August 13, 1996
Securities and Exchange Commission
Filer Support, Edgar
Operation Center, Stop 0-7
6432 General Green Way
Alexandria, VA 22312
Re: Boston Financial Qualified Housing Tax Credits L.P. IV
Report on Form 10-Q for Quarter Ended June 30, 1996
File No. 0-19765
Gentlemen:
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
QH4-10Q1.DOC
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
--------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended June 30, 1996 Commission file number 0-19765
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 - June 30, 1996 (Unaudited)
and March 31, 1996 1
Combined Statements of Operations (Unaudited) - For the Three
Months Ended June 30, 1996 and 1995 2
Combined Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Three Months Ended June 30, 1996 3
Combined Statements of Cash Flows (Unaudited) - For the
Three Months Ended June 30, 1996 and 1995 4
Notes to Combined Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II - OTHER INFORMATION
Items 1-6 15
SIGNATURE 16
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
COMBINED BALANCE SHEETS - June 30, 1996 and March 31, 1996
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
(Unaudited)
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 323,676 $ 414,451
Accounts receivable, net 19,572 39,646
Tenant security deposits 88,668 109,969
Mortgagee escrow deposits 142,419 113,368
Other current assets 21,713 35,465
------------- ------------
Total current assets 596,048 712,899
Investments in Local Limited Partnerships,
net of reserve for valuation of $949,906 and
$913,047, respectively (Note 2) 22,078,215 22,748,929
Marketable securities, at fair value (Note 1) 1,264,523 1,428,765
Rental property at cost, net of
accumulated depreciation 16,489,741 16,628,572
Deferred charges, net of $145,958 and $140,931 of
accumulated amortization, respectively 219,886 224,913
------------- ------------
Total Assets $ 40,648,413 $ 41,744,078
============= ============
Liabilities and Partners' Equity (Deficiency)
Current liabilities:
Accounts payable to affiliates $ 190,500 $126,151
Accounts payable and accrued expenses 299,046 409,693
Current portion of mortgage notes payable 3,646,615 3,707,570
Interest payable 439,233 218,437
Tenant security deposits payable 88,078 85,705
------------- ------------
Total current liabilities 4,663,472 4,547,556
Mortgage notes payable 7,508,835 7,521,294
Payable to affiliated Developer 2,482,000 2,482,000
------------- ------------
Total Liabilities 14,654,307 14,550,850
------------- ------------
Minority interest in Local Limited Partnerships 398,389 421,420
------------- ------------
General, Initial and Investor Limited Partners' Equity 25,603,356 26,771,540
Net unrealized gains (losses) on marketable securities (7,639) 268
------------- ------------
Total Partners' Equity 25,595,717 26,771,808
------------- ------------
Total Liabilities and Partners' Equity $ 40,648,413 $ 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 Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ -------
Revenue:
<S> <C> <C>
Rental $ 443,720 $ 597,585
Investment 28,949 33,857
Other 13,701 20,848
------------ ------------
Total Revenue 486,370 652,290
------------ ------------
Expenses:
Asset management fee, related party 64,343 62,752
General and administrative (includes reimbursements
to an affiliate in the amounts of $37,026 and
$39,736, respectively) 60,394 182,372
Bad debt expense 200,394 -
Rental operations, exclusive of depreciation 274,535 305,826
Property management fee, related party 18,739 27,457
Interest 270,378 345,482
Depreciation 177,865 198,808
Amortization 32,678 33,099
------------ ------------
Total Expenses 1,099,326 1,155,796
------------ ------------
Loss before equity in losses of
Local Limited Partnerships (612,956) (503,506)
Minority interest in losses of
Local Limited Partnership 23,031 21,217
Equity in losses of Local
Limited Partnerships (578,259) (685,229)
------------- ------------
Net Loss $ (1,168,184) $ (1,167,518)
============= ============
Net Loss allocated:
To General Partners $ (11,682) $ (11,675)
To Limited Partners (1,156,502) (1,155,843)
------------- ------------
$ (1,168,184) $ (1,167,518)
============= ============
Net Loss per Limited Partnership Unit
(68,043 Units) $ (17.00) $ (16.99)
============= ============
</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 Three Months Ended June 30, 1996
<TABLE>
<CAPTION>
Net
Initial Investor Unrealized
General Limited Limited Gains
Partners Partners Partners (Losses) Total
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1996 $ (323,370) $ 5,000 $ 27,089,910 $ 268 $ 26,771,808
Net change in net unrealized
gains on marketable securities
available for sale - - - (7,907) (7,907)
Net Loss (11,682) - (1,156,502) - (1,168,184)
---------- ------- ------------ --------- ------------
Balance at June 30, 1996 $ (335,052) $ 5,000 $ 25,933,408 $ (7,639) $ 25,595,717
========== ======= ============ ========= ============
</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 Three Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ -------
<S> <C> <C>
Net cash used for operating activities $ (224,514) $ (135,255)
----------- -----------
Cash flows from investing activities:
Purchases of marketable securities (437,069) (100,375)
Proceeds from sales and maturities of
marketable securities 618,452 166,111
Cash distributions received from Local
Limited Partnerships 64,804 -
Purchase of rental property (39,034) (6,905)
------------ -----------
Net cash provided by investing activities 207,153 58,831
----------- -----------
Cash flows from financing activities:
Payment of mortgage principal (73,414) (17,725)
----------- -----------
Net cash used for financing activities (73,414) (17,725)
------------ -----------
Net decrease in cash and cash equivalents (90,775) (94,149)
Cash and cash equivalents, beginning 414,451 532,287
----------- -----------
Cash and cash equivalents, ending $ 323,676 $ 438,138
=========== ===========
Supplemental disclosure:
Cash paid for interest $ 49,582 $ 260,431
=========== ===========
</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 $ 877,199 $ 1,997 $ (6,743) $ 872,453
Mortgage backed securities 344,237 1,790 (4,323) 341,704
Other debt securities 50,726 - (360) 50,366
----------- -------- -------- -----------
Marketable securities
at June 30, 1996 $ 1,272,162 $ 3,787 $(11,426) $ 1,264,523
=========== ======== ======== ===========
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 June 30, 1996 are as follows:
<TABLE>
<CAPTION>
Fair
Cost Value
<S> <C> <C>
Due in one year or less $ 243,477 $ 245,474
Due in one to five year 684,448 677,345
Mortgage backed securities 344,237 341,704
----------- -----------
$ 1,272,162 $ 1,264,523
=========== ===========
</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 $618,000 and $166,000 for the three
months ended June 30, 1996 and 1995, respectively. Included in investment income
are gross gains of $29,324 and $446 and gross losses of $4,276 and $861 that
were realized on these sales for the three months ended June 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 June 30, 1996:
<TABLE>
<CAPTION>
<S> <C>
Capital contributions paid to Local Limited Partnerships and purchase price paid
to withdrawing partners of Local
Limited Partnerships $ 43,424,108
Cumulative equity in losses of Local Limited
Partnerships (22,402,135)
Cash distributions received from Local
Limited Partnerships (1,222,644)
Investments in Local Limited Partnerships
before adjustment 19,799,329
Excess of investment cost over the underlying net assets acquired:
Acquisition fees and expenses 3,912,561
Accumulated amortization of acquisition
fees and expenses (683,769)
Investments in Local Limited Partnerships 23,028,121
Reserve for valuation of investments
in Local Limited Partnerships (949,906)
$ 22,078,215
</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:
<TABLE>
<CAPTION>
Summarized Balance Sheets - at March 31, 1996
<S> <C>
Assets:
Rental property, net $ 124,250,005
Current assets 6,766,546
Other assets, net 12,187,315
---------------
Total Assets $ 143,203,866
===============
Liabilities and Partners' Equity:
Current liabilities $ 6,847,016
Mortgages payable, net of current portion 101,813,146
Other liabilities 8,224,026
---------------
Total Liabilities 116,884,188
Partners' Equity 26,319,678
---------------
Total Liabilities and Partners' Equity $ 143,203,866
===============
Summarized Income Statements - For the
Three Months Ended March 31, 1996
Rental and other income $ 5,064,050
---------------
Expenses:
Operating expenses 2,585,319
Interest expense 1,887,756
Depreciation and amortization 1,205,947
---------------
Total Expenses 5,679,022
Net Loss $ (614,972)
===============
Partnership's share of net loss $ (596,893)
===============
Other Partners' share of net loss $ (18,079)
===============
</TABLE>
For the three months ended June 30, 1996, the Partnership has not recognized
$18,634 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 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
$18,051 and $11,899 of fees earned by BFPM and BF Lansing for the three months
ended June 30, 1996 and 1995.
4. Liquidation of Interests in Local Limited Partnerships
As previously reported, the Managing General Partner has transferred or is in
the process of transferring all of the assets of seven 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. The remaining properties
(Bent Tree Apartments, Nocona Terrace Apartments and Royal Creste Apartments)
are being transferred to new owners effective after June 30, 1996. The
Partnership will retain 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
<TABLE>
<CAPTION>
Balance Sheets
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 $ 213,040 $ 110,636 $ - $ 323,676
Accounts receivable, net 331,104 19,572 (331,104) 19,572
Tenant security deposits - 88,668 - 88,668
Mortgagee escrow deposits - 142,419 - 142,419
Other current assets 17,347 4,366 - 21,713
--------------- --------------- ------------- ------------
Total current assets 561,491 365,661 (331,104) 596,048
Investments in Local
Limited Partnerships, net 23,973,255 - (1,895,040) 22,078,215
Marketable securities, at fair value 1,264,523 - - 1,264,523
Rental property at cost, net of
accumulated depreciation - 16,489,741 - 16,489,741
Deferred charges, net - 219,886 - 219,886
--------------- --------------- ------------- ------------
Total Assets $ 25,799,269 $ 17,075,288 $ (2,226,144) $ 40,648,413
=============== =============== ============= ============
Liabilities and Partners' Equity (Deficiency)
Current liabilities:
Accounts payable to affiliates $ 150,764 $ 370,840 $ (331,104) $ 190,500
Accounts payable and accrued expenses 52,788 246,258 - 299,046
Current portion of mortgage notes payable- 3,646,615 - 3,646,615
Interest payable - 439,233 - 439,233
Tenant security deposits payable - 88,078 - 88,078
--------------- --------------- ------------- ------------
Total current liabilities 203,552 4,791,024 (331,104) 4,663,472
Mortgage notes payable - 7,508,835 - 7,508,835
Payable to affiliated Developer - 2,482,000 - 2,482,000
--------------- --------------- ------------- ------------
Total Liabilities 203,552 14,781,859 (331,104) 14,654,307
Minority interest in Local Limited
Partnerships - - 398,389 398,389
General, Initial, and Investor
Limited Partners' Equity 25,603,356 2,293,429 (2,293,429) 25,603,356
Net unrealized losses on
marketable securities (7,639) - - (7,639)
---------------- --------------- ------------- -------------
Total Partners' Equity 25,595,717 2,293,429 (2,293,429) 25,595,717
--------------- --------------- -------------- ------------
Total Liabilities and Partners' Equity $ 25,799,269 $ 17,075,288 $ _(2,226,144) $ 40,648,413
=============== =============== ============== ============
</TABLE>
(A) As of June 30, 1996.
(B) As of March 31, 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
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing
Tax Credits Combined
L.P. IV (A) Entities (B) Eliminations Combined
<S> <C> <C> <C> <C>
Revenue:
Rental $ - $ 443,720 $ - $ 443,720
Investment 26,130 2,819 - 28,949
Other 2,150 11,551 - 13,701
--------------- --------------- ------------- ------------
Total Revenue 28,280 458,090 - 486,370
--------------- --------------- ------------- ------------
Expenses:
Asset management fees, related party 64,343 - - 64,343
General and administrative 60,394 - - 60,394
Bad debt expense 200,394 - - 200,394
Rental operations, exclusive of depreciation - 274,535 - 274,535
Property management fee,
related party - 18,739 - 18,739
Interest - 270,378 - 270,378
Depreciation - 177,865 - 177,865
Amortization 27,651 5,027 - 32,678
--------------- --------------- ------------- ------------
Total Expenses 352,782 746,544 - 1,099,326
--------------- --------------- ------------- ------------
Loss before equity in losses of Local
Limited Partnerships (324,502) (288,454) - (612,956)
Minority interest in losses of
Local Limited Partnerships - - 23,031 23,031
Equity in losses of Local Limited
Partnerships (843,682) - 265,423 (578,259)
--------------- --------------- ------------- ------------
Net Loss $ (1,168,184) $ (288,454) $ 288,454 $ (1,168,184)
================ ================ ============= =============
(A) For the three months ended June 30, 1996.
(B) For the three months ended March 31, 1996.
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. 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 $ (340,053) $ 115,539 $ - $ (224,514)
----------- ------------ ------------ -------------
Cash flows from investing activities:
Purchases of marketable securities (437,069) - - (437,069)
Proceeds from sales and maturities
of marketable securities 618,452 - - 618,452
Cash distributions received from
Local Limited Partnerships 64,804 - - 64,804
Purchase of rental property - (39,034) - (39,034)
----------- ------------ ------------ -------------
Net cash provided by (used for)
investing activities 246,187 (39,034) - 207,153
----------- ------------ ------------ ------------
Cash flows from financing activities:
Payment of mortgage principal - (73,414) - (73,414)
----------- ------------- ------------ -------------
Net cash used for financing activities - (73,414) - (73,414)
----------- ------------- ------------ -------------
Net increase (decrease) in cash
and cash equivalents (93,866) 3,091 - (90,775)
Cash and cash equivalents, beginning 306,906 107,545 - 414,451
----------- ------------ ------------ ------------
Cash and cash equivalents, ending $ 213,040 $ 110,636 $ - $ 323,676
=========== ============ ============ ============
(A) For the three months ended June 30, 1996.
(B) For the three months ended March 31, 1996.
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. 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 $90,775 from $414,451 at March 31, 1996 to $323,676 at June
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 $918,000 have been withdrawn
from the reserve account to pay legal fees relating to various property issues.
This amount includes approximately $876,000 for the Texas Partnerships. At June
30, 1996, approximately $1,274,000 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 June 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 $876,000 noted above, the Partnership
has also advanced approximately $534,000 to the Texas Partnerships to fund
operating deficits.
Cash Distributions
No cash distributions were made in the three months ended June 30, 1996.
Results of Operations
The Partnership's results of operations for the three months ended June 30, 1996
resulted in a net loss of $1,168,184 as compared to a net loss of $1,167,518 for
the same period in 1995. The slight change in the net loss position is primarily
attributable to a decrease in rental revenue and an increase in bad debt
expense. These increases are partially offset by a decrease in equity in losses
of Local Limited Partnerships and decreases in general and administrative,
rental operations and interest expense items. 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 for on 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. The
decrease in general and administrative expenses is caused by a decrease in the
expenses paid on behalf of the Texas Partnerships. The decrease in equity in
losses of Local Limited Partnerships is caused by more efficient property
operations during the first quarter of 1996 as compared to the corresponding
1995 period.
<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
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.
As previously reported, the Managing General Partner has transferred or is in
the process of transferring all of the assets of seven 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. The remaining properties
(Bent Tree Apartments, Nocona Terrace Apartments and Royal Creste Apartments)
are being transferred to new owners effective after June 30, 1996. The
Partnership will retain 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 at least 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 nominal 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 as the Local General Partner was
pursuing a GNMA security reissuance to achieve a reduction in debt service.
However, the security reissuance was stalled due to the rise in interest rates.
Although the monetary default was a nominal amount, the Local General Partner
was advised that the lender intended to commence foreclosure proceedings. 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 he has assumed his 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 General Partner defaults on the 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.
<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)
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 delayed because the lender initially insisted that the
insurance proceeds be used to pay down the mortgage. The City of Cincinnati
interceded and extended a grant to pay down the mortgage. 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 on additional funding sources needed to reconstruct the units. The
Partnership will advance $345,000 of Partnership reserves to help cover the
shortfall of funds and reconstruction commenced in May 1996. As of June 30,
1996, approximately $202,000 has been advanced. The Local General Partner
currently estimates that reconstruction will be complete by November 1996. The
low-income housing tax credits continue to be earned on the units to be
reconstructed; however, a portion of the historic tax credits attached to the
units received in 1991 and 1992 will be recaptured. The amount of recapture is
estimated to be approximately $1.60 per investment unit.
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 recently 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
Goldmark Property Management ("Goldmark"). Goldmark 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. The amount of additional capital needed has
not been determined at this time.
<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 June 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: August 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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1996
<CASH> 323,676
<SECURITIES> 1,264,523
<RECEIVABLES> 19,572
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 252,800<F1>
<PP&E> 16,489,741
<DEPRECIATION> 000
<TOTAL-ASSETS> 40,648,413<F2>
<CURRENT-LIABILITIES> 4,663,472
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 25,595,717
<TOTAL-LIABILITY-AND-EQUITY> 40,648,413<F3>
<SALES> 000
<TOTAL-REVENUES> 486,370<F4>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 828,948<F5>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 270,378
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (1,168,184)<F6>
<EPS-PRIMARY> (17.00)
<EPS-DILUTED> 000
<FN>
<F1>Included in current assets: Mortgage escrow deposits $142,419, Tenant
security deposits $88,668 and Other current assets $21,713.
<F2>Included in total assets: Investments in Local Limited Partnerships
$22,078,215, Deferred charges, net $219,886.
<F3>Included in Total Liabilities and Equity: Payable to affiliated developer
$2,482,000, $7,508,835 of long-term debt and Minority interest in Local
Limited Partnerships $398,389.
<F4>Total revenue includes: Rental $443,720, Investment $28,949, Other
$13,701.
<F5>Included in Other Expenses: Asset management fees $64,343, General and
administrative $60,394, Bad debt $200,394, Property management fees $18,739,
Rental operations, exclusive of depreciation $274,535, Depreciation $177,865
and Amortization $32,678.
<F6>Net loss reflects: Equity in losses of Local Limited Partnerships of
$578,259 and Minority interest in losses of Local Limited Partnerships
23,031.
</FN>
</TABLE>
