February , 1999
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 December 31, 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-Q3.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 December 31, 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 - December 31, 1998 (Unaudited)
and March 31, 1998 1
Combined Statements of Operations (Unaudited) - For the
Three and Nine Months Ended December 31, 1998 and 1997 2
Combined Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Nine Months Ended December 31, 1998 3
Combined Statements of Cash Flows (Unaudited) - For the Nine
Months Ended December 31, 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>
December 31, March 31,
1998 1998
(Unaudited)
Assets
<S> <C> <C>
Cash and cash equivalents $ 248,838 $ 243,723
Tenant security deposits 3,999 4,731
Accounts receivable, net 3,000 3,000
Marketable securities, at fair value 1,952,000 2,025,236
Mortgagee escrow deposits 12,143 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) 1,351,071 1,809,096
Deferred charges, net of accumulated
amortization of $37,887 and $35,469
in 1998 and 1997, respectively 42,727 45,145
Rental property, at cost, net of
accumulated depreciation 1,114,179 1,145,823
Other assets 41,806 32,193
------------- -------------
Total Assets $ 4,883,733 $ 5,428,937
============= =============
Liabilities and Partners' Equity
Accounts payable to affiliates $ 11,281 $ 22,773
Accounts payable and accrued expenses 37,863 27,577
Accrued interest 68,819 68,819
Tenant security deposits payable 3,809 4,731
Bonds payable 1,210,000 1,210,000
------------- -------------
Total Liabilities 1,331,772 1,333,900
------------- -------------
Minority interest in Local Limited Partnership 58,398 58,589
------------- -------------
General, Initial and Investor Limited Partners' Equity 3,474,602 4,031,390
Net unrealized gains on marketable securities 18,961 5,058
------------- -------------
Total Partners' Equity 3,493,563 4,036,448
------------- -------------
Total Liabilities and Partners' Equity $ 4,883,733 $ 5,428,937
============= =============
The accompanying notes are an integral part of these combined financial statements.
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three and Nine Months Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31, December 31, December 31,
1998 1997 1998 1997
-------------- ------------- ------------- --------------
Revenues:
<S> <C> <C> <C> <C>
Rental $ 53,478 $ 57,934 $ 167,781 $ 172,266
Investment 33,821 35,467 94,321 107,755
Other 8,156 2,929 100,721 29,311
-------------- ------------- -------------- --------------
Total Revenue 95,455 96,330 362,823 309,332
-------------- ------------- -------------- --------------
Expenses:
General and administrative
(includes reimbursements to
affiliates in the amounts of
$95,499 and $119,312 in 1998
and 1997, respectively) 139,336 73,898 292,760 204,655
Bad debt expense - 52,665 - 52,665
Rental operations, exclusive
of depreciation 20,193 25,312 62,749 77,914
Interest 34,024 29,498 96,058 88,554
Depreciation 10,182 10,182 30,546 30,546
Amortization 8,645 20,923 25,934 62,769
Provision for valuation of investments
in Local Limited Partnerships 8,587 - 8,587 (55,803)
-------------- ------------- -------------- --------------
Total Expenses 220,967 212,478 516,634 461,300
-------------- ------------- -------------- --------------
Loss before minority
interest and equity in losses of
Local Limited Partnerships (125,512) (116,148) (153,811) (151,968)
Minority interest in loss of
Local Limited Partnership 103 63 191 215
Equity in losses of
Local Limited Partnerships (99,153) (576,523) (403,168) (1,582,876)
-------------- ------------- -------------- --------------
Net Loss $ (224,562) $ (692,608) $ (556,788) $ (1,734,629)
============== ============= ============== ==============
Net Loss allocated:
To General Partners $ (2,246) $ (6,926) $ (5,568) $ (17,346)
To Limited Partners (222,316) (685,682) (551,220) (1,717,283)
-------------- ------------- -------------- --------------
$ (224,562) $ (692,608) $ (556,788) $ (1,734,629)
============== ============= ============== ==============
Net Loss per Limited
Partnership Unit (50,000 Units) $ (4.45) $ (13.72) $ (11,02) $ (34.35)
============== ============= ============= ==============
The accompanying notes are an integral part of these combined financial statements.
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
COMBINED STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
(Unaudited)
For the Nine Months Ended December 31, 1998
<TABLE>
<CAPTION>
Initial Investor Net
General Limited Limited Unrealized
Partners Partners Partners Gains Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1998 $ (394,183) $ 4,648 $ 4,420,925 $ 5,058 $ 4,036,448
----------- ----------- ----------- ---------- ------------
Comprehensive Income (Loss):
Net Loss (5,568) - (551,220) - (556,788)
Change in net unrealized gains
on marketable securities
available for sale - - - 13,903 13,903
----------- ----------- ----------- ----------- -----------
Comprehensive Income (Loss) (5,568) - (551,220) 13,903 (542,885)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1998 $ (399,751) $ 4,648 $ 3,869,705 $ 18,961 $ 3,493,563
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these combined financial statements.
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------- -----------
<S> <C> <C>
Net cash used for operating activities $ (209,407) $ (126,154)
----------- -----------
Cash flows from investing activities:
Purchases of marketable securities (1,095,072) (1,892,652)
Proceeds from sales and maturities of marketable securities 1,186,985 1,842,880
Cash distributions received from Local Limited Partnerships 122,609 25,732
Additions to rental property and equipment - (139)
----------- -----------
Net cash provided by (used for) investing activities 214,522 (24,179)
----------- -----------
Net increase (decrease) in cash and cash equivalents 5,115 (150,333)
Cash and cash equivalents, beginning 243,723 453,264
----------- -----------
Cash and cash equivalents, ending $ 248,838 $ 302,931
=========== ===========
Supplemental disclosure:
Cash paid for interest $ 96,059 $ 59,060
=========== ===========
The accompanying notes are an integral part of these combined financial statements.
</TABLE>
<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 September 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, 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
December 31, 1998 is as follows:
<TABLE>
<CAPTION>
Capital contributions to Local Limited Partnerships and purchase
<S> <C>
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 $26,259,970) (36,075,167)
Cumulative cash distributions received from Local Limited Partnerships (1,725,158)
----------------
Investments in Local Limited Partnerships before adjustment (1,544,160)
Excess of investment costs over underlying net assets acquired:
Acquisition fees and expenses 4,725,764
Accumulated amortization of acquisition fees and expenses (1,145,332)
----------------
Investments in Local Limited Partnerships 2,036,272
Reserve for Valuation of Investments in
Local Limited Partnerships (685,201)
$ 1,351,071
</TABLE>
The Partnership's share of net losses of the Local Limited Partnerships,
excluding Hughes, for the nine months ended December 31, 1998 is $4,057,112. For
the nine months ended December 31, 1998, the Partnership has not recognized
$3,744,251 of equity in losses relating to twenty-nine 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.
3. Transfer of Interest in Local Limited Partnerships
During the quarter ended December 31, 1998, the Managing General Partner
transferred 50% of its interest in capital and profits of Boulevard Common and
Delmar to their respective local general partners. Included in each of these
transfers is a put option. The put option grants the Managing General Partner
the right to put the Partnership's remaining interest to the local general
partner any time after one year has elapsed. The Partnership will retain its
full share of tax credits until such time as the remaining interest is put to
the local general partner.
<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 $ 246,433 $ 2,405 $ - $ 248,838
Tenant security deposits - 3,999 - 3,999
Accounts receivable, net 56,490 - (53,490) 3,000
Marketable securities, at fair value 1,952,000 - - 1,952,000
Mortgagee escrow deposits - 12,143 - 12,143
Replacement reserve escrow - 6,398 - 6,398
Bond trusts - 107,572 - 107,572
Investments in Local Limited
Partnerships, net 1,243,744 - 107,327 1,351,071
Deferred charges, net - 42,727 - 42,727
Rental property at cost, net - 1,081,964 32,215 1,114,179
Other assets 29,972 11,834 - 41,806
------------- ------------- ------------- -------------
Total Assets $ 3,528,639 $ 1,269,042 $ 86,052 $ 4,883,733
============= ============= ============= =============
Liabilities and Partners' Equity (Deficiency)
Accounts payable to affiliates $ 11,281 $ 53,490 $ (53,490) $ 11,281
Accounts payable and accrued
expenses 23,795 14,068 - 37,863
Accrued interest - 68,819 - 68,819
Tenant security deposits payable - 3,809 - 3,809
Bonds payable - 1,210,000 - 1,210,000
------------- ------------- ------------- -------------
Total Liabilities 35,076 1,350,186 (53,490) 1,331,772
------------- ------------- ------------- -------------
Minority interest in Local Limited
Partnership - - 58,398 58,398
------------- ------------ ------------- -------------
General, Initial and Investor
Limited Partners' Equity (Deficiency) 3,474,602 (81,144) 81,144 3,474,602
Net unrealized gains on marketable
securities 18,961 - - 18,961
------------- ------------- ------------- -------------
Total Partners' Equity (Deficiency) 3,493,563 (81,144) 81,144 3,493,563
------------- ------------- ------------- -------------
Total Liabilities and
Partners' Equity (Deficiency) $ 3,528,639 $ 1,269,042 $ 86,052 $ 4,883,733
============= ============= ============= =============
</TABLE>
(A) As of December 31, 1998.
(B) As of September 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)
Statements of Operations
For the Three Months Ended December 31, 1998
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing Hughes
Tax Credits Apartments Combined
L.P. (A) Ltd.(B) Eliminations (A)
Revenue:
<S> <C> <C> <C> <C>
Rental $ - $ 53,478 $ - $ 53,478
Investment 33,799 22 - 33,821
Other 6,710 1,446 - 8,156
------------- ------------- ------------- -------------
Total Revenue 40,509 54,946 - 95,455
------------- ------------- ------------- -------------
Expenses:
General and administrative 139,336 - - 139,336
Rental operations, exclusive
of depreciation - 20,193 - 20,193
Interest - 34,024 - 34,024
Depreciation - 10,182 - 10,182
Amortization 7,839 806 - 8,645
Provision for valuation of investments
in Local Limited Partnerships 8,587 - - 8,587
------------- ------------- ------------- -------------
Total Expenses 155,762 65,205 - 220,967
------------- ------------- ------------- -------------
Loss before minority interest in losses
of Local Limited Partnership and equity
in losses of Local Limited
Partnerships (115,253) (10,259) - (125,512)
Minority interest in losses of
Local Limited Partnership - - 103 103
Equity in losses of Local
Limited Partnerships (109,309) - 10,156 (99,153)
------------- ------------- ------------- -------------
Net Loss $ (224,562) $ (10,259) $ 10,259 $ (224,562)
============= ============= ============= =============
</TABLE>
(A) For the three months ended December 31, 1998.
(B) For the three months ended September 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)
Statements of Operations
For the Nine Months Ended December 31, 1998
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing Hughes
Tax Credits Apartments Combined
L.P. (A) Ltd.(B) Eliminations (A)
Revenue:
<S> <C> <C> <C> <C>
Rental $ - $ 167,781 $ - $ 167,781
Investment 94,163 158 - 94,321
Other 95,987 4,734 - 100,721
------------- ------------- ------------- -------------
Total Revenue 190,150 172,673 - 362,823
------------- ------------- ------------- -------------
Expenses:
General and administrative 292,760 - - 292,760
Rental operations, exclusive
of depreciation - 62,749 - 62,749
Interest - 96,058 - 96,058
Depreciation - 30,546 - 30,546
Amortization 23,516 2,418 - 25,934
Provision for valuation of investment
in Local Limited Partnerships 8,587 - - 8,587
------------- ------------- ------------- -------------
Total Expenses 324,863 191,771 - 516,634
------------- ------------- ------------- -------------
Loss before minority interest in losses of
Local Limited Partnership and equity
in losses of Local Limited
Partnerships (134,713) (19,098) - (153,811)
Minority interest in losses of
Local Limited Partnership - - 191 191
Equity in losses of Local
Limited Partnerships (422,075) - 18,907 (403,168)
------------- ------------- ------------- -------------
Net Loss $ (556,788) $ (19,098) $ 19,098 $ (556,788)
============= ============= ============= =============
</TABLE>
(A) For the nine months ended December 31, 1998.
(B) For the nine months ended September 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)
Statements of Cash Flows
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing Hughes
Tax Credits Apartments Combined
L.P. (A) Ltd.(B) Eliminations (A)
<S> <C> <C> <C> <C>
Net cash used for operating activities $ (209,348) $ (59) $ - $ (209,407)
------------- ------------- ------------- -------------
Cash flows from investing activities:
Purchases of marketable securities (1,095,072) - - (1,095,072)
Proceeds from sales and maturities
of marketable securities 1,186,985 - - 1,186,985
Cash distributions received from
Local Limited Partnerships 122,609 - - 122,609
------------- ------------- ------------- -------------
Net cash provided by investing
activities 214,522 - - 214,522
------------- ------------- ------------- -------------
Net increase (decrease) in cash and cash
equivalents 5,174 (59) - 5,115
Cash and cash equivalents, beginning 241,259 2,464 - 243,723
------------- ------------- ------------- -------------
Cash and cash equivalents, ending $ 246,433 $ 2,405 $ - $ 248,838
============= ============= ============= =============
</TABLE>
(A) For the nine months ended December 31, 1998.
(B) For the nine months ended September 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 December 31, 1998, the Partnership, including the combined entity (Hughes
Apartments, Ltd.), has cash and cash equivalents of $248,838 as compared with
$243,723 at March 31, 1998. The increase is primarily attributable to proceeds
from sales and maturities of marketable securities in excess of purchases of
marketable securities, partially off-set by cash used for operations. The
decrease in cash and cash equivalents is also offset by cash distributions
received from Local Limited Partnerships.
At December 31, 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 such 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, 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 interest to provide such funds,
voluntarily, in order to protect its investment.
Cash Distributions
No cash distributions to Limited Partners were made during the nine months ended
December 31, 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 three and nine months ended
December 31, 1998 resulted in net losses of $224,562 and $556,788,
respectively, as compared to net losses of $692,608 and $1,734,629 for the
same respective periods in 1997. The decreases are 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 are
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. In addition, the Local General
Partner has the right to call the remaining interest after the tax credit period
has expired. The Managing General Partner continues to monitor property
operations closely.
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. 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. Further, the Managing General Partner
consummated the transfer of 50% of the Partnership's capital and profits in the
properties to the new Local General Partner. The Managing General Partner has
the right to transfer the Partnership's remaining interest to the new Local
General Partner any time after one year has elapsed. Occupancy as of December
31, 1998 was 82%.
Delmar, located in Gillette, Wyoming, has been experiencing operating deficits.
In addition, a significant amount of capital improvements on the property needs
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, the Managing General Partner negotiated
with the Local General Partner 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.
The plan is currently being reviewed by HUD for its approval.
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 was 92%.
<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, 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 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 (ODLs). Effective October 1,
1997, the Massachusetts Housing Finance Agency (MHFA), which provided the SHARP
subsidies, withdrew funding of the ODLs from its portfolio of 77 subsidized
properties. Properties unable to make full debt service payments were declared
in default by MHFA. 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 December 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 occupancy issues. The December 31, 1998 occupancy for
Sierra Pointe is 85% and for Terrace is 92%. 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. 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 December 31, 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: February , 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> 9-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> DEC-31-1998
<CASH> 248,838
<SECURITIES> 1,952,000
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 1,114,179
<DEPRECIATION> 000
<TOTAL-ASSETS> 4,883,733 <F1>
<CURRENT-LIABILITIES> 000
<BONDS> 1,210,000
000
000
<COMMON> 000
<OTHER-SE> 3,493,563
<TOTAL-LIABILITY-AND-EQUITY> 4,883,733<F2>
<SALES> 000
<TOTAL-REVENUES> 362,823<F3>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 420,576<F4>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 96,058
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (556,788)<F5>
<EPS-PRIMARY> (11.02)
<EPS-DILUTED> 000
<FN>
<F1>Included in total assets is $3,999 of Tenant security deposits, Investments
in Local Limited Partnerships of $1,351,071, Deferred charges of $42,727, Bond
trusts of $107,572, Mortgagee escrow deposits of $12,143, Replacement reserve
escrow of $6,398, Other assets of $41,806 and Accounts receivable, net of
$3,000. <F2>Included in total liability and equity is Accounts payable to
affiliates $11,281, Accounts payable and accrued expenses of $37,863, Accrued
interest of $68,819, Tenant security deposits payable of $3,809 and $58,398 of
Minority interest in Local Limited Partnership. <F3>Total revenue includes
Rental of $167,781, Investment of $94,321 and Other of $100,721. <F4>Included in
other expenses is General and administrative of $292,760, Rental operations,
exclusive of depreciation of $62,749, Depreciation of $30,546 and Amortization
of $25,934. Adjustment to provision for valuation of investments in Local
Limited Partnership $8,587. <F5>Net loss reflects Equity in losses of Local
Limited Partnerships of $403,168 and Minority interest in loss of Local Limited
Partnership of $191.
</FN>
</TABLE>
