February 13, 1998
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 December 31, 1997
File No. 0-19765
Gentlemen:
Pursuant to the requirements of section 15(d) of the Securities Exchange Act of
1934, there is filed herewith a copy of subject report.
Very truly yours,
/s/George Fondulis
George Fondulis
Assistant Controller
QH4-10Q3DOC
<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 December 31, 1997
------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
For Quarter Ended December 31, 1997 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 - December 31, 1997 (Unaudited)
and March 31, 1997 1
Combined Statements of Operations (Unaudited) - For the Three and Nine
Months Ended December 31, 1997 and 1996 2
Combined Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Nine Months Ended December 31, 1997 4
Combined Statements of Cash Flows (Unaudited) - For the
Nine Months Ended December 31, 1997 and 1996 5
Notes to Combined Financial Statements (Unaudited) 6
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)
<TABLE>
COMBINED BALANCE SHEETS - December 31, 1997 and March 31, 1997
<CAPTION>
December 31, March 31,
1997 1997
(Unaudited)
Assets
<S> <C> <C>
Cash and cash equivalents $ 207,993 $ 288,153
Marketable securities, at fair value 1,030,270 1,056,590
Accounts receivable, net of allowance for bad debt
of $314,837 and $337,793, respectively 9,087 23,778
Tenant security deposits 101,071 98,963
Investments in Local Limited Partnerships,
net of reserve for valuation of $844,000 and
$945,277, respectively (Note 1) 18,329,831 19,593,420
Rental property at cost, net of accumulated depreciation and
reserve for valuation of $5,134,142 and $5,670,590, respectively 14,124,348 15,217,196
Mortgagee escrow deposits 144,165 106,501
Deferred charges, net of $171,741 and $156,662 of
accumulated amortization, respectively 194,103 209,182
Other assets 35,467 38,270
------------- ------------
Total Assets $ 34,176,335 $ 36,632,053
============= ============
Liabilities and Partners' Equity
Mortgage notes payable $ 9,743,875 $11,111,888
Accounts payable to affiliates 538,820 390,926
Accounts payable and accrued expenses 350,802 366,076
Interest payable 552,869 507,457
Tenant security deposits payable 85,567 89,709
Payable to affiliated Developer 2,482,000 2,482,000
------------- ------------
Total Liabilities 13,753,933 14,948,056
------------- ------------
Minority interest in Local Limited Partnerships 448,601 421,489
------------- ------------
General, Initial and Investor Limited Partners' Equity 19,972,137 21,267,760
Net unrealized gains (losses) on marketable securities 1,664 (5,252)
------------- ------------
Total Partners' Equity 19,973,801 21,262,508
------------- ------------
Total Liabilities and Partners' Equity $ 34,176,335 $ 36,632,053
============= ============
</TABLE>
The accompanying notes are an integral part of these combined
financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
<TABLE>
COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three and Nine Months Ended December 31, 1997 and 1996
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31, December 31, December 31,
1997 1996 1997 1996
------------- ------------- ------------- ---------
Revenue:
<S> <C> <C> <C> <C>
Rental $ 443,542 $ 444,241 $ 1,351,191 $ 1,334,813
Investment 37,895 25,362 83,904 71,936
Other 17,625 39,637 106,916 120,659
------------- --------------- ------------- --------------
Total Revenue 499,062 509,240 1,542,011 1,527,408
------------- --------------- ------------- --------------
Expenses:
Asset management fee,
related party 57,480 64,343 172,440 193,029
General and administrative,
includes reimbursements to an
affiliate in the amounts of
$112,064 and $91,887 in 1997
and 1996, respectively 102,800 92,200 273,472 261,054
Bad debt expense 88,710 9,158 239,249 254,331
Rental operations, exclusive of
depreciation 235,800 289,167 749,203 823,786
Property management fee,
related party 29,895 31,769 94,922 97,069
Interest 252,405 263,672 766,879 803,624
Depreciation 152,656 189,595 526,037 568,790
Amortization 27,024 29,030 82,770 87,088
------------- --------------- ------------- --------------
Total Expenses 946,770 968,934 2,904,972 3,088,771
------------- --------------- ------------- --------------
Loss before equity in losses of
Local Limited Partnerships, minority interest,
loss on liquidation of interests
in Local Limited Partnerships and
extraordinary item (447,708) (459,694) (1,362,961) (1,561,363)
Equity in losses of Local
Limited Partnerships (518,946) (505,019) (1,047,830) (1,606,673)
Minority interest in losses of
Local Limited Partnerships 26,531 23,824 65,109 67,792
Loss on liquidation of interests in
Local Limited Partnerships (Note 2) (1,384) - (3,922) -
------ ------ ------------ -------
Net Loss before extraordinary item (941,507) (940,889) (2,349,604) (3,100,244)
Extraordinary gain on cancellation
of indebtedness (Note 2) 600,104 - 1,053,981 -
------------- --------------- ------------- --------------
Net Loss $ (341,403) $ (940,889) $ (1,295,623) $ (3,100,244)
============= =============== ============= ==============
Net Loss allocated:
To General Partners $ (3,414) $ (9,408) $ (12,956) $ (31,002)
To Limited Partners (337,989) (931,481) (1,282,667) (3,069,242)
------------- --------------- ------------- --------------
$ (341,403) $ (940,889) $ (1,295,623) $ (3,100,244)
============= =============== ============= ==============
</TABLE>
The accompanying notes are an integral part of these combined
financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
<TABLE>
COMBINED STATEMENTS OF OPERATIONS (continued)
(Unaudited)
For the Three and Nine Months Ended December 31, 1997 and 1996
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31, December 31, December 31,
1997 1996 1997 1996
------------- ------------- ------------- ---------
Net Loss before extraordinary
item per Limited Partnership
<S> <C> <C> <C> <C>
Unit (68,043 Units) $ (13.71) $ (13.69) $ (34.19) $ (45.11)
============ =============== ============= =============
Extraordinary item
per Limited Partnership
Unit (68,043 Units) $ 8.74 $ - $ 15.34 $ -
=============== =========== ================ ======
Net Loss per Limited
Partnership Unit
(68,043 Units) $ (4.97) $ (13.69) $ (18.85) $ (45.11)
============ =============== ============= =============
</TABLE>
The accompanying notes are an integral part of these combined
financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
<TABLE>
COMBINED STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
(Unaudited)
For the Nine Months Ended December 31, 1997
<CAPTION>
Net
Initial Investor Unrealized
General Limited Limited Gains
Partners Partners Partners (Losses) Total
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1997 $ (378,408) $ 5,000 $ 21,641,168 $ (5,252) $ 21,262,508
Net change in net unrealized
losses on marketable securities
available for sale - - - 6,916 6,916
Net Loss (12,956) - (1,282,667) - (1,295,623)
---------- ------- ------------ --------- -------------
Balance at December 31, 1997 $ (391,364) $ 5,000 $ 20,358,501 $ 1,664 $ 19,973,801
========== ======= ============ ========= =============
</TABLE>
The accompanying notes are an integral part of these combined
financial statements.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
<TABLE>
COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended December 31, 1997 and 1996
<CAPTION>
1997 1996
------------ -------
<S> <C> <C>
Net cash used for operating activities $ (275,720) $ (59,962)
----------- -----------
Cash flows from investing activities:
Investments in Local Limited Partnerships - 3,331
Purchases of marketable securities (373,664) (487,098)
Proceeds from sales and maturities of
marketable securities 405,899 837,233
Cash distributions received from Local
Limited Partnerships 208,180 204,867
Advances to Local Limited Partnerships (33,974) (291,290)
Purchase of rental property and equipment (45,806) (141,708)
----------- -----------
Net cash provided by investing activities 160,635 125,335
----------- -----------
Cash flows from financing activities:
Payment of mortgage principal (91,652) (153,237)
Advances from affiliate 34,356 51,982
Capital contributions received 92,221 -
----------- -----------
Net cash provided by (used for) financing activities 34,925 (101,255)
----------- -----------
Net decrease in cash and cash equivalents (80,160) (35,882)
Cash and cash equivalents, beginning 288,153 414,451
----------- -----------
Cash and cash equivalents, ending $ 207,993 $ 378,569
=========== ===========
Supplemental disclosure:
Cash paid for interest $ 660,951 $ 401,250
=========== ===========
</TABLE>
The accompanying notes are an integral part of these 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, 1997. In the opinion of management, these financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the Partnership's financial position and results of
operations. The results of operations for the periods may not be indicative of
the results to be expected for the year. Certain amounts in prior year financial
statements have been restated herein to conform to current year presentation.
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 about the Local Limited Partnerships that is included in the
accompanying combined financial statements is as of September 30, 1997 and 1996.
1. Investments in Local Limited Partnerships
The Partnership uses the equity method to account for its limited partnership
interests in twenty-three 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 December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Capital contributions paid to Local Limited Partnerships and purchase price paid
to withdrawing partners of Local
Limited Partnerships $ 43,001,951
Cumulative equity in losses of Local Limited
Partnerships (includes cumulative unrecognized
losses of $1,855,403) (25,215,795)
Cash distributions received from Local
Limited Partnerships (1,698,459)
Investments in Local Limited Partnerships
before adjustment 16,087,697
Excess of investment cost over the underlying net assets acquired:
Acquisition fees and expenses 3,899,388
Accumulated amortization of acquisition
fees and expenses (813,254)
Investments in Local Limited Partnerships 19,173,831
Reserve for valuation of investments
in Local Limited Partnerships (844,000)
$ 18,329,831
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
Notes to Combined Financial Statements (continued)
(Unaudited)
1. Investments in Local Limited Partnerships (continued)
The Partnership's share of the net losses of the Local Limited Partnerships,
excluding the Combined Entities, for the nine months ended December 31, 1997 is
$1,943,324. For the nine months ended December 31, 1997, the Partnership has not
recognized $959,530 of equity in losses relating to nine Local Limited
Partnerships where cumulative equity in losses and cumulative distributions
exceeded its total investments in these Local Limited Partnerships.
2. Liquidation of Interests in Local Limited Partnerships
The Managing General Partner has transferred all of the assets of ten of the
Texas Partnerships, subject to their liabilities, to unaffiliated entities. The
transfers of Grandview Terrace Apartments, Pecan Hills Apartments, Seagraves
Garden Apartments, Hilltop Apartments and Bent Tree Housing were effective
February 21, 1996, February 29, 1996, March 8, 1996, June 6, 1996 and November
20, 1996, respectively. Justin Place Apartments and Valley View Apartments were
transferred July 9, 1997, Nacona Terrace Apartments and Royal Creste Apartments
were transferred August 6, 1997, and Pine Manor Apartments was transferred on
October 28, 1997. Transfer of one of the remaining two Texas Partnerships is
expected to take place in the first quarter of 1998. The Partnership will retain
its interest in Gateway Village.
For financial reporting purposes, loss on liquidation of interests in Local
Limited Partnerships of $3,922 and extraordinary gain on cancellation of
indebtedness of $1,053,981 were recognized in the period ended December 31, 1997
as a result of the transfer of Justin Place Apartments, Valley View Apartments
and Pine Manor Apartments. The loss on the transfers of Nacona Terrace
Apartments and Royal Creste Apartments had previously been reserved for in the
provision for valuation of investment in Local Limited Partnerships.
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.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
Notes to Combined Financial Statements (continued)
(Unaudited)
3. Supplemental Combining Schedules
<TABLE>
Balance Sheets
<CAPTION>
Boston Financial
Qualified Housing
Tax Credits Combined Combined
L.P. IV (A) Entities (B) Eliminations (A)
Assets
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 100,084 $ 107,909 $ - $ 207,993
Marketable securities, at fair value 1,030,270 - - 1,030,270
Accounts receivable, net 340,507 9,087 (340,507) 9,087
Tenant security deposits - 101,071 - 101,071
Investments in Local
Limited Partnerships, net 19,062,482 - (732,651) 18,329,831
Rental property at cost, net - 14,124,348 - 14,124,348
Mortgagee escrow deposits - 144,165 - 144,165
Deferred charges, net - 194,103 - 194,103
Other assets 15,095 20,372 - 35,467
--------------- --------------- ------------- ------------
Total Assets $ 20,548,438 $ 14,701,055 $ (1,073,158) $ 34,176,335
=============== =============== ============= ============
Liabilities and Partners' Equity
Mortgage notes payable $ - $ 9,743,875 $ - $ 9,743,875
Accounts payable to affiliates 498,092 381,235 (340,507) 538,820
Accounts payable and accrued expenses 76,545 274,257 - 350,802
Interest payable - 552,869 - 552,869
Tenant security deposits payable - 85,567 - 85,567
Payable to affiliated Developer - 2,482,000 - 2,482,000
--------------- --------------- ------------- ------------
Total Liabilities 574,637 13,519,803 (340,507) 13,753,933
--------------- --------------- ------------- ------------
Minority interest in Local Limited
Partnerships - - 448,601 448,601
--------------- --------------- ------------- ------------
General, Initial and Investor
Limited Partners' Equity 19,972,137 1,181,252 (1,181,252) 19,972,137
Net unrealized losses on
marketable securities 1,664 - - 1,664
--------------- --------------- ------------- ------------
Total Partners' Equity 19,973,801 1,181,252 (1,181,252) 19,973,801
--------------- --------------- ------------- ------------
Total Liabilities and Partners' Equity $ 20,548,438 $ 14,701,055 $ (1,073,158) $ 34,176,335
=============== =============== ============= ============
</TABLE>
(A) As of December 31, 1997. (B) As of September 30, 1997.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
Notes to Combined Financial Statements (continued)
(Unaudited)
3. Supplemental Combining Schedules (continued)
<TABLE>
Statements of Operations
For the Three Months Ended December 31, 1997
<CAPTION>
Boston Financial
Qualified Housing
Tax Credits Combined Combined
L.P. IV (A) Entities (B) Eliminations (A)
Revenue:
<S> <C> <C> <C> <C>
Rental $ - $ 443,542 $ - $ 443,542
Investment 17,104 20,791 - 37,895
Other 4,385 13,240 - 17,625
--------------- --------------- ------------- ------------
Total Revenue 21,489 477,573 - 499,062
--------------- --------------- ------------- ------------
Expenses:
Asset management fee, related party 57,480 - - 57,480
General and administrative 102,800 - - 102,800
Bad debt expense 88,710 - - 88,710
Rental operations, exclusive of depreciation - 235,800 - 235,800
Property management fee, related party - 29,895 - 29,895
Interest - 252,405 - 252,405
Depreciation - 152,656 - 152,656
Amortization 21,998 5,026 - 27,024
--------------- --------------- ------------- ------------
Total Expenses 270,988 675,782 - 946,770
--------------- --------------- ------------- ------------
Loss before equity in losses of
Local Limited Partnerships,
minority interest,
loss on liquidation of interests
in Local Limited Partnerships and
extraordinary item (249,499) (198,209) - (447,708)
Equity in losses of Local Limited
Partnerships (90,520) - (428,426) (518,946)
Minority interest in losses of
Local Limited Partnerships - - 26,531 26,531
Loss on liquidation of interests
in Local Limited Partnerships (1,384) - - (1,384)
--------------- --------------- ------------- ------------
Net Loss before extraordinary item (341,403) (198,209) (401,895) (941,507)
Extraordinary gain on cancellation
of indebtedness - 600,104 - 600,104
--------------- --------------- ------------- ------------
Net Income (Loss) $ (341,403) $ 401,895 $ (401,895) $ (341,403)
=============== =============== ============= ============
</TABLE>
(A) For the three months ended December 31, 1997. (B) For the three months ended
September 30, 1997.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
Notes to Combined Financial Statements (continued)
(Unaudited)
3. Supplemental Combining Schedules (continued)
<TABLE>
Statements of Operations
For the Nine Months Ended December 31, 1997
<CAPTION>
Boston Financial
Qualified Housing
Tax Credits Combined Combined
L.P. IV (A) Entities (B) Eliminations (A)
Revenue:
<S> <C> <C> <C> <C>
Rental $ - $ 1,351,191 $ - $ 1,351,191
Investment 56,662 27,242 - 83,904
Other 71,924 34,992 - 106,916
--------------- --------------- ------------- ------------
Total Revenue 128,586 1,413,425 - 1,542,011
--------------- --------------- ------------- ------------
Expenses:
Asset management fee, related party 172,440 - - 172,440
General and administrative 273,472 - - 273,472
Bad debt expense 239,249 - - 239,249
Rental operations, exclusive of depreciation - 749,203 - 749,203
Property management fee, related party - 94,922 - 94,922
Interest - 766,879 - 766,879
Depreciation - 526,037 - 526,037
Amortization 67,691 15,079 - 82,770
--------------- --------------- ------------- ------------
Total Expenses 752,852 2,152,120 - 2,904,972
--------------- --------------- ------------- ------------
Loss before equity in losses of Local
Limited Partnerships, minority interest,
loss on liquidation of interests
in Local Limited Partnerships and
extraordinary
item (624,266) (738,695) - (1,362,961)
Equity in losses of Local Limited
Partnerships (667,435) - (380,395) (1,047,830)
Minority interest in losses of
Local Limited Partnerships - - 65,109 65,109
Loss on liquidation of interests
in Local Limited Partnerships (3,922) - - (3,922)
--------------- --------------- ------------- ------------
Net Loss before extraordinary item (1,295,623) (738,695) (315,286) (2,349,604)
Extraordinary gain on cancellation
of indebtedness - 1,053,981 - 1,053,981
--------------- --------------- ------------- ------------
Net Income (Loss) $ (1,295,623) $ 315,286 $ (315,286) $ (1,295,623)
=============== =============== ============= ============
</TABLE>
(A) For the nine months ended December 31, 1997. (B) For the nine months ended
September 30, 1997.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
Notes to Combined Financial Statements (continued)
(Unaudited)
3. Supplemental Combining Schedules (continued)
<TABLE>
Statements of Cash Flows
For the Nine Months Ended December 31, 1997
<CAPTION>
Boston Financial
Qualified Housing
Tax Credits Combined Combined
L.P. IV (A) Entities (B) Eliminations (A)
<S> <C> <C> <C> <C>
Net cash used for operating activities $ (217,643) $ (58,077) $ - $ (275,720)
------------ ------------ ------------ ------------
Cash flows from investing activities:
Purchases of marketable securities (373,664) - - (373,664)
Proceeds from sales and maturities
of marketable securities 405,899 - - 405,899
Cash distributions received from
Local Limited Partnerships 208,180 - - 208,180
Advances to Local Limited Partnerships (139,415) - 105,441 (33,974)
Purchase of rental property and equipment - (45,806) - (45,806)
----------- ------------ ------------ ------------
Net cash provided by (used for)
investing activities 101,000 (45,806) 105,441 160,635
----------- ------------ ------------ ------------
Cash flows from financing activities:
Payment of mortgage principal - (91,652) - (91,652)
Advances from affiliate - 139,797 (105,441) 34,356
Capital contributions received - 92,221 - 92,221
----------- ------------ ------------ ------------
Net cash provided by financing activities - 140,366 (105,441) 34,925
----------- ------------ ------------ ------------
Net increase (decrease) in cash
and cash equivalents (116,643) 36,483 - (80,160)
Cash and cash equivalents, beginning 216,727 71,426 - 288,153
----------- ------------ ------------ ------------
Cash and cash equivalents, ending $ 100,084 $ 107,909 $ - $ 207,993
=========== ============ ============ ============
</TABLE>
(A) For the nine months ended December 31, 1997. (B) For the nine months ended
September 30, 1997.
<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 $80,160 from $288,153 at March 31, 1997 to $207,993 at
December 31, 1997. The decrease is mainly attributable to cash used for
operations, repayment of mortgage principal and purchase of rental property by
the Combined Entities. These decreases are 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.
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 $1,152,000 have been
withdrawn from the reserve account to pay legal fees relating to various
property issues. This amount includes approximately $1,087,000 for the Texas
Partnerships. To date, Reserve funds in the amount of $304,000 have been used to
make additional capital contributions to a Local Limited Partnership. To date,
the Partnership has used approximately $1,038,000 of operating funds to
replenish reserves. At December 31, 1997, approximately $1,149,000 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. 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 $1,152,000 noted above, the Partnership has also advanced approximately
$794,000 to the Texas Partnerships to fund operating deficits. Approximately
$360,000 has also been advanced to two other Local Limited Partnerships.
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 December 31, 1997, the Partnership had
no contractual or other obligation to any Local Limited Partnership which had
not been paid or provided for.
Cash Distributions
No cash distributions were made during the nine months ended December 31, 1997.
Results of Operations
The Partnership's results of operations for the three and nine months ended
December 31, 1997 resulted in net losses of $341,403 and $1,295,623 as compared
to net losses of $940,889 and $3,100,244 for the same periods in 1996. The
decrease in net loss is primarily attributable to the recognition of
extraordinary gain on cancellation of indebtedness for three of the Texas
Partnerships and a decrease in equity in losses of Local Limited Partnerships
for the nine month period. The decrease in equity in losses of Local Limited
Partnerships is due to an increase in losses not recognized by the Partnership
for Local Limited Partnerships whose cumulative equity in losses and cumulative
distributions exceeded its total investment in those partnerships. The decrease
in Equity in Losses of Local Limited Partnerships is expected to continue. The
expected transfer of Pinewood Terrace Apartments in the first quarter of 1998
will result in additional extraordinary gain on cancellation of indebtedness.
<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 ten 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, 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.
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 SHARP mortgage subsidy has been an
important part of the property's annual income. However, effective October 1,
1997, the Massachusetts Housing Finance Agency (MHFA) which provided the SHARP
subsidies, withdrew future SHARP mortgage subsidies from its portfolio of 77
SHARP subsidized properties. The Managing General Partner joined a group of
interested parties and is working with MHFA to find a solution to the problems
that will arise as a result of withdrawn subsidies. Given the dependence on the
mortgage subsidy, it is possible that the property will default on its mortgage
obligation during the first quarter of 1998. It is possible that Partnership
Reserves will be used to support the property until these issues can be
resolved. The Local General Partner has also obtained preliminary approval for
releases from lender escrows to fund certain cash deficits. In addition to the
SHARP issues, the Managing General Partner continues to work with the lender to
develop a satisfactory workout. It is likely that a workout would require an
advance from Partnership Reserves.
As previously reported, BK Apartments, located in Jamestown, North Dakota, has
been generating operating deficits despite improved occupancy. The lender issued
a default notice and threatened to foreclose. A workout agreement was negotiated
and completed on November 10, 1997. The Managing General Partner will closely
monitor the workout plan with the Local General Partner. Furthermore, the
Managing General Partner consummated a transfer of 50% of its interest in
capital and profits of BK Apartments Limited Partnership to an affiliate of the
Local General Partner. Included in this transfer is a Put Agreement option. The
Put Agreement option grants the Managing General Partner the right to Put their
remaining interest to the Local General Partner any time after one year has
elapsed.
Bentley Court, located in Columbia, South Carolina, continues to generate
significant deficits despite the July 1996 debt refinancing. As previously
reported, an agreement was set up with the lender which enabled an affiliate of
the Managing General Partner to become an additional General Partner and
substitute management agent, subject to lender approval, with the right to take
control of the property if it becomes necessary. In addition, the agreement
stipulates that if the Local Limited Partnership defaults on the agreement, the
lender has the right to remove the management company. The Managing General
Partner will continue to monitor property operations closely. Operating deficits
are currently being funded by the Local General Partner.
<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)
At Findlay Market (Cincinnati, Ohio), reconstruction of the property units
damaged by fire was completed in December 1996, and lease-up continues. As
previously reported, in order to reconstruct the units, the Partnership agreed
to advance up to $345,000 to help cover the funding shortfall between the
insurance proceeds, lender funding and a City grant. To date, the Partnership
has advanced approximately $297,000 of this amount. However, the property
continues to generate operating deficits which caused the default of the first
mortgage. At this juncture, the lender is not amenable to a cure of the mortgage
and is expected to exercise its right to foreclose on the mortgage. Despite
these indications, the Managing and Local General Partners continue to negotiate
with the lender in hopes of averting a foreclosure. A foreclosure of this
property will result in recapture of tax credits and the allocation of taxable
income to the Partnership.
As previously reported, the Managing General Partner transferred all of the
assets of five of the Texas Partnerships, subject to their liabilities, to
unaffiliated entities in 1996. In 1997, the Managing General Partner transferred
all of the assets on five of the remaining seven Texas Partnerships, subject to
their liabilities, to unaffiliated entities. An additional transfer of one of
the remaining two Texas Partnerships is expected to take place in the first
quarter of 1998. The Partnership will retain its interest in Gateway Village.
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.
<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 December 31, 1997.
<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: February 13, 1998 BOSTON FINANCIAL QUALIFIED HOUSING
TAX CREDITS L.P. IV
By: Arch Street IV, Inc.,
its Managing General Partner
/s/William E. Haynsworth
William E. Haynsworth
Managing Director, Vice President and
Chief Operating Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> DEC-31-1997
<CASH> 207,993
<SECURITIES> 1,030,270
<RECEIVABLES> 9,087
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 14,124,348
<DEPRECIATION> 000
<TOTAL-ASSETS> 34,176,335<F1>
<CURRENT-LIABILITIES> 000
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 19,973,801
<TOTAL-LIABILITY-AND-EQUITY> 34,176,335<F2>
<SALES> 000
<TOTAL-REVENUES> 1,542,011<F3>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 2,138,093<F4>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 766,879
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (1,295,623)<F5>
<EPS-PRIMARY> (18.85)
<EPS-DILUTED> 000
<FN>
<F1>Included in total assets: Investments in Local Limited Partnerships of
$18,329,831, Deferred charges, net $194,103, Tenant security deposits $101,071,
Mortgagee escrow deposits $144,165 and other assets $35,467. <F2>Included in
Total Liabilities and Equity: Mortgage notes payable of $9,743,875, Accounts
payable to affiliates of $538,820, Accounts payable and accrued expenses of
$350,802, Interest payable of $552,869, Tenant security deposits payable of
$85,567, Payable to affiliated developer of $2,482,000 and Minority interest in
Local Limited Partnerships of $448,601. <F3>Total revenue includes: Rental of
$1,351,191, Investment of $83,904 and Other of $106,916. <F4>Included in Other
Expenses: Asset management fees of $172,440, General and administrative of
$273,472, Rental operations, exclusive of depreciation of $749,203, Bad debt of
$239,249, Property management fees of $94,922, Depreciation of $526,037 and
Amortization of $82,770. <F5>Net loss reflects: Equity in losses of Local
Limited Partnerships of $1,047,830, Minority interest in losses of Local Limited
Partnerships of $65,109, loss on liquidation of interests in Local Limited
Partnerships of $3,922 and gain on transfer and liquidation of real estate of
$1,053,981.
</FN>
</TABLE>
