Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended |
Sep. 30, 2013 | |
Document and Entity Information: | ' |
Entity Registrant Name | 'REAL ESTATE ASSOCIATES LTD VII |
Document Type | '10-Q |
Document Period End Date | 30-Sep-13 |
Amendment Flag | 'false |
Entity Central Index Key | '0000722648 |
Current Fiscal Year End Date | '--12-31 |
Entity Common Stock, Shares Outstanding | 15,091.50 |
Entity Filer Category | 'Smaller Reporting Company |
Entity Current Reporting Status | 'Yes |
Entity Voluntary Filers | 'No |
Entity Well-known Seasoned Issuer | 'No |
Document Fiscal Year Focus | '2013 |
Document Fiscal Period Focus | 'Q3 |
Consolidated_Balance_Sheets_Un
Consolidated Balance Sheets (Unaudited) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Assets | ' | ' |
Cash and cash equivalents | $624 | $992 |
Receivables - limited partners | 262 | 57 |
Total assets | 886 | 1,049 |
Liabilities | ' | ' |
Notes payable, in default | ' | 2,341 |
Accrued interest payable, in default | ' | 5,750 |
Accounts payable and accrued expenses | 18 | 87 |
Total liabilities | 18 | 8,178 |
Contingencies | ' | ' |
Partners' Capital Equity (Deficit): | ' | ' |
General partners | -316 | -396 |
Limited partners | 1,184 | -6,733 |
Total partners' capital equity (deficit) | 868 | -7,129 |
Total liabilities and partners' capital equity (deficit) | $886 | $1,049 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Operating Expenses: | ' | ' | ' | ' |
Management fees - General Partner | $12 | $45 | $36 | $135 |
General and administrative | 6 | 4 | 18 | 17 |
Legal and accounting | 7 | 25 | 39 | 95 |
Interest | 26 | 93 | 114 | 345 |
Total operating expenses | 51 | 167 | 207 | 592 |
Income (Loss) from partnership operations | -51 | -167 | -207 | -592 |
Gain (loss) on sale of interests in Local Limited Partnerships | ' | ' | ' | 69 |
Distribution in excess of investment in Local Limited Partnership | ' | ' | ' | 105 |
Gain (loss) on Extinguishment of Debt | 4,856 | 2,614 | 8,204 | 8,365 |
Net Income (Loss) | 4,805 | 2,447 | 7,997 | 7,947 |
Net Income (Loss) allocated to general partners (1%) | 48 | 24 | 80 | 79 |
Net Income (Loss) allocated to limited partners (99%) | $4,757 | $2,423 | $7,917 | $7,868 |
Net Income (Loss) per limited partnership interest | $313.26 | $158.89 | $521.35 | $515.95 |
Consolidated_Statement_of_Shar
Consolidated Statement of Shareholder Deficit (Unaudited) (USD $) | General Partners | Limited Partners | Total |
In Thousands | |||
Partners' capital equity (deficit), beginning balance at Dec. 31, 2012 | ($396) | ($6,733) | ($7,129) |
Net Income (Loss) | 80 | 7,917 | 7,997 |
Partners' capital equity (deficit), ending balance at Sep. 30, 2013 | ($316) | $1,184 | $868 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Cash flows from operating activities: | ' | ' |
Net Income (Loss) | $7,997 | $7,947 |
Adjustments to reconcile Net Income (Loss) to net cash used in operating activities: | ' | ' |
Gain (loss) on sale of interests in Local Limited Partnerships | ' | -69 |
Distribution from sale of Local Limited Partnership property recognized as income (loss) | ' | -105 |
Gain (loss) on Extinguishment of Debt | -8,204 | -8,365 |
Changes in accounts: | ' | ' |
Change in Accounts Receivables - limited partners | -205 | ' |
Change in Accrued interest payable | 113 | 345 |
Change in Accounts payable and accrued expenses | -69 | -5 |
Net cash used in operating activities | -368 | -252 |
Cash flows from investing activities: | ' | ' |
Distribution from sale of Local Limited Partnership property | ' | 55 |
Proceeds from sale of interests in Local Limited Partnerships | ' | 69 |
Net cash provided by (used in) investing activities | ' | 124 |
Net decrease in cash and cash equivalents | -368 | -128 |
Cash and cash equivalents, beginning of period | 992 | 1,178 |
Cash and cash equivalents, end of period | $624 | $1,050 |
Note_1_Organization_and_Summar
Note 1 - Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2013 | |
Notes | ' |
Note 1 - Organization and Summary of Significant Accounting Policies | ' |
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
General | |
The information contained in the following notes to the unaudited consolidated financial statements is condensed from that which would appear in the annual consolidated financial statements; accordingly, the consolidated financial statements included herein should be reviewed in conjunction with the consolidated financial statements and related notes thereto contained in the Annual Report for the fiscal year ended December 31, 2012 prepared by the Partnership. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results of operations for the interim periods presented are not necessarily indicative of the results expected for the entire year. | |
In the opinion of the Partnership’s management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting primarily of normal recurring items) considered necessary for a fair presentation. The consolidated balance sheet at December 31, 2012 has been derived from the audited financial statements at that date but does not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. | |
The general partners collectively share a one percent interest in profits and losses of the Partnership. The limited partners share the remaining 99 percent interest which is allocated in proportion to their respective individual investments. The general partners of the Partnership are National Partnership Investments, LLC ("NAPICO or “General Partner"), a California limited liability company, and National Partnership Investments Associates II, a California limited partnership. The General Partner is a subsidiary of Bethesda Holdings II, LLC, a privately held real estate asset management company (“Bethesda”). | |
At September 30, 2013 and December 31, 2012, respectively, the Partnership had 15,091.5 and 15,185.5 limited partnership interests outstanding. | |
Basis of Presentation | |
The accompanying unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States. | |
Principles of Consolidation | |
These consolidated financial statements include the accounts of Real Estate Associates Limited VII and Real Estate Associates IV (“REA IV”), a California general partnership in which the Partnership holds 99 percent of the general partner interest. Losses in excess of the minority investment that would otherwise be attributed to the minority interest are being allocated to the Partnership. | |
Method of Accounting for Investments in Local Limited Partnerships | |
The investments in Local Limited Partnerships are accounted for using the equity method. | |
Net Loss Per Limited Partnership Interest | |
Net loss per limited partnership interest was computed by dividing the limited partners’ share of net income (loss) by the number of limited partnership interests outstanding at the beginning of the year. The number of limited partnership interests used was 15,185.5 for the three and nine months ended September 30, 2013, respectively and 15,249.5 for the three and nine months ended September 30, 2012, respectively. | |
Variable Interest Entities | |
The Partnership consolidates any variable interest entities in which the Partnership holds a variable interest and is the primary beneficiary. Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The primary beneficiary of a VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. | |
In determining whether it is the primary beneficiary of a VIE, the Partnership considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of the Partnership’s investment; the obligation or likelihood for the Partnership or other investors to provide financial support; and the similarity with and significance to the business activities of the Partnership and the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions. | |
At September 30, 2013 and December 31, 2012, the Partnership held variable interests in one and three VIEs, respectively, for which the Partnership was not the primary beneficiary. The Partnership has concluded, based on its qualitative consideration of the partnership agreement, the partnership structure and the role of the general partner in each of the Local Limited Partnerships, that the general partner of each of the Local Limited Partnerships is the primary beneficiary of the respective Local Limited Partnership. In making this determination, the Partnership considered the following factors: | |
· the general partners conduct and manage the business of the Local Limited Partnerships; | |
· the general partners have the responsibility for and sole discretion over selecting a property management agent for the Local Limited Partnerships’ underlying real estate properties; | |
· the general partners are responsible for approving operating and capital budgets for the properties owned by the Local Limited Partnerships; | |
· the general partners are obligated to fund any recourse obligations of the Local Limited Partnerships; | |
· the general partners are authorized to borrow funds on behalf of the Local Limited Partnerships; and | |
· the Partnership, as a limited partner in each of the Local Limited Partnerships, does not have the ability to direct or otherwise significantly influence the activities of the Local Limited Partnerships that most significantly impact such entities’ economic performance. | |
The one VIE at September 30, 2013 consists of a Local Limited Partnership that is directly engaged in the ownership and management of one apartment property with a total of 36 units. The Partnership is involved with that VIE as a non-controlling limited partner equity holder. The Partnership’s maximum exposure to loss as a result of its involvement with the unconsolidated VIE is limited to the Partnership’s recorded investments in and receivables from this VIE, which were zero at September 30, 2013 and December 31, 2012. The Partnership may be subject to additional losses to the extent of any financial support that the Partnership voluntarily provides in the future. |
Note_2_Investments_in_and_Adva
Note 2 - Investments in and Advances To Local Partnerships | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Notes | ' | ||||
Note 2 - Investments in and Advances To Local Partnerships | ' | ||||
NOTE 2 - INVESTMENTS IN AND ADVANCES TO LOCAL LIMITED PARTNERSHIPS | |||||
As of September 30, 2013 and December 31, 2012, the Partnership held limited partnership interests in one Local Limited Partnership and a general partner interest in REA IV which, in turn, held limited partnership interests in zero and two additional Local Limited Partnerships, respectively; therefore, the Partnership held interests, either directly or indirectly through REA IV, in one and three Local Limited Partnerships, respectively. The other general partner of REA IV is NAPICO. The Local Limited Partnerships own residential low income rental projects consisting of 36 and 302 apartment units at September 30, 2013 and December 31, 2012, respectively. The mortgage loans of these projects are payable to or insured by various governmental agencies. | |||||
The Partnership, as a limited partner, does not have a contractual relationship with the Local Limited Partnerships or exercise control over the activities and operations, including refinancing or selling decisions, of the Local Limited Partnerships that would require or allow for consolidation. Accordingly, the Partnership accounts for its investments in the Local Limited Partnerships using the equity method. The Partnership is allocated profits and losses of the Local Limited Partnerships based upon its respective ownership percentage of 99%. Distributions of surplus cash from operations from both of the Local Limited Partnerships are restricted by the Local Limited Partnerships’ Regulatory Agreements with the United States Department of Housing and Urban Development (“HUD”). These restrictions limit the distribution to a portion, generally less than 10%, of the initial invested capital. The excess surplus cash is deposited into a residual receipts reserve, of which the ultimate realization by the Partnership is uncertain as HUD frequently retains it upon sale or dissolution of the Local Limited Partnership. The Partnership is allocated profits and losses and receives distributions from refinancings and sales in accordance with the Local Limited Partnerships’ partnership agreements. These agreements usually limit the Partnership’s distributions to an amount substantially less than its ownership percentage in the Local Limited Partnership. | |||||
The individual investments are carried at cost plus the Partnership’s share of the Local Limited Partnership’s profits less the Partnership’s share of the Local Limited Partnership’s losses, distributions and impairment charges. The Partnership is not legally liable for the obligations of the Local Limited Partnerships and is not otherwise committed to provide additional support to them. Therefore, it does not recognize losses once its investment in each of the Local Limited Partnerships reaches zero. Distributions from the Local Limited Partnerships are accounted for as a reduction of the investment balance until the investment balance is reduced to zero. When the investment balance has been reduced to zero, subsequent distributions received are recognized as income in the accompanying unaudited consolidated statements of operations. The Partnership did not receive any operating distributions from Local Limited Partnerships during the nine months ended September 30, 2013 and 2012. | |||||
At times, advances are made to the Local Limited Partnerships. Advances made by the Partnership to the individual Local Limited Partnerships are considered part of the Partnership's investment in limited partnerships. Advances made to Local Limited Partnerships for which the investment has been reduced to zero are charged to expense. There were no advances made during the nine months ended September 30, 2013 and 2012. | |||||
For those investments where the Partnership has determined that the carrying value of its investments approximates the estimated fair value of those investments, the Partnership’s policy is to recognize equity in income of the Local Limited Partnerships only to the extent of distributions received and amortization of acquisition costs from those Local Limited Partnerships. Therefore, the Partnership limits its recognition of equity earnings to the amount it expects to ultimately realize. | |||||
The Partnership has no carrying value in investments in Local Limited Partnerships as of September 30, 2013 and December 31, 2012. | |||||
On February 2, 2012, Oakwood Park Apartments I and Oakwood Park Apartments II each sold their respective investment properties to the holder of the Local Limited Partnership’s non-recourse notes payable in exchange for (i) full satisfaction of non-recourse notes payable due to an affiliate of the purchaser and (ii) the sum of one dollar with respect to each property. The Partnership did not receive any proceeds from the sale. The Partnership had no investment balance remaining in either Oakwood Park Apartments I or Oakwood Park Apartments II at the date of the sale. | |||||
On March 9, 2012, Birch Manor I sold its investment property to the holder of the Local Limited Partnership’s non-recourse note payable in exchange for (i) full satisfaction of the Local Limited Partnership’s non-recourse note payable due to an affiliate of the purchaser and (ii) the sum of one dollar. The Partnership did not receive any proceeds from the sale. The Partnership had no investment balance remaining in Birch Manor I at the date of the sale. | |||||
On March 27, 2012, the Partnership assigned its limited partnership interest in Arkansas City and Oakview to a third party for a total of $3,000. This amount was recognized as gain on sale of interests in Local Limited Partnerships for the nine months ended September 30, 2012, as the Partnership had no investment balance remaining in either Arkansas City or Oakview at the date of the assignment. | |||||
On April 11, 2012, Oak Hill sold its investment property to the holder of the non-recourse note payable in exchange for (i) full satisfaction of the non-recourse note payable due to an affiliate of the purchaser, (ii) the assumption of the outstanding mortgage loan encumbering the property and (iii) the sum of one dollar. The Partnership did not receive any proceeds from the sale. The Partnership had no investment balance remaining in Oak Hill at the date of the sale. | |||||
On April 17, 2012 Richards Park sold its investment property to the holder of the Local Limited Partnership’s non-recourse note payable in exchange for (i) full satisfaction of the Local Limited Partnership’s non-recourse note payable due to an affiliate of the purchaser, (ii) the assumption of the outstanding mortgage loan encumbering the property, and (iii) the sum of one dollar. The Partnership did not receive any proceeds from the sale. The Partnership had no investment balance remaining in Richards Park at the date of the sale. | |||||
On May 11, 2012, Yorkview sold its investment property to the holder of the non-recourse note payable in exchange for (i) full satisfaction of the non-recourse note payable due to an affiliate of the purchaser, (ii) the assumption of the outstanding mortgage loan encumbering the property, and (iii) the sum of $150,000. After payment of closing costs, the Partnership received a distribution from the sale of Yorkview of $105,000, approximately $50,000 of which was received during the third quarter of 2011. This amount was recognized as a distribution in excess of investment in Local Limited Partnership during the three and nine months ended September 30, 2012. The Partnership had no investment balance remaining in Yorkview at the date of the sale. | |||||
On May 11, 2012, Mount Union sold its investment property to the holder of the non-recourse note payable in exchange for (i) full satisfaction of the non-recourse note payable due to an affiliate of the purchaser, (ii) the assumption of the outstanding | |||||
mortgage loan encumbering the property, and (iii) the sum of one dollar. The Partnership did not receive any proceeds from the sale of the property. The Partnership had no investment balance remaining in Mount Union at the date of the sale. | |||||
On May 16, 2012, Birch Manor II sold its investment property to the holder of the Local Limited Partnership’s non-recourse note payable in exchange for (i) full satisfaction of the Local Limited Partnership’s non-recourse note payable due to an affiliate of the purchaser, (ii) the assumption of the outstanding mortgage loan encumbering the property, and (iii) the sum of one dollar. The Partnership did not receive any proceeds from the sale. The Partnership had no investment balance remaining in Birch Manor II at the date of the sale. | |||||
On May 17, 2012, Bellair Manor sold its investment property to the holder of the non-recourse note payable in exchange for (i) full satisfaction of the non-recourse note payable due to an affiliate of the purchaser, (ii) the assumption of the outstanding mortgage loan encumbering the property, and (iii) the sum of one dollar. The Partnership did not receive any proceeds from the sale. The Partnership had no investment balance remaining in Bellair Manor at the date of the sale. | |||||
On May 23, 2012, the Partnership assigned its limited partnership interests in Jasper, Pachuta and Shubuta to an affiliate of the Local Operating General Partner for a total of $66,000. This amount was recognized as gain on sale of interests in Local Limited Partnerships for the three and nine months ended September 30, 2012, as the Partnership had no investment balance remaining in Jasper, Pachuta or Shubuta at the date of the assignment. | |||||
On August 14, 2012, Ivywood sold its investment property to the holder of the non-recourse note payable in exchange for (i) full satisfaction of the non-recourse note payable (as discussed in “Note 4”) due to an affiliate of the purchaser, (ii) the assumption of the outstanding mortgage loan encumbering the property, and (iii) the sum of one dollar. The Partnership did not receive any proceeds from the sale. The Partnership had no investment balance remaining in Ivywood at the date of the sale and December 31, 2011. | |||||
On October 29, 2012, the Partnership assigned its limited partnership interest in Aristocrat Manor to an affiliate of the Local Operating General Partner for $5,000 and the assumption of the non-recourse note payable (as discussed in “Note 4”) by the affiliate of the Local Operating General Partner. The Partnership had no investment balance remaining in Aristocrat Manor at September 30, 2012 and December 31, 2011. | |||||
For the period January 1, 2012 through September 30, 2012 the Partnership recorded gain from sale of partnership interest of approximately $69,000, sales distributions in excess of basis of approximately $105,000 and gain of extinguishment of debt of approximately $8,365,000 in connection with the sale of the above properties. | |||||
On May 6, 2013, the Partnership assigned its limited partnership interest in Bluewater Limited Dividend Housing Association (“Bluewater”) to an affiliate of the Local Operating General Partner for the cancellation of two non-recourse notes payable (as discussed in “Note 4”) by an affiliate of the Local Operating General Partner. The Partnership had no investment balance remaining in Bluewater at September 30, 2013 and December 31, 2012. In connection with the sale, the Partnership’s non-recourse notes payable of an aggregate of approximately $920,000 and associated accrued interest of approximately $2,428,000 were extinguished resulting in a gain of extinguishment of approximately $3,348,000 for the period January 1, 2013 through June 30, 2013. | |||||
On September 17, 2013, the Partnership assigned its limited partnership interest in Tradewinds East to an affiliate of the Operating General Partner. The fund received no proceeds from the transaction. The Partnership's investment balance in this local partnership was zero at both September 20, 2013 and 2012. | |||||
In August 2007, the mortgage lender for the mortgage encumbering Newton Apartments sent notice accelerating the debt. The Local Operating General Partner requested that the lender restructure or write down the debt. The Local Operating General Partner conducted mediation with the lender in June 2010. The mortgage lender was unwilling to write down or restructure the debt, but did agree to give the Local Operating General Partner additional time to complete a sale of the property. | |||||
The following are unaudited condensed combined estimated statements of operations for the three and nine months ended September 30, 2013 and 2012 for the Local Limited Partnerships in which the Partnership has invested (2012 amounts exclude Oakwood Park Apartments I and Oakwood Park Apartments II, which sold February 2, 2012, Birch Manor Apartments I, which sold March 9, 2012, Arkansas City Apartments and Oakview Apartments, due to the assignment of the Partnership’s interest in the Local Limited Partnerships on March 27, 2012, Oak Hill Apartments, which sold April 11, 2012, Richards Park Apartments, which sold on April 17, 2012, Yorkview Estates and Mount Union Apartments, which sold May 11, 2012, Birch Manor Apartments II, which sold May | |||||
16, 2012, Bellair Manor, which sold May 17, 2012 and Jasper County Properties, Pachuta and Shubuta Properties, due to the assignment of the Partnership’s interests in the Local Limited Partnerships on May 23, 2012, Ivywood, which sold August 14, 2012, Aristocrat Manor, due to the assignment of the Partnership’s interest in the Local Limited Partnership on October 29, 2012, Bluewater, which sold May 6, 2013 and Tradewinds East which sold in September 2013)(in thousands): | |||||
Three | Three | Nine | Nine | ||
Months | Months | Months | Months | ||
Ended | Ended | Ended | Ended | ||
September 30, | September 30, | September 30, | September 30, | ||
2013 | 2012 | 2013 | 2012 | ||
Revenues | |||||
Rental and other | $ 36 | $ 63 | $ 109 | $ 101 | |
Expenses | |||||
Depreciation and | 4 | 6 | 11 | 9 | |
amortization | |||||
Interest | 8 | 17 | 24 | 25 | |
Operating | 33 | 71 | 100 | 106 | |
45 | 94 | 135 | 140 | ||
Loss from continuing | $ (9) | $ (31) | $ (26) | $ (39) | |
operations |
Note_3_Notes_Payable
Note 3 - Notes Payable | 9 Months Ended |
Sep. 30, 2013 | |
Notes | ' |
Note 3 - Notes Payable | ' |
NOTE 3 - NOTES PAYABLE | |
Twelve of the original investments involved purchases of partnership interests from partners who subsequently withdrew from the operating partnership. As of September 30, 2013 and December 31, 2012, the Partnership is obligated on non-recourse notes payable of approximately zero and $2,341,000, respectively, bearing interest at 9.5 percent annually. The Partnership recognized interest expense of approximately $114,000 and $345,000 for the nine months ended September 30, 2013 and 2012, respectively. Accrued interest is approximately zero and $5,750,000 as of September 30, 2013 and December 31, 2012, respectively. These notes matured between December 1999 and December 2004. These obligations and related interest are collateralized by the Partnership's investments in the Local Limited Partnerships and are payable only out of cash distributions from the Local Limited Partnerships, as defined in the notes. Unpaid interest was due at maturity of the notes. | |
The Partnership had entered into an agreement with the holders of the non-recourse notes payable collateralized by the Partnership’s investment in twelve Local Limited Partnerships with notes payable in which the note holder agreed to forebear taking any action under these notes pending the purchase by the note holder the properties owned by twelve of the Local Limited Partnerships. All twelve of these Local Limited Partnerships sold their respective investment properties to the note holders during 2012 and 2013. In connection with these sales, non-recourse notes payable and associated accrued interest totaling approximately $21,806,000 were extinguished. | |
The Partnership recorded a gain of extinguishment of approximately $8,204,000 during the period January 1, 2013 to September 30, 2013 and $8,365,000 for the year ended December 31, 2012. | |
There were no principal or interest payments made on these notes during the nine months ended September 30, 2013 or 2012. |
Note_4_Transactions_With_Affil
Note 4 - Transactions With Affiliated Parties | 9 Months Ended |
Sep. 30, 2013 | |
Notes | ' |
Note 4 - Transactions With Affiliated Parties | ' |
NOTE 4 – TRANSACTIONS WITH AFFILIATED PARTIES | |
Under the terms of the Restated Certificate and Agreement of Limited Partnership, the Partnership is obligated to NAPICO for an annual management fee equal to 0.5 percent of the original remaining invested assets of the remaining partnerships and is calculated at the beginning of each year. Invested assets are defined as the costs of acquiring project interests, including the proportionate amount of the mortgage loans related to the Partnership's interest in the capital accounts of the respective partnerships. The fee was approximately $36,000 and $135,000 for the nine months ended September 30, 2013 and 2012, respectively. | |
An affiliate of the General Partner is the local general partner in one of the Partnership’s two remaining Local Limited Partnerships. |
Note_5_Fair_Value_of_Financial
Note 5 - Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2013 | |
Notes | ' |
Note 5 - Fair Value of Financial Instruments | ' |
NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS | |
Financial Accounting Standards Board Accounting Standards Codification Topic 825, “Financial Instruments”, requires disclosure of fair value information about financial instruments whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. The notes payable and amounts due for partnership interests are collateralized by the Partnership’s investment in two Local Limited Partnerships and are payable only out of cash distributions from the Local Limited Partnerships. The operations generated by the Local Limited Partnerships, which account for the Partnership’s primary source of revenues, are subject to various government rules, regulations and restrictions which make it impracticable to estimate the fair value of the notes and related accrued interest payable. At September 30, 2013, the Partnership believes that the carrying amount of its other assets and liabilities reported on the consolidated balance sheet that require such disclosure approximated their fair value due to the short-term maturity of these instruments. |
Note_6_Contingencies
Note 6 - Contingencies | 9 Months Ended |
Sep. 30, 2013 | |
Notes | ' |
Note 6 - Contingencies | ' |
NOTE 6 - CONTINGENCIES | |
The General Partner is involved in various lawsuits arising from transactions in the ordinary course of business. In the opinion of management and the General Partner, the claims will not result in any material liability to the Partnership. |
Note_7_Subsequent_Event
Note 7 - Subsequent Event | 9 Months Ended |
Sep. 30, 2013 | |
Notes | ' |
Note 7 - Subsequent Event | ' |
NOTE 7 - SUBSEQUENT EVENT | |
Newton Apartments has entered a purchase and sale contract and is scheduled to close in November, 2013. | |
The Partnership’s management evaluated subsequent events through the time this Quarterly Report on Form 10-Q was filed. |
Note_1_Organization_and_Summar1
Note 1 - Organization and Summary of Significant Accounting Policies: General (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
General | ' |
General | |
The information contained in the following notes to the unaudited consolidated financial statements is condensed from that which would appear in the annual consolidated financial statements; accordingly, the consolidated financial statements included herein should be reviewed in conjunction with the consolidated financial statements and related notes thereto contained in the Annual Report for the fiscal year ended December 31, 2012 prepared by the Partnership. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results of operations for the interim periods presented are not necessarily indicative of the results expected for the entire year. | |
In the opinion of the Partnership’s management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting primarily of normal recurring items) considered necessary for a fair presentation. The consolidated balance sheet at December 31, 2012 has been derived from the audited financial statements at that date but does not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. | |
The general partners collectively share a one percent interest in profits and losses of the Partnership. The limited partners share the remaining 99 percent interest which is allocated in proportion to their respective individual investments. The general partners of the Partnership are National Partnership Investments, LLC ("NAPICO or “General Partner"), a California limited liability company, and National Partnership Investments Associates II, a California limited partnership. The General Partner is a subsidiary of Bethesda Holdings II, LLC, a privately held real estate asset management company (“Bethesda”). | |
At September 30, 2013 and December 31, 2012, respectively, the Partnership had 15,091.5 and 15,185.5 limited partnership interests outstanding. |
Note_1_Organization_and_Summar2
Note 1 - Organization and Summary of Significant Accounting Policies: Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Basis of Presentation | ' |
Basis of Presentation | |
The accompanying unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States. |
Note_1_Organization_and_Summar3
Note 1 - Organization and Summary of Significant Accounting Policies: Principles of Consolidation (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Principles of Consolidation | ' |
Principles of Consolidation | |
These consolidated financial statements include the accounts of Real Estate Associates Limited VII and Real Estate Associates IV (“REA IV”), a California general partnership in which the Partnership holds 99 percent of the general partner interest. Losses in excess of the minority investment that would otherwise be attributed to the minority interest are being allocated to the Partnership. |
Note_1_Organization_and_Summar4
Note 1 - Organization and Summary of Significant Accounting Policies: Method of Accounting For Investment in Local Partnerships (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Method of Accounting For Investment in Local Partnerships | ' |
Method of Accounting for Investments in Local Limited Partnerships | |
The investments in Local Limited Partnerships are accounted for using the equity method. |
Note_1_Organization_and_Summar5
Note 1 - Organization and Summary of Significant Accounting Policies: Net Loss Per Limited Partnership Interest (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Net Loss Per Limited Partnership Interest | ' |
Net Loss Per Limited Partnership Interest | |
Net loss per limited partnership interest was computed by dividing the limited partners’ share of net income (loss) by the number of limited partnership interests outstanding at the beginning of the year. The number of limited partnership interests used was 15,185.5 for the three and nine months ended September 30, 2013, respectively and 15,249.5 for the three and nine months ended September 30, 2012, respectively. |
Note_1_Organization_and_Summar6
Note 1 - Organization and Summary of Significant Accounting Policies: Variable Interest Entities (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Variable Interest Entities | ' |
Variable Interest Entities | |
The Partnership consolidates any variable interest entities in which the Partnership holds a variable interest and is the primary beneficiary. Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The primary beneficiary of a VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. | |
In determining whether it is the primary beneficiary of a VIE, the Partnership considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of the Partnership’s investment; the obligation or likelihood for the Partnership or other investors to provide financial support; and the similarity with and significance to the business activities of the Partnership and the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions. | |
At September 30, 2013 and December 31, 2012, the Partnership held variable interests in one and three VIEs, respectively, for which the Partnership was not the primary beneficiary. The Partnership has concluded, based on its qualitative consideration of the partnership agreement, the partnership structure and the role of the general partner in each of the Local Limited Partnerships, that the general partner of each of the Local Limited Partnerships is the primary beneficiary of the respective Local Limited Partnership. In making this determination, the Partnership considered the following factors: | |
· the general partners conduct and manage the business of the Local Limited Partnerships; | |
· the general partners have the responsibility for and sole discretion over selecting a property management agent for the Local Limited Partnerships’ underlying real estate properties; | |
· the general partners are responsible for approving operating and capital budgets for the properties owned by the Local Limited Partnerships; | |
· the general partners are obligated to fund any recourse obligations of the Local Limited Partnerships; | |
· the general partners are authorized to borrow funds on behalf of the Local Limited Partnerships; and | |
· the Partnership, as a limited partner in each of the Local Limited Partnerships, does not have the ability to direct or otherwise significantly influence the activities of the Local Limited Partnerships that most significantly impact such entities’ economic performance. | |
The one VIE at September 30, 2013 consists of a Local Limited Partnership that is directly engaged in the ownership and management of one apartment property with a total of 36 units. The Partnership is involved with that VIE as a non-controlling limited partner equity holder. The Partnership’s maximum exposure to loss as a result of its involvement with the unconsolidated VIE is limited to the Partnership’s recorded investments in and receivables from this VIE, which were zero at September 30, 2013 and December 31, 2012. The Partnership may be subject to additional losses to the extent of any financial support that the Partnership voluntarily provides in the future. |
Note_1_Organization_and_Summar7
Note 1 - Organization and Summary of Significant Accounting Policies: General (Details) | Sep. 30, 2013 | Dec. 31, 2012 |
Details | ' | ' |
Outstanding Limited Partnership Interests | 15,091.50 | 15,185.50 |
Note_1_Organization_and_Summar8
Note 1 - Organization and Summary of Significant Accounting Policies: Net Loss Per Limited Partnership Interest (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2013 | Sep. 30, 2013 | |
Details | ' | ' |
Number of limited partnership interests | 15,185.50 | 15,249.50 |
Note_2_Investments_in_and_Adva1
Note 2 - Investments in and Advances To Local Partnerships (Details) (Partnership Interest, USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Partnership Interest | ' | ' | ' | ' |
Revenues | ' | ' | ' | ' |
Rental Income, Nonoperating | $36 | $63 | $109 | $101 |
Expenses | ' | ' | ' | ' |
Depreciation, Depletion and Amortization, Nonproduction | 4 | 6 | 11 | 9 |
Interest Expense | 8 | 17 | 24 | 25 |
Operating Costs and Expenses | 33 | 71 | 100 | 106 |
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest | ($9) | ($31) | ($26) | ($39) |
Note_3_Notes_Payable_Details
Note 3 - Notes Payable (Details) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Details | ' | ' |
Repayments of Debt | $0 | $0 |