November 13, 1996
Securities and Exchange Commission
Filer Support, Edgar
Operation Center, Stop 0-7
6432 General Green Way
Alexandria, VA 22312
Re: Boston Financial Qualified Housing Tax Credits L.P. II
Report on Form 10-Q Edgar for Quarter Ended September 30, 1996
File No. 0-17777
Dear Sir/Madam:
Pursuant to the requirements of Rule 901(d) of Regulation S-T, enclosed is one
copy of subject report.
Very truly yours,
/s/ Marie D. Reynolds
Marie D. Reynolds
Assistant Controller
QH2-10Q2.DOC
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended September 30, 1996 Commission file number 0-17777
Boston Financial Qualified Housing Tax Credits L.P. II
(Exact name of registrant as specified in its charter)
Delaware 04-3002607
(State or other jurisdiction of (I.R.S. Employer
ncorporation 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 TAX CREDITS L.P. II
(A Limited Partnership)
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Combined Balance Sheets - September 30, 1996 (Unaudited)
and March 31, 1996 1
Combined Statements of Operations (Unaudited) - For the Three and
Six Months Ended September 30, 1996 and 1995 2
Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Six Months Ended September 30, 1996 3
Combined Statements of Cash Flows (Unaudited) -
For the Six Months Ended September 30, 1996 and 1995 4
Notes to Combined Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
PART II - OTHER INFORMATION
Items 1-6 15
SIGNATURE 16
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, March 31,
1996 1996
(Unaudited)
Assets
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 205,985 $ 164,590
Tenant security deposits 29,654 32,644
Insurance proceeds receivable -- 375,000
Other current assets 322,516 81,015
------------ ------------
Total current assets 558,155 653,249
Notes and interest receivable 51,941 81,908
Mortgagee escrow deposits 49,050 50,121
Replacement reserves 82,528 69,262
Investments in Local Limited Partnerships (Note 2) 12,409,666 14,387,959
Marketable securities, at fair value (Note 1) 1,478,180 1,739,223
Rental property at cost, net of accumulated depreciation 5,500,369 5,645,672
Deferred fees (net of accumulated amortization
of $43,589 and $39,786, respectively) 260,669 264,472
------------ ------------
Total Assets $ 20,390,558 $ 22,891,866
============ ============
Liabilities and Partners' Equity
Current liabilities:
Accounts payable to affiliates $ 147,295 $ 86,178
Accounts payable and accrued expenses 255,646 774,568
Current portion of mortgage note payable 23,016 21,759
Accrued interest payable 38,198 38,291
Security deposits payable 29,654 29,754
------------ ------------
Total current liabilities 493,809 950,550
Mortgage note payable 5,100,297 5,112,191
------------ ------------
Total Liabilities 5,594,106 6,062,741
------------ ------------
Minority interest in Local Limited Partnership 95,375 97,466
------------ ------------
Commitments (Note 3)
General, Initial and Investor Limited Partners' Equity 14,702,359 16,725,984
Net unrealized gains (losses) on marketable securities (1,282) 5,675
------------ ------------
Total Partners' Equity 14,701,077 16,731,659
------------ ------------
Total Liabilities and Partners' Equity $ 20,390,558 $ 22,891,866
============ ============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
------------ ------------- ----------- -----------
Revenue:
<S> <C> <C> <C> <C>
Rental $ 182,437 $ 191,006 $ 368,969 $ 367,068
Investment 25,422 42,110 54,442 76,806
Other (35,490) 6,251 17,887 11,262
----------- ----------- ----------- -----------
Total Revenue 172,369 239,367 441,298 455,136
----------- ----------- ----------- -----------
Expenses:
Asset management fees,
related party 67,668 66,018 135,336 132,036
General and administrative
(includes reimbursements
to an affiliate of $56,106
and $49,408) 55,368 47,590 114,226 103,891
Rental operations,
exclusive of depreciation 80,739 132,087 170,970 214,997
Property management fees,
related party 9,848 9,774 19,728 18,683
Interest 124,258 115,137 248,656 230,383
Depreciation 75,531 68,301 145,303 139,454
Amortization 36,387 25,484 73,461 74,438
----------- ----------- ----------- -----------
Total Expenses 449,799 464,391 907,680 913,882
----------- ----------- ----------- -----------
Loss before equity in losses of
Local Limited Partnerships (277,430) (225,024) (466,382) (458,746)
Minority interest in loss of
Local Limited Partnership 1,047 1,218 2,091 2,335
Equity in losses of Local
Limited Partnerships (430,121) (610,451) (1,559,334) (1,697,927)
----------- ----------- ----------- -----------
Net Loss $ (706,504) $ (834,257) $(2,023,625) $(2,154,338)
=========== =========== =========== ===========
Net Loss allocated:
To General Partners $ (7,065) $ (8,343) $ (20,236) $ (21,543)
To Limited Partners (699,439) (825,914) (2,003,389) (2,132,795)
----------- ----------- ----------- -----------
$ (706,504) $ (834,257) $(2,023,625) $(2,154,338)
=========== =========== =========== ===========
Net Loss per Limited
Partnership Unit
(60,000 Units) $ (11.66) $ (13.77) $ (33.39) $ (35.55)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
(Unaudited)
For the Six Months Ended September 30, 1996
<TABLE>
<CAPTION>
Net
Initial Investor Unrealized
General Limited Limited Gains
Partners Partners Partners (Losses) Total
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1996 $ (360,058) $ 5,000 $ 17,081,042 $ 5,675 $ 16,731,659
Net change in net unrealized
gains on marketable securities
available for sale -- -- -- (6,957) (6,957)
Net Loss (20,236) -- (2,003,389) -- (2,023,625)
------------ ------------ ------------ ------------ ------------
Balance at September 30, 1996 $ (380,294) $ 5,000 $ 15,077,653 $ (1,282) $ 14,701,077
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
----------- ---------
<S> <C> <C>
Net cash used by operating activities $ (626,594) $ (309,613)
----------- -----------
Cash flows from investing activities:
Repayment of notes receivable 34,373 --
Purchases of marketable securities (908,552) (1,876,070)
Proceeds from sales and maturities
of marketable securities 1,214,971 1,669,581
Cash distributions received from Local
Limited Partnerships 350,029 2,935
Purchases of rental property and equipment -- (13,777)
Replacement reserves, net (13,266) (13,034)
----------- -----------
Net cash provided by (used for) investing activities 677,555 (230,365)
----------- -----------
Cash flows from financing activities:
Repayment of mortgage payable (10,637) (9,718)
Mortgagee escrow releases (deposits) 1,071 (21,191)
Proceeds from developer -- 6,110
----------- -----------
Net cash used for financing activities (9,566) (24,799)
----------- -----------
Net increase (decrease) in cash and cash equivalents 41,395 (564,777)
Cash and cash equivalents, beginning of period 164,590 614,257
----------- -----------
Cash and cash equivalents, end of period $ 205,985 $ 49,480
=========== ===========
Supplemental disclosure to cash flow activity:
Cash paid for interest $ 248,749 $ 230,467
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(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, 1996. In the opinion of management, these financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the Partnership's financial position and results of
operations. The results of operations for the periods may not be indicative of
the results to be expected for the year. Certain reclassifications have been
made to prior period financial statements to conform to current period
classifications.
1. Marketable Securities
A summary of marketable securities is as follows:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Debt securities issued by
the US Treasury and
other US government
corporations and agencies $ 814,258 $ 5,607 $ (1,905) $ 817,960
Mortgage backed securities 572,522 -- (4,651) 567,871
Other debt securities 92,682 -- (333) 92,349
---------- ---------- ---------- ----------
Marketable securities
at September 30, 1996 $1,479,462 $ 5,607 $ (6,889) $1,478,180
========== ========== ========== ==========
Debt securities issued by
the US Treasury and
other US government
corporations and agencies $1,025,378 $ 10,410 $ (7,636) $1,028,152
Mortgage backed securities 348,843 1,366 (977) 349,232
Other debt securities 359,327 3,183 (671) 361,839
---------- ---------- ---------- ----------
Marketable securities
at March 31, 1996 $1,733,548 $ 14,959 $ (9,284) $1,739,223
========== ========== ========== ==========
</TABLE>
The contractual maturities at September 30, 1996 are as follows:
Cost Fair Value
Due in one year or less $ 271,138 $ 273,151
Due in one year to five years 635,802 637,158
Mortgage backed securities 572,522 567,871
---------- ----------
$1,479,462 $1,478,180
========== ==========
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
Notes to the Combined Financial Statements (continued)
(Unaudited)
1. Marketable Securities (continued)
Actual maturities may differ from contractual maturities because some borrowers
have the right to call or prepay obligations. Proceeds from the sales of fixed
maturities were approximately $1,215,000 and $1,670,000 during the six months
ended September 30, 1996 and 1995. Included in investment income are gross gains
of $63,243 and gross losses of $10,910 which were realized on these sales during
the six months ended September 30, 1996 and gross gains of $4,462 and gross
losses of $16,717 which were realized on sales during the six months ended
September 30, 1995.
2. Investments in Local Limited Partnerships
The Partnership has acquired limited partner interests in thirty-nine Local
Limited Partnerships (excluding Garden Cove) which own and operate multi-family
housing complexes, most of which are government-assisted. The Partnership, as
Investor Limited Partner pursuant to the various Local Limited Partnership
Agreements, has acquired a 99% interest in the profits, losses, tax credits and
cash flows from operations of each of the Local Limited Partnerships. Upon
dissolution, proceeds will be distributed according to each respective
partnership agreement.
<TABLE>
<CAPTION>
A summary of investments in Local Limited Partnerships, excluding Garden Cove,
at September 30, 1996 is as follows:
<S> <C>
Capital contributions paid to Local Limited Partnerships and purchase price
paid to withdrawing partners of Local Limited Partnerships $ 40,811,675
Cumulative equity in losses of Local Limited Partnerships (31,853,784)
Cumulative cash distributions received
from Local Limited Partnerships (834,505)
Investments in Local Limited Partnerships before adjustment 8,123,386
Excess of investment costs over the underlying net assets acquired:
Acquisition fees and expenses 5,561,180
Accumulated amortization of acquisition fees and expenses (1,274,900)
------------
Investments in Local Limited Partnerships $ 12,409,666
============
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
Notes to the Combined Financial Statements (continued)
(Unaudited)
2. Investments in Local Limited Partnerships (continued)
Summarized financial information from the combined financial statements of all
Local Limited Partnerships, excluding Garden Cove, in which the Partnership has
invested at September 30, 1996 is as follows:
Summarized Balance Sheet - For the
six months ended June 30, 1996 (Unaudited)
Assets:
Investment property, net $ 104,356,730
Current assets 2,027,745
Other assets 6,507,119
-------------
Total Assets $ 112,891,594
=============
Liabilities and Partners' Equity:
Long-term debt $ 101,500,717
Current liabilities 2,805,789
Other liabilities 3,252,829
-------------
Total Liabilities 107,559,335
Partners' Equity 5,332,259
-------------
Total Liabilities and Partners' Equity $ 112,891,594
=============
Summarized Income Statement- For the
six months ended June 30, 1996 (Unaudited)
Rental and other income $ 9,760,272
-------------
Expenses:
Operating 4,835,201
Interest 4,476,801
Depreciation and amortization 2,481,276
-------------
Total Expenses 11,793,278
Net Loss $ (2,033,006)
=============
Partnership's share of net loss $ (2,012,675)
=============
Other Partners' share of net loss $ (20,331)
=============
For the six months ended September 30, 1996 the Partnership has not recognized
$454,069 in equity in losses relating to fifteen Local Limited Partnerships
where cumulative equity in losses and cumulative cash distributions exceed their
total investment.
3. Commitments
At September 30, 1996, the Partnership has committed to make future capital
contributions and to pay future purchase price installments on its investments
in Local Limited Partnerships. These future payments are contingent upon the
achievement of certain criteria as set forth in the Local Limited Partnership
Agreements and total approximately $337,500.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
Notes to the Combined Financial Statements (continued)
(Unaudited)
4. Litigation
As previously reported, the Partnership and its affiliates recently settled a
lawsuit with the former managing general partners of Garden Cove Apartments,
Ltd. ("Garden Cove"). Management believes the settlement was favorable to the
Partnership. Among other things, the majority of the settlement payments were
reimbursed by the Partnership's insurer. However, the Partnership also incurred
significant litigation expenses in connection with this matter. As of September
30, 1996, these expenses totaled approximately $188,000.
In early September, Garden Cove and the former local managing general partners
of this partnership were served with a lawsuit by Saunders Construction Company,
Inc., the contractor for this apartment complex. Saunders claims that certain
amounts on its construction contract remain unpaid and it is seeking
approximately $196,000, plus interest, from Garden Cove. Additional amounts are
sought from the former managing general partners. Neither the Partnership nor
its General Partners are defendants in this matter. Because this lawsuit was
only recently filed, it is too early to determine whether Garden Cove may have
any exposure.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
Notes to the Combined Financial Statements (continued)
(Unaudited)
5. Supplemental Combining Schedules
<TABLE>
<CAPTION>
Balance Sheets
Boston Financial
Qualified Housing Garden Cove
Tax Credits Apartments
L.P. II (A) Ltd.(B) Eliminations Combined
Assets
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 192,866 $ 13,119 $ -- $ 205,985
Tenant security deposits -- 29,654 -- 29,654
Other current assets 907,297 48,881 (633,662) 322,516
------------ ------------ ------------ ------------
Total current assets 1,100,163 91,654 (633,662) 558,155
Notes and interest receivable 51,941 -- -- 51,941
Mortgagee escrow deposits -- 49,050 -- 49,050
Replacement reserves -- 82,528 -- 82,528
Investments in Local Limited
Partnerships 12,263,448 -- 146,218 12,409,666
Marketable securities, at fair value 1,478,180 -- -- 1,478,180
Rental property at cost, net of
accumulated depreciation -- 5,500,369 -- 5,500,369
Deferred fees, net -- 260,669 -- 260,669
------------ ------------ ------------ ------------
Total Assets $ 14,893,732 $ 5,984,270 $ (487,444) $ 20,390,558
============ ============ ============ ============
Liabilities and Partners' Equity
Current liabilities:
Accounts payable to affiliates $ 143,984 $ 3,311 $ -- $ 147,295
Accounts payable and accrued
expenses 48,671 206,975 -- 255,646
Advances from Limited Partner -- 633,662 (633,662) --
Current portion of mortgage
note payable -- 23,016 -- 23,016
Accrued interest payable -- 38,198 -- 38,198
Security deposits payable -- 29,654 -- 29,654
------------ ------------ ------------ ------------
Total current liabilities 192,655 934,816 (633,662) 493,809
Mortgage note payable -- 5,100,297 -- 5,100,297
------------ ------------ ------------ ------------
Total Liabilities 192,655 6,035,113 (633,662) 5,594,106
------------ ------------ ------------ ------------
Minority interest in Local Limited
Partnership -- -- 95,375 95,375
------------ ------------ ------------ ------------
General, Initial and Investor
Limited Partners' Equity (Deficit) 14,702,359 (50,843) 50,843 14,702,359
Net unrealized losses on
marketable securities (1,282) -- -- (1,282)
------------ ------------ ------------ ------------
Total Partners' Equity (Deficit) 14,701,077 (50,843) 50,843 14,701,077
------------ ------------ ------------ ------------
Total Liabilities and Partners' Equity $ 14,893,732 $ 5,984,270 $ (487,444) $ 20,390,558
============ ============ ============ ============
</TABLE>
(A) September 30, 1996. (B) June 30, 1996.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
Notes to the Combined Financial Statements (continued)
(Unaudited)
5. Supplemental Combining Schedules (continued)
Statements of Operations
For the Three Months Ended September 30, 1996
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing Garden Cove
Tax Credits Apartments
L.P. II (A) Ltd.(B) Eliminations Combined
Revenue:
<S> <C> <C> <C> <C>
Rental $ -- $ 182,437 $ -- $ 182,437
Investment 24,483 939 -- 25,422
Other (39,730) 4,240 -- (35,490)
--------- --------- --------- ---------
Total Revenue (15,247) 187,616 -- 172,369
--------- --------- --------- ---------
Expenses:
Asset management fees, related party 67,668 -- -- 67,668
General and administrative 55,368 -- -- 55,368
Rental operations, exclusive
of depreciation -- 80,739 -- 80,739
Property management fees,
related party -- 9,848 -- 9,848
Interest -- 124,258 -- 124,258
Depreciation -- 75,531 -- 75,531
Amortization 34,487 1,900 -- 36,387
--------- --------- --------- ---------
Total Expenses 157,523 292,276 -- 449,799
--------- --------- --------- ---------
Loss before equity in losses of
Local Limited Partnerships (172,770) (104,660) -- (277,430)
Minority interest in loss of
Local Limited Partnership -- -- 1,047 1,047
Equity in losses of Local
Limited Partnerships (533,734) -- 103,613 (430,121)
--------- --------- --------- ---------
Net Loss $(706,504) $(104,660) $ 104,660 $(706,504)
========= ========= ========= =========
</TABLE>
(A) For the three months ended September 30,1996. (B) For the three months ended
June 30, 1996.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
Notes to the Combined Financial Statements (continued)
(Unaudited)
5. Supplemental Combining Schedules (continued)
<TABLE>
<CAPTION>
Statements of Operations
For the Six Months Ended September 30, 1996
Boston Financial
Qualified Housing Garden Cove
Tax Credits Apartments
L.P. II (A) Ltd.(B) Eliminations Combined
Revenue:
<S> <C> <C> <C> <C>
Rental $ -- $ 368,969 $ -- $ 368,969
Investment 52,540 1,902 -- 54,442
Other 9,384 8,503 -- 17,887
----------- ----------- ----------- -----------
Total Revenue 61,924 379,374 -- 441,298
----------- ----------- ----------- -----------
Expenses:
Asset management fees, related party 135,336 -- -- 135,336
General and administrative 114,226 -- -- 114,226
Rental operations, exclusive
of depreciation -- 170,970 -- 170,970
Property management fees,
related party -- 19,728 -- 19,728
Interest -- 248,656 -- 248,656
Depreciation -- 145,303 -- 145,303
Amortization 69,658 3,803 -- 73,461
----------- ----------- ----------- -----------
Total Expenses 319,220 588,460 -- 907,680
----------- ----------- ----------- -----------
Loss before equity in losses of
Local Limited Partnerships (257,296) (209,086) -- (466,382)
Minority interest in loss of
Local Limited Partnership -- -- 2,091 2,091
Equity in losses of Local
Limited Partnerships (1,766,329) -- 206,995 (1,559,334)
----------- ----------- ----------- -----------
Net Loss $(2,023,625) $ (209,086) $ 209,086 $(2,023,625)
=========== =========== =========== ===========
</TABLE>
(A) For the six months ended September 30,1996. (B) For the six months ended
June 30, 1996.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
Notes to the Combined Financial Statements (continued)
(Unaudited)
5. Supplemental Combining Schedules (continued)
Statements of Cash Flows
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing Garden Cove
Tax Credits Apartments
L.P. II (A) Ltd.(B) Eliminations Combined
<S> <C> <C> <C> <C>
Net cash provided by (used for)
operating activities $ (622,725) $ 69,117 $ (72,986) $ (626,594)
----------- ----------- ----------- -----------
Cash flows from investing activities:
Repayment of notes receivable 34,373 -- -- 34,373
Purchases of marketable securities (908,552) -- -- (908,552)
Proceeds from sales and maturities
of marketable securities 1,214,971 -- -- 1,214,971
Cash distributions received from
Local Limited Partnerships 350,029 -- -- 350,029
Replacement reserves, net -- (13,266) -- (13,266)
----------- ----------- ----------- -----------
Net cash provided by (used for)
investing activities 690,821 (13,266) -- 677,555
----------- ----------- ----------- -----------
Cash flows from financing activities:
Repayment of mortgage payable -- (10,637) -- (10,637)
Mortgagee escrow releases -- 1,071 -- 1,071
Advance from limited partner -- (72,986) 72,986 --
----------- ----------- ----------- -----------
Net cash used for financing activities -- (82,552) 72,986 (9,566)
----------- ----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents 68,096 (26,701) -- 41,395
Cash and cash equivalents, beginning 124,770 39,820 -- 164,590
----------- ----------- ----------- -----------
Cash and cash equivalents, ending $ 192,866 $ 13,119 $ -- $ 205,985
=========== =========== =========== ===========
</TABLE>
(A) For the six months ended September 30,1996. (B) For the six months ended
June 30, 1996.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At September 30, 1996, the Partnership, including Garden Cove Apartments, had
cash and cash equivalents of $205,985 as compared to $164,590 at March 31, 1996.
The increase is primarily attributable to proceeds from the sales and maturities
of marketable securities in excess of purchases of marketable securities and
cash distributions received from Local Limited Partnerships. These increases are
offset by cash used for operations.
The Managing General Partner initially designated 3% of the Gross Proceeds to
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. The Managing General Partner may increase or decrease
such Reserves from time to time, as it deems appropriate. During the year ended
March 31, 1993, the Managing General Partner decided to increase the Reserve
level to 4% and it transferred the additional funds to the Reserve account.
Approximately $184,000 has been withdrawn from the Reserve account to pay legal
and other costs related to the Mod Rehab issue. Additionally, legal fees
relating to various property issues totaling approximately $24,000 have been
paid from Reserves. The Partnership also advanced approximately $861,000 to two
Local Limited Partnerships.
Management believes that the investment income earned on the Reserves, along
with cash distributions received from Local Limited Partnerships, to the extent
available, will be sufficient to fund the Partnership's ongoing operations.
Reserves may be used to fund Partnership operating deficits, if the Managing
General Partner deems funding appropriate. At September 30, 1996, approximately
$1,193,000 of marketable securities has been designated as Reserves.
At September 30, 1996, the Partnership has committed to make future capital
contributions and to pay future purchase price installments on its investments
in Local Limited Partnerships. These future payments are contingent upon the
achievement of certain criteria as set forth in the Local Limited Partnership
Agreements and total approximately $337,500.
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, as of September 30, 1996, the Partnership
had no contractual or other obligation to any Local Limited Partnership which
had not been paid or provided for, except as disclosed above.
In the event a Local Limited Partnership encounters operating difficulties
requiring additional funds, the Partnership's management might deem it in its
best interest to provide such funds, voluntarily, in order to protect its
investment.
Cash Distributions
No cash distributions were made during the six months ended September 30,1996.
Results of Operations
For the three and six months ended September 30, 1996, the Partnership
operations resulted in a net losses of $706,504 and $2,023,625, respectively, as
compared to net losses of $834,257 and $2,154,338, respectively, for the same
period in 1995. The slight decrease in net loss is primarily due to lower equity
in losses of Local Limited Partnerships. Fewer losses are being recognized in
1996 because more Local Limited Partnerships have cumulative equity in losses in
excess of their total investments as compared to the same period in 1995.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Property Discussions
As previously reported, Garden Cove, located in Huntsville, Alabama, defaulted
on its mortgage, and the Managing Local General Partner, and affiliate of the
Managing General Partner, completed a GNMA security reissuance which resulted in
a reduction of debt service. However, the property continues to operate at a
cash flow deficit despite the lower debt service due to a weak rental market.
Beginning in the third quarter of 1994, the operating deficits have been funded
from Partnership reserves. In addition, this Local Limited Partnership has been
included in certain litigation matters, which are described in Note 4 to the
Combined Financial Statements.
Snapfinger Creste, Shannon Creste, and Grayton Pointe, three Georgia properties
which share the same Local General Partner, continue to be affected by a weak
rental market. The properties also suffer from deferred maintenance. The Local
General Partner is obligated to fund deficits and has made advances and has
deferred management fees. However, such funding obligations are limited, and it
is doubtful that the Local General Partner will be able to meet these
obligations. Recently, the Managing General Partner reached an agreement with
the Local General Partner to allow, under certain circumstances, the admission
of affiliates of the Managing General Partner as a General Partner and
Management Agent. Affiliates of the Managing General Partner are in the process
of assuming the General Partner interest and management contract of Shannon
Creste, and have negotiated a tentative agreement with the lender that will
provide debt service relief and capital improvements funding.
Both Snapfinger Creste and Grayton Point have defaulted on their loan
obligations. Negotiations with their respective lenders are still underway. In
July 1996, the Local General Partner transferred management of Snapfinger Creste
to an unaffiliated entity. Pending an acceptable workout agreement with these
lenders, affiliates of the Managing General Partner are prepared to step in as
General Partner and Managing Agent for both properties. Such agreement may
require advances from Partnership Reserves. Should these negotiations prove
unsatisfactory, it is unlikely that the Partnership will be able to retain its
interest in these properties, in which case investors will incur recapture of
previous tax credit benefits.
Shadow Wood Housing, located in Chickasha, Oklahoma, is also operating at a
deficit resulting from high security costs, low Section 8 contract rates and
high debt service payments. The Local General Partners are working to increase
operating income through contract rent increases and a debt service
restructuring. Operating deficits are currently being funded by the management
agent. A fire in one building has resulted in lower than anticipated occupancy.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(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, 1996.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(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 13, 1996 BOSTON FINANCIAL QUALIFIED HOUSING
TAX CREDITS L.P. II
By: Arch Street, Inc.,
its Managing General Partner
/s/Georgia Murray
Georgia Murray
A Managing Director, Treasurer
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 205,985
<SECURITIES> 1,478,180
<RECEIVABLES> 51,941
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 352,170<F1>
<PP&E> 5,500,369
<DEPRECIATION> 000
<TOTAL-ASSETS> 20,390,558<F2>
<CURRENT-LIABILITIES> 493,809
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 14,701,077
<TOTAL-LIABILITY-AND-EQUITY> 20,390,558<F3>
<SALES> 000
<TOTAL-REVENUES> 441,298<F4>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 659,024<F5>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 248,656
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (2,023,625)<F6>
<EPS-PRIMARY> (33.39)
<EPS-DILUTED> 000
<FN>
<F1>Included in Current Assets: Tenant security deposits $29,654 and Other
current assets $322,516.
<F2>Included in Total Assets: Investments in Local Limited Partnerships
$12,409,666, Replacement reserves $82,528, Mortgage escrow deposits $49,050
and Deferred fees, net $260,669.
<F3>Included in Total Liabilities and Equity: $5,100,297 of long-term debt
and Minority interest in Local Limited Partnerships $95,375.
<F4>Total Revenue includes: Rental $368,969, Investment $54,442 and
Other $17,887.
<F5>Included in Other Expenses: Asset Management fees $135,336, General
and Administrative $114,226, Property Management fees $19,728, Rental
operations, exclusive of depreciation $170,970, Depreciation $145,303 and
Amortization $73,461.
<F6>Net loss reflects: Equity in losses of Local Limited Partnerships of
$1,559,334 and minority interest in loss of Local Limited Partnership $2,091.
</FN>
</TABLE>
