserve escrow of $6,398, Other assets of $34,267 and Accounts receivable, net
of $3,000. <F2>Included in total liability and equity is Accounts payable to
affiliates $10,696, Accounts payable and accrued expenses of $19,722, Accrued
interest of $68,819, Tenant security deposits payable of $3,973 and $58,501 of
Minority interest in Local Limited Partnership. <F3>Total revenue includes
Rental of $114,303, Investment of $60,500 and Other of $92,564. <F4>Included in
other expenses is General and administrative of $153,424, Rental operations,
exclusive of depreciation of $42,556, Depreciation of $20,364 and Amortization
of $17,289. <F5>Net loss reflects Equity in losses of Local Limited Partnerships
of $304,013 and Minority interest in loss of Local Limited Partnership of $88.
</FN>
</TABLE>
