June 29, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Boston Financial Tax Credit Fund VIII, A Limited Partnership
Form 10-KSB Annual Report for the Year Ended March 31, 2000
File Number 0-26522
Dear Sir/Madam:
Pursuant to the requirements of Section 15(d) of the Securities Exchange Act
of 1934, filed herewith is one copy of subject report.
Very truly yours,
/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller
TC810K
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 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 0-26522
Boston Financial Tax Credit Fund VIII, A Limited Partnership
(Exact name of registrant as specified in its charter)
Massachusetts 04-3205879
(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
-----------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class)
200,000
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 __
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Subsection 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [ X ]
State the aggregate sales price of partnership units held by non affiliates of
the registrant.
$28,801,000 as of March 31, 2000
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE: LIST THE FOLLOWING DOCUMENTS IF
INCORPORATED BY REFERENCE AND THE PART OF THE FORM 10-KSB INTO WHICH THE
DOCUMENT IS INCORPORATED: (1) ANY ANNUAL REPORT TO SECURITY HOLDERS: (2) ANY
PROXY OR INFORMATION STATEMENT: AND (3) ANY PROSPECTUS FILED PURSUANT TO RULE
424(b) OR (c) UNDER THE SECURITIES ACT OF 1933.
<TABLE>
<CAPTION>
<S> <C>
Part of Report on
Form 10-KSB into
Which the Document
Documents incorporated by reference is Incorporated
Report on Form 8-K dated April 8, 1994 Part I, Item 1
Report on Form 8-K dated June 14, 1994 Part I, Item 1
Acquisition Reports Part I, Item 1
Prospectus - Sections Entitled:
"Investment Objectives and Policies -
Principal Investment Objectives" Part I, Item 1
"Investment Risks" Part I, Item 1
"Estimated Use of Proceeds" Part III, Item 13
"Management Compensation and Fees" Part III, Item 13
"Profits and Losses for Tax Purposes, Tax
Credits and Cash Distributions" Part III, Item 13
</TABLE>
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
ANNUAL REPORT ON FORM 10-KSB
FOR THE YEAR ENDED MARCH 31, 2000
TABLE OF CONTENTS
Page No.
PART I
Item 1 Business K-3
Item 2 Properties K-5
Item 3 Legal Proceedings K-8
Item 4 Submission of Matters to a Vote of
Security Holders K-8
PART II
Item 5 Market for the Registrant's Units and
Related Security Holder Matters K-9
Item 6 Management's Discussion and Analysis of
Financial Condition and Results of Operations K-9
Item 7 Financial Statements and Supplementary Data K-11
Item 8 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure K-11
PART III
Item 9 Directors and Executive Officers
of the Registrant K-11
Item 10 Management Remuneration K-12
Item 11 Security Ownership of Certain Beneficial
Owners and Management K-13
Item 12 Certain Relationships and Related Transactions K-13
PART IV
Item 13 Exhibits and Reports on Form 8-K K-16
SIGNATURES K-17
<PAGE>
PART I
Item 1. Business
Boston Financial Tax Credit Fund VIII, A Limited Partnership (the "Fund") is a
Massachusetts limited partnership formed on August 25, 1993 under the laws of
the Commonwealth of Massachusetts. The Fund's partnership agreement
("Partnership Agreement") authorizes the sale of up to 200,000 Units of limited
partnership interest at $1,000 per Unit in series. The first series offered
50,000 Units. On July 29, 1994, the Fund held its final investor closing. In
total, the Fund raised $36,497,000 ("Gross Proceeds") through the sale of 36,497
Units. Such amounts exclude a fractional unregistered Unit previously acquired
for $100 by the Initial Limited Partner. The offering of Units terminated on
March 29, 1995.
The Fund is engaged solely in the business of real estate investment.
Accordingly, a presentation of information about industry segments is not
applicable and would not be material to an understanding of the Fund's business
taken as a whole.
The Fund has invested as a limited partner in other limited partnerships ("Local
Limited Partnerships") which own and operate residential apartment complexes
("Properties"), some of which are expected to benefit from some form of federal,
state or local assistance programs and all of which qualify for low-income
housing tax credits ("Tax Credits") added to the Internal Revenue Code (the
"Code") by the Tax Reform Act of 1986. The investment objectives of the Fund
include the following: (i) to provide investors with annual tax credits which
they may use to reduce their federal income taxes; (ii) to provide limited cash
distributions from the operations of apartment complexes; and (iii) to preserve
and protect the Fund's capital. There cannot be any assurance that the Fund will
attain any or all of these investment objectives. A more detailed discussion of
these investment objectives, along with the risks in achieving them is contained
in the sections of the Prospectus entitled "Investment Objectives and Policies -
Principal Investment Objectives" and "Investment Risks", which are herein
incorporated by this reference.
Table A on the following page lists the properties originally acquired by the
Local Limited Partnerships in which the Fund had invested as of March 31, 2000.
Item 6 of this Report contains other significant information with respect to
such Local Limited Partnerships. The terms of the acquisition of each Local
Limited Partnership interest have been described in the Form 8-Ks and a
supplement to the Prospectus listed in Part IV of this Report on Form 10-KSB;
such descriptions are incorporated herein by this reference.
<PAGE>
<TABLE>
<CAPTION>
TABLE A
SELECTED LOCAL LIMITED
PARTNERSHIP DATA
<S> <C> <C>
Property owned by Local Date
Limited Partnerships* Interest
Location Acquired
--------------------------- -------------------- ------------
Green Wood Gallatin, TN 03/02/94
Webster Court Kent, WA 05/13/94
Springwood Tallahassee, FL 12/15/94
Meadow Wood of Pella Pella, IA 06/03/94
Hemlock Ridge Livingston Manor, NY 04/29/94
Pike Place Fort Smith, AR 01/31/94
West End Place Springdale, AR 01/12/94
Oak Knoll Renaissance Gary, IN 11/01/94
Beaverdam Creek Mechanicsville, VA 11/16/94
Live Oaks Plantation West Palm Beach, FL 06/28/94
</TABLE>
* The Fund's interest in profits and losses of each Local Limited Partnership
arising from normal operations is 99%, except for Springwood which is
79.20%, Hemlock Ridge which is 77%, and Pike Place and West End Place which
are 90%. Profits and losses arising from sale or refinancing transactions
are allocated in accordance with the respective Local Limited Partnership
Agreements.
Although the Fund's investments in Local Limited Partnerships are not subject to
seasonal fluctuations, the Fund's equity in losses of Local Limited
Partnerships, to the extent it reflects the operations of individual Properties,
may vary from quarter to quarter based upon changes in occupancy and operating
expenses as a result of seasonal factors.
Each Local Limited Partnership has, as its general partners ("Local General
Partners"), one or more individuals or entities not affiliated with the Fund or
its General Partner. In accordance with the partnership agreements under which
such entities are organized ("Local Limited Partnership Agreements"), the Fund
depends on the Local General Partners for the management of each Local Limited
Partnership. As of March 31, 2000, the following Local Limited Partnerships have
a common Local General Partner or affiliated group of Local General Partners
accounting for the specified percentage of the total capital contributions in
Local Limited Partnerships: (i) Green Wood and Springwood, representing 21.71%,
have Flournoy Development Company as Local General Partner; (ii) Pike Place and
West End Place, representing 12.90%, have Lindsey Management Company as Local
General Partner. The Local General Partners of the remaining Local Limited
Partnerships are identified in the Acquisition Reports which are herein
incorporated by reference.
<PAGE>
The Properties owned by Local Limited Partnerships in which the Fund invests
are, and will continue to be, subject to competition from existing and future
apartment complexes in the same areas. The success of the Fund will depend on
many outside factors, most of which are beyond the control of the Fund and which
cannot be predicted at this time. Such factors include general economic and real
estate market conditions, both on a national basis and in those areas where the
Properties are located, the availability and cost of borrowed funds, real estate
tax rates, operating expenses, energy costs and government regulations. In
addition, other risks inherent in real estate investment may influence the
ultimate success of the Fund, including: (i) possible reduction in rental income
due to an inability to maintain high occupancy levels or adequate rental levels;
(ii) possible adverse changes in general economic conditions and adverse local
conditions, such as competitive overbuilding, a decrease in employment or
adverse changes in real estate laws, including building codes; and (iii) the
possible future adoption of rent control legislation which would not permit
increased costs to be passed on to the tenants in the form of rent increases, or
which suppress the ability of the Local Limited Partnerships to generate
operating cash flow. Since most of the Properties benefit from some form of
governmental assistance, the Fund is subject to the risks inherent in that area
including decreased subsidies, difficulties in finding suitable tenants and
obtaining permission for rent increases. In addition, any Tax Credits allocated
to investors with respect to a Property are subject to recapture to the extent
that the Property or any portion thereof ceases to qualify for the Tax Credits.
Other future changes in federal and state income tax laws affecting real estate
ownership or limited partnerships could have a material and adverse affect on
the business of the Fund.
The Fund is managed by Arch Street VIII Limited Partnership, the sole General
Partner of the Fund. The Fund, which does not have any employees, reimburses
Group Limited Partnership, an affiliate of the General Partner, for certain
expenses and overhead costs. A complete discussion of the management of the Fund
is set forth in Item 9 of this Report.
Item 2. Properties
The Fund owns limited partnership interests in ten Local Limited Partnerships
which own and operate Properties, some of which benefit from some form of
federal, state, or local assistance programs and all of which qualify for the
Tax Credits added to the Code by the Tax Reform Act of 1986. The Fund's
ownership interest in the Local Limited Partnerships is 99%, with the exception
of Springwood which is 79.20%, Hemlock Ridge which is 77%, and Pike Place and
West End Place which are 90%.
All of the Local Limited Partnerships have received an allocation of Tax Credits
from the relevant state tax credit agency. In general, the Tax Credit runs for
ten years from the date the Property is placed in service. The required holding
period (the "Compliance Period") of the Properties is fifteen years. During
these fifteen years, the Properties must satisfy rent restrictions, tenant
income limitations and other requirements, as promulgated by the Internal
Revenue Service, in order to maintain eligibility for the Tax Credit at all
times during the Compliance Period. Once a Local Limited Partnership has become
eligible for the Tax Credits, it may lose such eligibility and suffer an event
of recapture if its Property fails to remain in compliance with the
requirements. To date, none of the Local Limited Partnerships have suffered an
event of recapture of Tax Credits.
In addition, some of the Local Limited Partnerships have obtained one or a
combination of different types of loans such as: i) below market rate interest
loans; ii) loans provided by a redevelopment agency of the town or city in which
the property is located at favorable terms; or iii) loans that have repayment
terms that are based on a percentage of cash flow.
The following schedule provides certain key information on the Local Limited
Partnership interests acquired by the Fund.
<PAGE>
<TABLE>
<CAPTION>
Capital Contributions Mtge. loans Occupancy
Local Limited Partnership Number Total Committed Paid Through payable at at
Property Name of at March 31, March 31, December 31, Type of March 31,
Property Location Apt. Units 2000 2000 1999 Subsidy* 2000
--------------------------- ----------- ---------------- -------------- ------------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Green Wood Apartments,
a Limited Partnership
Green Wood Apartments
Gallatin, TN 164 $3,825,916 $3,825,916 $5,128,724 None 84%
Webster Court Apartments
a Limited Partnership
Webster Court Apartments
Kent, WA 92 2,318,078 2,318,078 2,806,338 None 94%
Springwood Apartments
a Limited Partnership (1)
Springwood Apartments
Tallahassee, FL 113 2,499,202 2,499,202 3,854,331 None 95%
Meadow Wood Associates
of Pella, a Limited Partnership
Meadow Wood of Pella
Pella, IA 30 893,808 893,808 1,085,325 Section 8 100%
RMH Associates, a Limited
Partnership (1)
Hemlock Ridge
Livingston Manor, NY 100 1,697,298 1,697,298 2,038,274 Section 8 85%
Pike Place, a Limited
Partnership (1)
Pike Place
Fort Smith, AR 144 1,915,328 1,915,328 3,268,093 None 100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Capital Contributions Mtge. Loans Occupancy
Local Limited Partnership Number Total Committed Paid Through payable at at
Property Name of at March 31, March 31, December 31, Type of March 31,
Property Location Apt. Units 2000 2000 1999 Subsidy* 2000
----------------------------- ------------ -------------- ------------- --------------- ------------ ---------------
West End Place, a Limited
Partnership (1)
West End Place
<S> <C> <C> <C> <C> <C>
Springdale, AR 120 1,843,010 1,843,010 2,883,783 None 100%
Oak Knoll Renaissance, a
Limited Partnership
Oak Knoll Renaissance
Gary, IN 256 4,922,412 4,922,412 5,228,904 Section 8 98%
Beaverdam Creek Associates,
a Limited Partnership (2)
Beaverdam Creek
Mechanicsville, VA 120 3,629,140 3,629,140 3,300,558 None 97%
Schickedanz Brothers Palm
Beach Limited
Live Oaks Plantation
West Palm Beach, FL 218 5,587,953 5,587,953 7,737,537 None 78%
------ ------------- ------------ ------------
1,357 $29,132,145 $ 29,132,145 $37,331,867
====== =========== ============ ============
(1) Boston Financial Tax Credits Fund VIII has a 79.20% interest in Springwood Apartments, L.P., a 77% interest in RMH
Associates, L.P., and a 90%
interest in Pike Place, L.P. and West End Place, L.P. The mortgage payable balances represent 100% of the outstanding
balances.
(2) The amount paid includes funds advanced under a promissory note agreement with Boston Financial Tax Credit Fund VIII, a
Limited Partnership.
*Section 8 This subsidy, which is authorized under Section 8 of Title II of the Housing and Community Development Act of 1974,
allows qualified low-income tenants to pay 30%
of their monthly income as rent with the balance paid by the federal government.
</TABLE>
<PAGE>
Four Local Limited Partnerships invested in by the Fund each represent more than
10% of the total capital contributions to be made to Local Limited Partnerships
by the Fund. These Local Limited Partnerships are as follows: (i) Green Wood
Apartments Limited Partnership, with Flournoy Development Company as Local
General Partner; (ii) Oak Knoll Renaissance Limited Partnership, with Ronald M.
Gatton Redevelopment Services as Local General Partner; (iii) Beaverdam Creek
Associates Limited Partnership, with Castle Development Corporation as Local
General Partner; and (iv) Schickedanz Brothers Palm Beach Limited Partnership,
which owns Live Oaks Plantation and has Schickedanz Enterprise as its Local
General Partner.
Green Wood Apartments Limited Partnership, representing 13.13% of the Fund's
total investment in the Local Limited Partnerships, has obtained a $5,322,000
mortgage loan payable at 8.860% per annum with monthly payments of principal and
interest in the amount of $42,287 due through June 1, 2010.
Oak Knoll Renaissance Limited Partnership, representing 16.90% of the total
investment in the Local Limited Partnerships, has obtained a permanent mortgage
loan payable at 10.125% per annum, with monthly payments of principal and
interest in the amount of $52,205 due through June 1, 2018. The construction
loan of $5,676,337 with the City of Gary, Indiana, was repaid in 1996 when
permanent financing was obtained.
Beaverdam Creek Associates Limited Partnership ("Beaverdam Creek LP"),
representing 12.46% of the Fund's total investment in the Local Limited
Partnerships, has obtained two mortgage loans in the original principal amounts
of $2,420,000 and $1,000,000 from the Virginia Housing and Development Authority
("VHDA"). The VHDA mortgage notes bear interest at 10.62% and 5%, respectively,
per annum. The mortgage notes are unsecured and are secured by a deed of trust
on the rental property. The mortgage notes payable are due in monthly
installments of principal and interest of $22,354 and $5,368, respectively, to
the year 2025.
Schickedanz Brothers Palm Beach Limited Partnership, representing 19.18% of the
total investment in the Local Limited Partnerships, entered into two loan
agreements. The first is with Newport Mortgage Company, L.P., in the original
amount of $6,493,000. The loan bears interest at a rate of 8.94% per annum, with
monthly payments of principal and interest in the amount of $51,964 due through
July 7, 2026. As of December 31, 1999, $6,321,537 is outstanding on the
mortgage.
The second loan agreement is a Home loan with the Florida Housing Finance
Agency, with a principal amount not to exceed $1,531,000. Interest on the unpaid
principal balance shall be due at the Applicable Federal Rate ("AFR") for long
term obligations as of the commencement date of the loan. Interest shall be
payable at 3% per annum commencing on June 30, 1995. Deferred interest is
compounded annually and is due together with the principal balance on February
28, 2025. As of December 31, 1999, total funds in the amount of $1,416,000 have
been drawn on the loan.
Duration of leases for occupancy in the Properties described above is six to
twelve months. The Managing General Partner believes the described herein are
adequately covered by insurance.
Additional information required under this Item, as it pertains to the Fund, is
contained in Items 1, 6 and 7 of this Report.
Item 3. Legal Proceedings
The Fund is not a party to any pending legal or administrative proceeding, and
to the best of its knowledge, no legal or administrative proceeding is
threatened or contemplated against it.
Item 4. Submission of Matters to a Vote of Security Holders
None.
<PAGE>
PART II
Item 5. Market for the Registrant's Units and Related Security Holder Matters
There is no public market for the Units, and it is not expected that a public
market will develop. If a Limited Partner desires to sell Units, the buyer of
those Units will be required to comply with the minimum purchase and retention
requirements and investor suitability standards imposed by applicable federal or
state securities laws and the minimum purchase and retention requirements
imposed by the Fund. The price to be paid for the Units, as well as the
commissions to be received by any participating broker-dealers, will be subject
to negotiation by the Limited Partner seeking to sell his Units. Units will not
be redeemed or repurchased by the Fund.
The Partnership Agreement does not impose on the Fund or its General Partner any
obligation to obtain periodic appraisals of assets or to provide Limited
Partners with any estimates of the current value of Units.
As of June 15, 2000, there were 1,236 record holders of Units of the Fund.
Cash distributions, when made, are paid annually. For the years ended March 31,
2000 and 1999, no cash distributions were made.
Item 6. 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 March 31, 2000, the Fund had cash and cash equivalents of $188,645 as
compared to $180,030 at March 31, 1999. This increase is attributable to cash
distributions received from Local Limited Partnerships. This increase to cash
and cash equivalents is offset partially by purchases of marketable securities
in excess of proceeds from sales and maturities of marketable securities and
cash used for operating activities.
At March 31, 2000, approximately $1,117,028 of marketable securities has been
designated as Reserves. The Reserves are 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
General Partner deems funding appropriate.
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 March 31, 2000, the Fund had no contractual or other
obligation to any Local Limited Partnership which had not been paid or provided
for, except as disclosed above.
In the event a Local Limited Partnership encounters operating difficulties
requiring additional funds, the Fund might deem it in its best interests to
voluntarily provide such funds, in order to protect its investment. No such
event has occurred to date.
<PAGE>
Cash Distributions
No cash distributions were made during the two years ended March 31, 2000. It is
expected that cash available for distribution, if any, will not be significant
in fiscal year 2000. As funds from temporary investments are paid to Local
Limited Partnerships, interest earnings on those funds decrease. In addition,
some of the properties benefit from some type of federal or state subsidy and,
as a consequence, are subject to restrictions on cash distributions.
Results of Operations
2000 versus 1999
For the year ended March 31, 2000, the Fund's operations resulted in a net loss
of $2,195,805, as compared to $2,027,965 for the year ended March 31, 1999. The
increase in net loss is primarily attributable to a increase in equity in losses
of Local Limited Partnerships. The increase to equity in losses of Local Limited
Partnerships for the year ended March 31, 2000 as compared to the same period in
1999, is primarily attributable to an increase in operating expenses and a
decrease in total income. The increase in operating expenses is partially offset
by a decrease in depreciation and amortization of Local Limited Partnerships.
Low-Income Housing Tax Credits
The 2000 and 1999 tax credits were $141.98 per Unit. Tax Credits are not
available for a property until the property is placed in service and its
apartment units are occupied by qualified tenants. In the first year the Tax
Credit is claimed, the allowable credit amount is determined using an averaging
convention to reflect the number of months that units comprising the qualified
basis were occupied by qualified tenants during the year. To the extent that the
full amount of the annual credit is not allocated in the first year, an
additional credit in such amount is available in the 11th taxable year.
As of December 31, 1995, all of the properties had been placed in service and
were generating Tax Credits. Some of the properties had less than a full year of
operations in the period ended December 31, 1995. They were subject to the
averaging convention mentioned above, therefore the Fund did not receive a full
allocation of Tax Credits with respect to those properties in 1995. The Tax
Credits per Limited Partnership Unit have stabilized at approximately $142 per
unit, as properties have reached completion and have become fully leased. Since
the Tax Credits have stabilized, the annual amount allocated to investors is
expected to remain the same for about seven years. In years eight through ten,
the credits are expected to decrease as properties reach the end of the ten year
credit period. However, because the compliance periods extend significantly
beyond the tax credit periods, the Partnership is expected to retain most of its
interests in the Local Limited Partnerships for the foreseeable future.
Property Discussions
Live Oaks Plantation, located in West Palm Beach, Florida, continues to
experience operating deficits due primarily to occupancy fluctuations. The
fluctuations in occupancy have been caused by the majority of first-year leases
expiring and management's decision not to renew all the leases because of tenant
collection problems. Further compounding the problem is competition from new
affordable housing complexes in the area and deferred maintenance issues on the
property. Accordingly, the Managing General Partner continues to work closely
with the Local General Partner to develop a strategy to stabilize operations and
monitor property management.
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>
Inflation and Other Economic Factors
Inflation had no material impact on the operations or financial condition of the
Fund for the years ended March 31, 2000, and 1999.
Since some of the properties are expected to benefit from some form of
governmental assistance, the Fund is subject to the risks inherent in that area
including decreased subsidies, difficulties in finding suitable tenants and
obtaining permission for rent increases. In addition, any Tax Credits allocated
to investors with respect to a property are subject to recapture to the extent
that the property, or any portion thereof, ceases to qualify for the Tax
Credits.
Certain of the properties in which the Fund invests may be located in areas
suffering from poor economic conditions. Such conditions could have an adverse
effect on the rent or occupancy levels at such properties. Nevertheless,
management believes that the generally high demand for below market rate housing
will tend to negate such factors. However, no assurance can be given in this
regard.
Other Development
Lend Lease Real Estate Investments, Inc.("Lend Lease"), the U.S. subsidiary
of Lend Lease Corporation and the leading U.S. institutional real estate
advisor, as ranked by assets under management, acquired The Boston Financial
Group Limited Partnership ("Boston Financial") on November 3, 1999.
Headquartered in New York and Atlanta, Lend Lease Corporation has regional
offices in 12 cities nationwide. The company ranks as the leading U.S. manager
of tax-exempt assets invested in real estate. Lend Lease is a subsidiary of Lend
Lease Corporation, an international real estate and financial services group
listed on the Australian Stock Exchange. Worldwide, Lend Lease Corporation
operates from more than 30 cities on five continents: North America, Europe,
Asia, Australia and South America. In addition to real estate investments, the
Lend Lease Group operates in the areas of property development, project
management and construction, and capital services (infrastructure).
Item 7. Financial Statements and Supplementary Data
Information required under this Item is submitted as a separate section of this
Report. See Index on page F-1 hereof.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 9. Directors and Executive Officers of the Registrant
The General Partner of the Fund is Arch Street VIII Limited Partnership, a
Massachusetts limited partnership (the "General Partner"), an affiliate of Lend
Lease Estate Investment, Inc. ("Lend Lease"). The General Partner was formed in
August 1993. Randolph G. Hawthorne is the Chief Operating Officer of the General
Partner and has the primary responsibility for evaluating, selecting and
negotiating investments for the Fund. The Investment Committee of the General
Partner approves all investments. The names and positions of the principal
officers and the directors of the General Partner are set forth below.
Name Position
Jenny Netzer President, Managing Director
Michael H. Gladstone Vice President, Managing Director
Randolph G. Hawthorne Vice President, Managing Director
Paul F. Coughlan Vice President
William E. Haynsworth Vice President
<PAGE>
The General Partner provides day-to-day management of the Fund. Compensation
is discussed in Item 10 of this report. Such day-to-day management does not
include the management of the properties.
The business experience of each of the persons listed above is described below.
There is no family relationship between any of the persons listed in this
section.
Jenny Netzer, age 44, Principal, Head of Housing and Community Investing. -
Responsible for tax credit investment programs to institutional clients. Joined
Lend Lease through its 1999 acquisition of Boston Financial, started with Boston
Financial in 1987. Previously, led Boston Financial's new business initiatives
and managed firm's Asset Management division, responsible for performance of 750
properties and providing service to 35,000 investors. Prior to joining Boston
Financial, served as Deputy Budget Director for Commonwealth of Massachusetts,
responsible for Commonwealth's health care and public pension program's budgets,
served as Assistant Controller at Yale University and former member of Watertown
Zoning Board of Appeals Officer of Affordable Housing Tax Credit Coalition and
frequent speaker on affordable housing and tax credit industry issues, BA
Harvard University; Master's in Public Policy Harvard's Kennedy School of
Government.
Michael H. Gladstone, age 43, Principal, Legal - Responsible for legal work in
the areas of affordable and conventional housing and investment products and
services. Joined Lend Lease through its 1999 acquisition of Boston Financial,
started with Boston Financial in 1985; served as firm's General Counsel. Prior
to joining Boston Financial, associated with law firm of Herrick & Smith, served
on advisory board of Housing and Development Reporter. Lectured at Harvard
University on affordable housing matters, Member, The National Realty Committee,
Cornell Real Estate Council, National Association of Real Estate Investment
Managers and Massachusetts Bar, BA Emory University; JD & MBA Cornell
University.
Randolph G. Hawthorne, age 50, Principal, Housing and Community Investing -
Responsible for structuring and acquiring real estate investments. Joined Lend
Lease through its 1999 acquisition of Boston Financial, started with Boston
Financial in 1973. Previously, served as Boston Financial's Treasurer, Past
Chairman of the Board of the National Multi Housing Council, having served on
the board since 1989, Past President of the National Housing and Rehabilitation
Association, Member, Multifamily Council of the Urban Land Institute, Frequent
speaker at industry conferences. Serves on the Editorial Advisory Boards of the
Tax Credit Advisor and Multi-Housing News, BS Massachusetts Institute of
Technology; MBA Harvard Graduate School of Business, Board of Directors National
Housing Conference. Graduated MIT 1971, HBS 1973.
Paul F. Coughlan, age 56, Principal, Housing and Community Investing -
Responsible for marketing and sales of institutional tax credit investments.
Joined Lend Lease through its 1999 acquisition of Boston Financial, started with
Boston Financial in 1975. Previously, served as sales manager for Boston
Financial's retail tax credit fund, AB Brown University.
William E. Haynsworth, age 60, Principal, Housing and Community Investing -
Responsible for the structuring of real estate investments and the acquisition
of property interests. Joined Lend Lease through its 1999 acquisition of Boston
Financial, started with Boston Financial 1977. Prior to joining Boston
Financial, Acting Executive Director and General Counsel of the Massachusetts
Housing Finance Agency. Served as Director of Non-Residential Development of the
Boston Redevelopment Authority and Associate of Goodwin, Proctor & Hoar, Past
President and current Chairman of the Board of Directors of Affordable Housing
Tax Credit Coalition, BA Dartmouth College; LLB and LLM Harvard Law School.
Item 10. Management Remuneration
Neither the partners of Arch Street VIII Limited Partnership nor any other
individual with significant involvement in the business of the Fund receives any
current or proposed remuneration from the Fund.
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
As of March 31, 2000, the following entities are the only entities known to the
Fund to be the beneficial owners of more than 5% of the Units outstanding:
<TABLE>
<CAPTION>
Amount
Title of Class Name and Address of Beneficially Percent of
Beneficial Owner Owned Class
--------------- ------------------------------- -------------- -------------
<S> <C> <C> <C>
Limited Oldham Institutional Tax Credits LLC 2,476 Units 6.78%
Partner 101 Arch Street
Boston, MA
Limited Oldham Institutional Tax Credits 5,220 Units 14.30%
Partner VI LLC
101 Arch Street
Boston, MA
Limited Liberty Corporation 2,079 Units 5.70%
Partner PO Box 789
Greenville, SC
</TABLE>
Oldham Institutional Tax Credits LLC and Oldham Institutional Tax Credits VI LLC
are affiliates of Arch Street VIII Limited Partnership, the General Partner.
The equity securities registered by the Fund under Section 12(g) of the Act
consist of 200,000 Units, 36,497 of which have been sold to the public at March
31, 2000. Holders of Units are permitted to vote on matters affecting the Fund
only in certain unusual circumstances and do not generally have the right to
vote on the operation or management of the Fund.
Arch Street VIII, Inc. owns a fractional (unregistered) Unit not included in the
Units sold to the public.
Except as described in the preceding paragraphs, neither Arch Street VIII, Inc.,
Arch Street VIII Limited Partnership, Lend Lease nor any of their executive
officers, directors, partners or affiliates is the beneficial owner of any
Units. None of the foregoing persons possesses a right to acquire beneficial
ownership of Units.
The General Partner does not know of any existing arrangement that might at a
later date result in a change in control of the Fund.
Item 12. Certain Relationships and Related Transactions
The Fund is required to pay certain fees to and reimburse certain expenses of
the General Partner or its affiliates (including Lend Lease) in connection with
the organization of the Fund and the offering of Units. The Fund is also
required to pay certain fees to and reimburse certain expenses of the General
Partner or its affiliates (including Lend Lease) in connection with the
administration of the Fund and its acquisition and disposition of investments in
Local Limited Partnerships. In addition, the General Partner is entitled to
certain Fund distributions under the terms of the Partnership Agreement. Also,
an affiliate of the General Partner will receive up to $10,000 from the sale or
refinancing proceeds of each Local Limited Partnership, if it is still a limited
partner at the time of such transaction. All such fees, expenses and
distributions paid in the years ended March 31, 2000 and 1999 are described
below and in the sections of the Prospectus entitled "Estimated Use of
Proceeds", "Management Compensation and Fees" and "Profits and Losses for Tax
Purposes, Tax Credits and Cash Distributions". Such sections are incorporated
herein by reference.
<PAGE>
The Fund is permitted to enter into transactions involving affiliates of the
General Partner, subject to certain limitations established in the Partnership
Agreement.
Information required under this Item is contained in Note 5 to the Financial
Statements presented as a separate section of this Report. The affiliates of the
Managing Partner which have received or will receive fee payments and expense
reimbursements from the Fund are as follows:
Organizational fees and expenses and selling expenses
In accordance with the Partnership Agreement, the Fund is required to pay
certain fees to and reimburse expenses of the General Partner and others in
connection with the organization of the Fund and the offering of its Limited
Partnership Units. Selling commissions, fees and accountable expenses related to
the sale of the Units totaling $4,664,369 have been charged directly to Limited
Partners' equity. In connection therewith, $2,828,918 of selling expenses and
$1,835,451 of offering expenses incurred on behalf of the Fund have been paid to
an affiliate of the General Partner. The Fund may be required to pay a
non-accountable expense allowance for marketing expense equal to a maximum of 1%
of Gross Proceeds. The Fund has capitalized an additional $50,000 which was
reimbursed to an affiliate of the General Partner. Total organization and
offering expenses exclusive of selling commissions and underwriting advisory
fees did not exceed 5.5% of the Gross Proceeds and organizational and offering
expenses, inclusive of selling commissions and underwriting advisory fees, did
not exceed 15.0% of the Gross Proceeds. There were no organizational fees and
expenses paid for the two years ended March 31, 2000.
Acquisition fees and expenses
In accordance with the Partnership Agreement, the Fund is required to pay
acquisition fees to and reimburse acquisition expenses of the General Partner or
its affiliates for selecting, evaluating, structuring, negotiating and closing
the Partnership's investments in Local Limited Partnerships. Acquisition fees
total 6% of the Gross Proceeds. Acquisition expenses, which include such
expenses as legal fees and expenses, travel and communications expenses, costs
of appraisals, accounting fees and expenses, were expected to total 1.5% of the
Gross Proceeds. Acquisition fees totaling $2,189,820 for the closing of the
Fund's Local Limited Partnership Investments were paid to an affiliate of the
General Partner. Acquisition expenses totaling $335,196 were reimbursed to an
affiliate of the General Partner. These were no acquisition fees and expenses
paid for the two years ended March 31, 2000.
Asset Management Fees
In accordance with the Partnership Agreement, an affiliate of the General
Partner receives a base amount of 0.577% (as adjusted by the CPI factor) of
Gross Proceeds annually as an Asset Management Fee for administering the affairs
of the Fund. Asset Management Fees incurred in the years ended March 31, 2000
and 1999 are as follows:
2000 1999
------------ -----------
Asset Management Fees $ 210,716 $ 206,220
Salaries and benefits expense reimbursement
An affiliate of the General Partner is reimbursed for the cost of certain
salaries and benefits expenses which are incurred by an affiliate of the General
Partner on behalf of the Fund. The reimbursements are based upon the size and
complexity of the Fund's operations. Reimbursements paid or payable in the years
ended March 31, 2000, and 1999 are as follows:
2000 1999
------------ ----------
Salaries and benefits expense reimbursement $ 88,541 $ 77,890
<PAGE>
Property Management Fees
An affiliate of the Managing General Partner, currently manages Beaverdam Creek,
a property in which the Fund has invested. The Property Management Fee charged
is equal to 4% of cash receipts. Fees earned by this affiliate which have been
included in operating expenses in the summarized income statements in Note 4 to
the Financial Statements for the two years ended December 31, 1999 and 1998, are
as follows:
1999 1998
------------ -----------
Property Management Fees $ 40,126 $ 34,183
Cash distributions paid to the General Partners
In accordance with the Partnership Agreement, the General Partner of the Fund,
Arch Street VIII Limited Partnership, receives 1% of cash distributions made to
partners. As of March 31, 2000, the Fund has not paid any cash distributions to
partners.
Additional information concerning cash distributions and other fees paid or
payable to the Managing General Partner and its affiliates and the reimbursement
of expenses paid or payable to Boston Financial and its affiliates during each
of the two years ended March 31, 2000 is presented in Note 5 to the Financial
Statements.
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K
(a)(1) and (2) Documents filed as a part of this Report.
In response to this portion of Item 13, the financial statements and the
auditors' report relating thereto are submitted as a separate section of this
Report. See Index to the Financial Statements on page F-1 hereof.
The reports of auditors of the Local Limited Partnerships relating to the audits
of the financial statements of such Local Limited Partnerships appear in Exhibit
28.1 of this Report.
All other financial statement schedules and exhibits for which provision is made
in the applicable accounting regulations of the Securities and Exchange
Commission are not required under related instructions or are inapplicable, and
therefore have been omitted.
(a)(3) See Exhibit Index contained herein.
(a)(3)(b) Reports on Form 8-K:
No reports on Form 8-K were filed for the year ended March 31, 2000.
(a)(3)(c) Exhibits
Number and Description in Accordance
with Item 601 of Regulation S-K
27. Financial Data Schedule
28. Additional Exhibits
(a) 28.1 Reports of Other Independent Auditors
(a)(3)(d) None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
By: Arch Street VIII, Limited Partnership
its General Partner
By: /s/ Randolph G. Hawthorne Date: June 29, 2000
Randolph G. Hawthorne, -------------
Managing Director and
Chief Operating Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the General Partner of the
Fund and in the capacities and on the dates indicated:
By: /s/ Randolph G. Hawthorne Date: June 29, 2000
------------------------------ -------------
Randolph G. Hawthorne,
Managing Director and
Chief Operating Officer
By: /s/Michael H. Gladstone Date: June 29, 2000
------------------------------ -------------
Michael H. Gladstone,
Managing Director, Vice President
<PAGE>
Item 8. Financial Statements and Supplementary Data
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
ANNUAL REPORT ON FORM 10-KSB
FOR THE YEAR ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
INDEX
<S> <C>
Page No.
Report of Independent Accountants
For the years ended March 31, 2000 and 1999 F-2
Financial Statements
Balance Sheet - March 31, 2000 F-3
Statements of Operations - Years Ended
March 31, 2000 and 1999 F-4
Statements of Changes in Partners' Equity (Deficiency) -
Years Ended March 31, 2000 and 1999 F-5
Statements of Cash Flows - Years Ended
March 31, 2000 and 1999 F-6
Notes to the Financial Statements F-7
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners
Boston Financial Tax Credit Fund VIII, A Limited Partnership:
In our opinion, based on our audits and the reports of other auditors, the
financial statements listed in the accompanying index present fairly, in all
material respects, the financial position Boston Financial Tax Credit Fund VIII,
A Limited Partnership (the "Fund") at March 31, 2000 and the results of its
operations and its cash flows for each of the two years in the period ended
March 31, 2000, in conformity with accounting principles generally accepted in
the United States. These financial statements are the responsibility of
the Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the financial
statements of certain local limited partnerships for which $8,680,809 of
cumulative equity in losses are included in the balance sheet as of March 31,
2000 and for which net losses of $1,886,030 and $1,745,890 are included in the
accompanying financial statements for the years ended March 31, 2000 and 1999,
respectively. Those statements were audited by other auditors whose reports
thereon have been furnished to us, and our opinion expressed herein, insofar
as it relates to the amounts included for the Local Limited Partnerships,
is based solely on the reports of the other auditors. We conducted our
audits of these financial statements in accordance with auditing standard
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits and the reports of other
auditors provide a reasonable basis for the opinions expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
June 22, 2000
Boston, Massachusetts
<PAGE>
<TABLE>
<CAPTION>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
BALANCE SHEET
MARCH 31, 2000
Assets
<S> <C>
Cash and cash equivalents $ 188,645
Investments in Local Limited Partnerships (Note 4) 21,137,909
Marketable securities, at fair value (Note 3) 1,443,509
Other assets 18,465
--------------
Total Assets $ 22,788,528
==============
Liabilities and Partners' Equity
Accounts payable to affiliate (Note 5) $ 479,028
Accrued expenses 36,098
--------------
Total Liabilities 515,126
General, Initial and Investor Limited Partners' Equity 22,295,731
Net unrealized losses on marketable securities (22,329)
Total Partners' Equity 22,273,402
--------------
Total Liabilities and Partners' Equity $ 22,788,528
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
For the Years Ended March 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
------------- -------------
Revenue:
<S> <C> <C>
Investment $ 90,604 $ 96,265
Other 1,700 7,565
------------- -------------
Total Revenue 92,304 103,830
------------- -------------
Expenses:
Asset management fees, related party (Note 5) 210,716 206,220
General and administrative (includes
reimbursements to an affiliate in the
amounts of $88,541 and $77,890, respectively) (Note 5) 161,421 140,575
Amortization 29,942 39,110
------------- -------------
Total Expenses 402,079 385,905
------------- -------------
Loss before equity in losses of
Local Limited Partnerships (309,775) (282,075)
Equity in losses of Local Limited
Partnerships (Note 4) (1,886,030) (1,745,890)
------------- -------------
Net Loss $ (2,195,805) $ (2,027,965)
============= =============
Net Loss allocated to:
General Partner $ (21,958) $ (20,280)
Limited Partners (2,173,847) (2,007,685)
------------- -------------
$ (2,195,805) $ (2,027,965)
============= =============
Net Loss per Limited Partnership Unit
(36,497 Units) $ (59.56) $ (55.01)
============== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
For the Years Ended March 31, 2000 and 1999
<TABLE>
<CAPTION>
Net
Initial Investor Unrealized
General Limited Limited Gains
Partner Partner Partners (Losses) Total
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1998 $(51,152) $ 100 $ 26,570,553 $ (99) $ 26,519,402
-------- -------- ------------- ----------- -------------
Comprehensive Income (Loss):
Change in net unrealized losses
on marketable securities
available for sale - - - 1,152 1,152
Net Loss (20,280) - (2,007,685) - (2,027,965)
-------- --------- ------------- ----------- -------------
Comprehensive Income (Loss) (20,280) - (2,007,685) 1,152 (2,026,813)
-------- --------- ------------- ----------- -------------
Balance at March 31, 1999 (71,432) 100 24,562,868 1,053 24,492,589
--------- --------- ------------- ----------- -------------
Comprehensive Loss:
Change in net unrealized losses
on marketable securities
available for sale - - - (23,382) (23,382)
Net Loss (21,958) - (2,173,847) - (2,195,805)
-------- --------- ------------- ----------- -------------
Comprehensive Loss (21,958) - (2,173,847) (23,382) (2,219,187)
-------- --------- ------------- ----------- -------------
Balance at March 31, 2000 $ (93,390) $ 100 $ 22,389,021 $ (22,329) $ 22,273,402
========= ========= ============= =========== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the Years Ended March 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
------------- ------------
Cash flows from operating activities:
<S> <C> <C>
Net Loss $ (2,195,805) $ (2,027,965)
Adjustments to reconcile net loss to net
cash used for operating activities:
Equity in losses of Local Limited Partnerships 1,886,030 1,745,890
Amortization 29,942 39,110
Gain on sales and maturities of
marketable securities (923) (3,424)
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Other assets 390 420
Accounts payable to affiliate 136,795 73,416
Accrued expenses (18,248) 14,599
------------- ------------
Net cash used for operating activities (161,819) (157,954)
------------- ------------
Cash flows from investing activities:
Purchases of marketable securities (596,988) (1,174,765)
Proceeds from sales and maturities of
marketable securities 586,638 1,209,947
Cash distributions received from Local
Limited Partnerships 180,784 88,836
------------- ------------
Net cash provided by investing activities 170,434 124,018
------------- ------------
Net increase (decrease) in cash and cash equivalents 8,615 (33,936)
Cash and cash equivalents, beginning 180,030 213,966
------------- ------------
Cash and cash equivalents, ending $ 188,645 $ 180,030
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
1. Organization
Boston Financial Tax Credit Fund VIII, A Limited Partnership (the "Fund") is a
Massachusetts limited partnership organized to invest in other limited
partnerships ("Local Limited Partnerships") which own and operate apartment
complexes which are eligible for low income housing tax credits which may be
applied against the federal income tax liability of an investor.
Arch Street VIII Limited Partnership ("Arch Street L.P."), a Massachusetts
limited partnership consisting of Arch Street VIII, Inc., a Massachusetts
corporation ("Arch Street, Inc.") as the sole general partner and Lend Lease
Real Estate Investments, Inc. as the sole limited partner, is the sole General
Partner of the Fund. Arch Street L.P. and Arch Street, Inc. are affiliates of
Lend Lease Real Estate Investments, Inc. ("Lend Lease"). An affiliate of Arch
Street L.P. ("SLP Affiliate") is a special limited partner in each Local
Limited Partnership in which the Fund invests, with the right to become a
general partner under certain circumstances. The fiscal year of the Fund ends
on March 31.
The Partnership Agreement authorizes the sale of up to 200,000 Units of limited
partnership interests ("Units") at $1,000 per Unit in series. The first series
offered 50,000 Units. Boston Financial Securities, Inc., an affiliate of the
General Partner, has received selling commissions and underwriting advisory fees
in the amount of 6.5% and 1.25%, respectively, of Gross Proceeds for Units sold
by the entity as a soliciting dealer. On July 29, 1994, the Fund held its final
investor closing. In total, the Fund received $36,497,000 of capital
contributions from investors admitted as Limited Partners for 36,497 Units.
The Partnership Agreement provides that all cash available for distribution will
be distributed 99% to the Limited Partners and 1% to the General Partner. Sale
or refinancing proceeds generally will be distributed first to the Limited
Partners in an amount equal to their adjusted capital contributions; second, to
the General Partner in an amount equal to its capital contributions; third, to
the General Partner (after payment of the 6% return as set forth in Section
4.2.3 of the Partnership Agreement and, of any accrued but unpaid Subordinated
Disposition Fee, a fee equal to 1% of the sales price of a property owned by a
Local Limited Partnership) in such amount as is necessary to cause the General
Partner to have received 5% of all distributions to the Partners; and lastly,
95% to the Limited Partners and 5% to the General Partner.
Profits and losses for tax purposes arising from general operations and tax
credits generally will be allocated 99% to the Limited Partners and 1% to the
General Partner. However, as set forth in the Partnership Agreement, profits and
losses for tax purposes arising from a sale or refinancing generally will be
allocated among the Partners in such manner as is necessary to cause their
respective capital accounts to reflect the amount that would be distributable to
them in accordance with the priorities set forth in the preceding paragraph, if
all of the Fund's assets were sold for their federal adjusted basis and the Fund
were then liquidated.
Under the terms of the Partnership Agreement, the Fund initially designated 5%
of the Gross Proceeds from the sale of Units as a reserve for working capital of
the Fund and contingencies related to ownership of Local Limited Partnership
interests. The General Partner may increase or decrease such amounts from time
to time, as it deems appropriate. At March 31, 2000, the General Partner has
designated approximately $1,117,028 of marketable securities as such Reserve.
2. Significant Accounting Policies
Basis of Presentation
The Fund accounts for its investments in Local Limited Partnerships using the
equity method of accounting because the Fund does not have control of the major
operating and financial policies of the Local Limited Partnerships in which it
invests. Under the equity method, the investment is carried at cost, adjusted
for the Fund's
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (continued)
2. Significant Accounting Policies (continued)
Basis of Presentation (continued)
share of income or loss of the Local Limited Partnerships, additional
investments in and cash distributions from the Local Limited Partnerships.
Equity in income or loss of the Local Limited Partnerships is included in the
Fund's operations. The Fund has no obligation to fund liabilities of the Local
Limited Partnerships beyond its investment, therefore a Local Limited
Partnership's investment will not be carried below zero. To the extent that
equity losses are incurred or distributions received when a Local Limited
Partnership's respective investment balance has been reduced to zero, the losses
will be suspended to be used against future income.
Excess investment costs over the underlying net assets acquired have arisen from
acquisition fees paid and expenses reimbursed to an affiliate of the Fund. These
fees and expenses are included in the Fund's Investments in Local Limited
Partnerships and are being amortized on a straight-line basis over 35 years.
The Fund recognizes a decline in the carrying value of its investments in Local
Limited Partnerships when there is evidence of a non-temporary decline in the
recoverable amount of the investment. There is a possibility that the estimates
relating to reserves for non-temporary declines in carrying value of investments
in Local Limited Partnerships may be subject to material near term adjustments.
The Fund, as a limited partner in the Local Limited Partnerships, is subject to
risks inherent in the ownership of properties which are beyond its control, such
as fluctuations in occupancy rates and operating expenses, variations in rental
schedules, proper maintenance of facilities and continued eligibility of tax
credits. If the cost of operating a property exceeds the rental income earned
thereon, the Fund may deem it in its best interest to voluntarily provide funds
in order to protect its investment.
The General Partners have decided 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 December 31, 1999 and 1998.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, the
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash Equivalents
Cash and cash equivalents consists of short-term money market instruments with
maturities of 90 days or less at acquisition and approximate fair value.
Marketable Securities
The Fund's investments in securities are classified as "Available for Sale"
securities and reported at fair value as reported by the brokerage firm at which
the securities are held. Realized gains and losses from the sales of securities
are based on the specific identification method. Unrealized gains and losses are
excluded from earnings and reported as a separate component of partners' equity.
Deferred Fees
Costs incurred in connection with the organization of the Fund, amounting to
$50,000, have been deferred and are completely amortized as of March 31, 2000.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (continued)
2. Significant Accounting Policies (continued)
Fair Value of Financial Instruments
Statements of Financial Accounting Standards No. 107 ("SFAS No. 107"),
Disclosures About Fair Value of Financial Instruments, requires disclosure for
the fair value of most on- and off-balance sheet financial instruments for which
it is practicable to estimate that value. The scope of SFAS No. 107 excludes
certain financial instruments, such as trade receivables and payables when the
carrying value approximates the fair value and investments accounted for under
the equity method, and all nonfinancial assets, such as real property. The fair
values of the Partnership's assets and liabilities which qualify as financial
instruments under SFAS No. 107 approximate their carrying amounts in the
accompanying balance sheet except as otherwise disclosed.
Income Taxes
No provision for income taxes has been made as the liability for such taxes is
an obligation of the partners of the Fund.
3. Marketable Securities
A summary of marketable securities is as follows:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Fair
Cost Gains Losses Value
Debt securities issued by the
US Treasury and other US
government corporations
<S> <C> <C> <C> <C>
and agencies $ 1,224,106 $ 51 $ (15,961) $ 1,208,196
Mortgage backed securities 241,732 - (6,419) 235,313
----------- ----------- ----------- -----------
Marketable securities
at March 31, 2000 $ 1,465,838 $ 51 $ (22,380) $ 1,443,509
=========== =========== =========== ===========
</TABLE>
The contractual maturities at March 31, 2000 are as follows:
<TABLE>
<CAPTION>
Fair
Cost Value
<S> <C> <C>
Due in less than one year $ 524,599 $ 521,857
Due in one to five years 699,507 686,339
Mortgage backed securities 241,732 235,313
----------- -----------
$1,465,838$ 1,443,509
</TABLE>
Actual maturities may differ from contractual maturities because some borrowers
have the right to call or prepay obligations. Proceeds from the sales of
marketable securities were approximately $50,000 and $176,000 during the fiscal
years ended March 31, 2000 and 1999, respectively. Proceeds from the maturities
of marketable securities were approximately $536,000 and $1,034,000 during the
fiscal years ended March 31, 2000 and 1999, respectively. Included in investment
income are gross gains of $923 and $4,411 which were realized on the sales
during the fiscal years ended March 31, 2000 and 1999, respectively. Also
included in investment income are gross losses of $987 which were realized on
the sales during the fiscal year ended March 31, 1999.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (continued)
4. Investments in Local Limited Partnerships
The Fund uses the equity method to account for its limited partner interests in
ten Local Limited Partnerships which own and operate multi-family housing
complexes. The Fund, as Investor Limited Partner, pursuant to the Local Limited
Partnership Agreements, which contain certain operating and distribution
restrictions, has acquired a 99% interest in the profits, losses, tax credits
and cash flows from operations of the Local Limited Partnerships, with the
exception of Springwood, Hemlock Ridge, Pike Place and West End Place which are
79.20%, 77%, 90% and 90%, respectively. Another partnership sponsored by an
affiliate of the General Partner owns the remaining 19.80% Limited Partnership
interest in Springwood. Upon dissolution, proceeds will be distributed according
to the partnership agreements.
The following is a summary of Investments in Local Limited Partnerships at March
31, 2000:
<TABLE>
<CAPTION>
Capital Contributions paid to Local
<S> <C>
Limited Partnerships $ 29,264,859
Cumulative equity in losses of Local
Limited Partnerships (8,680,809)
Cumulative cash distributions received
from Local Limited Partnerships (353,320)
Investments in Local Limited Partnerships ------------
before adjustments 20,230,730
Excess of investment cost over the underlying net assets acquired:
Acquisition fees and expenses 1,048,010
Accumulated amortization of acquisition
fees and expenses (140,831)
-------------
Investments in Local Limited Partnerships $ 21,137,909
=============
</TABLE>
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (continued)
4. Investments in Local Limited Partnerships (continued)
Summarized financial information as of December 31, 1999 and 1998 (due to the
Fund's policy of reporting the financial information of its Local Limited
Partnership interests on a 90 day lag basis) of the ten Local Limited
Partnerships in which the Fund was invested in as of the that date is as
follows:
<TABLE>
<CAPTION>
Summarized Balance Sheets - as of December 31,
1999 1998
------------- ------------
Assets:
<S> <C> <C>
Investment property, net $ 62,327,142 $ 64,711,442
Current assets 1,066,150 880,542
Other assets 2,475,224 2,478,753
------------- -------------
Total Assets $ 65,868,516 $ 68,070,737
============= =============
Liabilities and Partners' Equity:
Long-term debt $ 36,812,575 $ 37,318,536
Current liabilities 2,753,343 1,956,075
Other liabilities 5,384,057 5,517,363
------------- -------------
Total Liabilities 44,949,975 44,791,974
Fund's Equity 20,475,760 22,537,757
Other Partners' Equity 442,781 741,006
------------- -------------
Total Liabilities and Partners' Equity $ 65,868,516 $ 68,070,737
============= =============
Summarized Income Statements - for
the year ended December 31,
Rental and other income $ 7,641,370 $ 7,809,919
------------- -------------
Expenses:
Operating 3,891,489 3,805,421
Depreciation and amortization 2,587,287 2,667,667
Interest 3,227,127 3,260,386
------------- -------------
Total Expenses 9,705,903 9,733,474
------------- -------------
Net Loss $ (2,064,533) $ (1,923,555)
============= =============
Fund's share of Net Loss $ (1,886,030) $ (1,745,890)
============= =============
Other partners' share of Net Loss $ (178,503) $ (177,665)
============= =============
</TABLE>
The Fund's equity as reflected by the Local Limited Partnerships of $20,475,760
differs from the Fund's Investments in Local Limited Partnerships before
adjustments of $20,230,730 principally because of differences in miscellaneous
items.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (continued)
5. Transactions with Affiliates
An affiliate of the General Partner receives the base amount of 0.577% (as
adjusted by the CPI factor) of Gross Proceeds annually as an Asset Management
Fee for administering the affairs of the Fund. Asset Management Fees of $210,716
and $206,220 for the years ended March 31, 2000 and 1999, respectively, have
been included in expenses. Included in accounts payable to affiliates at March
31, 2000 and 1999 is $447,827 and $327,111 of Asset Management Fees due to an
affiliate of the General Partner.
An affiliate of the General Partner is reimbursed for the actual cost of the
Fund's operating expenses. Included in general and administrative expenses for
the years ended March 31, 2000 and 1999, is $88,541 and $77,890, respectively,
that the Fund has paid as reimbursement for salaries and benefits. As of March
31, 2000 and 1999, $31,201 and $15,122, respectively, is payable to an affiliate
of the General Partner for salaries and benefits.
An affiliate of the Managing General Partner currently manages one property in
which the Fund has invested. The property management fee charged is equal to 4%
of cash receipts. Included in operating expenses in the summarized income
statements in Note 4 to the Financial Statements is $40,126 and $34,183 of fees
earned by this affiliate for the years ended December 31, 1999 and 1998,
respectively.
6. Federal Income Taxes
The following schedule reconciles the reported financial statement loss for the
fiscal years ended March 31, 2000 and 1999 to the loss reported on the Form
1065, U.S. Partnership Return of Income for the years ended December 31, 1999
and 1998:
<TABLE>
<CAPTION>
2000 1999
------------- -------------
<S> <C> <C>
Net Loss per financial statements $ (2,195,805) $ (2,027,965)
Adjustment for equity in losses of Local Limited
Partnerships for tax purposes in excess of equity in
losses for financial reporting purposes (342,686) (415,055)
Adjustment to reflect March 31 fiscal year end
to December 31 tax year end 11,181 (21,788)
Related party expenses not deductible for tax purposes 391,776 407,821
Related party expenses paid in current year but expensed
for financial reporting purposes in prior year (407,821) (204,761)
Amortization of acquisition fees and expenses for tax
purposes in excess of amortization for financial reporting
purposes (8,167) (8,166)
------------- -------------
Net Loss per tax return $ (2,551,522) $ (2,269,914)
============= =============
</TABLE>
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS (continued)
6. Federal Income Taxes (continued)
The differences in the assets and liabilities of the Fund for financial
reporting purposes and tax reporting purposes for the year ended March 31,
2000 are as follows:
<TABLE>
<CAPTION>
Financial Tax
Reporting Reporting
Purposes Purposes Differences
<S> <C> <C> <C>
Investments in Local Limited Partnerships $ 21,137,909 $ 18,654,115 $ 2,483,794
============= ============= =============
Other assets $ 1,650,619 $ 6,483,763 $ (4,833,144)
============= ============= =============
Liabilities $ 515,126 $ 48,781 $ 466,345
============= ============= =============
The differences in assets and liabilities of the Fund for financial reporting
purposes are primarily attributable to: (i) the cumulative equity in losses from
Local Limited Partnerships for tax reporting purposes is approximately
$2,322,000 greater than for financial reporting purposes; (ii) the amortization
of acquisition fees for tax return purposes exceeds financial reporting purposes
by approximately $29,000; (iii) organizational and offering costs of
approximately $4,664,000 that have been capitalized for tax reporting purposes
are charged to Limited Partners' equity for financial reporting purposes; and
(iv) related party expenses which are deductible for financial reporting
purposes of approximately $447,000 but are not deductible for tax reporting
purposes.
The differences in the assets and liabilities of the Fund for financial
reporting purposes and tax reporting purposes for the year ended March 31,
1999 are as follows:
Financial Tax
Reporting Reporting
Purposes Purposes Differences
Investments in Local Limited Partnerships $ 23,234,665 $ 21,103,905 $ 2,130,760
============= ============= =============
Other assets $ 1,654,503 $ 6,584,853 $ (4,930,350)
============= ============= =============
Liabilities $ 396,579 $ 48,139 $ 348,440
============= ============= =============
</TABLE>
The differences in assets and liabilities of the Fund for financial reporting
purposes are primarily attributable to: (i) the cumulative equity in losses from
Local Limited Partnerships for tax reporting purposes is approximately
$1,979,000 greater than for financial reporting purposes; (ii) the amortization
of acquisition fees for tax return purposes exceeds financial reporting purposes
by approximately $21,000; (iii) organizational and offering costs of
approximately $4,664,000 that have been capitalized for tax reporting purposes
are charged to Limited Partners' equity for financial reporting purposes; and
(iv) related party expenses which are deductible for financial reporting
purposes of approximately $327,000 but are not deductible for tax reporting
purposes.
<PAGE>
