February 11, 1999
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, 1998
File No. 0-24584
Gentlemen:
Pursuant to the requirements of Section 15(d) of the Securities Exchange Act
of 1934, filed herewith is a copy of subject report.
Very truly yours,
/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller
TC7-Q3.DOC
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 1998
--------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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, 1998 (Unaudited)
and March 31, 1998 1
Statements of Operations (Unaudited) -
For the Three and Nine Months Ended December 31, 1998
and 1997 2
Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Nine Months Ended December 31, 1998 3
Statements of Cash Flows (Unaudited) -
For the Nine Months Ended December 31, 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>
December 31, March 31,
1998 1998
(Unaudited)
Assets ------------- -------------
<S> <C> <C>
Cash and cash equivalents $ 549,521 $ 375,168
Marketable securities, at fair value 2,877,748 3,106,645
Restricted cash 262,858 252,555
Investments in Local Limited Partnerships (Note 1) 25,769,839 28,387,876
Other assets 32,398 36,064
------------- -------------
Total Assets $ 29,492,364 $ 32,158,308
============= =============
Liabilities and Partners' Equity
Accounts payable to affiliates $ 304,464 $ 309,172
Accounts payable and accrued expenses 62,871 63,932
------------- -------------
Total Liabilities 367,335 373,104
------------- -------------
Commitments (Note 3)
General, Initial and Investor Limited Partners' Equity 29,101,539 31,779,079
Net unrealized gains on marketable securities 23,490 6,125
------------- -------------
Total Partners' Equity 29,125,029 31,785,204
------------- -------------
Total Liabilities and Partners' Equity $ 29,492,364 $ 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 and Nine Months Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31, December 31, December 31,
1998 1997 1998 1997
------------- ------------- ------------- -------------
Revenue:
<S> <C> <C> <C> <C>
Investment $ 48,427 $ 52,132 $ 149,594 $ 152,227
Other 30,149 28,065 51,142 52,555
----------- ----------- ------------ ------------
Total Revenue 78,576 80,197 200,736 204,782
----------- ----------- ------------ ------------
Expenses:
Asset management fee,
related party 72,753 71,097 218,259 213,291
General and administrative
(includes reimbursements
to an affiliate in the amounts
of $65,970 and $79,105 in
1998 and 1997, respectively) 86,231 58,386 193,476 169,857
Amortization 8,045 11,433 24,136 34,300
----------- ----------- ------------ ------------
Total Expenses 167,029 140,916 435,871 417,448
----------- ----------- ------------ ------------
Loss before equity in losses
of Local Limited Partnerships (88,453) (60,719) (235,135) (212,666)
Equity in losses of
Local Limited Partnerships (774,103) (913,317) (2,442,405) (2,349,506)
----------- ----------- ------------ ------------
Net Loss $ (862,556) $ (974,036) $ (2,677,540) $ (2,562,172)
=========== =========== ============ ============
Net Loss allocated:
To General Partners $ (8,625) $ (9,741) $ (26,775) $ (25,622)
To Limited Partners (853,931) (964,295) (2,650,765) (2,536,550)
----------- ----------- ------------ ------------
$ (862,556) $ (974,036) $ (2,677,540) $ (2,562,172)
=========== =========== ============ ============
Net Loss per Limited
Partnership Unit
(50,930 Units) $ (16.77) $ (18.93) $ (52.05) $ (49.80)
=========== =========== ============ ============
</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, 1998
<TABLE>
<CAPTION>
Initial Investor Net
General Limited Limited Unrealized
Partners Partner Partners Gains Total
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1998 $ (126,530) $ 5,000 $ 31,900,609 $ 6,125 $ 31,785,204
------------ ------- ------------- ----------- --------------
Comprehensive Loss:
Net Loss (26,775) - (2,650,765) - (2,677,540)
Change in net unrealized
gains on marketable securities
available for sale - - - 17,365 17,365
------------ ------- ------------- ----------- --------------
Comprehensive Loss (26,775) - (2,650,765) 17,365 (2,660,175)
------------ ------- ------------- ----------- --------------
Balance at December 31, 1998 $ (153,305) $ 5,000 $ 29,249,844 $ 23,490 $ 29,125,029
============ ======= ============= =========== ==============
</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, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Net cash used for operating activities $ (225,894) $ (246,390)
------------- -------------
Cash flows from investing activities:
Purchases of marketable securities (1,547,876) (1,446,141)
Proceeds from sales and maturities of
marketable securities 1,796,627 1,660,978
Restricted cash - (10,007)
Investments in Local Limited Partnerships - (99,191)
Cash distributions received from Local
Limited Partnerships 151,496 135,414
------------- -------------
Net cash provided by investing activities 400,247 241,053
------------- -------------
Net increase (decrease) in cash and cash equivalents 174,353 (5,337)
Cash and cash equivalents, beginning of period 375,168 373,729
------------- -------------
Cash and cash equivalents, end of period $ 549,521 $ 368,392
============= =============
</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 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
of the Local Limited Partnerships that is included in the accompanying financial
statements is as of September 30, 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
acquired a 99% interest, with the exception of Springwood, in which it has 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
December 31, 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 $408,929) (14,033,953)
Cash distributions received from Local Limited Partnerships (590,283)
-------------
Investments in Local Limited Partnerships before adjustments 24,664,916
Excess of investment costs over the underlying net assets acquired:
Acquisition fees and expenses 1,252,338
Accumulated amortization of acquisition fees and expenses (147,415)
-------------
Investments in Local Limited Partnerships $ 25,769,839
=============
</TABLE>
The Fund's share of the net losses of the Local Limited Partnerships for the
nine months ended December 31, 1998 is $2,713,034. For the nine months ended
December 31, 1998, the Fund has not recognized $270,629 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
In June, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income". The
Statement, which is effective for fiscal years beginning after December 15,
1997, requires that the Fund display an amount representing total comprehensive
income for the period in its financial statements. The Fund adopted the new
standard effective April 1, 1998.
3. Commitments
At December 31, 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 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 December 31, 1998, the Fund had cash and cash equivalents of $549,521,
compared with $375,168 at March 31, 1998. The increase is primarily attributable
to proceeds from sales and maturities of marketable securities in excess of
purchases of marketable securities and cash distributions received from Local
Limited Partnerships. This increase is partially offset by cash used for
operating activities.
As of December 31, 1998, approximately $2,440,000 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 December 31, 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 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 December 31, 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 during the nine months ended December 31, 1998.
Results of Operations
The Fund's results of operations for the three and nine months ended December
31, 1998 resulted in a net loss of $862,556 and $2,677,540, respectively, as
compared to a net loss of $974,036 and $2,562,172 for the same periods in 1997.
The increase in net loss is primary attributable to an increase in equity in
losses of Local Limited Partnerships and an increase in general administrative
expenses. The increase in general and administrative expenses is due to an
increase in professional fees in connection with the operation of the fund.
Equity in losses of Local Limited Partnerships increased due to an increase in
general operating expenses of the Local Limited Partnerships, partially offset
by unrecognized losses by the Partnership of Local Limited Partnerships whose
cumulative equity in losses exceed its total investment in those 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 1,574 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.
Most of the nineteen Local Limited Partnerships have stabilized operations. The
majority of these stabilized properties are operating at break-even or
generating positive operating cash flow.
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 September
30, 1998 is 87%. 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, the lender and the local housing authority to replace the management
agent for Los Claveles II as well as its neighboring property, Los Claveles I.
The new management agent assumed responsibility for the property in December
1996. In addition, the Managing General Partner was successful in completing the
negotiations with the lender, resulting in a loan modification for Los Claveles
II. As part of the workout plan, the Local General Partners agreed to step down
voluntarily and be replaced by an unaffiliated general partner. It is expected
that the new General Partner will be admitted to Los Claveles II in the first
quarter of 1999.
Oak Ridge, located in Macon, Georgia, has been experiencing operating
difficulties due to low occupancy. Occupancy as of December 31, 1998 is 78%. 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 monitor property operations and
marketing efforts.
Woods Lane, located in Rogers, Arkansas, has been suffering from poor occupancy
due to local competition. Occupancy as of December 31, 1998 is 72%. 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.
Impact of Year 2000
The Managing General Partner has assessed the Fund's exposure to date sensitive
computer software programs that may not be operative subsequent to 1999 and has
executed a requisite course of action to minimize Year 2000 risk and ensure that
neither significant costs nor disruption of normal business operations are
encountered. However, due to the inherent uncertainty that all systems of
outside vendors or other companies on which the Fund and/or Local Limited
Partnerships rely will be compliant, the Fund remains susceptible to
consequences of the Year 2000 issue.
<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, 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: February 11, 1999 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> 9-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> DEC-31-1998
<CASH> 549,521
<SECURITIES> 2,877,748
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 000
<DEPRECIATION> 000
<TOTAL-ASSETS> 29,492,364<F1>
<CURRENT-LIABILITIES> 000
<BONDS> 000
000
000
<COMMON> 000
<OTHER-SE> 29,125,029
<TOTAL-LIABILITY-AND-EQUITY> 29,492,364<F2>
<SALES> 000
<TOTAL-REVENUES> 200,736<F3>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 435,871<F4>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (2,677,540)<F5>
<EPS-PRIMARY> (52.05)
<EPS-DILUTED> 000
<FN>
<F1>Included in Total Assets is Investments in Local Limited Partnerships of $25,769,839, Restricted cash of $262,858
and Other assets of $32,398.
<F2>Included in Total Liabilities and Equity is Accounts payable to affiliates of $304,464 and Accounts payable and
accrued expenses of $62,871.
<F3>Total revenue includes Investment of $149,594 and Other of $51,142.
<F4>Included in Other Expenses is Asset management fees of $218,259, General and administrative of
$193,476 and Amortization of $24,136.
<F5>Net loss reflects Equity in losses of Local Limited Partnerships of $2,442,405.
</FN>
</TABLE>
