February 11, 2000
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-QSB for Quarter Ended December 31, 1999
File No. 0-16796
Gentlemen:
Pursuant to the requirements of Section 15(d) of the Securities Exchange Act of
1934, filed herewith is one 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-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 December 31, 1999
---------------------------------
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 Identification No.)
incorporation or organization)
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
<TABLE>
<CAPTION>
<S> <C>
PART I - FINANCIAL INFORMATION Page No.
- ------------------------------ --------
Item 1. Financial Statements
Combined Balance Sheet - December 31, 1999 (Unaudited) 1
Combined Statements of Operations (Unaudited) - For the Three and Nine
Months Ended December 31, 1999 and 1998 2
Combined Statement of Changes in Partners' Equity (Deficiency) (Unaudited) -
For the Nine Months Ended December 31, 1999 3
Combined Statements of Cash Flows (Unaudited) - For the Nine
Months Ended December 31, 1999 and 1998 4
Notes to the Combined Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II - OTHER INFORMATION
Items 1-6 13
SIGNATURE 14
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
COMBINED BALANCE SHEET
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 174,443
Tenant security deposits 5,080
Accounts receivable, net 4,488
Marketable securities, at fair value 991,202
Mortgagee escrow deposits 10,069
Replacement reserve escrow 6,719
Bond trusts 122,093
Investments in Local Limited Partnerships, net of reserve
for valuation of $685,201 (Note 1) 1,292,962
Deferred charges, net 39,503
Rental property, at cost, net of
accumulated depreciation 1,068,382
Other assets 18,252
Total Assets $ 3,733,193
=============
Liabilities and Partners' Equity
Accounts payable and accrued expenses $ 27,379
Accrued interest 68,819
Tenant security deposits payable 4,962
Bonds payable 1,210,000
Other liabilities 195
-------------
Total Liabilities 1,311,355
Minority interest in Local Limited Partnership 58,106
-------------
General, Initial and Investor Limited Partners' Equity 2,374,714
Net unrealized losses on marketable securities (10,982)
-------------
Total Partners' Equity 2,363,732
-------------
Total Liabilities and Partners' Equity $ 3,733,193
=============
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
For the Three and Nine Months Ended December 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
-------------- ------------- ------------- --------------
Revenues:
<S> <C> <C> <C> <C>
Rental $ 57,192 $ 53,478 $ 171,804 $ 167,781
Investment 22,404 33,821 83,507 94,321
Other 6,364 8,156 132,407 100,721
-------------- ------------- -------------- --------------
Total Revenue 85,960 95,455 387,718 362,823
-------------- ------------- -------------- --------------
Expenses:
General and administrative
(includes reimbursements to
affiliates in the amounts of
$97,588 and $95,499 in 1999
and 1998, respectively) 121,734 139,336 271,938 292,760
Bad debt expense 764,436 - 930,955 -
Rental operations, exclusive
of depreciation 12,168 20,193 66,062 62,749
Interest 31,822 34,024 98,858 96,058
Depreciation 10,182 10,182 30,546 30,546
Amortization 6,688 8,645 20,076 25,934
Provision for valuation of investments
in Local Limited Partnerships - 8,587 - 8,587
-------------- ------------- -------------- --------------
Total Expenses 947,030 220,967 1,418,435 516,634
-------------- ------------- -------------- --------------
Loss before Minority interest and Equity
in income (losses) of Local Limited
Partnerships (861,070) (125,512) (1,030,717) (153,811)
Minority interest in (income) losses of
Local Limited Partnership (30) 103 216 191
Equity in income (losses) of
Local Limited Partnerships 84,736 (99,153) (83,917) (403,168)
-------------- ------------- -------------- --------------
Net Loss $ (776,364) $ (224,562) $ (1,114,418) $ (556,788)
============== ============= ============== ==============
Net Loss allocated:
To General Partners $ (7,763) $ (2,246) $ (11,144) $ (5,568)
To Limited Partners (768,601) (222,316) (1,103,274) (551,220)
-------------- ------------- -------------- --------------
$ (776,364) $ (224,562) $ (1,114,418) $ (556,788)
============== ============= ============== ==============
Net Loss per Limited
Partnership Unit (50,000 Units) $ (15.37) $ (4.45) $ (22.07) $ (11,02)
============== ============= ============= ==============
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)
For the Nine Months Ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Net
Initial Investor Unrealized
General Limited Limited Gains
Partners Partners Partners (Losses) Total
<S> <C> <C> <C> <C>
Balance at March 31, 1999 $ (399,606) $ 4,648 $3,884,090 $ 12,442 $ 3,501,574
----------- ----------- ----------- ----------- -----------
Comprehensive Loss:
Net change in net unrealized gains
on marketable securities
available for sale - - - (23,424) (23,424)
Net Loss (11,144) - (1,103,274) - (1,114,418)
----------- ----------- ----------- ----------- -----------
Comprehensive Loss (11,144) - (1,103,274) (23,424) (1,137,842)
------------ ----------- ----------- ----------- -----------
Balance at December 31, 1999 $ (410,750) $ 4,648 $ 2,780,816 $ (10,982) $ 2,363,732
=========== =========== =========== =========== ===========
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
For the Nine Months Ended December 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
------------- -----------
<S> <C> <C>
Net cash used for operating activities $ (209,298) $ (209,407)
------------ -----------
Net cash provided by investing activities 157,919 214,522
------------ -----------
Net increase (decrease) in cash and cash equivalents (51,379) 5,115
Cash and cash equivalents, beginning 225,822 243,723
------------ -----------
Cash and cash equivalents, ending $ 174,443 $ 248,838
============ ===========
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-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 thereto included with the Partnership's Form 10-K for the
year ended March 31, 1999. 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, 1999 and 1998.
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, 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, Graver Inn, 600 Dakota and Duluth in each of
which the Partnership's interest is only 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, 1999 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 $31,313,265) (35,936,288)
Cumulative cash distributions received from Local Limited Partnerships (1,899,880)
----------------
Investments in Local Limited Partnerships before adjustment (1,580,003)
Excess of investment costs over underlying net assets acquired:
Acquisition fees and expenses 4,725,764
Accumulated amortization of acquisition fees and expenses (1,167,598)
----------------
Investments in Local Limited Partnerships 1,978,163
Reserve for Valuation of Investments in
Local Limited Partnerships (685,201)
$ 1,292,962
</TABLE>
The Partnership's share of net losses of the Local Limited Partnerships, for the
nine months ended December 31, 1999, excluding Huges, totaled $3,541,941. For
the nine months ended December 31, 1999, the Partnership has not recognized
$3,582,880 of equity in losses relating to twenty-eight 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)
<TABLE>
<CAPTION>
2. Supplemental Combining Schedules
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 $ 171,607 $ 2,836 $ - $ 174,443
Tenant security deposits - 5,080 - 5,080
Accounts receivable, net 4,488 - - 4,488
Marketable securities, at fair value 991,202 - - 991,202
Mortgagee escrow deposits - 10,069 - 10,069
Replacement reserve escrow - 6,719 - 6,719
Bond trusts - 122,093 - 122,093
Investments in Local Limited
Partnerships, net 1,155,320 - 137,642 1,292,962
Deferred charges, net - 39,503 - 39,503
Rental property at cost, net - 1,037,445 30,937 1,068,382
Other assets 12,524 5,728 - 18,252
------------- ------------- ------------- -------------
Total Assets $ 2,335,141 $ 1,229,473 $ 168,579 $ 3,733,193
============= ============= ============= =============
Liabilities and Partners' Equity (Deficiency)
Accounts payable to affiliates $ - $ 53,490 $ (53,490) $ -
Accounts payable and accrued
expenses 24,899 2,480 - 27,379
Accrued interest - 68,819 - 68,819
Tenant security deposits payable - 4,962 - 4,962
Bonds payable - 1,210,000 - 1,210,000
Other liabilities - 195 - 195
------------- ------------- ------------- -------------
Total Liabilities 24,899 1,339,946 (53,490) 1,311,355
------------- ------------- ------------- -------------
Minority interest in Local Limited
Partnership - - 58,106 58,106
------------- ------------ ------------- -------------
General, Initial and Investor
Limited Partners' Equity (Deficiency) 2,321,224 (110,473) 163,963 2,374,714
Net unrealized losses on marketable
securities (10,982) - - (10,982)
------------- ------------- ------------- -------------
Total Partners' Equity (Deficiency) 2,310,242 (110,473) 163,963 2,363,732
------------- ------------- ------------- -------------
Total Liabilities and
Partners' Equity $ 2,335,141 $ 1,229,473 $ 168,579 $ 3,733,193
============= ============= ============= =============
</TABLE>
(A) As of December 31, 1999.
(B) As of September 30, 1999.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(Unaudited)
<TABLE>
<CAPTION>
2. Supplemental Combining Schedules (continued)
Statements of Operations
Boston Financial
Qualified Housing Hughes
Tax Credits Apartments
L.P. (A) Ltd.(B) Eliminations Combined
Revenue:
<S> <C> <C> <C> <C>
Rental $ - $ 171,804 $ - $ 171,804
Investment 83,320 187 - 83,507
Other 128,106 4,301 - 132,407
------------- ------------- ------------- -------------
Total Revenue 211,426 176,292 - 387,718
------------- ------------- ------------- -------------
Expenses:
General and administrative 271,938 - - 271,938
Bad debt expense 984,445 - (53,490) 930,955
Rental operations, exclusive
of depreciation - 66,062 - 66,062
Interest - 98,858 - 98,858
Depreciation - 30,546 - 30,546
Amortization 17,658 2,418 - 20,076
------------- ------------- ------------- -------------
Total Expenses 1,274,041 197,884 (53,490) 1,418,435
------------- ------------- ------------- -------------
Loss before minority interest in
losses of Local Limited Partnership
and equity in losses of Local Limited
Partnerships (1,062,615) (21,592) 53,490 (1,030,717)
Minority interest in losses of
Local Limited Partnership - - 216 216
Equity in losses of Local
Limited Partnerships (105,293) - 21,376 (83,917)
------------- ------------- ------------- -------------
Net Loss $ (1,167,908) $ (21,592) $ 75,082 $ (1,114,418)
============= ============= ============= =============
</TABLE>
(A) For the nine months ended December 31, 1999.
(B) For the nine months ended September 30, 1999.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(Unaudited)
<TABLE>
<CAPTION>
2. Supplemental Combining Schedules (continued)
Statements of Cash Flows
Boston Financial
Qualified Housing Hughes
Tax Credits Apartments
L.P. (A) Ltd.(B) Eliminations Combined
<S> <C> <C> <C> <C>
Net cash used for operating activities $ (208,070) $ (1,228) $ - $ (209,298)
------------- ------------- ------------- -------------
Net cash provided by investing
activities 157,919 - - 157,919
------------- ------------- ------------- -------------
Net decrease in cash and cash
equivalents (50,151) (1,228) - (51,379)
Cash and cash equivalents, beginning 221,758 4,064 - 225,822
------------- ------------- ------------- -------------
Cash and cash equivalents, ending $ 171,607 $ 2,836 $ - $ 174,443
============= ============= ============= =============
</TABLE>
(A) For the nine months ended December 31, 1999.
(B) For the nine months ended September 30, 1999.
<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 December 31, 1999, the Partnership, including the combined entity (Hughes
Apartments, Ltd.), has cash and cash equivalents of $174,443, as compared with
$225,822 at March 31, 1999. The decrease is primarily attributable to loans to
various Local Limited Partnerships and cash used for operations. These decreases
in cash and cash equivalents are partially offset by proceeds from sales and
maturities of marketable securities in excess of purchases of marketable
securities and cash distributions received from Local Limited Partnerships.
At December 31, 1999, approximately $375,000 of cash, cash equivalents and
marketable securities has been designated as Reserves, as defined in the
Partnership Agreement, as compared with approximately $1,543,000 at March 31,
1999. This decrease is primarily due to advances to certain Local Limited
Partnerships for various property issues. Additionally, significant legal and
consulting fees relating to various Local Limited Partnerships were paid during
the nine months ended December 31, 1999. 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, 1999, 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, 1999. 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, if any, of cash will be distributed to
Limited Partners from this source in the future.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Partnership's results of operations for the three and nine months ended
December 31, 1999 resulted in net losses of $776,364 and $1,114,418,
respectively, as compared to net losses of $224,562 and $556,788 for the same
periods in 1998. The increases in losses for both the three and nine month
periods are primarily attributable to bad debt reserves on advances made to
certain Local Limited Partnerships. The increase in losses is partially offset
by an increase in losses not recognized by the Partnership for Local Limited
Partnerships whose cumulative equity in losses and cumulative distributions
exceeded its total investment in these partnerships.
Property Discussions
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. Subsequently, the Local General
Partner transferred both its general partner interest and 48.5% of its
partnership interest in Barrington Manor and Duluth 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, 1999. Further, the new Local General Partner has the
right to call the remaining interest after the tax credit period has expired.
In addition, on April 9, 1999, due to concerns over the financial viability of
600 Dakota and Graver Inn and to avoid the potential risk of recapture of tax
credits associated with the properties, the Managing General Partner exercised
its right to transfer the Partnership's remaining interest in 600 Dakota and
Graver Inn to the Local General Partner. This transfer will not trigger a
recapture event for the Partnership nor have any impact on the Partnership's
financial statement. However, for tax purposes, this event will result in both
Section 1231 gain and cancellation of indebtedness income for the 1999 tax year.
The Managing General Partner continues to monitor closely the operations of
Barrington Manor and Duluth.
The Local General Partner of Chestnut Lane, located in Newman, Georgia,
Glenville Properties, located in Glenville, Georgia, Pine Village, located in
Pine Mountain, Georgia, Talbot Village, located in Talbottom, Georgia and
Willopeg Village, located in Rincon, Georgia, 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 is in negotiations with the Local General Partner to develop 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.
As previously reported, Boulevard Commons, located in Chicago, Illinois, is
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 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. 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
<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)
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 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 a plan with
the Local General Partner 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 one year has elapsed.
As previously reported, the Managing General Partner at Pebble Creek, located in
Arlington, Texas, was in negotiations with HUD to extend and/or modify the
existing workout agreement which expired May 31, 1998. In December, the Local
General Partner signed a Provisional Workout Agreement (PWA) with HUD. As part
of the PWA, the Fund assumed the out-of-pocket costs of the workout totaling
approximately $700,000. Going forward, the Managing General Partner will
continue to pursue "HUD" Mark to Market "restructuring". In 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 and Verdean Gardens, both located in
Massachusetts and share a common Local General Partner, continue to operate
below break-even. Both properties, as well as Bittersweet Apartments, receive a
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 (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, 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 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.
As previously reported, the Local General Partner for Brentwood Manor II, in
Nashua, New Hampshire, filed for protection under the provisions of the Chapter
7 bankruptcy laws. Consequently, the Local General Partner was removed as
general partner of the Local Limited Partnership and replaced with an affiliate
of the Managing General Partner. In addition, the Managing General Partner
replaced the former Local General Partner as management agent of the property
with an unaffiliated third-party management agent. Although full mortgage
payments are being made at this time, partial mortgage payments were made
earlier in 1998 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 former Local General Partner to develop a plan for the payment of
this amount. It is possible that Partnership Reserves will be used to pay this
deficit.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING LIMITED PARTNERSHIP
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Property Discussions (continued)
Sierra Pointe, located in 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, 1999, occupancy for
Sierra Pointe was 73% and for Terrace was 97%. 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. In addition, the Managing General
Partner is negotiating a plan with the Local General Partner that will
ultimately transfer ownership of the properties to the Local General Partner.
The plan includes provisions to minimize the risk of recapture.
<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, 1999.
<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 11, 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>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> DEC-31-1999
<CASH> 174,443
<SECURITIES> 991,202
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 1,068,382
<DEPRECIATION> 000
<TOTAL-ASSETS> 3,733,193<F1>
<CURRENT-LIABILITIES> 000
<BONDS> 1,210,000
000
000
<COMMON> 000
<OTHER-SE> 2,363,732
<TOTAL-LIABILITY-AND-EQUITY> 3,733,193<F2>
<SALES> 000
<TOTAL-REVENUES> 387,718<F3>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 1,319,577 <F4>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 98,858
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (1,114,418)<F5>
<EPS-BASIC> (22.07)
<EPS-DILUTED> 000
<FN>
<F1>Included in total assets is $5,080 of Tenant security deposits, Accounts
receivable, net of $4,488, Investments in Local Limited Partnerships, net of
$1,292,962, Deferred charges, net of $39,503, Bond trusts of $122,093, Mortgagee
escrow deposits of $10,069, Replacement reserve escrow of $6,719 and Other
assets of $18,252. <F2>Included in total liability and equity is Accounts
payable and accrued expenses of $27,379, Accrued interest of $68,819, Tenant
security deposits payable of $4,962, Other liabilities of $195, and $58,106 of
Minority interest in Local Limited Partnership. <F3>Total revenue includes
Rental of $171,804, Investment of $83,507 and Other of $132,407. <F4>Included in
other expenses is General and administrative of $271,938, Bad debt expenses of
$930,955, Rental operations, exclusive of depreciation of $66,062, Depreciation
of $30,546 and Amortization of $20,076. <F5>Net loss reflects Equity in losses
of Local Limited Partnerships of $83,917 and Minority interest in loss of Local
Limited Partnership of $216.
</FN>
</TABLE>
