<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: MARCH 31, 1996
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 33-64452
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0596399
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3158 REDHILL AVENUE, SUITE 120, COSTA MESA, CA 92626
(Address of principal executive offices)
(714) 662-5565
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(a California Limited Partnership)
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED March 31, 1996
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets, March 31, 1996 and December 31, 1995 ............. 3
Statement of Operations
For the three months ended March 31, 1996 ...................... 4
Statement of Partners' Equity
For the three months ended March 31, 1996 ...................... 5
Statement of Cash Flows
For the three months ended March 31, 1996 ...................... 6
Notes to Financial Statements .................................... 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ...................... 13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .............................. 17
Signatures ............................................................ 18
2
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
BALANCE SHEETS
March 31, 1996 and December 31, 1995
<TABLE>
<CAPTION>
ASSETS
1996 1995
----------- -----------
<S> <C> <C>
Cash and cash equivalents $ 3,930,784 $ 5,285,730
Investment in limited partnerships (Note 2) 9,381,650 9,417,744
Other assets 14,026 29,568
----------- -----------
$13,326,460 $14,733,042
----------- -----------
----------- -----------
<CAPTION>
LIABILITIES AND PARTNERS' EQUITY
<S> <C> <C>
Liabilities:
Accrued fees and advances due to affiliate (Note 3) $ 93,403 $ 146,685
Payable to limited partnerships (Note 4) 993,884 2,134,797
----------- -----------
Total liabilities 1,087,287 2,281,482
----------- -----------
Partners' equity (deficit) (Note 1):
General partner (29,919) (27,796)
Limited partners (20,000 units authorized -
15,600 and 6,617 outstanding at March 31, 1996
and December 31, 1995) 12,269,092 12,479,356)
----------- -----------
Total partners' equity 12,239,173 12,451,560
----------- -----------
$13,326,460 $14,733,042
----------- -----------
----------- -----------
</TABLE>
Unaudited
See accompanying notes to financial statements.
3
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
STATEMENT OF OPERATIONS
For the Three months Ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Interest income $ 50,668 $ 8,469
OPERATING EXPENSES:
Amortization 9,349 4,404
Asset management fees (Note 3) 10,725 6,167
Interest expense 376
Other 5,060
----------- -----------
Total operating expenses 25,134 10,947
----------- -----------
Income (Loss) from operations 25,534 (2,478)
Equity in loss from limited partnerships (237,600) (69,000)
----------- -----------
Net loss $ (212,066) $ (71,478)
----------- -----------
----------- -----------
Net loss allocated to:
General partner $ (2,121) $ (715)
----------- -----------
Limited partners $ (209,945) $ (70,763)
----------- -----------
Net loss per 15,600 and 6,717 weighted limited partner
units outstanding March 31, 1996 and 1995 $ (13) $ (11)
----------- -----------
</TABLE>
Unaudited
See accompanying notes to financial statements.
4
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
STATEMENT OF PARTNERS' EQUITY
For the Three months Ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31, 1996
General Partner Limited Partner Total
--------------- --------------- -----------
<S> <C> <C> <C>
Equity (deficit), December 31, 1995 $ (27,796) $12,479,356 $12,451,560
Offering expenses (32) (291) (323)
Net loss for the three months ended
March 31, 1996 (2,121) (209,945) (212,066)
---------- ----------- -----------
Equity (deficit), March 31, 1996 $ (29,949) $12,269,120 $12,239,171
---------- ----------- -----------
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31, 1995
General Partner Limited Partner Total
--------------- --------------- -----------
<S> <C> <C> <C>
Equity (deficit) December 31, 1994 $ (9,902) $ 4,473,382 $ 4,463,480
Capital contributions (20,000 units
authorized 2,437 units issued and
outstanding) 2,437,000 2,437,000
Offering expenses (4,004) (396,435) (400,439)
Capital issued for notes receivable (37,500) (37,500)
Net loss for the three months ended
March 31, 1995 (715) (70,763) (71,478)
---------- ----------- -----------
Equity (deficit), March 31, 1995 $ (14,621) $ 6,405,684 $ 6,391,063
---------- ----------- -----------
</TABLE>
Unaudited
See accompanying notes to financial statements.
5
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
STATEMENT OF CASH FLOWS
For the Three months Ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ----------
<S> <C> <C>
Cash flows provided by operating activities:
Net loss $ (212,066) $ (71,478)
Adjustments to reconcile net loss to net cash used by
operating activities:
Amortization 9,349 4,404
Equity in loss of limited partnerships 237,600 69,000
Decrease in accrued interest payable (403)
Increase (decrease) in interest receivable 15,542 (4,983)
Increase in asset management fee payable 30,292 6,167
------------ ----------
Net cash provided by operating activities 80,717 2,707
------------ ----------
Cash used by investing activities:
Investments in limited partnerships (1,357,706) (786,215)
Acquisition costs and fees 2,139 (204,345)
Distributions from limited partnerships 3,800
------------ ----------
Net cash used by investing activities (1,351,767) (990,560)
------------ ----------
Cash provided (used) by financing activities
Capital contributions from partners 1,722,500
Decrease (increase) of subscriptions receivable 597,100
Decrease in loan payable (280,569)
Offering costs (323) (400,439)
Decrease in advances from affiliates (83,573) (105,013)
------------ ----------
Net cash provided (used) by financing activities (83,896) 1,533,579
------------ ----------
Net increase (decrease) in cash and cash equivalents (1,354,946) 545,726
Cash and cash equivalents, beginning of period 5,285,730 720,130
------------ ----------
Cash and cash equivalents, end of period $ 3,930,784 $ 1,265,856
------------ ----------
</TABLE>
Continued
Unaudited
See accompanying notes to financial statements.
6
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
STATEMENT OF CASH FLOWS - CONTINUED
For the Three months ended March 31, 1996
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITY:
During the three months ended March 31, 1996, the Partnership's payables to
limited partnerships (in connection with its investments in limited
partnerships) decreased by $11,527 due to various price adjuster provisions
in the respective limited partnership agreements due to acquisitions of
limited partnership interests.
During the three months ended March 31, 1995, the Partnership incurred, but
did not pay $162,709 of payables to limited partnerships (in connection with
its investments in limited partnerships.) The Partnership had subscriptions
for limited partnership interests of $677,000 which were collected subsequent
to March 31, 1995.
Unaudited
See accompanying notes to financial statements.
7
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
WNC Housing Tax Credit Fund IV, L.P., Series 2 (the "Partnership") was formed
under the California Revised Limited Partnership Act on September 27, 1993,
and commenced operations on July 18, 1995. The Partnership was formed to
invest primarily in other limited partnerships which will own and operate
multi-family housing complexes that will qualify for low income housing credits.
The information contained in the following notes to the financial statements
is condensed from that which would appear in the annual financial statements;
accordingly, the financial statements included herein should be reviewed in
conjunction with the financial statements and related notes thereto contained
in the WNC Housing Tax Credit Fund IV, L.P., Series 2 Annual Report for the
year ended December 31, 1995.
In the opinion of the Partnership, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of March 31,
1996 and changes in cash flows for the three month period then ended.
Accounting measurements at interim dates inherently involve greater reliance
on estimates than at year end. The results of operations for the interim
period presented are not necessarily indicative of the results for the
entire year.
The general partner is WNC & Associates, Inc. Wilfred N. Cooper Sr.,
through the Cooper Revocable Trust, owns 70% of the outstanding stock of
WNC & Associates, Inc. John B. Lester is the original limited partner of
the Partnership and, through the Lester Family Trust, owns 30% of the
outstanding stock of WNC & Associates, Inc.
ALLOCATIONS UNDER THE TERMS OF THE PARTNERSHIP AGREEMENT
The General Partner has a 1% interest in operating profits and losses of
the Partnership. The limited partners will be allocated the remaining 99%
interest in proportion to their respective investments.
8
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - ORGANIZATION AND OTHER MATTERS (CONTINUED)
After the limited partners have received sale or refinancing proceeds equal
to their capital contributions and their return on investment (as defined in
the Partnership's Agreement of Limited Partnership) and the General Partner
has received a subordinated disposition fee (as described in Note 2 below),
any additional sale or refinancing proceeds will be distributed 90% to the
limited partners (in proportion to their respective investments) and 10% to
the General Partner.
METHOD OF ACCOUNTING FOR INVESTMENT IN LIMITED PARTNERSHIPS
The Partnership accounts for its investments in limited partnerships using
the equity method of accounting, whereby the Partnership adjusts its
investment balance for its share of each limited partnership's results of
operations and for any distributions received. Costs incurred by the
Partnership in acquiring the investments in limited partnerships are
capitalized as part of the investment.
CASH AND CASH EQUIVALENTS
The Partnership considers all bank certificates of deposit with a maturity
of less than three months to be cash equivalents.
NOTE 2 - INVESTMENT IN LIMITED PARTNERSHIPS
As of March 31, 1996 the Partnership had acquired limited partnership
interests in seventeen limited partnerships each of which owns one Apartment
Complex. As of March 31, 1996, construction or rehabilitation of thirteen of
the Apartment Complexes had been completed and four were undergoing
construction or rehabilitation.
The Partnership, as a limited partner, is entitled to 95% to 99%, as specified
in the partnership agreements, of the operating profits and losses of the
limited partnerships upon the acquisition of its limited partnership interest.
Following is a summary of the components of investment in limited partnerships
as of March 31, 1996 and December 31, 1995:
9
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - INVESTMENT IN LIMITED PARTNERSHIPS (CONTINUED)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Investment per balance sheet, beginning of period $ 9,417,744 $ 6,235,586
Investments in limited partnerships 216,794 3,099,425
Capitalized acquisition fees and costs (2,139) 737,464
Equity in loss of limited partnerships (237,600) (628,521)
Distributions from limited partnerships (3,800)
Amortization (9,349) (26,208)
----------- -----------
Investment per balance sheet, end of period $ 9,381,650 $ 9,417,744
----------- -----------
</TABLE>
Selected financial information from the financial statements of the limited
partnerships with operations for the three months ended March 31, 1996 and
1995 follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Total revenue $ 585,000 $ 208,000
Expenses:
Operating expenses 318,000 128,000
Interest expense 254,000 73,000
Depreciation 253,000 77,000
----------- -----------
Total expenses 825,000 278,000
----------- -----------
Net loss $ (240,000) $ (70,000)
----------- -----------
Net loss allocable to the Partnership $ (237,600) $ (69,000)
----------- -----------
</TABLE>
10
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE3 - RELATED PARTY TRANSACTIONS
Under the terms of its Agreement of Limited Partnership, the Partnership is
obligated to the General Partner or its affiliates for the following items:
Acquisition fees of up to 8% of the gross proceeds from the sale of
Partnership units. As of March 31, 1996 and 1995 the Partnership incurred
acquisition fees of approximately $1,052,000 and $629,000, respectively.
An annual asset management fee equal to the greater amount of (i) $2,000
for each Apartment Complex, or (ii) 0.275% of Gross Proceeds. In either
case, the fee will be decreased or increased annually based on changes to
the Consumer Price Index. However, in no event will the maximum amount
exceed 0.2 % of the invested assets (defined as the Partnership's capital
contributions to the limited partnerships plus its allocable percentage of
the permanent financing) of the limited partnerships which are subsidized
under one or more Federal, state or local government programs. The
Partnership has incurred fees of $10,725 and $6,167, respectively, for
the three months ended March 31, 1996 and 1995.
Reimbursement for organizational, offering and selling expenses advanced
by an affiliate of the General Partner on behalf of the Partnership.
These reimbursements plus all other organizational and offering expenses
inclusive of sales commissions will not exceed 15% of the gross proceeds.
The Partnership incurred organizational, offering and selling expenses
during the three months ended March 31, 1996 of $-0-, $323 and $-0-,
respectively.
A subordinated disposition fee in an amount equal to 1% of the sales price
of real estate sold. Payment of this fee is subordinated to the limited
partners receiving a return on investment (as defined in the Agreement of
Limited Partnership) and is payable only if services are rendered in the
sales effort.
11
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 - PAYABLE TO LIMITED PARTNERSHIPS
Payable to limited partnerships represent amounts which are due at various
times based on conditions specified in the respective limited partnership
agreements. These contributions are payable in installments, are generally
due upon the limited partnerships achieving certain operating benchmarks and
are generally expected to be paid within two years of the Partnership's
initial investment.
NOTE 5 - INCOME TAXES
The Partnership will not make a provision for income taxes since all items of
taxable income and loss will be allocated to the partners for inclusion in
their respective income tax returns.
NOTE 6 - SUBSCRIPTION AND INVESTOR NOTES RECEIVABLE
During the three months ended March 31, 1995, the Partnership accepted $37,500
in promissory notes from limited partners. Limited partners who subscribe for
ten or more units of limited partnership interest ($10,000) may elect to pay
50% of such purchase price in cash upon subscription and the remaining 50%
by the delivery of a promissory note payable bearing interest at the rate of
11% per annum. Principal and interest are due on the later of the date of
subscription or September 30,1995. This amount is presented as a reduction
in partners' equity.
NOTE 7 - NET LOSS PER LIMITED PARTNER UNITS
Net loss per limited partner unit was computed by dividing the limited partners'
share of net loss by the weighted number of limited partner units outstanding
during the period. The weighted number of limited partner units outstanding
during the three months ended March 31, 1996 and 1995 was 15,600 and 6,717.
12
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
March 31, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
WNC Housing Tax Credit Fund IV, L.P., Series 2 (the Partnership) is a
California Limited Partnership formed under the laws of the State of
California on September 27, 1993, and commenced operations on July 18,
1995 to acquire limited partnership interests in limited partnerships
("Limited Partnerships") which own multifamily apartment complexes that
are eligible for low-income housing federal income tax credits (the
"Housing Tax Credit").
The Partnership's offering of units terminated on July 26, 1996
LIQUIDITY AND CAPITAL RESOURCES
Overall, as reflected in its Statement of Cash Flows, the Partnership had
a net decrease in cash and cash equivalents of approximately $1,355,000
for the three months ended March 31, 1996. This decrease in cash was used
by the Partnership's investing activities, including the capital contribution
to limited partnerships. Cash provided and used by the operating activities
of the Partnership was minimal compared to its other activities. Cash provided
from operations consisted primarily of interest received on cash deposits, and
cash used in operations consisted primarily of payments for operating fees and
expenses. The major components of all these activities are discussed in greater
detail below.
As of March 31, 1996 and December 31, 1995 the Partnership was indebted to
WNC & Associates, Inc. in the amount of approximately $93,000 and $147,000,
respectively. The component items of such indebtedness were as follows:
accrued acquisition fees of approximately $0 and $90,000 respectively,
accrued asset management fees of approximately $70,000 and $39,000
respectively, and advances for expenses of $24,0000 and $18,000,
respectively..
As of March 31, 1996, the Partnership has received and accepted subscriptions
funds in the amount of $15,600,000.
Prior to sale of the Apartment Complexes, it is not expected that any of the
Limited Partnerships in which the Partnership has invested or will invest
will generate cash from operations sufficient to provide distributions to
the Limited Partners in any material amount. Such cash from operations, if
any, would first be used to meet operating expenses of the Partnership,
including payment of the asset management fee to the General Partner. As
a result, it is not anticipated that the Partnership will provide
distributions to the Limited Partners prior to the sale of the Apartment
Complexes.
13
<PAGE>
The Partnership's investments will not be readily marketable and may be
affected by adverse general economic conditions which, in turn, could
substantially increase the risk of operating losses for the Apartment
Complexes, the Limited Partnerships and the Partnership. These problems
may result from a number of factors, many of which cannot be controlled
by the General Partner. Nevertheless, the General Partner anticipates
that capital raised from the sale of the Units will be sufficient to
fund the Partnership's investment commitments and proposed operations.
The Partnership will establish working capital reserves of at least 3%
of capital contributions, an amount which is anticipated to be sufficient
to satisfy general working capital and administrative expense requirements
of the Partnership excluding payment of the asset management fee as well
as expenses attendant to the preparation of tax returns and reports to the
Limited Partners and other investor servicing obligations of the Partnership.
Liquidity would, however, be adversely affected by unanticipated or greater
than anticipated operating costs. The Partnership's liquidity could also be
affected by defaults or delays in payment of the Limited Partners' promissory
notes, from which a portion of the working capital reserves is expected to be
funded. To the extent that working capital reserves are insufficient to satisfy
the cash requirements of the Partnership, it is anticipated that additional
funds would be sought through bank loans or other institutional financing.
The General Partner may also apply any cash distributions received from the
Limited Partnerships for such purposes or to replenish or increase working
capital reserves.
Under the Partnership Agreements the Partnership does not have the ability to
assess the Limited Partners for additional capital contributions to provide
capital if needed by the Partnership or Limited Partnerships. Accordingly,
if circumstances arise that cause the Limited Partnerships to require capital
in addition to that contributed by the Partnership and any equity contributed
by the general partners of the Limited Partnerships, the only sources from
which such capital needs will be able to be satisfied (other than the limited
reserves available at the Partnership level) will be (i) third-party debt
financing (which may not be available, if, as expected, the Apartment
Complexes owned by the Limited Partnerships are already substantially
leveraged), (ii) additional equity contributions or advances of the general
partners of the Limited Partnerships (in this regard, each local general
partner is required to fund operating deficits, but only for a period of
two years following construction completion), (iii) other equity sources
(which could adversely affect the Partnership's interest in Housing Tax
Credits, cash flow and/or proceeds of sale or refinancing of the Apartment
Complexes and result in adverse tax consequences to the Limited Partners),
or (iv) the sale or disposition of the Apartment Complexes (which could have
the same adverse effects as discussed in (iii) above). There can be no
assurance that funds from any of such sources would be readily available
in sufficient amounts to fund the capital requirement of the Limited
Partnerships in question. If such funds are not available, the Limited
Partnerships would risk foreclosure on their Apartment Complexes if they
were unable to re-negotiate the terms of their first mortgages and any
other debt secured by the Apartment Complexes to the extent the capital
requirements of the Limited Partnerships relate to such debt.
The Partnership's capital needs and resources are expected to undergo major
changes during their first several years of operations as a result of the
completion of their offerings of Units and their acquisition of investments.
Thereafter, the Partnership's capital needs and resources are expected to be
relatively stable over the holding periods of the investments except to the
extent of proceeds received in payment of promissory notes and disbursed to
fund the deferred obligations of the Partnership.
14
<PAGE>
RESULTS OF OPERATIONS
As of December 31, 1995 and March 31, 1996 the Partnership had acquired 17 and
13 Limited Partnership Interests, respectively. Each of the 17 Limited
Partnerships receives or is expected to receive government assistance and each
of them has received a reservation for Housing Tax Credits. As of March 31,
1995, two of the Apartment Complexes in the Partnership had commenced
operations, none of them for a full year; as of March 31, 1996, thirteen of
the Apartment Complexes had commenced operations. Accordingly, the "Equity
in losses from limited partnerships" for the periods ended December 31, 1995
and March 31, 1996 reflected in the Statement of Operations of the Partnership
is not indicative of the amounts to be reported in future years.
As reflected on its Statements of Operations, the Partnership had a loss of
approximately $212,000 for the three months ended March 31, 1996. The
component items of revenue and expense are discussed below.
REVENUE. The Partnership's revenues consisted entirely of interest earned
on promissory notes and cash deposits held in financial institutions (i) as
reserves, or (ii) pending investment in Limited Partnerships. Interest revenue
in future years will be a function of prevailing interest rates and the amount
of cash balances. It is anticipated that the Partnership will maintain cash
Reserves in an amount not materially in excess of the minimum amount required
by its Partnership Agreement, which is 3% of capital contributions.
EXPENSES. The most significant component of operating expenses was and is
expected to be the Asset Management Fee. The Asset Management Fee is equal
to the greater of (i) $2,000 for each Apartment Complex or (ii) 0.275% of
gross proceeds, and will be decreased or increased annually based on changes
to the Consumer Price Index.
Amortization expense consist of the amortization over a period of 30 years of
the Acquisition Fee and other expenses attributable to the acquisition of
Limited Partnership Interests.
Because of the amounts of the Asset Management Fee and amortization expense
primarily are determined by the gross proceeds from the offering, the number
and size of Apartment Complexes and the number of investors, until termination
of the Offering and investment of the net proceeds therefrom the Partnership
cannot predict with any accuracy what these amounts will be.
EQUITY IN LOSSES FROM LIMITED PARTNERSHIP. The Partnership's equity in losses
from Limited Partnerships is equal to 96%-99% of the aggregate net losses of
each Limited Partnership incurred after admission of the Partnership as a
limited partner thereof.
After rent-up all Limited Partnerships are expected to generate losses
during each year of operations; this is so because, although rental income
is expected to exceed cash operating expenses, depreciation and amortization
deductions claimed by the Limited Partnerships are expected to exceed net
rental income.
15
<PAGE>
The Partnership accounts for its investments in Local Partnerships using the
equity method of accounting, whereby the Partnership reduces its investment
balance for its share of Local Partnerships' losses and distributions.
Losses are not recognized to the extent that the investment balance would
be adjusted below zero.
16
<PAGE>
PART II - OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) None
(b) No reports on Form 8-K were filed during the quarter ended
March 31, 1996.
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 3930784
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 13326460
<CURRENT-LIABILITIES> 1087287
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 12239173
<TOTAL-LIABILITY-AND-EQUITY> 13326460
<SALES> 0
<TOTAL-REVENUES> 50668
<CGS> 0
<TOTAL-COSTS> 25534
<OTHER-EXPENSES> 237600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (212066)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (212066)
<EPS-PRIMARY> (13)
<EPS-DILUTED> 0
</TABLE>
