February 11, 2000
Securities and Exchange Commission
Filer Support, Edgar
Operation Center, Stop 0-7
6432 General Green Way
Alexandria, VA 22312
Re: Boston Financial Tax Credit Fund VII, A Limited Partnership
Report on Form 10-Q for Quarter Ended December 31, 1999
File No. 0-24584
Gentlemen:
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
TC7-Q3.DOC
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-24584
Boston Financial Tax Credit Fund VII, A Limited Partnership
(Exact name of registrant as specified in its charter)
Massachusetts 04-3166203
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
101 Arch Street, Boston, Massachusetts 02110-1106
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-3911
----------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page No.
- ------------------------------ --------
Item 1. Financial Statements
Balance Sheets - December 31, 1999 (Unaudited)
and March 31, 1999 1
Statements of Operations (Unaudited) -
For the Three and Nine Months Ended December 31, 1999 and 1998 2
Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Nine Months Ended December 31, 1999 3
Statements of Cash Flows (Unaudited) -
For the Nine Months Ended December 31, 1999 and 1998 4
Notes to Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION
Items 1-6 9
SIGNATURE 10
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
BALANCE SHEETS
December 31, March 31,
1999 1999
(Unaudited)
Assets
Cash and cash equivalents $ 232,145 $ 114,347
Marketable securities, at fair value 2,520,339 3,020,272
Restricted cash 276,128 266,031
Investments in Local Limited Partnerships (Note 1) 23,365,603 25,341,905
Other assets 28,530 37,349
------------- -------------
Total Assets $ 26,422,745 $ 28,779,904
============= =============
Liabilities and Partners' Equity
Accounts payable to affiliates $ 61,704 $ 72,014
Accounts payable and accrued expenses 53,492 68,778
------------- -------------
Total Liabilities 115,196 140,792
------------- -------------
Commitments (Note 2)
General, Initial and Investor Limited Partners' Equity 26,339,928 28,628,826
Net unrealized gains (losses) on marketable securities (32,379) 10,286
------------- -------------
Total Partners' Equity 26,307,549 28,639,112
------------- -------------
Total Liabilities and Partners' Equity $ 26,422,745 $ 28,779,904
============= =============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended December 31, 1999 and 1998
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
------------- ------------- ------------- --------------
Revenue:
Investment $ 41,162 $ 48,427 $ 127,379 $ 149,594
Other 2,205 30,149 66,888 51,142
------------- ------------- ------------- ---------------
Total Revenue 43,367 78,576 194,267 200,736
------------- ------------- ------------- ---------------
Expenses:
Asset management fee,
related party 73,888 72,753 221,664 218,259
General and administrative
(includes reimbursements
to an affiliate in the amounts
of $68,054 and $65,970 in
1999 and 1998, respectively) 57,373 86,231 144,774 193,476
Amortization 8,046 8,045 24,138 24,136
------------- ------------- ------------- ---------------
Total Expenses 139,307 167,029 390,576 435,871
------------- ------------- ------------- ---------------
Loss before equity in losses
of Local Limited Partnerships (95,940) (88,453) (196,309) (235,135)
Equity in losses of Local Limited
Partnerships (Note 1) (1,021,743) (774,103) (2,092,589) (2,442,405)
------------- ------------- ------------- ---------------
Net Loss $ (1,117,683) $ (862,556) $ (2,288,898) $ (2,677,540)
============= ============= ============= ===============
Net Loss allocated:
To General Partners $ (11,177) $ (8,625) $ (22,889) $ (26,775)
To Limited Partners (1,106,506) (853,931) (2,266,009) (2,650,765)
------------- ------------- ------------- ---------------
$ (1,117,683) $ (862,556) $ (2,288,898) $ (2,677,540)
============= ============= ============= ===============
Net Loss per Limited
Partnership Unit
(50,930 Units) $ (21.72) $ (16.77) $ (44.49) $ (52.05)
============= ============= ============= ===============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
For the Nine Months Ended December 31, 1999
(Unaudited)
Net
Initial Investor Unrealized
General Limited Limited Gains
Partners Partner Partners (Losses) Total
Balance at March 31, 1999 $ (158,033) $ 5,000 $ 28,781,859 $ 10,286 $ 28,639,112
------------ ------- ------------- ----------- --------------
Comprehensive Loss:
Net change in net unrealized
gains on marketable securities
available for sale - - - (42,665) (42,665)
Net Loss (22,889) - (2,266,009) - (2,288,898)
------------ ------- ------------- ----------- --------------
Comprehensive Loss (22,889) - (2,266,009) (42,665) (2,331,563)
------------ ------- ------------- ----------- --------------
Balance at December 31, 1999 $ (180,922) $ 5,000 $ 26,515,850 $ (32,379) $ 26,307,549
============ ======= ============= =========== ==============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended December 31, 1999 and 1998
(Unaudited)
1999 1998
------------- -------------
Net cash used for operating activities $ (200,514) $ (225,894)
------------- -------------
Cash flows from investing activities:
Purchases of marketable securities (498,955) (1,547,876)
Proceeds from sales and maturities of
marketable securities 957,692 1,796,627
Investments in Local Limited Partnerships (230,000) -
Cash distributions received from Local
Limited Partnerships 89,575 151,496
------------- -------------
Net cash provided by investing activities 318,312 400,247
------------- -------------
Net increase in cash and cash equivalents 117,798 174,353
Cash and cash equivalents, beginning of period 114,347 375,168
------------- -------------
Cash and cash equivalents, end of period $ 232,145 $ 549,521
============= =============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the financial
statements and notes thereto included with the Fund's 10-K for the year ended
March 31, 1999. In the opinion of management, these financial statements include
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the Fund's financial position and results of operations. The
results of operations for the period may not be indicative of the results to be
expected for the year.
The Managing General Partner has elected to report results of the Local Limited
Partnerships on a 90 day lag basis because the Local Limited Partnerships report
their results on a calendar year basis. Accordingly, the financial information
of the Local Limited Partnerships that is included in the accompanying financial
statements is as of September 30, 1999 and 1998.
1. Investments in Local Limited Partnerships
The Fund has acquired interests in nineteen Local Limited Partnerships which own
and operate multi-family housing complexes. The Fund, as Investor Limited
Partner, pursuant to the various Local Limited Partnership Agreements, has
acquired a 99% interest, with the exception of Springwood, in which it has a
19.80% interest, in the profits, losses, tax credits and cash flows from
operations of each of the Local Limited Partnerships. Upon dissolution, proceeds
will be distributed according to each respective partnership agreement.
The following is a summary of Investments in Local Limited Partnerships at
December 31, 1999:
Capital Contributions paid to Local Limited Partnerships
and purchase price paid to withdrawing partners of
Local Limited Partnerships $ 39,539,152
Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
unrecognized losses of $871,205) (16,536,428)
Cash distributions received from Local Limited Partnerships (709,858)
-------------
Investments in Local Limited Partnerships before adjustments 22,292,866
Excess of investment costs over the underlying net assets acquired:
Acquisition fees and expenses 1,252,338
Accumulated amortization of acquisition fees and expenses (179,601)
-------------
Investments in Local Limited Partnerships $ 23,365,603
=============
The Fund's share of the net losses of the Local Limited Partnerships for the
nine months ended December 31, 1999 totaled $2,300,012. For the nine months
ended December 31, 1999, the Fund has not recognized $207,423 of equity in
losses relating to one Local Limited Partnership where cumulative equity in
losses exceeded its total investment in the Local Limited Partnership.
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Commitments
At December 31, 1999, the Fund has committed to make future capital
contributions and pay future purchase price installments on its investments in
Local Limited Partnerships. These future payments are contingent upon the
achievement of certain criteria set forth in the Local Limited Partnership
Agreements and total approximately $408,000. In addition, the Fund has set aside
$217,000 for future capital contributions to one Local Limited Partnership.
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain matters discussed herein constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. The Fund
intends such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements and is including this statement for
purposes of complying with these safe harbor provisions. Although the Fund
believes the forward-looking statements are based on reasonable assumptions, the
Fund can give no assurance that their expectations will be attained. Actual
results and timing of certain events could differ materially from those
projected in or contemplated by the forward-looking statements due to a number
of factors, including, without limitation, general economic and real estate
conditions and interest rates.
Liquidity and Capital Resources
At December 31, 1999, the Fund had cash and cash equivalents of $232,145,
compared with $114,347 at March 31, 1999. The increase is primarily attributable
to proceeds from sales and maturities of marketable securities in excess of
purchases of marketable securities and cash distributions received from Local
Limited Partnerships. This increase is partially offset by capital contributions
paid to Local Limited Partnerships and cash used for operating activities.
As of December 31, 1999, approximately $2,230,000 of marketable securities has
been designated as Reserves by the Managing General Partner. The Reserves, as
defined in the Partnership Agreement, were established to be used for working
capital of the Fund and contingencies related to the ownership of Local Limited
Partnership interests. Management believes that the interest income earned on
Reserves, along with cash distributions received from Local Limited
Partnerships, to the extent available, will be sufficient to fund the Fund's
ongoing operations. Reserves may be used to fund operating deficits if the
Managing General Partner deems such funding appropriate.
At December 31, 1999, the Fund has committed to make future capital
contributions and pay future purchase price installments on its investments in
Local Limited Partnerships. These future payments are contingent upon the
achievement of certain criteria set forth in the Local Limited Partnership
Agreements and total approximately $408,000. In addition, the Fund has set aside
$217,000 for future capital contributions to one Local Limited Partnership.
Since the Fund invests as a limited partner, the Fund has no contractual duty to
provide additional funds to Local Limited Partnerships beyond its specified
investment. Thus, as of December 31, 1999, the Fund had no contractual or other
obligation to any Local Limited Partnership which had not been paid or provided
for, except as described above.
In the event a Local Limited Partnership encounters operating difficulties
requiring additional funds, the Fund might deem it in its best interest to
voluntarily provide such funds in order to protect its investment. No such event
has occurred to date.
Cash Distributions
No cash distributions were made during the nine months ended December 31, 1999.
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Fund's results of operations for the three and nine months ended December
31, 1999 resulted in net losses of $1,117,683 and $2,288,898, respectively, as
compared to net losses of $862,556 and $2,677,540 for the same respective
periods in 1998. The increase in net losses for the three month period is
primarily attributable to investments by the Fund to a Local Limited Partnership
as a result of a loan modification at the Local Limited Partnership resulting in
the recognition of previously unrecognized losses. The decrease in net losses
for the nine month period is primarily attributable to a decrease in equity in
losses of Local Limited Partnerships and a decrease in general and
administrative expenses. Equity in losses of Local Limited Partnerships
decreased due to an increase in total rental income of the Local Limited
Partnerships, partially offset by a decrease unrecognized losses by the Fund of
Local Limited Partnerships whose cumulative equity in losses exceed its total
investment in those partnerships.
Property Discussions
As previously reported, Grand Boulevard Renaissance, located in Chicago,
Illinois, has been experiencing operating difficulties and is unable to achieve
debt service coverage. These difficulties are mainly due to poor collections
from tenants. On April 1, 1998, a new management agent was brought in to monitor
property operations and increase tenant collections. As of December 31, 1999,
occupancy was 97%. The Managing General Partner will be working closely with the
Local General Partner and new management agent to monitor operations.
As previously reported, Los Claveles II, located in Trujillo Alto, Puerto Rico,
continues to experience operating difficulties due to ongoing capital repair
needs and management issues.
However, effective December 30, 1999, the Managing General Partner and the
lender were successful in closing a workout for Los Claveles II which included
bringing in the replacement General Partner and restructuring the existing debt
on the property. The loan restructuring will generate cancellation of debt
income. However, this workout provides funds for much needed capital
improvements and deferred maintenance. In addition, the incoming Local General
Partner and its management affiliate are well qualified and experienced to deal
with the complicated task of turning this property around. The Managing General
Partner will continue to monitor this property closely.
Oak Ridge, located in Macon, Georgia, has been experiencing operating
difficulties due to low occupancy. Occupancy as of December 31, 1999 was 70%. In
September, a new on-site manager was hired to enhance tenant screening and
marketing efforts. The Managing General Partner will be working closely with the
management agent and Local General Partner to monitor property operations and
marketing efforts.
Woods Lane, located in Rogers, Arkansas, has been suffering from poor occupancy
due to local competition. Occupancy as of December 31, 1999 was 94%. In
September 1998, a new management team was hired to step-up the marketing
efforts, review rent concessions, install a resident referral plan and monitor
competing rent levels. In addition, capital improvements have recently been
completed which include exterior painting, carpet replacement and landscaping
and grounds improvement. The Managing General Partner will closely monitor the
new management agent and also review possible debt restructuring. The Managing
General Partner is currently funding operating deficits.
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K
(a)Exhibits - None
(b)Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended December 31, 1999.
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DATED: February 11, 2000 BOSTON FINANCIAL TAX CREDIT FUND VII,
A LIMITED PARTNERSHIP
By: Arch Street VII, Inc.,
its Managing General Partner
/s/Randolph G. Hawthorne
Randolph G. Hawthorne
Managing Director, Vice President and
Chief Operating Officer