August 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 for Quarter Ended June 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
QH2-10Q1.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 June 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 June 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
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 TAX CREDITS L.P. II
(A Limited Partnership)
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page No.
- - ------------------------------ --------
Item 1. Financial Statements
Combined Balance Sheets - June 30, 1996 (Unaudited)
and March 31, 1996 1
Combined Statements of Operations (Unaudited) - For the Three
Months Ended June 30, 1996 and 1995 2
Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Three Months Ended June 30,
1996 3
Combined Statements of Cash Flows (Unaudited) -
For the Three Months Ended June 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 12
PART II - OTHER INFORMATION
Items 1-6 14
SIGNATURE 15
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
(Unaudited)
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 488,070 $ 164,590
Tenant security deposits 30,044 32,644
Insurance proceeds receivable - 375,000
Other current assets 90,092 81,015
------------- ------------
Total current assets 608,206 653,249
Notes and interest receivable 48,513 81,908
Mortgagee escrow deposits 36,136 50,121
Replacement reserves 75,895 69,262
Investments in Local Limited Partnerships (Note 2) 13,118,343 14,387,959
Marketable securities, at fair value (Note 1) 1,204,616 1,739,223
Rental property at cost, net of accumulated depreciation 5,575,900 5,645,672
Deferred fees (net of accumulated amortization
of $41,689 and $39,786, respectively) 262,569 264,472
------------- ------------
Total Assets $ 20,930,178 $ 22,891,866
============= ============
Liabilities and Partners' Equity
Current liabilities:
Accounts payable to affiliates $ 122,541 $ 86,178
Accounts payable and accrued expenses 112,580 774,568
Current portion of mortgage note payable 16,500 21,759
Accrued interest payable 38,251 38,291
Security deposits payable 28,854 29,754
------------- ------------
Total current liabilities 318,726 950,550
Mortgage note payable 5,112,191 5,112,191
------------- ------------
Total Liabilities 5,430,917 6,062,741
------------- ------------
Minority interest in Local Limited Partnership 96,422 97,466
------------- ------------
Commitments (Note 3)
General, Initial and Investor Limited Partners' Equity 15,408,863 16,725,984
Net unrealized gains (losses) on marketable securities (6,024) 5,675
------------- ------------
Total Partners' Equity 15,402,839 16,731,659
------------- ------------
Total Liabilities and Partners' Equity $ 20,930,178 $ 22,891,866
============= ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
-------------- --------
<S> <C> <C>
Revenue:
Rental $ 186,532 $ 176,062
Investment 29,020 34,696
Other 53,377 5,011
-------------- -------------
Total Revenue 268,929 215,769
-------------- -------------
Expenses:
Asset management fees, related party 67,668 66,018
General and administrative (includes reimbursements
to an affiliate of $30,134 and $28,110, respectively) 58,858 56,301
Rental operations, exclusive of depreciation 90,231 82,910
Property management fees, related party 9,880 8,909
Interest 124,398 115,246
Depreciation 69,772 71,153
Amortization 37,074 48,954
-------------- -------------
Total Expenses 457,881 449,491
-------------- -------------
Loss before equity in losses of
Local Limited Partnerships (188,952) (233,722)
Minority interest in loss of
Local Limited Partnership 1,044 1,117
Equity in losses of Local Limited
Partnerships (1,129,213) (1,087,476)
-------------- -------------
Net Loss $ (1,317,121) $ (1,320,081)
============== =============
Net Loss allocated:
To General Partners $ (13,171) $ (13,201)
To Limited Partners (1,303,950) (1,306,880)
-------------- -------------
$ (1,317,121) $ (1,320,081)
============== =============
Net Loss per Limited
Partnership Unit (60,000 Units) $ (21.73) $ (21.78)
============== ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
(Unaudited)
For the Three Months Ended June 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 - - - (11,699) (11,699)
Net Loss (13,171) - (1,303,950) - (1,317,121)
---------- -------- ------------ ---------- -------------
Balance at June 30, 1996 $ (373,229) $ 5,000 $ 15,777,092 $ (6,024) $ 15,402,839
========== ======== ============ ========== =============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
-------------- --------
<S> <C> <C>
Net cash used for operating activities $ (379,747) $ (97,079)
------------- ------------
Cash flows from investing activities:
Purchases of marketable securities (509,896) (649,960)
Proceeds from sales and maturities of
marketable securities 1,059,912 210,926
Cash distributions received from Local
Limited Partnerships 151,118 7,988
Purchase of rental property and equipment - (3,823)
Replacement reserves, net (6,633) (11,055)
------------ ------------
Net cash provided by (used for) investing activities 694,501 (445,924)
------------ ------------
Cash flows from financing activities:
Repayment of mortgage payable (5,259) (4,799)
Deferred charges - 1,609
Mortgagee escrow deposits 13,985 (2,587)
Proceeds from developer - 6,110
------------ ------------
Net cash provided by financing activities 8,726 333
------------ ------------
Net increase (decrease) in cash and cash equivalents 323,480 (542,670)
Cash and cash equivalents, beginning of period 164,590 614,257
------------ ------------
Cash and cash equivalents, end of period $ 488,070 $ 71,587
============ ============
Supplemental Disclosure:
Cash paid for interest $ 124,438 $ 115,294
============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<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 $ 489,709 $ 4,014 $ (2,162) $ 491,561
Mortgage backed securities 597,677 - (7,295) 590,382
Other debt securities 123,254 - (581) 122,673
----------- -------- ------- -----------
Marketable securities
at June 30, 1996 $ 1,210,640 $ 4,014 $(10,038) $ 1,204,616
=========== ======== ======== ===========
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 June 30, 1996 are as follows:
<TABLE>
<CAPTION>
Cost Fair Value
<S> <C> <C>
Due in one year or less $ 145,324 $ 146,763
Due in one year to five years 467,639 467,471
Mortgage backed securities 597,677 590,382
----------- -----------
$ 1,210,640 $ 1,204,616
=========== ===========
</TABLE>
<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 $1,060,000 and $211,000 during the three months
ended June 30, 1996 and 1995. Included in investment income are gross gains of
$36,916 and gross losses of $1,720 which were realized on these sales in the
three months ended June 30, 1996 and gross gains of $79 and gross losses of
$4,682 which were realized on sales during the three months ended June 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.
A summary of investments in Local Limited Partnerships, excluding Garden Cove at
June 30, 1996 is as follows:
<TABLE>
<CAPTION>
<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 (31,378,505)
Cumulative cash distributions received
from Local Limited Partnerships (635,594)
Investments in Local Limited Partnerships before adjustment 8,797,576
Excess of investment costs over the underlying net assets acquired:
Acquisition fees and expenses 5,561,180
Accumulated amortization of acquisition fees and expenses (1,240,413)
-------------
Investments in Local Limited Partnerships $ 13,118,343
=============
</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 is as follows:
<TABLE>
<CAPTION>
Summarized Balance Sheet - For the
three months ended March 31, 1996 (Unaudited)
<S> <C>
Assets:
Investment property, net $ 103,833,541
Current assets 2,946,798
Other assets 7,306,976
--------------
Total Assets $ 114,087,315
==============
Liabilities and Partners' Equity:
Long-term debt $ 93,609,470
Current liabilities 6,920,826
Other liabilities 7,624,223
--------------
Total Liabilities 108,154,519
Partners' Equity 5,932,796
--------------
Total Liabilities and Partners' Equity $ 114,087,315
==============
Summarized Income Statement- For the
three months ended March 31, 1996 (Unaudited)
Rental and other income $ 4,382,869
--------------
Expenses:
Operating 2,316,846
Interest 2,142,650
Depreciation and amortization 1,319,058
--------------
Total Expenses 5,778,554
Net Loss $ (1,395,685)
==============
Partnership's share of net loss $ (1,381,728)
==============
Other Partners' share of net loss $ (13,957)
==============
</TABLE>
For the three months ended June 30, 1996 the Partnership has not recognized
$298,401 in equity in losses relating to thirteen Local Limited Partnerships
where cumulative equity in losses and cumulative cash dsitributions exceeds
their total investment.
3. Commitments
At June 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
In connection with BF Alabama, Inc. assuming 51% control of the managerial
rights, authority and voting rights of Garden Cove's general partner interests
and the dismissal of the prior management company, BF Alabama, Inc. obtained a
preliminary injunction against the other general partners which prevents them
from exercising control over the Partnership. In addition, BF Alabama, Inc.
pursued the other general partners for monetary damages. BF Alabama, Inc.
believes that the other general partners had breached certain provisions of the
Local Limited Partnership Agreement and that the change in control was
appropriate.
The former Managing Local General Partners of Garden Cove filed a counterclaim
against the Partnership, Garden Cove Apartments, Ltd., BF Alabama, Inc. and
Boston Financial. The counterclaim sought damages for fraud, misrepresentation,
and intentional interference, among other claims. The counterclaim sought
compensatory damages in excess of five million dollars ($5,000,000) and punitive
damages in excess of fifty million dollars ($50,000,000). On March 11, 1996 a
jury trial began. Four days into the trial, an out of court settlement was
reached, which is believed by management to be favorable for the Partnership.
Briefly, the settlement will involve a $262,500 payment by the Partnership to
the former managing general partners and a $285,000 payment to a bank which had
claims against both Garden Cove and the former local managing general partners.
$375,000 of these payments will be covered by the Partnership's insurance.
However, the Partnership also incurred and will incur significant litigation
expenses in this matter. The settlement agreement also includes the mutual
release of certain liabilities, including amounts due to the developer, and
making permanent the previously described injunction. As of June 30, 1996 , the
Partnership has unpaid litigation expenses of $150,000 related to this matter.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
Notes to the Combined Financial Statements (continued)
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
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 460,846 $ 27,224 $ - $ 488,070
Tenant security deposits - 30,044 - 30,044
Other current assets 810,132 37,493 (757,533) 90,092
-------------- ----------- ------------ --------------
Total current assets 1,270,978 94,761 (757,533) 608,206
Notes and interest receivable 48,513 - - 48,513
Mortgagee escrow deposits - 36,136 - 36,136
Replacement reserves - 75,895 - 75,895
Investments in Local Limited
Partnerships 13,075,738 - 42,605 13,118,343
Marketable securities, at fair value 1,204,616 - - 1,204,616
Rental property at cost, net of
accumulated depreciation - 5,575,900 - 5,575,900
Deferred fees, net - 262,569 - 262,569
-------------- ----------- ------------ --------------
Total Assets $ 15,599,845 $ 6,045,261 $ (714,928) $ 20,930,178
============== =========== ============ ==============
Liabilities and Partners' Equity
Current liabilities:
Accounts payable to affiliates $ 118,850 $ 3,691 $ - $ 122,541
Accounts payable and accrued
expenses 78,156 34,424 - 112,580
Advances from Limited Partner - 757,533 (757,533) -
Current portion of mortgage
note payable - 16,500 - 16,500
Accrued interest payable - 38,251 - 38,251
Security deposits payable - 28,854 - 28,854
-------------- ----------- ------------ --------------
Total current liabilities 197,006 879,253 (757,533) 318,726
Mortgage note payable - 5,112,191 - 5,112,191
-------------- ----------- ------------ --------------
Total Liabilities 197,006 5,991,444 (757,533) 5,430,917
-------------- ----------- ------------ --------------
Minority interest in Local Limited
Partnership - - 96,422 96,422
-------------- ----------- ------------ --------------
General, Initial and Investor
Limited Partners' Equity 15,408,863 53,817 (53,817) 15,408,863
Net unrealized losses on
marketable securities (6,024) - - (6,024)
-------------- ----------- ------------ --------------
Total Partners' Equity 15,402,839 53,817 (53,817) 15,402,839
-------------- ----------- ------------ --------------
Total Liabilities and Partners' Equity $ 15,599,845 $ 6,045,261 $ (714,928) $ 20,930,178
============== =========== ============ ==============
(A) June 30, 1996.
(B) March 31, 1996.
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
Notes to the Combined Financial Statements (continued)
5. Supplemental Combining Schedules (continued)
<TABLE>
<CAPTION>
Statements of Operations
Boston Financial
Qualified Housing Garden Cove
Tax Credits Apartments
L.P. II (A) Ltd.(B) Eliminations Combined
<S> <C> <C> <C> <C>
Revenue:
Rental $ - $ 186,532 $ - $ 186,532
Investment 28,057 963 - 29,020
Other 49,114 4,263 - 53,377
-------------- ------------ ----------- ------------
Total Revenue 77,171 191,758 - 268,929
-------------- ------------ ----------- ------------
Expenses:
Asset management fees, related party 67,668 - - 67,668
General and administrative 58,858 - - 58,858
Rental operations, exclusive
of depreciation - 90,231 - 90,231
Property management fees,
related party - 9,880 - 9,880
Interest - 124,398 - 124,398
Depreciation - 69,772 - 69,772
Amortization 35,171 1,903 - 37,074
-------------- ------------ ----------- ------------
Total Expenses 161,697 296,184 - 457,881
-------------- ------------ ----------- ------------
Loss before equity in losses of
Local Limited Partnerships (84,526) (104,426) - (188,952)
Minority interest in loss of
Local Limited Partnership - - 1,044 1,044
Equity in losses of Local
Limited Partnerships (1,232,595) - 103,382 (1,129,213)
-------------- ------------ ----------- -------------
Net Loss $ (1,317,121) $ (104,426) $ 104,426 $ (1,317,121)
============== ============ =========== ============
(A) For the three months ended June 30, 1996.
(B) For the three months ended March 31, 1996.
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
Notes to the Combined Financial Statements (continued)
5. Supplemental Combining Schedules (continued)
<TABLE>
<CAPTION>
Statements of Cash Flows
Boston Financial
Qualified Housing Garden Cove
Tax Credits Apartments
L.P. II (A) Ltd.(B) Eliminations Combined
<S> <C> <C> <C> <C>
Net cash used for operating activities $ (365,058) $ (65,574) $ 50,885 $ (379,747)
-------------- ------------ ----------- -------------
Cash flows from investing activities:
Purchases of marketable securities (509,896) - - (509,896)
Proceeds from sales and maturities
of marketable securities 1,059,912 - - 1,059,912
Cash distributions received from
Local Limited Partnerships 151,118 - - 151,118
Replacement reserves deposits - (6,633) - (6,633)
-------------- ------------ ----------- -------------
Net cash provided by (used for) investing
activities 701,134 (6,633) - 694,501
-------------- ------------- ----------- -------------
Cash flows from financing activities:
Repayment of mortgage payable - (5,259) - (5,259)
Mortgagee escrow deposits - 13,985 - 13,985
Advance from limited partner - 50,885 (50,885) -
-------------- ------------ ------------ -----------
Net cash provided by financing activities - 59,611 (50,885) 8,726
-------------- ------------ ------------ -----------
Net increase (decrease) in cash
and cash equivalents 336,076 (12,596) - 323,480
Cash and cash equivalents, beginning 124,770 39,820 - 164,590
-------------- ------------ ------------ -----------
Cash and cash equivalents, ending $ 460,846 $ 27,224 $ - $ 488,070
============== ============ ============ ===========
(A) For the three months ended June 30, 1996.
(B) For the three months ended March 31, 1996.
</TABLE>
<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 June 30, 1996, the Partnership had cash and cash equivalents of $488,070 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. To
date, funds have 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 $12,136 have also been paid from reserves.
During the three months ended June 30, 1996, the Partnership advanced
approximately $26,129 to Garden Cove to cover operating deficits.
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 June 30, 1996, approximately
$1,131,000 of marketable securities has been designated as reserves.
At June 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 June 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 three months ended June 30, 1996.
Results of Operations
The Partnership's results of operations for the three months ended June 30,
1996, resulted in a net loss of $1,317,121 as compared to a net loss of
$1,320,081 for the same period in 1995. The slight decrease in net loss is
primarily due to an increase in other revenue, offset by a slight increase in
equity in losses of Local Limited Partnerships. The increase in other revenue is
the result of distribution income received from a property whose carrying value
has reached zero.
<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, the Local Limited Partnership reached a
settlement regarding the litigation against the former Local General Partners,
which is described in detail in Note 4 to the Combined Financial Statements.
Atlantic Terrace, located in Washington, D. C., received HUD approval to
increase the mortgage amount and reduce the interest rate which will lower the
property's debt service. Despite continued high occupancy, the property is
operating at a deficit which the Local General Partner has been funding.
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
now appears doubtful that the Local General Partner will be able to continue to
meet these obligations. Funds in escrow will be available to fund deficits, if
needed and deemed appropriate by the Managing General Partner. After meeting
with the Local General Partner, an agreement was reached to allow admission of
an affiliate of the Managing General Partner as Local General Partner under
certain circumstances. Both Snapfinger Creste and Greyton Point have defaulted
on their loan obligations. Currently, the Managing General Partner is working on
obtaining a two year debt service moratorium for Snapfinger Creste. Also,
effective July 1996, management of the property was transferred to an
unaffiliated entity. An affiliate of the Managing General Partner is in the
process of assuming management of Shannon Creste and Grayton Pointe. The
Managing General Partner is also working actively to secure a debt restructuring
for the Shannon Creste property. A tentative agreement has been reached with the
lender which will provide debt service relief over approximately 30 months. This
agreement includes the use of an operating reserve escrow and approximately
$150,000 in advances from the Partnership. To date, the agreement has not been
finalized.
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.
<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 June 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: August 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
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1996
<CASH> 488,070
<SECURITIES> 1,204,616
<RECEIVABLES> 48,513
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 120,136<F1>
<PP&E> 5,575,900
<DEPRECIATION> 000
<TOTAL-ASSETS> 20,930,178<F2>
<CURRENT-LIABILITIES> 318,726
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 15,402,839
<TOTAL-LIABILITY-AND-EQUITY> 20,930,178<F3>
<SALES> 000
<TOTAL-REVENUES> 268,929<F4>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 333,483<F5>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 124,398
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (1,317,121)<F6>
<EPS-PRIMARY> (21.73)
<EPS-DILUTED> 000
<FN>
<F1>Included in Current Assets: Tenant security deposits $30,044 and Other
current assets $90,092
<F2>Included in Total Assets: Investments in Local Limited Partnerships
$13,118,343, Replacement reserves $75,895, Mortgage escrow deposits $36,136
and Deferred fees, net $262,569
<F3>Included in Total Liabilities and Equity: $5,112,191 of long-term debt
and Minority interest in Local Limited Partnerships $96,422.
<F4>Total Revenue includes: Rental $186,532, Investment $29,020 and Other
$53,377.
<F5>Included in Other Expenses: Asset Management fees $67,668, General and
Administrative $58,858, Property Management fees $9,880, Rental operations,
exclusive of depreciation $90,231, Depreciation $69,772 and Amortization
$37,074.
<F6>Net loss reflects: Equity in losses of Local Limited Partnerships of
$1,129,213 and minority interest in loss of Local Limited Partnership $1,044.
</FN>
</TABLE>
