August 14, 2000
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Re: Boston Financial Tax Credit Fund VII, A Limited Partnership
Report on Form 10-Q for Quarter Ended June 30, 2000
File Number 0-24584
Dear Sir/Madam:
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/Stephen Guilmette
Stephen Guilmette
Assistant Controller
TC7-Q1.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 June 30, 2000
------------------------------------
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 - June 30, 2000 (Unaudited)
and March 31, 2000 1
Statements of Operations (Unaudited) -
For the Three Months Ended June 30, 2000 and 1999 2
Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Three Months Ended June 30, 2000 3
Statements of Cash Flows (Unaudited) -
For the Three Months Ended June 30, 2000 and 1999 4
Notes to the 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,
2000 2000
(Unaudited)
Assets
<S> <C> <C>
Cash and cash equivalents $ 175,956 $ 307,807
Marketable securities, at fair value 2,602,963 2,491,752
Restricted cash 284,311 280,053
Investments in Local Limited Partnerships (Note 1) 22,010,075 22,640,861
Other assets 31,898 31,930
------------- -------------
Total Assets $ 25,105,203 $ 25,752,403
============= =============
Liabilities and Partners' Equity
Accounts payable to affiliates $ 131,348 $ 170,084
Accounts payable and accrued expenses 36,065 36,491
------------- -------------
Total Liabilities 167,413 206,575
------------- -------------
Commitments (Note 2)
General, Initial and Investor Limited Partners' Equity 24,968,283 25,580,333
Net unrealized losses on marketable securities (30,493) (34,505)
------------- -------------
Total Partners' Equity 24,937,790 25,545,828
------------- -------------
Total Liabilities and Partners' Equity $ 25,105,203 $ 25,752,403
============= =============
</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 Months Ended June 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
------------- -------------
Revenue:
<S> <C> <C>
Investment $ 40,359 $ 43,995
Other 11,126 50,636
------------- -------------
Total Revenue 51,485 94,631
------------- -------------
Expenses:
General and administrative expenses (includes reimbursements
to an affiliate in the amounts of $32,506 and $23,957, respectively) 61,649 51,660
Asset management fee, related party 75,499 73,888
Amortization 8,046 8,046
------------- -------------
Total Expenses 145,194 133,594
------------- -------------
Loss before equity in losses of
Local Limited Partnerships (93,709) (38,963)
Equity in losses of Local Limited Partnerships (Note 1) (518,341) (516,104)
------------- -------------
Net Loss $ (612,050) $ (555,067)
============= =============
Net Loss allocated:
To General Partners $ (6,121) $ (5,551)
To Limited Partners (605,929) (549,516)
------------- -------------
$ (612,050) $ (555,067)
============= =============
Net Loss per Limited Partnership Unit
(50,930 Units) $ (11.90) $ (10.79)
============= ==============
</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)
For the Three Months Ended June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Initial Investor Net
General Limited Limited Unrealized
Partners Partner Partners Losses Total
<S> <C> <C> <C> <C> <C>
Balance at March 31, 2000 $ (188,518) $ 5,000 $ 25,763,851 $ (34,505) $ 25,545,828
----------- --------- -------------- ----------- -------------
Comprehensive Loss:
Change in net unrealized losses
on marketable securities
available for sale - - - 4,012 4,012
Net Loss (6,121) - (605,929) - (612,050)
----------- --------- -------------- ----------- -------------
Comprehensive Loss (6,121) - (605,929) 4,012 (608,038)
----------- --------- -------------- ----------- -------------
Balance at June 30, 2000 $ (194,639) $ 5,000 $ 25,157,922 $ (30,493) $ 24,937,790
=========== ========= ============== =========== =============
</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
For the Three Months Ended June 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
------------- -------------
<S> <C> <C>
Net cash provided by (used for) operating activities $ (129,118) $ 24,594
------------- -------------
Cash flows from investing activities:
Purchases of marketable securities (223,286) (299,842)
Proceeds from sales and maturities of
marketable securities 116,154 461,901
Cash distributions received from Local
Limited Partnerships 104,399 90,628
------------- -------------
Net cash provided by (used for) investing activities (2,733) 252,687
------------- -------------
Net increase (decrease) in cash and cash equivalents (131,851) 277,281
Cash and cash equivalents, beginning 307,807 114,347
------------- -------------
Cash and cash equivalents, ending $ 175,956 $ 391,628
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
NOTES TO THE 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 Form 10-K for the year
ended March 31, 2000. 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, 2000 and 1999.
1. Investments in Local Limited Partnerships
The Fund uses the equity method to account for its limited partnership 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, which contain certain operating
and distribution restrictions, has generally acquired a 99% interest, with the
exception of Springwood which is a 19.8% 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, 2000:
<TABLE>
<CAPTION>
Capital contributions paid to Local Limited
Partnerships and purchase price paid to
withdrawing partners of Local Limited
<S> <C>
Partnerships $ 39,539,152
Cumulative equity in losses of Local Limited
Partnerships (excluding cumulative unrecognized losses
of $1,645,344) (17,707,446)
Cash distributions received from Local Limited
Partnerships (878,276)
---------------
Investments in Local Limited Partnerships before
adjustments 20,953,430
Excess of investment costs over the underlying net
assets acquired:
Acquisition fees and expenses 1,252,338
Accumulated amortization of acquisition fees and expenses (195,693)
---------------
Investments in Local Limited Partnerships $ 22,010,075
===============
</TABLE>
The Fund's share of the net losses of the Local Limited Partnerships for the
three months ended June 30, 2000 is $703,282. For the three months ended June
30, 2000, the Fund has not recognized $184,941 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. Commitments
At June 30, 2000, 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 $408,000. 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
Certain matters discussed herein constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. The Fund
intends such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements and is including this statement for
purposes of complying with these safe harbor provisions. Although the Fund
believes the forward-looking statements are based on reasonable assumptions, the
Fund can give no assurance that their expectations will be attained. Actual
results and timing of certain events could differ materially from those
projected in or contemplated by the forward-looking statements due to a number
of factors, including, without limitation, general economic and real estate
conditions and interest rates.
Liquidity and Capital Resources
At June 30, 2000, the Fund had cash and cash equivalents of $175,956 compared
with $307,807 at March 31, 2000. This decrease is due to purchases of marketable
securities and cash used for operations. These decreases are offset by proceeds
from sales and maturities of marketable securities and cash distributions
received from Local Limited Partnerships.
As of June 30, 2000, approximately $2,263,000 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 June 30, 2000, 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 $408,000. 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, 2000, 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 three months ended June 30, 2000.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Results of Operations
The Fund's results of operations for the three months ended June 30, 2000
resulted in a net loss of $612,050, as compared to a net loss of $555,067 for
the same period in 1999. 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.
Property Discussions
As previously reported, Grand Boulevard Renaissance, located in Chicago,
Illinois, has been experiencing operating difficulties and has difficulties in
achieving debt service coverage. As a result of the operating difficulties, the
Local General Partner has begun negotiations with the lender in an attempt to
reduce the interest rate on the current mortgage. The Managing General Partner
performed a site visit in April and found the property to be in good physical
condition. As of June 30, 2000, occupancy was 83%. The Managing General Partner
will continue to work closely with the Local General Partner and new management
agent to monitor operations.
As previously reported, Los Claveles II (Trujillo Alto, Puerto Rico) continues
to perform poorly. The property requires significant capital for maintenance and
repair and also faces crime and security issues. As of June 30, 2000, occupancy
was 43%. Effective December 30, 1999, the property restructured its existing
mortgage loan balance, in the approximate amount of $9 million, into a $4
million first mortgage with an interest rate of 6% amortized over a 30-year term
and a $5 million second mortgage with no interest and principal payable from
cash flow. No debt service payments are required until November 2000. The
reduction in debt service payments has made cash available for use towards the
necessary maintenance and repairs required at the property. However, if
occupancy does not improve prior to the time that debt service payments resume,
the property will have difficulty meeting required debt service payments. As
part of the loan restructuring, the Local General Partner was replaced. An
affiliate of the new Local General Partner began managing the property in
January, and is focused on improving occupancy. However, to date the new Local
General Partner has had difficulty attracting qualified tenants. The Managing
General Partner will continue to closely monitor the property's operations.
Operations at Oak Ridge, located in Macon, Georgia, continue to suffer due to
low occupancy rates during the current quarter and prior year. Occupancy
increased slightly as of June 30, 2000 to 72%, as compared to 71% as of March
31, 2000. The low occupancy is generally attributable to lack of public
transportation, site management turnover, as well as a fire in one of the
buildings during the fourth quarter of 1999. The building that experienced the
fire was back on line as of March 2000. Also during March, a new on-site manager
was hired to further enhance tenant marketing efforts, which include direct
mailing and posting fliers on cars, as well as enhanced interaction with the
localhousing authority to attract more tenants with Section 8 certificates.
The Managing General Partner will be working closely with the management agent
and Local General Partner to monitor property operations and marketing efforts.
The Fund has implemented policies and practices for assessing potential
impairment of its investments in Local Limited Partnerships. The investments are
analyzed by real estate experts to determine if impairment indicators exist. If
so, the carrying value is compared to the undiscounted future cash flows
expected to be derived from the asset. If there is a significant impairment in
carrying value, a provision to write down the asset to fair value will be
recorded in the Fund's financial statements.
<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, 2000.
<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 14, 2000 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>
