November 14 , 2000
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC. 20549
Re: Boston Financial Qualified Housing Limited Partnership
Report on Form 10-QSB for the Quarter Ended September 30, 2000
File Number 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-Q2.DOC
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(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, 2000
-------------------------------------------
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
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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
Balance Sheet - September 30, 2000 (Unaudited) 1
Statements of Operations (Unaudited) - For the Three and Six
Months Ended September 30, 2000 and 1999 2
Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Six Months Ended September 30, 2000 3
Statements of Cash Flows (Unaudited) - For the Six
Months Ended September 30, 2000 and 1999 4
Notes to the Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II - OTHER INFORMATION
Items 1-6 10
SIGNATURE 11
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
BALANCE SHEET
September 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 201,380
Marketable securities, at fair value 863,906
Investments in Local Limited Partnerships, net (Note 1) 693,279
Other assets 12,252
-------------
Total Assets $ 1,770,817
=============
Liabilities and Partners' Equity
Accounts payable to affiliates $ 122,100
Accounts payable and accrued expenses 21,176
-------------
Total Liabilities 143,276
-------------
General, Initial and Investor Limited Partners' Equity 1,632,762
Net unrealized losses on marketable securities (5,221)
-------------
Total Partners' Equity 1,627,541
-------------
Total Liabilities and Partners' Equity $ 1,770,817
=============
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three and Six Months Ended September 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
September 30, 1999 September 30, 1999
2000 (Restated) 2000 (Restated)
-------------- ------------- ------------- --------------
Revenues:
<S> <C> <C> <C> <C>
Investment $ 14,862 $ 26,710 $ 30,235 $ 60,937
Other 40,200 23,075 112,280 122,556
-------------- ------------- ------------- --------------
Total Revenue 55,062 49,785 142,515 183,493
-------------- ------------- ------------- --------------
Expenses:
General and administrative
(includes reimbursements to
affiliates in the amounts of
$51,100 and $62,814 in 2000
and 1999, respectively) 89,753 74,608 188,591 150,204
Provision for valuation of investment in
Local Limited Partnership 30,000 220,009 80,000 220,009
Amortization 6,740 5,570 10,921 11,136
-------------- ------------- ------------- --------------
Total Expenses 126,493 300,187 279,512 381,349
-------------- ------------- ------------- --------------
Loss before equity in income (losses)
of Local Limited Partnerships (71,431) (250,402) (136,997) (197,856)
Equity in income (losses) of
Local Limited Partnerships (Note 1) (171,331) 51,766 (394,930) (168,654)
-------------- ------------- ------------- --------------
Net Loss $ (242,762) $ (198,636) $ (531,927) $ (366,510)
============== ============= ============= ==============
Net Loss allocated:
To General Partners $ (2,427) $ (1,986) $ (5,319) $ (3,665)
To Limited Partners (240,335) (196,650) (526,608) (362,845)
-------------- ------------- ------------- --------------
$ (242,762) $ (198,636) $ (531,927) $ (366,510)
============== ============= ============= ==============
Net Loss per Limited
Partnership Unit (50,000 Units) $ (4.80) $ (3.94) $ (10.53) $ (7.26)
============== ============= ============= ==============
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
For the Six Months Ended September 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Initial Investor Net
General Limited Limited Unrealized
Partners Partners Partners Losses Total
<S> <C> <C> <C> <C> <C>
Balance at March 31, 2000 $ (412,849) $ 4,648 $ 2,572,890 $ (11,516) $ 2,153,173
----------- ----------- ----------- ------------- --------------
Comprehensive Income (Loss):
Change in net unrealized losses
on marketable securities
available for sale - - - 6,295 6,295
Net Loss (5,319) - (526,608) - (531,927)
----------- ----------- ----------- ------------- --------------
Comprehensive Income (Loss) (5,319) - (526,608) 6,295 (525,632)
----------- ----------- ----------- ------------- --------------
Balance at September 30, 2000 $ (418,168) $ 4,648 $ 2,046,282 $ (5,221) $ 1,627,541
=========== =========== =========== ============= ==============
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Six Months Ended September 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
1999
2000 (Restated)
------------- ------------
<S> <C> <C>
Net cash used for operating activities $ (87,077) $ (111,683)
Net cash provided by (used for) investing activities (43,367) 104,922
------------- -------------
Net decrease in cash and cash equivalents (130,444) (6,761)
Cash and cash equivalents, beginning 331,824 221,758
------------- ------------
Cash and cash equivalents, ending $ 201,380 $ 214,997
============= =============
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-QSB 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 included with the Partnership's Form 10-KSB for the year
ended March 31, 2000. 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
about the Local Limited Partnerships included in the accompanying financial
statements is as of June 30, 2000 and 1999.
1. Investments in Local Limited Partnerships
The Partnership uses the equity method to account for its limited partnership
interests in thirty-two Local Limited Partnerships 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, which contain certain operating and distribution
restrictions, has acquired 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 and Duluth, where 49.5% interests are held.
Upon dissolution, proceeds will be distributed according to each respective
partnership agreement.
The following is a summary of Investments in Local Limited Partnerships at
September 30, 2000:
Capital contributions and advances paid to Local Limited Partnerships and
purchase price paid to withdrawing partners of Local Limited
Partnerships $ 37,160,846
Cumulative equity in losses of Local Limited
Partnerships (excluding cumulative
unrecognized losses of $35,629,778) (36,254,712)
Cumulative cash distributions received
from Local Limited Partnerships (2,016,648)
-------------
Investments in Local Limited Partnerships
before adjustment (1,110,514)
Excess investment costs over the underlying net assets acquired:
Acquisition fees and expenses 4,648,780
Accumulated amortization of acquisition
fees and expenses (1,161,433)
-------------
Investments in Local Limited Partnerships
before reserve for valuation 2,376,833
Reserve for valuation of investments in
Local Limited Partnerships (1,683,554)
-------------
Investments in Local Limited Partnerships $ 693,279
=============
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS (continued)
(Unaudited)
1. Investments in Local Limited Partnerships (continued)
----------------------------------------------------
The Partnership's share of net losses of the Local Limited Partnerships for the
six months ended September 30, 2000, is $2,945,684. For the six months ended
September 30, 2000, the Partnership has not recognized $2,569,038 of equity in
losses relating to twenty-five Local Limited Partnerships where cumulative
equity in losses and cumulative distributions from Local Limited Partnerships
exceeded its total investments in these Local Limited Partnerships. In addition,
for the six months ended September 30, 2000, the Partnership recognized $18,284
of previously unrecognized losses.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain matters discussed herein constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. The
Partnership intends such forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements and is including this statement
for purposes of complying with these safe harbor provisions. Although the
Partnership believes the forward-looking statements are based on reasonable
assumptions, the Partnership can give no assurance that their expectations will
be attained. Actual results and timing of certain events could differ materially
from those projected in or contemplated by the forward-looking statements due to
a number of factors, including, without limitation, general economic and real
estate conditions and interest rates.
Liquidity and Capital Resources
At September 30, 2000, the Partnership has cash and cash equivalents of
$201,380, as compared with $331,824 at March 31, 2000. The decrease is primarily
attributable to cash used for operations and purchases of marketable securities
in excess of proceeds from sales of marketable securities. These decreases to
cash and cash equivalents are partially offset by cash distributions received
from Local Limited Partnerships in excess of advances to Local Limited
Partnerships.
At September 30, 2000, approximately $209,000 of cash, cash equivalents and
marketable securities has been designated as Reserves, as defined in the
Partnership Agreement. 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, 2000, 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. As of September 30, 2000, the Partnership has advanced approximately
$1,515,000 to eleven Local Limited Partnerships for various property issues. In
addition, professional and legal fees relating to various property issues
totaling approximately $624,000 have been paid from Reserves.
Cash Distributions
No cash distributions were made during the six months ended September 30, 2000.
Results of Operations
The Partnership's results of operations for the three and six months ended
September 30, 2000 resulted in a net loss of $242,762 and $531,927,
respectively, as compared to a net loss of $198,636 and $366,510 for the same
periods in 1999. The increase in net loss is primarily attributable to increases
in equity in losses from Local Limited Partnerships and general and
administrative expenses and a decrease in investment income. The increase in net
loss is partially offset by a decrease in the provision for valuation of
investment in Local Limited Partnerships.
<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
As previously reported, the Local General Partner of Barrington Manor (Fargo,
North Dakota) and Duluth (Sioux Falls, South Dakota) expressed to the Managing
General Partner 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. Subsequently, the Local General Partner transferred both its
general partner interest and 48.5% of its partnership interest in the properties
to a non-profit general partner effective June 17, 1999. As a result of this
change, the date when the Managing General Partner has the right to transfer the
remaining interest to the new Local General Partner was amended to reflect the
June 17, 1999 effective date. Accordingly, 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 from June 17, 2000. Further, the new Local
General Partner has the right to call the remaining interest after the tax
credit period has expired. The Managing General Partner will continue to monitor
closely the operations of Barrington Manor and Duluth.
The Local General Partner of Chestnut Lane (Newman, Georgia), Country Estates
(Glenville, Georgia), Pine Village (Pine Mountain, Georgia), Talbot Village,
(Talbottom, Georgia) and Willopeg Village (Rincon, Georgia) expressed to the
Managing General Partner 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 reached agreement with the Local General Partner on
a plan that will ultimately transfer ownership of the properties to the Local
General Partner. The plan includes provisions to minimize the risk of recapture.
The Managing General Partner has yet to transfer any of the Partnership's
interest in these properties.
As previously reported, Boulevard Commons (Chicago, Illinois) has experienced
operating deficits due to expenses associated with high unit turnover, 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 replaced the Local General Partners
with a new unaffiliated 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 Local Limited Partnership.
Further, the Managing General Partner consummated the transfer of 48% of the
Partnership's capital and profits in the property to the new Local General
Partner on October 9, 1998. The Managing General Partner has the right to
transfer the Partnership's remaining interest to the new Local General Partner
any time after June 9, 1999. Currently, the Managing General Partner continues
to work with the United States Department of Housing and Urban Development
("HUD") to obtain final approval to transfer the Partnership's remaining
interest in the property.
Due to the Managing General Partner's concerns regarding the long-term viability
of Delmar (Gillette, Wyoming), an agreement with the Local General Partner was
reached that will ultimately transfer ownership of the property to the Local
General Partner. Effective January 1, 1998, the Managing General Partner
consummated the transfer of 49.5% of the Partnership's capital and profits in
the property to the Local General Partner. The Managing General Partner has the
right to transfer the Partnership's remaining interest in the property to the
Local General Partner any time after January 1, 1999. Currently, the Managing
General Partner is preparing the documents necessary to transfer the
Partnership's remaining interest in the property.
As previously reported, the existing workout agreement between Pebble Creek
(Arlington, Texas) and HUD expired May 31, 1998. In December 1999, the Local
General Partner signed a Provisional Workout Agreement (PWA) with HUD. As part
of the PWA, the Partnership assumed the out-of-pocket costs of the workout of
approximately $700,000. During the third quarter of 2000, the Managing General
Partner secured HUD approval for "Mark to Market" restructuring. The Managing
General Partner will also continue to work with the Local General Partner to
locate a replacement partner to assume General and Limited Partner interests,
which will require HUD approval. In
<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)
-------------------------------
the meantime, the Managing General Partner will continue to work closely with
the Local General Partners to monitor the property.
As previously reported, Cass House (Boston, Massachusetts) and Verdean Gardens
(New Bedford, Massachusetts), continue to operate below break-even. Both of
these properties, as well as Bittersweet Apartments (Randolph, Massachusetts),
receive a material amount of income subsidies through the State Housing
Assistance Rental Program ("SHARP"). 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 ("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 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. With
regard to Bittersweet, the mortgage loan is current and the Local General
Partner is seeking HUD approval to redeem the Partnership's interest in
Bittersweet. 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 predictions 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.
Due to persistent operating deficits and concern over the long-term financial
viability of at Sierra Pointe (Las Vegas, Nevada), the Managing General Partner
negotiated an agreement that will ultimately transfer ownership of the
Partnership's interest in the property to the Local General Partner. This plan
includes provisions to minimize the risk of recapture. Pursuant to this
agreement, during May 2000 the Partnership transferred 49.5% of its interest in
the capital and profits of the local limited partnership to the Local General
Partner. The Managing General Partner has the right to transfer the
Partnership's remaining interest in the property to the Local General Partner
any time after one year has elapsed. We continue to closely monitor the
operations of the property.
The Managing General Partner also had concerns about the long-term financial
viability of Terrace (Oklahoma City, Oklahoma), which has the same Local General
Partner as Sierra Pointe. Accordingly, the Managing General Partner negotiated
an agreement to transfer the Partnership's interest in the property to Local
General Partner. Subsequent to receiving HUD's approval of the agreement, the
Managing General Partner redeemed the Partnership's interest in the property on
June 26, 2000. This redemption will not trigger a recapture event for the
Partnership.
The Partnership has implemented policies and practices for assessing potential
impairment of its investments in Local Limited Partnerships. The investments are
analyzed by real estate experts to determine if impairment indicators exist. If
so, the carrying value is compared to the undiscounted future cash flows
expected to be derived from the asset. If there is a significant impairment in
carrying value, a provision to write down the asset to fair value will be
recorded in the Partnership's financial statements.
<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, 2000.
<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 14 , 2000 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>
