November 13, 1996
Securities and Exchange Commission
Filer Support, Edgar
Operation Center, Stop 0-7
6432 General Green Way
Alexandria, VA 22312
Re: Boston Financial Qualified Housing Tax Credits L.P. IV
Report on Form 10-Q Edgar for Quarter Ended September 30, 1996
File No. 0-19765
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
QH4-10Q2.DOC
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
For the Quarter ended September 30, 1996 Commission file number 0-19765
Boston Financial Qualified Housing Tax Credits L.P. IV
(Exact name of registrant as specified in its charter)
Massachusetts 04-3044617
(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. IV
(A Limited Partnership)
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page No.
- - ------------------------------ --------
Item 1. Combined Financial Statements
Combined Balance Sheets - September 30, 1996 (Unaudited)
and March 31, 1996 1
Combined Statements of Operations (Unaudited) - For the Three
and Six Months Ended September 30, 1996 and 1995 2
Combined Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Six Months Ended September 30, 1996 3
Combined Statements of Cash Flows (Unaudited) - For the
Six Months Ended September 30, 1996 and 1995 4
Notes to Combined Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
PART II - OTHER INFORMATION
Items 1-6 16
SIGNATURE 17
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
COMBINED BALANCE SHEETS - September 30, 1996 and March 31, 1996
<TABLE>
<CAPTION>
September 30, March 31,
1996 1996
(Unaudited)
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 144,274 $ 414,451
Accounts receivable, net 123,901 39,646
Tenant security deposits 95,971 109,969
Mortgagee escrow deposits 94,328 113,368
Other current assets 41,726 35,465
-------------- -------------
Total current assets 500,200 712,899
Investments in Local Limited Partnerships,
net of reserve for valuation of $949,906 and
$913,047, respectively (Note 2) 21,528,795 22,748,929
Marketable securities, at fair value (Note 1) 1,180,073 1,428,765
Rental property at cost, net of
accumulated depreciation 16,338,789 16,628,572
Deferred charges, net of $150,985 and $140,931 of
accumulated amortization, respectively 214,859 224,913
-------------- -------------
Total Assets $ 39,762,716 $ 41,744,078
============== =============
Liabilities and Partners' Equity (Deficiency)
Current liabilities:
Accounts payable to affiliates $ 261,583 $ 126,151
Accounts payable and accrued expenses 295,117 409,693
Current portion of mortgage notes payable 3,615,467 3,707,570
Interest payable 532,758 218,437
Tenant security deposits payable 92,730 85,705
-------------- -------------
Total current liabilities 4,797,655 4,547,556
Mortgage notes payable 7,496,377 7,521,294
Payable to affiliated Developer 2,482,000 2,482,000
-------------- -------------
Total Liabilities 14,776,032 14,550,850
-------------- -------------
Minority interest in Local Limited Partnerships 377,452 421,420
-------------- -------------
General, Initial and Investor Limited Partners' Equity 24,612,185 26,771,540
Net unrealized gains (losses) on marketable securities (2,953) 268
-------------- -------------
Total Partners' Equity 24,609,232 26,771,808
-------------- -------------
Total Liabilities and Partners' Equity $ 39,762,716 $ 41,744,078
============== =============
</TABLE>
The accompanying notes are an integral part of the combined
financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three and Six Months Ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
------------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
Revenue:
Rental $ 446,852 $ 604,117 $ 890,572 $ 1,201,702
Investment 17,625 27,631 46,574 61,488
Other 67,321 12,815 81,022 33,663
------------- --------------- ------------- --------------
Total Revenue 531,798 644,563 1,018,168 1,296,853
------------- --------------- ------------- --------------
Expenses:
Asset management fee,
related party 64,343 62,752 128,686 125,504
General and administrative,
includes reimbursements to an
affiliate in the amounts of
$70,051 and $69,795 in 1996
and 1995, respectively 108,460 96,014 168,854 278,386
Bad debt expense 44,779 - 245,173 -
Rental operations, exclusive of
depreciation 260,084 485,544 534,619 791,370
Property management fee,
related party 46,561 8,311 65,300 35,768
Interest 269,574 305,487 539,952 650,969
Depreciation 201,330 191,536 379,195 390,344
Amortization 25,380 33,105 58,058 66,204
------------- --------------- ------------- --------------
Total Expenses 1,020,511 1,182,749 2,119,837 2,338,545
------------- --------------- ------------- --------------
Loss before equity in losses of
Local Limited Partnerships (488,713) (538,186) (1,101,669) (1,041,692)
Minority interest in losses of
Local Limited Partnerships 20,937 24,519 43,968 45,736
Equity in losses of Local
Limited Partnerships (523,395) (939,104) (1,101,654) (1,624,333)
------------- --------------- ------------- --------------
Net Loss $ (991,171) $ (1,452,771) $ (2,159,355) $ (2,620,289)
============= =============== ============= ==============
Net Loss allocated:
To General Partners $ (9,912) $ (14,528) $ (21,594) $ (26,203)
To Limited Partners (981,259) (1,438,243) (2,137,761) (2,594,086)
------------- --------------- ------------- --------------
$ (991,171) $ (1,452,771) $ (2,159,355) $ (2,620,289)
============= =============== ============= ==============
Net Loss per Limited
Partnership Unit
(68,043 Units) $ (14.42) $ (21.14) $ (31.42) $ (38.12)
======== ========= ========= ========
</TABLE>
The accompanying notes are an integral part of the combined
financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
COMBINED STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
(Unaudited)
For the Six Months Ended September 30, 1996
<TABLE>
<CAPTION>
Net
Initial Investor Unrealized
General Limited Limited Gains
Partners Partners Partners (Losses) Total
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1996 $ (323,370) $ 5,000 $ 27,089,910 $ 268 $ 26,771,808
Net change in net unrealized
gains on marketable securities
available for sale - - - (3,221) (3,221)
Net Loss (21,594) - (2,137,761) - (2,159,355)
---------- ------- ------------ --------- ------------
Balance at September 30, 1996 $ (344,964) $ 5,000 $ 24,952,149 $ (2,953) $ 24,609,232
========== ======= ============ ========= ============
</TABLE>
The accompanying notes are an integral part of the combined
financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ---------
<S> <C> <C>
Net cash used for operating activities $ (418,531) $ (509,453)
------------ -------------
Cash flows from investing activities:
Investment in Local Limited Partnership 3,331 -
Purchases of marketable securities (437,069) (1,094,075)
Proceeds from sales and maturities
of marketable securities 721,379 1,444,817
Cash distributions received from Local
Limited Partnerships 67,145 2,013
Purchase of rental property (89,412) (10,903)
------------ -------------
Net cash provided by investing activities 265,374 341,852
------------ -------------
Cash flows from financing activities:
Payment of mortgage principal (117,020) (27,441)
------------ -------------
Net cash used for financing activities (117,020) (27,441)
------------ -------------
Net decrease in cash and cash equivalents (270,177) (195,042)
Cash and cash equivalents, beginning 414,451 532,287
------------ -------------
Cash and cash equivalents, ending $ 144,274 $ 337,245
============ =============
Supplemental disclosure of cash flow activity:
Cash paid for interest $ 225,631 $ 585,726
============ =============
</TABLE>
The accompanying notes are an integral part of the combined
financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
Notes to 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 period may not be indicative of
the results to be expected for the year.
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 agencies $ 918,838 $ 3,761 $ (6,901) $ 915,698
Mortgage backed securities 228,727 1,729 (1,261) 229,195
Other debt securities 35,461 - (281) 35,180
----------- -------- -------- -----------
Marketable securities
at September 30, 1996 $ 1,183,026 $ 5,490 $ (8,443) $ 1,180,073
=========== ======== ========= ===========
Debt securities issued by the
US Treasury and other US
Government agencies $ 945,321 $ 280 $ (4,773) $ 940,828
Mortgage backed securities 164,815 2,200 (1,046) 165,969
Other debt securities 318,361 3,979 (372) 321,968
----------- -------- -------- -----------
Marketable securities
at March 31, 1996 $ 1,428,497 $ 6,459 $ (6,191) $ 1,428,765
=========== ======== ======== ===========
</TABLE>
The contractual maturities at September 30, 1996 are as follows:
<TABLE>
<CAPTION>
Fair
Cost Value
<S> <C> <C>
Due in one year or less $ 194,072 $ 197,809
Due in one to five years 760,227 753,069
Mortgage backed securities 228,727 229,195
----------- -----------
$ 1,183,026 $ 1,180,073
=========== ===========
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
Notes to 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 sale of fixed
maturity securities were approximately $721,000 and $1,445,000 for the six
months ended September 30, 1996 and 1995, respectively. Included in investment
income are gross gains of $44,191 and $5,165 and gross losses of $5,352 and
$14,700 that were realized on these sales for the six months ended September 30,
1996 and 1995, respectively.
2. Investments in Local Limited Partnerships
The Partnership uses the equity method to account for its limited partnership
interests in twenty-seven Local Limited Partnerships (excluding 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 which contain certain
operating and distribution restrictions, 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,
excluding the Combined Entities, at September 30, 1996:
<TABLE>
<CAPTION>
<S> <C>
Capital contributions paid to Local Limited Partnerships and purchase price paid
to withdrawing partners of Local
Limited Partnerships $ 43,420,777
Cumulative equity in losses of Local Limited
Partnerships (22,925,530)
Cash distributions received from Local
Limited Partnerships (1,224,985)
----------
Investments in Local Limited Partnerships
before adjustment 19,270,262
Excess of investment cost over the underlying net assets acquired:
Acquisition fees and expenses 3,912,561
Accumulated amortization of acquisition
fees and expenses (704,122)
----------
Investments in Local Limited Partnerships 22,478,701
Reserve for valuation of investments
in Local Limited Partnerships (949,906)
------------
$ 21,528,795
===========
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
Notes to Combined Financial Statements (continued)
(Unaudited)
2. Investments in Local Limited Partnerships (continued)
Summarized financial information from the financial statements of all Local
Limited Partnerships (excluding the Combined Entities) in which the Partnership
has invested is as follows:
Summarized Balance Sheets - at June 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Assets:
Rental property, net $ 121,736,552
Current assets 6,227,698
Other assets, net 11,649,759
---------------
Total Assets $ 139,614,009
===============
Liabilities and Partners' Equity:
Current liabilities $ 5,694,877
Mortgages payable, net of current portion 101,810,359
Other liabilities 7,881,723
---------------
Total Liabilities 115,386,959
Partners' Equity 24,227,050
---------------
Total Liabilities and Partners' Equity $ 139,614,009
===============
</TABLE>
Summarized Income Statements - For the
six months ended June 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Rental and other income $ 9,860,528
---------------
Expenses:
Operating expenses 4,952,172
Interest expense 3,671,341
Depreciation and amortization 2,419,015
---------------
Total Expenses 11,042,528
Net Loss $ (1,182,000)
===============
Partnership's share of net loss $ (1,170,182)
===============
Other Partners' share of net loss $ (11,818)
===============
</TABLE>
For the six months ended September 30, 1996, the Partnership has not recognized
$68,528 of equity in losses relating to three Local Limited Partnerships where
cumulative equity in losses exceed its total investment in these Local Limited
Partnerships.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
Notes to Combined Financial Statements (continued)
(Unaudited)
3. Transactions with Affiliates
Boston Financial Property Management ("BFPM"), an affiliate of the Managing
General Partner, currently manages Oakview Square, a Local Limited Partnership
in which the Partnership has invested. BF Lansing Limited Partnership ("BF
Lansing"), an affiliate of the Managing General Partner, currently manages three
Local Limited Partnerships in which the Partnership has invested: Whitehills II
Apartments Company Limited Partnership ("Whitehills II"); Gobles Limited
Dividend Housing Association ("Orchard View"); and Milan Apartments Company
Limited Partnership ("Canfield Crossing"). Included in operating expenses in the
summarized income statements in Note 2 to the Combined Financial Statements is
$37,973 of fees earned by BFPM and BF Lansing for the six months ended June 30,
1996.
BF Lansing is also the management agent for Pinewood Terrace, Gateway Village,
Justin Place, Pine Manor and Valley View, properties in which the Partnership
has invested. Additionally, BFPM currently manages Leawood Manor, a property in
which the Partnership has invested. Included in the Combined Statements of
Operations for the six months ended September 30, 1996 is $65,300 of fees earned
by BFPM and BF Lansing during the six months ended June 30, 1996.
4. Liquidation of Interests in Local Limited Partnerships
The Managing General Partner has transferred or is in the process of
transferring all of the assets of five of the Texas Partnerships subject to
their liabilities to unaffiliated entities. The transfers of Grandview Terrace
Apartments, Pecan Hills Apartments, Seagraves Garden Apartments and Hilltop
Apartments were effective February 21, 1996, February 29, 1996, March 8, 1996
and June 6, 1996, respectively. Bent Tree Apartments is being transferred to a
new owner effective after September 30, 1996. As previously reported, Nocona
Terrace Apartments and Royal Creste Apartments were in the process of being
transferred to an unaffiliated entity. This transaction is not expected to take
place. The Managing General Partner is currently seeking alternative options for
the transfer of these properties. The Partnership will retain its interest in
Gateway Village.
The Managing General Partner of the Partnership has executed an agreement to
sell the general partner interests in the four remaining Texas Partnerships
(Justin Place Apartments, Pine Manor Apartments, Pinewood Terrace Apartments and
Valley View Apartments) to an unaffiliated buyer. These properties will be
restructured into a new partnership in which the Partnership will retain a
limited partner interest for a period of at least twelve months. During this
period, investors will continue to receive tax credits from these properties.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
Notes to Combined Financial Statements (continued)
(Unaudited)
5. Supplemental Combining Schedules
Balance Sheets
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing
Tax Credits Combined
L.P. IV (A) Entities (B) Eliminations Combined
Assets
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 70,095 $ 74,179 $ - $ 144,274
Accounts receivable, net 469,518 20,680 (366,297) 123,901
Tenant security deposits - 95,971 - 95,971
Mortgagee escrow deposits - 94,328 - 94,328
Other current assets 15,207 26,519 - 41,726
--------------- --------------- ------------- ------------
Total current assets 554,820 311,677 (366,297) 500,200
Investments in Local
Limited Partnerships, net 23,124,926 - (1,596,131) 21,528,795
Marketable securities, at fair value 1,180,073 - - 1,180,073
Rental property at cost, net of
accumulated depreciation - 16,338,789 - 16,338,789
Deferred charges, net - 214,859 - 214,859
--------------- --------------- ------------- ------------
Total Assets $ 24,859,819 $ 16,865,325 $ (1,962,428) $ 39,762,716
=============== =============== ============= ============
Liabilities and Partners' Equity (Deficiency)
Current liabilities:
Accounts payable to affiliates $ 204,003 $ 423,877 $ (366,297) $ 261,583
Accounts payable and accrued expenses 46,584 248,533 - 295,117
Current portion of mortgage notes payable - 3,615,467 - 3,615,467
Interest payable - 532,758 - 532,758
Tenant security deposits payable - 92,730 - 92,730
--------------- --------------- ------------- ------------
Total current liabilities 250,587 4,913,365 (366,297) 4,797,655
Mortgage notes payable - 7,496,377 - 7,496,377
Payable to affiliated Developer - 2,482,000 - 2,482,000
--------------- --------------- ------------- ------------
Total Liabilities 250,587 14,891,742 (366,297) 14,776,032
--------------- --------------- ------------- ------------
Minority interest in Local Limited
Partnerships - - 377,452 377,452
--------------- --------------- ------------- ------------
General, Initial and Investor
Limited Partners' Equity 24,612,185 1,973,583 (1,973,583) 24,612,185
Net unrealized losses on
marketable securities (2,953) - - (2,953)
--------------- --------------- ------------- -------------
Total Partners' Equity 24,609,232 1,973,583 (1,973,583) 24,609,232
--------------- --------------- -------------- ------------
Total Liabilities and Partners' Equity $ 24,859,819 $ 16,865,325 $ (1,962,428) $ 39,762,716
=============== =============== ============== ============
</TABLE>
(A) As of September 30, 1996.
(B) As of June 30, 1996.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
Notes to Combined Financial Statements (continued)
(Unaudited)
5. Supplemental Combining Schedules (continued)
Statements of Operations
For the Three Months Ended September 30, 1996
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing
Tax Credits Combined
L.P. IV (A) Entities (B) Eliminations Combined
<S> <C> <C> <C> <C>
Revenue:
Rental $ - $ 446,852 $ - $ 446,852
Investment 14,269 3,356 - 17,625
Other 54,799 12,522 - 67,321
--------------- --------------- ------------- ------------
Total Revenue 69,068 462,730 - 531,798
--------------- --------------- ------------- ------------
Expenses:
Asset management fees, related party 64,343 - - 64,343
General and administrative 108,460 - - 108,460
Bad debt expense 44,779 - - 44,779
Rental operations, exclusive of depreciation - 260,084 - 260,084
Property management fee,
related party - 46,561 - 46,561
Interest - 269,574 - 269,574
Depreciation - 201,330 - 201,330
Amortization 20,353 5,027 - 25,380
--------------- --------------- ------------- ------------
Total Expenses 237,935 782,576 - 1,020,511
--------------- --------------- ------------- ------------
Loss before equity in losses of Local
Limited Partnerships (168,867) (319,846) - (488,713)
Minority interest in losses of
Local Limited Partnerships - - 20,937 20,937
Equity in losses of Local Limited
Partnerships (822,304) - 298,909 (523,395)
--------------- --------------- ------------- ------------
Net Loss $ (991,171) $ (319,846) $ 319,846 $ (991,171)
=============== =============== ============= ============
</TABLE>
(A) For the three months ended September 30, 1996.
(B) For the three months ended June 30, 1996.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
Notes to Combined Financial Statements (continued)
(Unaudited)
5. Supplemental Combining Schedules (continued)
Statements of Operations
For the Six Months Ended September 30, 1996
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing
Tax Credits Combined
L.P. IV (A) Entities (B) Eliminations Combined
<S> <C> <C> <C> <C>
Revenue:
Rental $ - $ 890,572 $ - $ 890,572
Investment 40,399 6,175 - 46,574
Other 56,949 24,073 - 81,022
--------------- --------------- ------------- ------------
Total Revenue 97,348 920,820 - 1,018,168
--------------- --------------- ------------- ------------
Expenses:
Asset management fees, related party 128,686 - - 128,686
General and administrative 168,854 - - 168,854
Bad debt expense 245,173 - - 245,173
Rental operations, exclusive of depreciation - 534,619 - 534,619
Property management fee,
related party - 65,300 - 65,300
Interest - 539,952 - 539,952
Depreciation - 379,195 - 379,195
Amortization 48,004 10,054 - 58,058
--------------- --------------- ------------- ------------
Total Expenses 590,717 1,529,120 - 2,119,837
--------------- --------------- ------------- ------------
Loss before equity in losses of Local
Limited Partnerships (493,369) (608,300) - (1,101,669)
Minority interest in losses of
Local Limited Partnerships - - 43,968 43,968
Equity in losses of Local Limited
Partnerships (1,665,986) - 564,332 (1,101,654)
--------------- --------------- ------------- ------------
Net Loss $ (2,159,355) $ (608,300) $ 608,300 $ (2,159,355)
=============== =============== ============= ============
</TABLE>
(A) For the six months ended September 30, 1996.
(B) For the six months ended June 30, 1996.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
Notes to Combined Financial Statements (continued)
(Unaudited)
5. Supplemental Combining Schedules (continued)
Statements of Cash Flows
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing
Tax Credits Combined
L.P. IV (A) Entities (B) Eliminations Combined
<S> <C> <C> <C> <C>
Net cash provided by (used for)
operating activities $ (591,597) $ 173,066 $ - $ (418,531)
------------ ------------ ------------ -------------
Cash flows from investing activities:
Investment in Local Limited Partnership 3,331 - - 3,331
Purchases of marketable securities (437,069) - - (437,069)
Proceeds from sales and maturities
of marketable securities 721,379 - - 721,379
Cash distributions received from
Local Limited Partnerships 67,145 - - 67,145
Purchase of rental property - (89,412) - (89,412)
----------- ------------- ------------ -------------
Net cash provided by (used for)
investing activities 354,786 (89,412) - 265,374
----------- ------------- ------------ ------------
Cash flows from financing activities:
Payment of mortgage principal - (117,020) - (117,020)
----------- ------------- ------------ -------------
Net cash used for financing activities - (117,020) - (117,020)
----------- ------------- ------------ -------------
Net decrease in cash and cash equivalents (236,811) (33,366) - (270,177)
Cash and cash equivalents, beginning 306,906 107,545 - 414,451
----------- ------------ ------------ ------------
Cash and cash equivalents, ending $ 70,095 $ 74,179 $ - $ 144,274
=========== ============ ============ ============
</TABLE>
(A) For the six months ended September 30, 1996.
(B) For the six months ended June 30, 1996.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership (including the Combined Entities) had a decrease in cash and
cash equivalents of $270,177 from $414,451 at March 31, 1996 to $144,274 at
September 30, 1996. The decrease is attributable to cash used for operations,
repayment of mortgage principal and purchase of rental property by the Combined
Entities. These decreases were offset by proceeds from sales and maturities of
marketable securities in excess of purchases of marketable securities and cash
distributions received from Local Limited Partnerships in which the Partnership
invested.
The Managing General Partner initially designated 4% of the Gross Proceeds as
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. Funds totaling approximately $971,000 have been withdrawn
from the Reserve account to pay legal fees and other expenses relating to
various property issues. This amount includes approximately $917,000 for the
Texas Partnerships. To date, Reserve funds in the amount of approximately
$304,000 have been used to make additional capital contributions to a Local
Limited Partnership. To date, the Partnership has used approximately $754,000 of
operating funds to replenish Reserves. At September 30, 1996, approximately
$1,316,000 of cash, cash equivalents and marketable securities has been
designated as Reserves. 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.
If Reserves are not adequate to cover the Partnership's operations, the
Partnership will seek other financing sources including, but not limited to, the
deferral of Asset Management Fees to an affiliate of the Managing General
Partner or working with Local Limited Partnerships to increase cash
distributions.
Since the Partnership invests as a limited partner, the Partnership has no
contractual obligation to provide additional funds to Local Limited Partnerships
beyond its specified investment. Thus, at September 30, 1996, the Partnership
had no contractual or other obligation to any Local Limited Partnership which
had not been paid or provided for.
In the event a Local Limited Partnership encounters operating difficulties
requiring additional funds, the Partnership's management might deem it in its
best interests to voluntarily provide such funds in order to protect its
investment. To date, in addition to the $917,000 noted above, the Partnership
has also advanced approximately $577,000 to the Texas Partnerships to fund
operating deficits. Approximately $308,000 has also been advanced to two other
Local Limited Partnerships.
Cash Distributions
No cash distributions were made during the six months ended September 30, 1996.
Results of Operations
The Partnership's results of operations for the three and six months ended
September 30, 1996 resulted in a net loss of $991,171 and $2,159,355,
respectively, as compared to a net loss of $1,452,771 and $2,620,289,
respectively, for the same periods in 1995. The decrease in net loss is
primarily attributable to decreases in equity in losses of Local Limited
Partnerships and decreases in general and administrative, rental operations and
interest expense items. These decreases are offset by a decrease in rental
revenue and an increase in bad debt expense. The decrease in equity in losses of
Local Limited Partnerships is caused by more efficient property operations
during the first half of 1996 as compared to the corresponding 1995 period and
the elimination of losses incurred by the four Texas Partnerships which were
disposed of. The decrease in general and administrative expenses is the result
of a decrease in the expenses paid on behalf of the Texas Partnerships by the
Partnership. The decrease in rental revenue and rental operation and interest
expenses is due to the exclusion of seven of the Texas Partnerships' operations
which were previously combined. Four of these Texas Partnerships were disposed
of and three are now being accounted
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations (continued)
for under the equity method of accounting. Please refer to the section entitled
"Property Discussions" for additional information. The increase in bad debt
expense is the result of a reserve for advances made to one Local Limited
Partnership.
Property Discussions
Prior to the transfer of four of the Texas Partnerships, Limited Partnership
interests had been acquired in thirty-seven Local Limited Partnerships which are
located in thirteen states, Washington, D.C. and Puerto Rico. Fifteen of the
properties with 1,440 apartments were newly constructed, and twenty-two of the
properties with 2,061 apartments were rehabilitated. Most of the Local Limited
Partnerships have stable operations. The majority of these properties 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.
The Managing General Partner has transferred or is in the process of
transferring all of the assets of five of the Texas Partnerships subject to
their liabilities to unaffiliated entities. The transfers of Grandview Terrace
Apartments, Pecan Hills Apartments, Seagraves Garden Apartments and Hilltop
Apartments were effective February 21, 1996, February 29, 1996, March 8, 1996
and June 6, 1996, respectively. Bent Tree Apartments is being transferred to a
new owner effective after September 30, 1996. As previously reported, Nocona
Terrace Apartments and Royal Creste Apartments were in the process of being
transferred to an unaffiliated entity. This transaction is not expected to take
place. The Managing General Partner is currently seeking alternative options for
the transfer of these properties. The Partnership will retain its interest in
Gateway Village.
The Managing General Partner of the Partnership has executed an agreement to
sell the general partner interests in the four remaining Texas Partnerships
(Justin Place Apartments, Pine Manor Apartments, Pinewood Terrace Apartments and
Valley View Apartments) to an unaffiliated buyer. These properties will be
restructured into a new partnership in which the Partnership will retain a
limited partner interest for a period estimated to be about twelve months.
During this period, investors will continue to receive tax credits from these
properties.
For tax purposes, these events will result in both Section 1231 Gain and
cancellation of indebtedness income. In addition, the transfer of ownership will
result in a nominal amount of recapture of tax credits, since the Texas
Partnerships represent only 3% of the Partnership's tax credits.
As previously reported, Bentley Court, located in Columbia, South Carolina,
defaulted on its mortgage in August 1994 and was threatened with foreclosure by
the lender. The Local General Partner began pursuing a GNMA security reissuance
to achieve a reduction in debt service. The default was cured, and as a part of
the plan to remedy the default, an affiliate of the Managing General Partner
was, subject to lender consent, admitted as an additional General Partner with
the right to take over control of the property in certain circumstances. The HUD
Inspector General's office audited the property in October 1994 and ruled that
certain fees could not be charged to tenants. The Local General Partner has
complied with this ruling, which will reduce property income, and has reinstated
the Local General Partner's obligation to fund any resulting deficits. On July
18, 1996, the Local General Partner reached an agreement on a GNMA security
reissuance which achieved a reduction in debt service through an interest rate
reduction to current market levels. The agreement stipulates that if the Local
Limited Partnership defaults on the
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Property Discussions (continued)
agreement the lender has the right to remove the management company. An
affiliate of the Managing General Partner has been approved as a substitute
management company and has the right to replace the Local General Partner in the
event of a default.
Findlay Market, located in Cincinnati, Ohio, has been affected by occupancy
problems because 45% of the property's units were damaged by a fire. The
reconstruction was initially delayed because of insufficient funds from the
insurance proceeds to satisfy lender requirements. In March 1996, an affiliate
of the Managing General Partner became actively involved in discussions with the
Local General Partner, the lender and the City of Cincinnati to provide
additional funding sources needed to reconstruct the units. As part of the
agreement, the Partnership will advance $345,000 from Partnership reserves to
help cover the shortfall of funds. As of September 30, 1996, approximately
$245,000 has been advanced. The Local General Partner currently estimates that
reconstruction, which commenced in May 1996, will be complete by November 1996.
The low-income housing tax credits continue to be earned on the units to be
reconstructed.
Audobon Apartments, located in Massachusetts, is operating below break-even
primarily due to decreased rental subsidy assistance, increased operating
expenses and adverse market conditions. The Managing General Partner is
negotiating with the Local General Partner and the local housing authority to
replace the management agent with an affiliate of the Managing General Partner
and to obtain additional operating subsidies from the state in order to help
stabilize property operations. It is likely that these transactions will require
advances from Partnership Reserves.
One other property in which the Partnership has invested, BK Apartments,
continues to experience cash flow deficits as a result of high vacancy. A number
of units were damaged by flooding in 1993 and have been rebuilt. In January
1996, property operations were insufficient to cover the full bond payment which
resulted in a technical default on the bonds. The General Partner reached an
agreement with the trustee, whereby he would make February, March and April
payments in a timely manner and cure the delinquent bond payment by May 1, 1996.
At this time, the Local General Partner has not satisfied his obligation, and
the lender has threatened further action. As a result of the default, the
General Partner has transferred management of the property to an unaffiliated
property management company. The new management agent is in the process of
determining the cost of capital improvements required to stabilize the
property's operations. These costs may require the use of Partnership reserves.
The Managing General Partner has requested debt service relief in proportion to
the amount of additional capital the Partnership must invest in order to
complete the capital improvements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K
(a)Exhibits - None
(b)Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended September 30, 1996.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DATED: November 13, 1996 BOSTON FINANCIAL QUALIFIED HOUSING
TAX CREDITS L.P. IV
By: Arch Street IV, 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> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 144,274
<SECURITIES> 1,180,073
<RECEIVABLES> 123,901
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 232,025<F1>
<PP&E> 16,338,789
<DEPRECIATION> 000
<TOTAL-ASSETS> 39,762,716<F2>
<CURRENT-LIABILITIES> 4,797,655<F3>
<BONDS> 000
0
0
<COMMON> 000
<OTHER-SE> 24,609,232
<TOTAL-LIABILITY-AND-EQUITY> 39,762,716<F4>
<SALES> 000
<TOTAL-REVENUES> 1,018,168<F5>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 1,579,885<F6>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 539,952
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (2,159,355)<F7>
<EPS-PRIMARY> (31.42)
<EPS-DILUTED> 000
<FN>
<F1>Included in current assets: Mortgagee escrow deposits $94,328, Tenant
security deposits $95,971 and Other current assets $41,726.
<F2>Included in total assets: Investments in Local Limited Partnerships
$21,528,795, Deferred charges, net $214,859.
<F3>Included in Current Liabilities: Accounts payable to affiliates $261,583,
Accounts payable and accrued expenses $295,117, Current portion of debt
$3,615,467, Interest payable of $532,758 and Tenant security deposits
payable of $92,730.
<F4>Included in Total Liabilities and Equity:Payable to affiliated
developer $2,482,000, $7,496,377 of long-term debt and Minority
interest in Local Limited Partnerships $377,452.
<F5>Total revenue includes: Rental $890,572, Investment $46,574,
Other $81,022.
<F6>Included in Other Expenses: Asset management fees $128,686,
General and administrative $168,854, Bad debt $245,173, Property
management fees $65,300, Rental operations, exclusive of
depreciation $534,619, Depreciation $379,195 and Amortization $58,058.
<F7>Net loss reflects: Equity in losses of Local Limited Partnerships
of $1,101,654 and Minority interest in losses of Local Limited
Partnerships $43,968.
</FN>
</TABLE>
