February 11, 2000
Securities and Exchange Commission
Filer Support, Edgar
Operation Center, Stop 0-7
6432 General Green Way
Alexandria, VA 22312
Re: Boston Financial Qualified Housing Tax Credits L.P. II
Report on Form 10-QSB for Quarter Ended December 31, 1999
File No. 0-17777
Gentlemen:
Pursuant to the requirements of Section 15(d) of the Securities Exchange Act of
1934, filed herewith is a one copy of subject report.
Very truly yours,
/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller
QH2-Q3.DOC
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
---------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-17777
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 Identification No.)
incorporation or organization)
101 Arch Street, Boston, Massachusetts 02110-1106
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-3911
----------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS, L.P. II
(A Limited Partnership)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page No.
- ------------------------------ --------
<S> <C> <C>
Item 1. Financial Statements
Combined Balance Sheet - December 31, 1999 (Unaudited) 1
Combined Statements of Operations (Unaudited) - For the Three and Nine
Months Ended December 31, 1999 and 1998 2
Combined Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Nine Months Ended December 31, 1999 3
Combined Statements of Cash Flows (Unaudited) -
For the Nine Months Ended December 31, 1999 and 1998 4
Notes to Combined Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II - OTHER INFORMATION
Items 1-6 12
SIGNATURE 13
</TABLE>
The accompanying notes are an integral part of these combined financial
statements
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS, L.P. II
(A Limited Partnership)
COMBINED BALANCE SHEET
December 31, 1999
(Unaudited)
Assets
Cash and cash equivalents $ 280,659
Marketable securities, at fair value 1,728,025
Accounts receivable 42,125
Tenant security deposits 66,181
Investments in Local Limited Partnerships (Note 1) 891,205
Rental property at cost, net of accumulated depreciation 11,949,034
Mortgage escrow deposits 74,717
Replacement reserves 205,861
Deferred fees net of accumulated amortization
of $171,556 37,064
Other assets 47,073
Total Assets $ 15,321,944
=============
Liabilities and Partners' Equity
Mortgage notes payable $ 11,421,942
Accounts payable to affiliates 35,718
Accounts payable and accrued expenses 186,161
Accrued interest payable 146,124
Security deposits payable 65,730
-------------
Total Liabilities 11,855,675
Minority interests in Local Limited Partnerships (175,387)
-------------
Commitments (Note 3)
General, Initial and Investor Limited Partners' Equity 3,661,687
Net unrealized losses on marketable securities (20,031)
Total Partners' Equity 3,641,656
-------------
Total Liabilities and Partners' Equity $ 15,321,944
=============
The accompanying notes are an integral part of these combined financial
statements
1
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS, L.P. II
(A Limited Partnership)
COMBINED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended December 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
-------------- ------------- ------------- ---------
Revenue:
<S> <C> <C> <C> <C>
Rental $ 569,143 $ 546,762 $ 1,665,986 $ 1,601,147
Investment 32,317 37,690 94,490 113,015
Other 18,946 (85,331) 53,866 272,475
-------------- ------------- ------------- -------------
Total Revenue 620,406 499,121 1,814,342 1,986,637
-------------- ------------- ------------- -------------
Expenses:
Asset management fees,
related party 69,096 68,040 203,762 204,120
General and administrative
(includes reimbursements
to an affiliate of $74,774
and $72,329 respectively) 45,123 65,611 110,152 163,248
Rental operations,
exclusive of depreciation 358,785 322,220 856,415 942,785
Property management fees,
related party 24,303 23,396 72,243 68,326
Interest 238,522 221,311 691,981 664,364
Depreciation 139,034 139,464 417,964 416,776
Amortization 23,484 30,672 314,937 92,023
-------------- ------------- ------------- -------------
Total Expenses 898,347 870,714 2,667,454 2,551,642
-------------- ------------- ------------- -------------
Loss before minority interests in losses of
Local Limited Partnerships and equity in
losses of Local Limited Partnerships (277,941) (371,593) (853,112) (565,005)
Minority interests in losses of
Local Limited Partnerships 2,314 2,017 7,015 6,715
Equity in losses of Local
Limited Partnerships (Note 1) (55,344) (244,738) (498,618) (1,874,274)
-------------- ------------- ------------- -------------
Net Loss $ (330,971) $ (614,314) $ (1,344,715) $ (2,432,564)
============== ============= ============= =============
Net Loss allocated:
To General Partners $ (3,310) $ (6,144) $ (13,447) $ (24,326)
To Limited Partners (327,661) (608,170) (1,331,268) (2,408,238)
-------------- ------------- ------------- -------------
$ (330,971) $ (614,314) $ (1,344,715) $ (2,432,564)
============== ============= ============= =============
Net Loss per Limited
Partnership Unit (60,000 Units) $ (5.46) $ (10.15) $ (22.19) $ (40.14)
============== ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these combined financial
statements
2
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS, L.P. II
(A Limited Partnership)
COMBINED STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
For the Nine Months Ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Net
Initial Investor Unrealized
General Limited Limited Gains
Partners Partners Partners (Losses) Total
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1999 $ (477,253) $ 5,000 $ 5,478,655 $ 10,438 $ 5,016,840
----------- ------------- -------------- ------------- --------------
Comprehensive Loss:
Net change in net unrealized
gains on marketable securities
available for sale - - - (30,469) (30,469)
Net Loss (13,447) - (1,331,268) - (1,344,715)
----------- ------------- -------------- ------------- --------------
Comprehensive Loss (13,447) - (1,331,268) (30,469) (1,375,184)
----------- ------------- -------------- ------------- --------------
Balance at December 31, 1999 $ (490,700) $ 5,000 $ 4,147,387 $ (20,031) $ 3,641,656
=========== ============= ============== ============= ==============
</TABLE>
The accompanying notes are an integral part of these combined financial
statements
3
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS, L.P. II
(A Limited Partnership)
COMBINED STATEMENTS OF CASH FLOWS
For the Nine Months Ended December 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
------------- ---------
<S> <C> <C>
Net cash used for operating activities $ (363,863) $ (770,441)
Net cash provided by investing activities 90,287 311,941
Net cash provided by (used for) financing activities 234,695 (75,028)
------------- -------------
Net decrease in cash and cash equivalents (38,881) (533,528)
Cash and cash equivalents, beginning 319,540 722,737
------------- -------------
Cash and cash equivalents, ending $ 280,659 $ 189,209
============= =============
Supplemental Disclosure:
Cash paid for interest $ 808,580 $ 537,905
============= =============
</TABLE>
The accompanying notes are an integral part of these combined financial
statements
4
<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-QSB and do not include all of the
information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the financial
statements and notes thereto included with the Partnership's Form 10-K for the
year ended March 31, 1999. In the opinion of management, these financial
statements include all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the Partnership's financial position
and results of operations. The results of operations for the periods may not be
indicative of the results to be expected for the year.
The Managing General Partner has elected to report results of the Local Limited
Partnerships on a 90 day lag basis, because the Local Limited Partnerships
report their results on a calendar year basis. Accordingly, the financial
information of the Local Limited Partnerships that is included in the
accompanying combined financial statements is as of September 30, 1999 and 1998.
Certain reclassifications have been made to prior period finanial statements to
conform to current period classification.
1. Investments in Local Limited Partnerships
The Partnership has acquired limited partnership interests in thirty-six Local
Limited Partnerships (excluding Snapfinger Creste and Grayton Pointe, which have
been written off, and the Combined Entities) 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 generally 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.
The following is a summary of Investments in Local Limited Partnerships at
December 31, 1999, excluding the Combined Entities:
<TABLE>
<CAPTION>
Capital contributions paid to Local Limited Partnerships and purchase price
<S> <C>
paid to withdrawing partners of Local Limited Partnerships $ 30,801,675
Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
unrecognized losses of $5,071,625) (30,076,802)
Cumulative cash distributions received
from Local Limited Partnerships (2,585,069)
Investments in Local Limited Partnerships before adjustment (1,860,196)
Excess of investment costs over the underlying net assets acquired:
Acquisition fees and expenses 3,917,757
Accumulated amortization of acquisition fees and expenses (1,166,356)
-------------
Investments in Local Limited Partnerships $ 891,205
=============
</TABLE>
The Partnership's share of losses of the Local Limited Partnerships, excluding
the Combined Entities, for the nine months ended December 31, 1999 totaled
$1,804,435. For the nine months ended December 31, 1999, the Partnership has not
recognized $1,306,362 of equity in losses relating to twenty-five Local Limited
Partnerships where cumulative equity in losses and cumulative distributions
exceeded its total investment in these Local Limited Partnerships.
5
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS, L.P. II
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (Continued)
(Unaudited)
2. Litigation
As previously reported, the Partnership, Garden Cove Apartments LTD. ("Garden
Cove") and the Managing General Partner were involved in litigation with the
former local managing general partner of Garden Cove. On March 11, 1997 a jury
trial began. Four days into the trial, an out of court settlement was reached,
which was believed by management to be favorable for the Partnership. Briefly,
the settlement involved a $262,500 payment by the Partnership to the former
local managing general partner and a $285,000 payment to a bank, which had
claims against both Garden Cove and the former local managing general partner.
$375,000 of these payments were covered by the Partnership's insurance. However,
the Partnership also incurred significant litigation expenses in this matter.
The settlement agreement also included the mutual release of certain liabilities
and made permanent the previously described injunction.
Garden Cove was involved in litigation. In this matter, the project's general
contractor claims that there are amounts due it (approximately $225,000 plus
interest) under the construction contract. The Partnership was aware of this
potential claim when it settled the previous dispute with the former managing
general partners and did not release them from liability with respect to it. In
January 1999, the Managing General Partner was successful in negotiations with
the lender and closed on a mortgage restructuring to the Garden Cove mortgage.
This mortgage restructuring involves a reduction of the first mortgage along
with delinquent mortgage payments to be included in a soft second mortgage.
As a result of the restructuring of the Garden Cove mortgage, the Managing
General Partner was able to settle the litigation instituted by the project's
general contractor. The settlement included a release of all claims in exchange
for a payment to the general contractor of an amount equal to less than half of
the original contract sum. The Partnership and one of the former General
Partners will be paying the settlement amount.
The Partnership is not a party to any other pending legal or administrative
proceeding, and to the best of its knowledge, no other legal or administrative
proceeding is threatened or contemplated against it.
3. Commitments
At December 31, 1999, the Partnership has committed to make future capital
contributions and 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 $338,000.
6
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS, L.P. II
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(Unaudited)
4. Supplemental Combining Schedules
Balance Sheets
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing Combined
Tax Credits Entities Combined
L.P. II (A) (B) Eliminations (A)
Assets
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 142,750 $ 137,222 $ 687 $ 280,659
Marketable securities, at fair value 1,728,025 - - 1,728,025
Accounts receivable - 42,125 - 42,125
Tenant security deposits - 66,181 - 66,181
Investments in Local Limited
Partnerships 565,611 - 325,594 891,205
Rental property at cost, net of
accumulated depreciation - 11,357,494 591,540 11,949,034
Mortgage escrow deposits - 74,717 - 74,717
Replacement reserves - 205,861 - 205,861
Deferred fees, net - 37,064 - 37,064
Other assets 24,153 22,920 - 47,073
------------- ------------- ------------- -------------
Total Assets $ 2,460,539 $ 11,943,584 $ 917,821 $ 15,321,944
============= ============= ============= =============
Liabilities and Partners' Equity
Mortgage notes payable $ - $ 11,421,942 $ - $ 11,421,942
Accounts payable to affiliates 27,546 8,172 - 35,718
Accounts payable and accrued
expenses 11,908 174,253 - 186,161
Advances from Limited Partner - 1,219,884 (1,219,884) -
Accrued interest payable - 146,124 - 146,124
Security deposits payable - 65,730 - 65,730
------------- ------------- ------------- -------------
Total Liabilities 39,454 13,036,105 (1,219,884) 11,855,675
------------- ------------- ------------- -------------
Minority interests in Local Limited
Partnerships - - (175,387) (175,387)
------------- ------------- ------------- -------------
General, Initial and Investor
Limited Partners' Equity 2,441,116 (1,092,521) 2,313,092 3,661,687
Net unrealized losses on
marketable securities (20,031) - - (20,031)
------------- ------------- ------------- -------------
Total Partners' Equity 2,421,085 (1,092,521) 2,313,092 3,641,656
------------- ------------- ------------- -------------
Total Liabilities and Partners' Equity $ 2,460,539 $ 11,943,584 $ 917,821 $ 15,321,944
============= ============= ============= =============
(A) As of December 31, 1999. (B) As of September 30, 1999.
</TABLE>
7
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS, L.P. II
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(Unaudited)
4. Supplemental Combining Schedules (continued)
Statements of Operations
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing Combined
Tax Credits Entities
L.P. II (A) (B) Eliminations Combined
Revenue:
<S> <C> <C> <C> <C>
Rental $ - $ 1,665,986 $ - $ 1,665,986
Investment 87,442 7,048 - 94,490
Other 7,744 46,122 - 53,866
------------- ------------- ------------- -------------
Total Revenue 95,186 1,719,156 - 1,814,342
------------- ------------- ------------- -------------
Expenses:
Asset management fees, related party 203,762 - - 203,762
General and administrative 136,568 - (26,416) 110,152
Bad debt expense 1,194,155 - (1,194,155) -
Rental operations, exclusive
of depreciation - 856,415 - 856,415
Property management fees,
related party - 72,243 - 72,243
Interest - 691,981 - 691,981
Depreciation - 417,964 - 417,964
Amortization 58,576 256,361 - 314,937
------------- ------------- ------------- -------------
Total Expenses 1,593,061 2,294,964 (1,220,571) 2,667,454
------------- ------------- ------------- -------------
Income (loss) before minority interests in
losses of Local Limited Partnerships
and equity in losses of Local Limited
Partnerships (1,497,875) (575,808) 1,220,571 (853,112)
Minority interests in losses of
Local Limited Partnerships - - 7,015 7,015
Equity in losses of Local
Limited Partnerships (1,067,411) - 568,793 (498,618)
------------- ------------- ------------- -------------
Net Loss $ (2,565,286) $ (575,808) $ 1,796,379 $ (1,344,715)
============= ============= ============= =============
</TABLE>
(A) For the nine months ended December 31, 1999. (B) For the nine months ended
September 30, 1999.
8
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS, L.P. II
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
(Unaudited)
4. Supplemental Combining Schedules (continued)
Statements of Cash Flows
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing Combined
Tax Credits Entities
L.P. II (A) (B) Eliminations Combined
<S> <C> <C> <C> <C>
Net cash used for operating activities $ (326,622) $ (37,928) $ 687 $ (363,863)
------------- ------------- ------------- -------------
Net cash provided by (used for)
investing activities 195,876 (105,589) - 90,287
------------- ------------- ------------- -------------
Net cash provided by financing activities - 234,695 - 234,695
------------- ------------- ------------- -------------
Net increase (decrease) in cash and cash
equivalents (130,746) 91,178 687 (38,881)
Cash and cash equivalents, beginning 273,496 46,044 - 319,540
------------- ------------- ------------- -------------
Cash and cash equivalents, ending $ 142,750 $ 137,222 $ 687 $ 280,659
============= ============= ============= =============
(A) For the nine months ended December 31, 1999. (B) For the nine months ended
September 30, 1999.
</TABLE>
9
<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
Certain matters discussed herein constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. The
Partnership intends such forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements and is including this statement
for purposes of complying with these safe harbor provisions. Although the
Partnership believes the forward-looking statements are based on reasonable
assumptions, the Partnership can give no assurance that their expectations will
be attained. Actual results and timing of certain events could differ materially
from those projected in or contemplated by the forward-looking statements due to
a number of factors, including, without limitation, general economic and real
estate conditions and interest rates.
Liquidity and Capital Resources
At December 31, 1999, the Partnership, including the Combined Entities, had cash
and cash equivalents of $280,659 as compared to $319,540 at March 31, 1999. The
decrease is primarily attributable to additions to rental property and cash used
for operations. These decreases are partially offset by proceeds from sales of
marketable securities in excess of purchases.
The Managing General Partner initially designated 3% of Gross Proceeds as
Reserves, as defined in the Partnership Agreement. The Reserves were established
to be used for working capital of the Partnership and contingencies related to
the ownership of Local Limited Partnership interests. 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%. 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 $72,000 have been paid from Reserves. The
Partnership also advanced approximately $1,220,000 to various 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 such funding appropriate. At December 31, 1999,
approximately $1,494,000 of cash, cash equivalents and marketable securities has
been designated as Reserves.
At December 31, 1999, 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 set forth in the Local Limited Partnership
Agreements and total $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 December 31, 1999, 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 nine months ended December 31, 1999.
10
<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 nine months ended December 31,
1999 resulted in a net loss of $1,344,715 as compared to a net loss of
$2,432,564 for the same period in 1998. The decrease in net loss is primarily
due to decreases in equity in losses of Local Limited Partnerships. The decrease
in equity in losses of Local Limited Partnerships is primarily due to the
Partnership not recognizing losses relating to Local Limited Partnerships where
cumulative equity in losses and cumulative distributions have exceeded its total
investment.
Property Discussions
As previously reported, Chapparal, Nottingham Square, Patrick Henry and Shadow
Wood, all located in Oklahoma and have the same Local General Partner, are
experiencing operating difficulties. In particular, Shadow Wood is experiencing
severe operating deficits due to high security costs, low Section 8 contract
rates and high debt service payments. Due to concerns regarding the long-term
viability of these properties, the Managing General Partner negotiated a plan
with the Local General Partner that will ultimately transfer ownership of each
property to the Local General Partner. The plan includes provisions to minimize
the risk of recapture. HUD approved the plan and effective July 1, 1998, the
Managing General Partner consummated the transfer of 49.5% of the Partnership's
capital and profits in the properties to the Local General Partner. The Managing
General Partner has the right to transfer the Partnership's remaining interest
in the properties to the Local General Partner any time after one year has
elapsed. The Partnership will retain its full share of tax credits until such
time as the remaining interest is put to the Local General Partner. In addition,
the Local General Partner has the right to call the remaining interest after the
tax credit period has expired.
As previously reported, Garden Cove, located in Huntsville, Alabama, was
involved in litigation. In this litigation, the project's general contractor
claimed there were amounts due it under the construction contract. The
Partnership was aware of this potential claim when it settled the previous
dispute in 1996 with the former managing general partners and did not release
them from liability with respect to it. The Managing General Partner recently
closed on a mortgage restructuring of the Garden Cove mortgage. This mortgage
restructuring involves a reduction of the first mortgage along with delinquent
mortgage payments to be included in a soft second mortgage. As a result of the
restructuring of the Garden Cove mortgage, the Managing General Partner was able
to settle the litigation instituted by the project's general contractor. The
settlement included a release of all claims in exchange for a payment to the
general contractor of an amount equal to less than half of the original contract
sum. The Partnership and one of the former General Partners will be paying the
settlement amount.
Shannon Creste located in Union City, Georgia, has experienced operating
difficulties due to occupancy, security and capital improvement needs. The
Managing General Partner is working with the management agent to develop a plan
to address these issues. Occupancy as of December 31, 1999 was 99%.
The Local General Partner of Ashton Place, located in Waynesboro, Georgia,
Bamberg Garden, located in Bamberg, South Carolina, Highland Village, located in
Monroe, Georgia, McKinley Lane, located in Fitzgerald, Georgia Meadowbrook,
located in Americus, Georgia and Willowpeg Lane, located in Rincon, Georgia,
expressed to the Managing General Partner some concerns over the long-term
financial health of the properties. In response to these concerns and to reduce
possible future risk, the Managing General Partner is negotiating with the Local
General Partner to develop a plan that will ultimately transfer ownership of the
properties to the Local General Partner. The plan includes provisions to
minimize the risk of recapture.
11
<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 December 31, 1999.
12
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DATED: February 11, 2000 BOSTON FINANCIAL QUALIFIED HOUSING
TAX CREDITS L.P. II
By: Arch Street, Inc.,
its Managing General Partner
/s/Randolph G. Hawthorne
Randolph G. Hawthorne
Managing Director, Vice President and
Chief Operating Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> DEC-31-1999
<CASH> 280,659
<SECURITIES> 1,728,025
<RECEIVABLES> 42,125
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 11,949,034
<DEPRECIATION> 000
<TOTAL-ASSETS> 15,321,944<F1>
<CURRENT-LIABILITIES> 000
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> 3,641,656
<TOTAL-LIABILITY-AND-EQUITY> 15,321,944<F2>
<SALES> 000
<TOTAL-REVENUES> 1,814,342<F3>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 1,975,473<F4>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 691,981
<INCOME-PRETAX> (1,344,715)
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (1,344,715)<F5>
<EPS-BASIC> (22.19)
<EPS-DILUTED> 000
<FN>
<F1>Included in Total Assets: Tenant security deposits of $66,181, Investments
in Local Limited Partnerships of $891,205, Mortgage escrow deposits of $74,717,
Replacement reserves of $205,861, Deferred fees, net of accumulated amortization
of $37,064 and Other assets of $47,073. <F2>Included in Total Liabilities and
Equity: Mortgage notes payable of $11,421,942, Notes payable of $0, Accounts
payable to affiliates of $35,718, Accounts payable and accrued expenses of
$186,161, Accrued interest payable of $146,124, Security deposits payable of
$65,730 and Minority interests in Local Limited Partnerships of $(175,387).
<F3>Total Revenue includes: Rental of $1,665,986, Investment of $94,490 and
Other of $53,866. <F4>Included in Other Expenses: Asset management fees of
$203,762, General and administrative of $110,152, Rental operations, exclusive
of depreciation of $856,415, Property management fees of $72,243, Depreciation
of $417,964 and Amortization of $314,937. <F5>Net loss reflects: Equity in
losses of Local Limited Partnerships of $498,618 and Minority interests in
losses of Local Limited Partnerships of $7,015. </FN>
</TABLE>
