August 13, 1998
Securities and Exchange Commission
Filer Support, Edgar
Operation Center, Stop 0-7
6432 General Green Way
Alexandria, VA 22312
Re: Boston Financial Tax Credit Fund VII, A Limited Partnership
Report on Form 10-Q for Quarter Ended June 30, 1998
File No. 0-24584
Gentlemen:
Pursuant to the requirements of Section 15(d) of the Securities Exchange Act of
1934, there is filed herewith one copy of subject report.
Very truly yours,
/s/Dianne Groark
Dianne Groark
Assistant Controller
TC7-Q1.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, 1998
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, 1998 Commission file number 0-24584
---------------------- -----------
Boston Financial Tax Credit Fund VII, A Limited Partnership
-------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-3166203
------------------------------ -----------------------------------
(State or other jurisdiction of (I.R.S. EmployerIdentification No.)
incorporation or organization)
101 Arch Street, Boston, Massachusetts 02110-1106
--------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-3911
---------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No .
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page No.
- ------------------------------ --------
Item 1. Financial Statements
Balance Sheets - June 30, 1998 (Unaudited)
and March 31, 1998 1
Statements of Operations (Unaudited) -
For the Three Months Ended June 30, 1998 and 1997 2
Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Three Months Ended June 30, 1998 3
Statements of Cash Flows (Unaudited) -
For the Three Months Ended June 30, 1998 and 1997 4
Notes to Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION
Items 1-6 9
SIGNATURE 10
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, March 31,
1998 1998
(Unaudited)
Assets
<S> <C> <C>
Cash and cash equivalents $ 382,532 $ 375,168
Marketable securities, at fair value 3,191,592 3,106,645
Restricted cash 256,003 252,555
Investments in Local Limited Partnerships (Note 1) 27,370,520 28,387,876
Other assets 43,323 36,064
------------- -------------
Total Assets $ 31,243,970 $ 32,158,308
============= =============
Liabilities and Partners' Equity
Accounts payable to affiliates $ 376,760 $ 309,172
Accounts payable and accrued expenses 37,191 63,932
------------- -------------
Total Liabilities 413,951 373,104
------------- -------------
Commitments (Note 3)
General, Initial and Investor Limited Partners' Equity 30,818,686 31,779,079
Net unrealized gains on marketable securities 11,333 6,125
------------- -------------
Total Partners' Equity 30,830,019 31,785,204
------------- -------------
Total Liabilities and Partners' Equity $ 31,243,970 $ 32,158,308
============= =============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------- -------------
Revenue:
<S> <C> <C>
Investment $ 49,353 $ 48,581
Other 7,883 17,342
------------- -------------
Total Revenue 57,236 65,923
------------- -------------
Expenses:
General and administrative (includes reimbursements
to an affiliate in the amounts of $21,383 and $34,147, respectively) 59,903 65,117
Asset management fee, related party 72,753 71,097
Amortization 8,046 11,432
------------- -------------
Total Expenses 140,702 147,646
------------- -------------
Loss before equity in losses of
Local Limited Partnerships (83,466) (81,723)
Equity in losses of Local Limited Partnerships (Note 1) (876,927) (784,603)
------------- -------------
Net Loss $ (960,393) $ (866,326)
============= =============
Net Loss allocated:
To General Partners $ (9,604) $ (8,663)
To Limited Partners (950,789) (857,663)
------------- -------------
$ (960,393) $ (866,326)
============= =============
Net Loss per Limited Partnership Unit
(50,930 Units) $ (18.67) $ (16.84)
============= =============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
(Unaudited)
For the Three Months Ended June 30, 1998
<TABLE>
<CAPTION>
Initial Investor Net
General Limited Limited Unrealized
Partners Partner Partners Gains Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1998 $ (126,530) $ 5,000 $ 31,900,609 $ 6,125 $ 31,785,204
Net change in net unrealized
gains on marketable securities
available for sale - - - 5,208 5,208
Net Loss (9,604) - (950,789) - (960,393)
------------ ------- ------------- --------- --------------
Balance at June 30, 1998 $ (136,134) $ 5,000 $ 30,949,820 $ 11,333 $ 30,830,019
============ ======= ============= ========= ==============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Net cash used for operating activities $ (41,452) $ (17,214)
------------- -------------
Cash flows from investing activities:
Purchases of marketable securities (599,248) (397,672)
Proceeds from sales and maturities of
marketable securities 519,129 530,507
Restricted cash (3,448) (2,866)
Investments in Local Limited Partnerships - (94,000)
Cash distributions received from Local
Limited Partnerships 132,383 3,758
------------- -------------
Net cash provided by investing activities 48,816 39,727
------------- -------------
Net increase in cash and cash equivalents 7,364 22,513
Cash and cash equivalents, beginning of period 375,168 373,729
------------- -------------
Cash and cash equivalents, end of period $ 382,532 $ 396,242
============= =============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
NOTES TO 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 Fund's 10-K for the year ended
March 31, 1998. In the opinion of management, these financial statements include
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the Fund'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.
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 financial statements is as of March 31, 1998 and 1997.
1. Investments in Local Limited Partnerships
The Fund has acquired interests in nineteen Local Limited Partnerships which own
and operate multi-family housing complexes. The Fund, as Investor Limited
Partner, pursuant to the various Local Limited Partnership Agreements, has
generally acquired a 99% interest, with the exception of Springwood which is a
19.80% interest, in the profits, losses, tax credits and cash flows from
operations of each of the Local Limited Partnerships. Upon dissolution, proceeds
will be distributed according to each respective partnership agreement.
The following is a summary of Investments in Local Limited Partnerships at June
30, 1998:
<TABLE>
<CAPTION>
<S> <C>
Capital Contributions paid to Local Limited Partnerships
and purchase price paid to withdrawing partners of
Local Limited Partnerships $ 39,289,152
Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
unrecognized losses of $209,547) (12,468,475)
Cash distributions received from Local Limited Partnerships (571,170)
-------------
Investments in Local Limited Partnerships before adjustments 26,249,507
Excess of investment cost over the underlying net assets acquired:
Acquisition fees and expenses 1,252,338
Accumulated amortization of acquisition fees and expenses (131,325)
-------------
Investments in Local Limited Partnerships $ 27,370,520
=============
</TABLE>
The Fund's share of the net losses of the Local Limited Partnerships for the
three months ended June 30, 1998 is $948,174. For the three months ended June
30, 1998, the Fund has not recognized $71,247 of equity in losses relating to
one Local Limited Partnership where cumulative equity in losses exceeded its
total investment in the Local Limited Partnership.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS(Continued)
(Unaudited)
2. Effect of Recently Issued Accounting Standard
The Financial Accounting Standards Board recently issued Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income. The Fund has
adopted the new standard effective April 1, 1998. The adoption of this standard
had no effect on the Fund's net income or partner's equity. Comprehensive loss
was $955,185 and $836,847 for the quarters ended June 30, 1998 and 1997,
respectively. Comprehensive loss includes the change in net unrealized gains and
losses on marketable securities available for sale of $5,208 and $29,479 for the
quarters ended June 30, 1998 and 1997, respectively.
3. Commitments
At June 30, 1998, the Fund has committed to make future capital contributions
and pay future purchase price installments on its investments in Local Limited
Partnerships. These future payments are contingent upon the achievement of
certain criteria as set forth in the Local Limited Partnership Agreements and
total approximately $658,000. In addition, the Fund has set aside $217,000 for
future capital contributions to one Local Limited Partnership.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At June 30, 1998, the Fund had cash and cash equivalents of $382,532, compared
with $375,168 at March 31, 1998. The increase is primarily attributable to cash
distributions received from Local Limited Partnerships. This increase is
partially offset by purchases of marketable securities in excess of proceeds
from sales and maturities of marketable securities and cash used for operating
activities.
As of June 30, 1998, approximately $2,533,000 of marketable securities has been
designated as Reserves by the Managing General Partner. The Reserves were
established to be used for working capital of the Fund and contingencies related
to the ownership of Local Limited Partnership interests. Management believes
that the interest income earned on Reserves, along with cash distributions
received from Local Limited Partnerships, to the extent available, will be
sufficient to fund the Fund's ongoing operations. Reserves may be used to fund
operating deficits if the Managing General Partner deems such funding
appropriate.
At June 30, 1998, the Fund has committed to make future capital contributions
and pay future purchase price installments on its investments in Local Limited
Partnerships. These future payments are contingent upon the achievement of
certain criteria as set forth in the Local Limited Partnership Agreements and
total approximately $658,000. In addition, the Fund has set aside $217,000 for
future capital contributions to one Local Limited Partnership.
Since the Fund invests as a limited partner, the Fund has no contractual duty to
provide additional funds to Local Limited Partnerships beyond its specified
investment. Thus, as of June 30, 1998, the Fund had no contractual or other
obligation to any Local Limited Partnership which had not been paid or provided
for, except as described above.
In the event a Local Limited Partnership encounters operating difficulties
requiring additional funds, the Fund might deem it in its best interest to
voluntarily provide such funds in order to protect its investment. No such event
has occurred to date.
Cash Distributions
No cash distributions were made in the three months ended June 30, 1998.
Results of Operations
The Fund's results of operations for the three months ended June 30, 1998
resulted in a net loss of $960,393, as compared to a net loss of $866,326 for
the same period in 1997. The increase in net loss is primary attributable to an
increase in equity in losses of Local Limited Partnerships and a decrease in
other revenue. Equity in losses of Local Limited Partnerships increased due to
an increase in general operating expenses of the Local Limited Partnerships,
partially offset by an increase in rental revenues due to an improvement in
local rental markets. Other revenue decreased as a result of a decrease in
escrow interest paid to the Fund from Local Limited Partnerships.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Property Discussions
The Fund is invested in nineteen Local Limited Partnerships which own nineteen
properties located in twelve states and Puerto Rico. Fifteen of the properties,
consisting of 1574 units, were new construction, and four of the properties,
consisting of 564 units, were rehabilitated. All properties have completed
construction or rehabilitation and initial lease-up.
As previously reported, Grand Boulevard Renaissance, located in Chicago,
Illinois, has been experiencing operating difficulties and is unable to achieve
debt service coverage. These difficulties are mainly due to poor collections
from tenants. On April 1, 1998, a new management agent was brought in to monitor
property operations and increase tenant collections. Occupancy as of June 30,
1998 was 93%. The Managing General Partner will be working closely with the
Local General Partner and new management agent to monitor operations.
As previously reported, Los Claveles II, located in Trujillio Alto, Puerto Rico,
continues to experience operating difficulties due to ongoing capital repair
needs and management issues. In 1996, an affiliate of the Managing General
Partner of the Fund successfully negotiated with the Local General Partners,
lender and local housing authority to replace the management agent for Los
Claveles II as well as its neighboring property, Los Claveles I. By
consolidating management, the Managing General Partner feels that it can achieve
greater control over both sites and attain certain operating efficiencies that
will benefit both properties. The new management agent assumed responsibility
for the property in December 1996 and has successfully obtained Section 8
subsidy increases. The Local General Partners agreed to step down voluntarily
and will be replaced by an unaffiliated general partner, once the workout plan
is approved by the lender. In addition, the Local General Partners executed a
delegation agreement which grants authority to an affiliate of the Managing
General Partner to implement the capital improvement plan and complete
negotiations with the lender. Negotiations with the lender are ongoing, however,
no agreement has been reached to date. The lender continues to indicate its
willingness to work with the Managing General Partner and management agent to
improve operations and cure defaults.
Oak Ridge, located in Macon, Georgia, has been experiencing operating
difficulties due to low occupancy. Occupancy as of June 30, 1998 was 64%. A new
on-site manager was recently hired to enhance tenant screening and marketing
efforts. The Managing General Partner will be working closely with the
management agent and Local General Partner to discuss property operations and
marketing efforts.
Woods Lane, located in Rogers, Arkansas, has been suffering from poor occupancy
due to local competition. Occupancy as of June 30, 1998 was 55%. A new
management team was recently hired to step-up the marketing efforts, review rent
concessions, install a resident referral plan and monitor competing rent levels.
In addition, capital improvements have recently been completed which include
exterior painting, carpet replacement and landscaping and grounds improvement.
The Managing General Partner will closely monitor the new management agent and
also review possible debt restructuring. The Managing General Partner is
currently funding operating deficits.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII
(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, 1998.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII
(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, 1998 BOSTON FINANCIAL TAX CREDIT FUND VII,
A LIMITED PARTNERSHIP
By: Arch Street VII, Inc.,
its Managing General Partner
/s/Randolph G. Hawthorne
Randolph G. Hawthorne
Managing Director, Vice President and
Chief Operating Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<CASH> 382,532
<SECURITIES> 3,191,592
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 000
<DEPRECIATION> 000
<TOTAL-ASSETS> 31,243,970<F1>
<CURRENT-LIABILITIES> 000
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 30,830,019
<TOTAL-LIABILITY-AND-EQUITY> 31,243,970<F2>
<SALES> 000
<TOTAL-REVENUES> 57,236<F3>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 140,702<F4>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (960,393)<F5>
<EPS-PRIMARY> (18.67)
<EPS-DILUTED> 000
<FN>
<F1>Included in Total Assets is Investments in Local Limited Partnerships of $27,370,520, Restricted cash of $256,003
and Other assets of $43,323.
<F2>Included in Total Liabilities and Equity is Accounts payable to affiliates of $376,760 and Accounts payable and
accrued expenses of $37,191.
<F3>Total revenue includes Investment of $49,353 and Other of $7,883.
<F4>Included in Other Expenses is Asset management fees of $72,753, General and administrative of $59,903 and
Amortization of $8,046.
<F5>Net loss reflects Equity in losses of Local Limited Partnerships of $876,927.
</FN>
</TABLE>
