August 13, 1997
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, 1997
File No. 0-17777
Dear Sir/Madam:
Pursuant to the requirements of section 15(d) of the Securities Exchange Act of
1934, there is filed herewith a copy of subject report.
Very truly yours,
/s/Veronica J. Curioso
Veronica J. Curioso
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, 1997
--------------
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, 1997 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, 1997 (Unaudited)
and March 31, 1997 1
Combined Statements of Operations (Unaudited) - For the Three
Months Ended June 30, 1997 and 1996 2
Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Three Months Ended June 30, 1997 3
Combined Statements of Cash Flows (Unaudited) -
For the Three Months Ended June 30, 1997 and 1996 4
Notes to 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 12
SIGNATURE 13
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
<TABLE>
<CAPTION>
COMBINED BALANCE SHEETS
June 30, March 31,
1997 1997
(Unaudited)
Assets
<S> <C> <C>
Cash and cash equivalents $ 332,382 $ 318,451
Marketable securities, at fair value 1,243,763 1,319,499
Accounts receivable 99,971 100,572
Tenant security deposits 32,574 30,976
Investments in Local Limited Partnerships (Note 1) 7,865,251 8,506,576
Rental property at cost, net of accumulated depreciation 12,151,137 12,293,738
Mortgagee escrow deposits 156,212 139,547
Operating reserves 312,353 337,353
Replacement reserves 81,250 74,617
Deferred fees (net of accumulated amortization
of $153,741 and $147,413, respectively) 330,891 337,219
Other assets 116,788 94,462
------------- ------------
Total Assets $ 22,722,572 $ 23,553,010
============= ============
Liabilities and Partners' Equity
Mortgage notes payable $ 11,261,215 $ 11,271,738
Note payable 9,800 9,800
Accounts payable to affiliates 310,993 251,522
Accounts payable and accrued expenses 276,305 269,009
Accrued interest payable 66,993 38,128
Security deposits payable 51,560 51,413
------------- ------------
Total Liabilities 11,976,866 11,891,610
------------- ------------
Minority interests in Local Limited Partnerships (151,430) (149,588)
------------- ------------
Commitments
General, Initial and Investor Limited Partners' Equity 10,895,568 11,811,938
Net unrealized gains (losses) on marketable securities 1,568 (950)
------------- ------------
Total Partners' Equity 10,897,136 11,810,988
------------- ------------
Total Liabilities and Partners' Equity $ 22,722,572 $ 23,553,010
============= ============
</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)
<TABLE>
<CAPTION>
COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended June 30, 1997 and 1996
1997 1996
-------------- --------
<S> <C> <C>
Revenue:
Rental $ 444,719 $ 186,532
Investment 29,667 29,020
Other 4,062 53,377
---------- ----------
Total Revenue 478,448 268,929
-------------- -------------
Expenses:
Asset management fees, related party 69,901 67,668
General and administrative (includes reimbursements
to an affiliate of $37,110 and $30,134, respectively) 64,937 58,858
Rental operations, exclusive of depreciation 241,107 90,231
Property management fees, related party 19,880 9,880
Interest 222,093 124,398
Depreciation 142,601 69,772
Amortization 37,266 37,074
-------------- -------------
Total Expenses 797,785 457,881
-------------- -------------
Loss before equity in losses of
Local Limited Partnerships (319,337) (188,952)
Minority interests in loss of
Local Limited Partnerships 1,842 1,044
Equity in losses of Local Limited
Partnerships (598,875) (1,129,213)
-------------- -------------
Net Loss $ (916,370) $ (1,317,121)
============== =============
Net Loss allocated:
To General Partners $ (9,164) $ (13,171)
To Limited Partners (907,206) (1,303,950)
-------------- -------------
$ (916,370) $ (1,317,121)
============== =============
Net Loss per Limited
Partnership Unit (60,000 Units) $ (15.12) $ (21.73)
============== ============
</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)
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
(Unaudited)
For the Three Months Ended June 30, 1997
Net
Initial Investor Unrealized
General Limited Limited Gains
Partners Partners Partners (Losses) Total
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1997 $ (409,198) $ 5,000 $ 12,216,136 $ (950) $ 11,810,988
Net change in net unrealized
gains on marketable securities
available for sale - - - 2,518 2,518
Net Loss (9,164) - (907,206) - (916,370)
---------- -------- ------------ ---------- -------------
Balance at June 30, 1997 $ (418,362) $ 5,000 $ 11,308,930 $ 1,568 $ 10,897,136
========== ======== ============ ========== =============
</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)
<TABLE>
<CAPTION>
COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended June 30, 1997 and 1996
1997 1996
-------------- --------
<S> <C> <C>
Net cash used for operating activities $ (49,701) $ (394,504)
------------ ------------
Cash flows from investing activities:
Purchases of marketable securities (349,066) (509,896)
Proceeds from sales and maturities of
marketable securities 427,324 1,059,912
Cash distributions received from Local
Limited Partnerships 11,512 151,118
Advances to affiliates (48,107) (36,128)
Deposits to replacement reserves (6,633) (6,633)
------------ ------------
Net cash provided by investing activities 35,030 658,373
------------ ------------
Cash flows from financing activities:
Repayment of mortgage payable (10,523) (5,259)
Mortgagee escrow deposits (16,665) 13,985
Advances from affiliate 55,790 50,885
------------ ------------
Net cash provided by financing activities 28,602 59,611
------------ ------------
Net increase in cash and cash equivalents 13,931 323,480
Cash and cash equivalents, beginning of period 318,451 164,590
------------ ------------
Cash and cash equivalents, end of period $ 332,382 $ 488,070
============ ============
Supplemental Disclosure:
Cash paid for interest $ 193,228 $ 124,438
============ ============
</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, 1997. 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. Investments in Local Limited Partnerships
The Partnership has acquired limited partner interests in thirty-seven Local
Limited Partnerships (excluding the Combined Entities and Snapfinger Creste,
which has been written off) 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 the Combined
Entities and Snapfinger Creste, at June 30, 1997 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 $ 33,326,675
Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
unrecognized losses of $2,184,412) (28,405,783)
Cumulative cash distributions received
from Local Limited Partnerships (881,156)
------------
Investments in Local Limited Partnerships before adjustment 4,039,736
Excess of investment costs over the underlying net assets acquired:
Acquisition fees and expenses 5,084,529
Accumulated amortization of acquisition fees and expenses (1,259,014)
-------------
Investments in Local Limited Partnerships $ 7,865,251
</TABLE>
The Partnership's share of the net losses of the Local Limited Partnerships for
the three months ended June 30, 1997 is $834,731. For the three months ended
June 30, 1997, the Partnership has not recognized $235,856 of equity in losses
relating to seventeen Local Limited Partnerships where cumulative equity in
losses exceeds their total investment.
2. Disposition of Investment in Local Limited Partnership
Snapfinger Creste, located in Georgia, was affected by a weak rental market and
deferred maintenance issues. The Local General Partner was obligated to fund
deficits and had made advances and had deferred management fees. Although the
initial foreclosure deadline was extended, the Partnership transferred its
interest in Snapfinger Creste through a foreclosure on August 5, 1997. In recent
months, continuing negotiations did not provide for a satisfactory agreement
between the parties. The transfer will result in recapture for investors of one
third of the tax credit benefits in 1997, the allocation of taxable income to
the Partnership and loss of future benefits associated with this property. The
Partnership's investment in Snapfinger Creste has been written off as of March
31, 1997.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
Notes to the Combined Financial Statements (continued)
(Unaudited)
2. Supplemental Combining Schedules
<TABLE>
<CAPTION>
Balance Sheets
Boston Financial
Qualified Housing Combined
Tax Credits Entities Combined
L.P. II (A) (B) Eliminations (A)
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 279,507 $ 52,875 $ - $ 332,382
Marketable securities, at fair value 1,243,763 - - 1,243,763
Accounts receivable 1,039,898 30,197 (970,124) 99,971
Tenant security deposits - 32,574 - 32,574
Investments in Local Limited
Partnerships 8,622,643 - (757,392) 7,865,251
Rental property at cost, net of
accumulated depreciation - 12,151,137 - 12,151,137
Mortgagee escrow deposits - 156,212 - 156,212
Operating reserves - 312,353 - 312,353
Replacement reserves - 81,250 - 81,250
Deferred fees, net - 330,891 - 330,891
Other assets 22,213 94,575 - 116,788
------------- ------------ ------------ -------------
Total Assets $ 11,208,024 $ 13,242,064 $ (1,727,516) $ 22,722,572
============= ============ ============ =============
Liabilities and Partners' Equity
Mortgage notes payable $ - $ 11,261,215 $ - $ 11,261,215
Note payable - 9,800 - 9,800
Accounts payable to affiliates 283,439 27,554 - 310,993
Accounts payable and accrued
expenses 27,449 248,856 - 276,305
Advances from Limited Partner - 970,124 (970,124) -
Accrued interest payable - 66,993 - 66,993
Security deposits payable - 51,560 - 51,560
------------- ------------ ------------ -------------
Total Liabilities 310,888 12,636,102 (970,124) 11,976,866
------------- ------------ ------------ -------------
Minority interests in Local Limited
Partnerships - - (151,430) (151,430)
------------- ------------ ------------ -------------
General, Initial and Investor
Limited Partners' Equity 10,895,568 605,962 (605,962) 10,895,568
Net unrealized gains on
marketable securities 1,568 - - 1,568
------------- ------------ ------------ -------------
Total Partners' Equity 10,897,136 605,962 (605,962) 10,897,136
------------- ------------ ------------ -------------
Total Liabilities and Partners' Equity $ 11,208,024 $ 13,242,064 $ (1,727,516) $ 22,722,572
============= ============ ============ =============
</TABLE>
(A) June 30, 1997.
(B) March 31, 1997.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
Notes to the Combined Financial Statements (continued)
(Unaudited)
2. Supplemental Combining Schedules (continued)
<TABLE>
<CAPTION>
Statements of Operations
Boston Financial
Qualified Housing Combined
Tax Credits Entities Combined
L.P. II (A) (B) Eliminations (A)
<S> <C> <C> <C> <C>
Revenue:
Rental $ - $ 444,719 $ - $ 444,719
Investment 28,724 943 - 29,667
Other 1,850 2,212 - 4,062
-------------- ------------ ----------- ------------
Total Revenue 30,574 447,874 - 478,448
-------------- ------------ ----------- ------------
Expenses:
Asset management fees, related party 69,901 - - 69,901
General and administrative 64,937 - - 64,937
Rental operations, exclusive
of depreciation - 241,107 - 241,107
Property management fees,
related party - 19,880 - 19,880
Interest - 222,093 - 222,093
Depreciation - 142,601 - 142,601
Amortization 30,938 6,328 - 37,266
-------------- ------------ ----------- ------------
Total Expenses 165,776 632,009 - 797,785
-------------- ------------ ----------- ------------
Loss before equity in losses of
Local Limited Partnerships (135,202) (184,135) (319,337)
Minority interests in loss of
Local Limited Partnerships - - 1,842 1,842
Equity in losses of Local
Limited Partnerships (781,168) - 182,293 (598,875)
-------------- ------------ ----------- ------------
Net Loss $ (916,370) $ (184,135) $ 184,135 $ (916,370)
============== ============ =========== ============
</TABLE>
(A) For the three months ended June 30, 1997.
(B) For the three months ended March 31, 1997.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. II
(A Limited Partnership)
Notes to the Combined Financial Statements (continued)
(Unaudited)
2. Supplemental Combining Schedules (continued)
<TABLE>
<CAPTION>
Statements of Cash Flows
Boston Financial
Qualified Housing Combined
Tax Credits Entities Combined
L.P. II (A) (B) Eliminations (A)
<S> <C> <C> <C> <C>
Net cash provided by
(used for) operating activities $ (61,947) $ 12,246 $ - $ (49,701)
-------------- ------------ ----------- -------------
Cash flows from investing activities:
Purchases of marketable securities (349,066) - - (349,066)
Proceeds from sales and maturities
of marketable securities 427,324 - - 427,324
Cash distributions received from
Local Limited Partnerships 11,512 - - 11,512
Advances to affiliate (48,107) - - (48,107)
Deposits to replacement reserves - (6,633) - (6,633)
-------------- ------------ ----------- -------------
Net cash provided by (used for) investing
activities 41,663 (6,633) - 35,030
-------------- ------------ ----------- -------------
Cash flows from financing activities:
Repayment of mortgage payable - (10,523) - (10,523)
Mortgagee escrow deposits - (16,665) - (16,665)
Advances from affiliate - 55,790 - 55,790
-------------- ------------ ------------ -----------
Net cash provided by financing activities - 28,602 - 28,602
-------------- ------------ ------------ -----------
Net increase (decrease) in cash
and cash equivalents (20,284) 34,215 - 13,931
Cash and cash equivalents, beginning 299,791 18,660 - 318,451
-------------- ------------ ------------ -----------
Cash and cash equivalents, ending $ 279,507 $ 52,875 $ - $ 332,382
============== ============ ============ ===========
</TABLE>
(A) For the three months ended June 30, 1997.
(B) For the three months ended March 31, 1997.
<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, 1997, the Partnership had cash and cash equivalents of $332,382 as
compared to $318,451 at March 31, 1997. 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 and
repayment of mortgage principal.
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, approximately $149,000 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 $31,000 have been
paid from Reserves. The Partnership also advanced approximately $1,040,000 to
four 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 June 30, 1997, approximately
$875,000 of marketable securities has been designated as Reserves.
At June 30, 1997, 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, 1997, 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, 1997.
<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
Results of Operations
The Partnership's results of operations for the three months ended June 30, 1997
resulted in a net loss of $916,370 as compared to a net loss of $1,317,121 for
the same period in 1996. The decrease in net loss is primarily due to a decrease
in equity in losses of Local Limited Partnerships and an increase in rental
revenue and is offset by increases in rental operations, interest and
depreciation expense items. The decrease in equity in losses is primarily
attributable to fewer losses being recognized in 1997 because more Local Limited
Partnerships have cumulative equity in losses in excess of their total
investments as compared to the previous year. Additionally, during the year
ended March 31, 1997, the Partnership wrote off its investment in one Local
Limited Partnership (Snapfinger Creste) because there was evidence of a
non-temporary decline in the recoverable amount of the investment (see section
entitled "Property Discussions" for additional information). The increases in
rental revenue, rental operations, interest and depreciation (as well as the
decrease in losses of Local Limited Partnerships) are due to the combination of
Shannon Creste, effective September 1, 1996.
Property Discussions
Limited Partnership interests have been acquired in forty Local Limited
Partnerships which own and operate forty rental properties located in fifteen
states, Washington, D.C. and Puerto Rico. Thirty of the properties with 2,325
apartments were newly constructed, and eight properties with 733 apartments were
rehabilitated. All of the properties have completed construction or
rehabilitation and initial rent-up. Most of the forty properties have stable
operations and are operating at break-even or generating operating cash flow.
A few properties are experiencing operating difficulties and cash flow deficits
due to a variety of reasons. The Local General Partners of those properties have
funded operating deficits through project expense loans, subordinated loans or
payments from operating escrows. In instances where the Local General Partners
have stopped funding deficits because their obligation to do so has expired or
otherwise, the Managing General Partner is working with the Local General
Partners to increase operating income, reduce expenses or refinance the debt at
lower interest rates in order to improve cash flow.
As previously reported, despite high occupancy and a debt restructuring,
Atlantic Terrace, located in Washington, D.C., continues to experience unstable
operations due primarily to costs associated with unit turnover and increased
maintenance and utility expenses. Deteriorating market conditions are also
impacting the property. The managing agent is addressing these issues through
enhanced tenant screening, social programs and more careful expense monitoring.
Garden Cove, located in Huntsville, Alabama, continues to generate operating
deficits which are being funded from Partnership Reserves. The Managing General
Partner continues to work with the management agent to find further ways to
curtail the operating shortfalls. Inasmuch as the property remains unable to
fully cover debt service from operating income due to depressed rents, the
Managing General Partner has entered into workout negotiations which include
exploring opportunities to restructure the first mortgage. This restructure may
result in converting a portion of the first mortgage into a cash flow second
mortgage and increasing the replacement reserve monthly deposits. It is likely
that without a modification, the lender will exercise its rights to foreclose on
the property. A foreclosure would result in recapture for investors of one third
of the tax credit benefits, the allocation of taxable income to the Partnership
and loss of future benefits associated with this property.
Shadow Wood Housing, located in Chickasha, Oklahoma, continues to generate
operating deficits resulting from high security costs, low Section 8 contract
rates and high debt service payments. The Local General Partners are working to
improve operating results through contract rent increases and debt service
relief. The management agent is currently funding operating deficits.
<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 (continued)
As previously reported, Snapfinger Creste and Grayton Pointe, located in Georgia
and which share the same Local General Partner, continue to be affected by a
weak rental market and deferred maintenance issues. The Local General Partner is
obligated to fund deficits and has made advances and deferred management fees.
Although the initial foreclosure deadline was extended, the Partnership
transferred its interests in Snapfinger Creste through a foreclosure on August
5, 1997. In recent months, continuing negotiations did not provide for a
satisfactory agreement between the parties. The transfer will result in
recapture for investors of one third of the tax credit benefits in 1997, the
allocation of taxable income to the Partnership and loss of future benefits
associated with this property. The Partnership's investment in Snapfinger Creste
has been written off as of March 31, 1997.
Although negotiations with the lender for Grayton Pointe are still underway, it
is expected that the lender will exercise its option to foreclose on the
property during the third quarter of 1997. The Managing General Partner is
negotiating with the first and second mortgagees to create as favorable a
disposition as possible to reduce the taxable impact on the Partnership's
partners. This may result in recapture for investors of one third of the tax
credit benefits in 1997, the allocation of taxable income to the Partnership and
loss of future benefits associated with this properties. The carrying value of
this investment for financial reporting purposes is zero.
The mortgage on Shannon Creste was successfully modified in January 1997. An
affiliate of the Managing General Partner assumed the local general partner
interest and management at the property. Currently, property management is
finalizing its capital needs assessment and will initiate an extensive capital
improvement plan during the summer 1997.
<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, 1997.
<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, 1997 BOSTON FINANCIAL QUALIFIED HOUSING
TAX CREDITS L.P. II
By: Arch Street, Inc.,
its Managing General Partner
/s/Vincent J. Costantini
Vincent J. Costantini
Treasurer and Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> JUN-30-1997
<CASH> 332,382
<SECURITIES> 1,243,763
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 12,151,137
<DEPRECIATION> 000
<TOTAL-ASSETS> 22,722,572<F1>
<CURRENT-LIABILITIES> 000
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 10,897,136
<TOTAL-LIABILITY-AND-EQUITY> 22,722,572<F2>
<SALES> 000
<TOTAL-REVENUES> 478,448<F3>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 575,692<F4>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 222,093
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (916,370)<F5>
<EPS-PRIMARY> (15.12)
<EPS-DILUTED> 000
<FN>
<F1>Included in Total Assets: Accounts receivable of $99,971, tenant security
deposits of $32,574, Investments in Local Limited Partnerships of $7,865,251,
Mortgagee escrow deposits of $156,212, Operating reserves of $312,353,
Replacement reserves of $81,250, Deferred fees, net of $330,891 and Other assets
of $116,788.
<F2>Included in Total Liabilities and Equity: Mortgage notes payable of
$11,261,215, Note payable of $9,800, Accounts Payable to Affiliates of $310,993,
Accounts Payable and accrued expenses of $276,305, Accrued interest payable of
$66,993, Security deposits payable of $51,560 and Minority interest in Local
Limited Partnerships of ($151,430).
<F3>Total Revenue includes: Rental of $444,719, Investment of $29,667 and
Other of $4,062.
<F4>Included in Other Expenses: Asset Management fees of $69,901, General and
Administrative of $64,937, Rental Operations, exclusive of depreciation of
$241,107, Property Management fees of $19,880, Depreciation of $142,601 and
Amortization of $37,266.
<F5>Net loss reflects: Equity in losses of Local Limited Partnerships of
$598,875 and minority interests in loss of Local Limited Partnerships of
$1,842.
</FN>
</TABLE>
