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 Tax Credit Fund VII, A Limited Partnership
Report on Form 10-Q for Quarter Ended December 31, 1997
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/George Fondulis
George Fondulis
Assistant Controller
TC7-Q3.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 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 0-24584
-------------------- --------------
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. Employer Identification No.)
incorporation or organization)
101 Arch Street, Boston, Massachusetts 02110-1106
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-3911
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page No.
- ------------------------------ --------
Item 1. Financial Statements
Balance Sheets - December 31, 1997 (Unaudited)
and March 31, 1997 1
Statements of Operations (Unaudited) - For the Three
and Nine Months Ended December 31, 1997 and 1996 2
Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Nine Months Ended December 31, 1997 3
Statements of Cash Flows (Unaudited) -
For the Nine Months Ended December 31, 1997 and 1996 4
Notes to Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
PART II - OTHER INFORMATION
Items 1-6 8
SIGNATURE 9
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
1997 1997
(Unaudited)
<S> <C> <C>
Assets
Cash and cash equivalents $ 368,392 $ 373,729
Marketable securities, at fair value 3,076,192 3,240,944
Restricted cash 249,162 239,155
Investments in Local Limited Partnerships (Note 1) 29,379,569 31,792,098
Organization costs, net of accumulated
amortization of $48,333 and $40,833,
respectively 1,667 9,167
Other assets 42,115 39,556
------------ ------------
Total Assets $ 33,117,097 $ 35,694,649
============ ============
Liabilities and Partners' Equity
Accounts payable to affiliates $ 225,031 $ 304,382
Accounts payable and accrued expenses 45,974 34,940
------------ ------------
Total Liabilities 271,005 339,322
------------ ------------
Commitments (Note 2)
General, Initial and Investor Limited Partners' Equity 32,843,247 35,405,419
Net unrealized gains (losses) on marketable securities 2,845 (50,092)
------------ ------------
Total Partners' Equity 32,846,092 35,355,327
------------ ------------
Total Liabilities and Partners' Equity $ 33,117,097 $ 35,694,649
============ ============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended December 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31, December 31, December 31,
1997 1996 1997 1996
------------- ------------- ------------- ----------
<S> <C> <C> <C> <C>
Revenue:
Investment $ 52,132 $ 43,057 $ 152,227 $ 146,175
Other 28,065 4,856 52,555 71,689
----------- ----------- ------------ ------------
Total Revenue 80,197 47,913 204,782 217,864
----------- ----------- ------------ ------------
Expenses:
Asset management fee,
related party 71,097 68,826 213,291 206,478
General and administrative
(includes reimbursements
to an affiliate in the amounts
of $79,105 and $80,646 in
1997 and 1996, respectively) 58,386 41,132 169,857 160,991
Amortization 11,433 11,457 34,300 34,372
----------- ----------- ------------ ------------
Total Expenses 140,916 121,415 417,448 401,841
----------- ----------- ------------ ------------
Loss before equity in losses
of Local Limited Partnerships (60,719) (73,502) (212,666) (183,977)
Equity in losses of
Local Limited Partnerships (913,317) (775,322) (2,349,506) (2,014,905)
----------- ----------- ------------ ------------
Net Loss $ (974,036) $ (848,824) $ (2,562,172) $ (2,198,882)
=========== =========== ============ ============
Net Loss allocated:
To General Partners $ (9,741) $ (8,488) $ (25,622) $ (21,989)
To Limited Partners (964,295) (840,336) (2,536,550) (2,176,893)
----------- ----------- ------------ ------------
$ (974,036) $ (848,824) $ (2,562,172) $ (2,198,882)
=========== =========== ============ ============
Net Loss per Limited
Partnership Unit
(50,930 Units) $ (18.93) $ (16.50) $ (49.80) $ (42.74)
========== ========== =========== ============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
(Unaudited)
For the Nine Months Ended December 31, 1997
<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, 1997 $ (90,267) $ 5,000 $ 35,490,686 $ (50,092) $ 35,355,327
Net change in net unrealized
losses on marketable securities
available for sale - - - 52,937 52,937
Net Loss (25,622) - (2,536,550) - (2,562,172)
--------- ------- ------------ --------- --------------
Balance at December 31, 1997 $(115,889) $ 5,000 $ 32,954,136 $ 2,845 $ 32,846,092
========= ======= ============ ========= ==============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
------------- ---------
<S> <C> <C>
Net cash used for operating activities $ (246,390) $ (90,525)
------------ -----------
Cash flows from investing activities:
Purchase of marketable securities (1,446,141) (1,095,655)
Proceeds from sales and maturities of
marketable securities 1,660,978 1,755,624
Cash distributions received from Local
Limited Partnerships 135,414 127,057
Investments in Local Limited Partnerships (99,191) (663,227)
Restricted cash (10,007) (8,171)
------------ -----------
Net cash provided by investing activities 241,053 115,628
------------ -----------
Net increase (decrease) in cash and cash equivalents (5,337) 25,103
Cash and cash equivalents, beginning of period 373,729 334,845
------------ -----------
Cash and cash equivalents, end of period $ 368,392 $ 359,948
============ ===========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<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 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 reclassifications have been
made to prior year financial statements to conform to the current year
classifications.
The General Partners have 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 September 30, 1997 and 1996.
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
19.80%, in the profits, losses, tax credits and cash flows from operations of
each of the Local Limited Partnerships. Upon dissolution, proceeds will be
distributed according to each respective partnership agreement.
The following is a summary of Investments in Local Limited Partnerships at
December 31, 1997:
<TABLE>
<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 (10,615,560)
Cash distributions received from Local Limited Partnerships (428,417)
-------------
Investments in Local Limited Partnerships before adjustments 28,245,175
Excess of investment cost over the underlying net assets acquired:
Acquisition fees and expenses 1,252,338
Accumulated amortization of acquisition fees and expenses (117,944)
-------------
Investments in Local Limited Partnerships $ 29,379,569
=============
</TABLE>
The Partnership's share of the net losses of the Local Limited Partnerships for
the nine months ended December 31, 1997 is $2,349,506.
2. Commitments
At December 31, 1997, 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 in 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 December 31, 1997, the Fund had cash and cash equivalents of $368,392,
compared with $373,729 at March 31, 1997. The decrease is primarily attributable
to investments in Local Limited Partnerships and cash used for operating
activities. These decreases to cash and cash equivalents 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.
As of December 31, 1997, approximately $2,540,000 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 funding appropriate.
At December 31, 1997, 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 in 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 December 31, 1997, 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 interests to
provide such funds, voluntarily, in order to protect its investment. No such
event has occurred to date.
Cash Distributions
No cash distributions were made during the nine months ended December 31, 1997.
Results of Operations
The Fund's results of operations for the three and nine months ended December
31, 1997 resulted in a net loss of $974,036 and $2,562,172, as compared to a net
loss of $848,824 and $2,198,882 for the same period in 1996. The increase in net
loss is primarily attributable to an increase in equity in losses of Local
Limited Partnerships and a decrease in other revenue for the nine months ended
December 31, 1997. Equity in losses of Local Limited Partnerships increased due
to an increase in general operating and depreciation expenses of the Local
Limited Partnerships, offset by an increase in rental revenues, due to an
improvement in local rental markets. Other revenue decreased during the nine
months ended December 31, 1997 as the result of a decrease in escrow interest
earned by the Partnership. There is an increase in other revenue for the three
months ended December 31, 1997 due to guaranteed distributions paid during the
third quarter, which offsets the increase in equity in losses of Local Limited
Partnerships for those three months.
<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 19 Local Limited Partnerships which own 19 properties
located in 12 states and Puerto Rico. Fifteen of the properties, consisting of
1574 units, are 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, Los Claveles II, located in Trujillio Alto, Puerto
Rico, continues to experience operating difficulties due to ongoing capital
repair needs and management issues. Recently, an affiliate of the Managing
General Partner of the Partnership 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. The lender continues to indicate its willingness
to work with the Managing General Partner and management agent to improve
operations and cure defaults. Although there appears to be sufficient resources
to turn the project around, no agreement has been reached with the lender to
date.
<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 December 31, 1997.
<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: February 13, 1998 BOSTON FINANCIAL TAX CREDIT FUND VII,
A LIMITED PARTNERSHIP
By: Arch Street VII, 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> 368,392
<SECURITIES> 3,076,192
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 000
<DEPRECIATION> 000
<TOTAL-ASSETS> 33,117,097<F1>
<CURRENT-LIABILITIES> 000
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 32,846,092
<TOTAL-LIABILITY-AND-EQUITY> 33,117,097<F2>
<SALES> 000
<TOTAL-REVENUES> 204,782<F3>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 417,448<F4>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (2,562,172)<F5>
<EPS-PRIMARY> (49.80)
<EPS-DILUTED> 000
<FN>
<F1>Included in total assets is Investments in Local Limited Partnerships of
$29,379,569, Restricted cash $249,162, Organizational costs, net, of $1,667 and
Other assets of $42,115. <F2>Included in Total liability and Equity is Accounts
payable to affiliates of $225,031 and accounts payable and accrued expenses
$45,974. <F3>Total revenue includes Investment of $152,227 and Other $52,555.
<F4>Included in Other Expenses is Asset Management fees of $213,291, General and
Administrative of $169,857, and Amortization of $34,300. <F5>Net loss reflects
Equity in losses of Local Limited Partnerships of $2,349,506.
</FN>
</TABLE>
