November 14 , 2000
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Re: Boston Financial Tax Credit Fund VII, A Limited Partnership
Report on Form 10-Q for the Quarter Ended September 30, 2000
File Number 0-24584
Dear Sir/Madam:
Pursuant to the requirements of Section 15(d) of the Securities Exchange Act of
1934, there is filed herewith one copy of subject report.
Very truly yours,
/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller
TC7-Q2.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 September 30, 2000
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-24584
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Boston Financial Tax Credit Fund VII, A Limited Partnership
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(Exact name of registrant as specified in its charter)
Massachusetts 04-3166203
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(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
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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 - September 30, 2000 (Unaudited)
and March 31, 2000 1
Statements of Operations (Unaudited) -
For the Three and Six Months Ended
September 30, 2000 and 1999 2
Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Six Months Ended September 30, 2000 3
Statements of Cash Flows (Unaudited) -
For the Six Months Ended September 30, 2000 and 1999 4
Notes to the Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION
Items 1-6 9
SIGNATURE 10
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
BALANCE SHEETS
September 30, March 31,
2000 2000
------------- ---------
(Unaudited)
Assets
Cash and cash equivalents $ 275,443 $ 307,807
Marketable securities, at fair value 2,573,557 2,491,752
Restricted cash 288,971 280,053
Investments in Local Limited Partnerships, net (Note 1) 21,383,047 22,640,861
Other assets 31,396 31,930
------------- -------------
Total Assets $ 24,552,414 $ 25,752,403
============= =============
Liabilities and Partners' Equity
Accounts payable to affiliates $ 244,014 $ 170,084
Accounts payable and accrued expenses 40,232 36,491
------------- -------------
Total Liabilities 284,246 206,575
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Commitments (Note 2)
General, Initial and Investor Limited Partners' Equity 24,284,967 25,580,333
Net unrealized losses on marketable securities (16,799) (34,505)
------------- -------------
Total Partners' Equity 24,268,168 25,545,828
------------- -------------
Total Liabilities and Partners' Equity $ 24,552,414 $ 25,752,403
============= =============
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 Six Months Ended September 30, 2000 and 1999
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
------------- ------------- ------------- ----------
Revenue:
Investment $ 40,171 $ 42,222 $ 80,530 $ 86,217
Other 8,896 14,047 20,022 64,683
------------ ------------ ------------- -------------
Total Revenue 49,067 56,269 100,552 150,900
------------ ------------ ------------- -------------
Expenses:
General and administrative
(includes reimbursements
to an affiliate in the amounts
of $65,012 and $43,791 in 2000
and 1999, respectively) 50,607 35,741 112,256 87,401
Asset management fee,
related party 75,499 73,888 150,998 147,776
Provision for valuation of
investment in Local
Limited Partnership 35,551 - 35,551 -
Amortization 8,045 8,046 16,091 16,092
------------ ------------ ------------- -------------
Total Expenses 169,702 117,675 314,896 251,269
------------ ------------ ------------- -------------
Loss before equity in losses
of Local Limited Partnerships (120,635) (61,406) (214,344) (100,369)
Equity in losses of
Local Limited Partnerships
(Note 1) (562,681) (554,742) (1,081,022) (1,070,846)
------------ ------------ ------------- -------------
Net Loss $ (683,316) $ (616,148) $ (1,295,366) $ (1,171,215)
============ ============ ============= =============
Net Loss allocated:
To General Partners $ (6,833) $ (6,161) $ (12,954) $ (11,712)
To Limited Partners (676,483) (609,987) (1,282,412) (1,159,503)
------------ ------------ ------------- -------------
$ (683,316) $ (616,148) $ (1,295,366) $ (1,171,215)
============ ============ ============= =============
Net Loss per Limited
Partnership Unit
(50,930 Units) $ (13.28) $ (11.98) $ (25.18) $ (22.77)
============ ============ ============= ============
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 Six Months Ended September 30, 2000
(Unaudited)
Initial Investor Net
General Limited Limited Unrealized
Partners Partner Partners Losses Total
Balance at March 31, 2000 $ (188,518) $ 5,000 $ 25,763,851 $ (34,505) $ 25,545,828
----------- --------- -------------- ----------- -------------
Comprehensive Income (Loss):
Change in net unrealized losses
on marketable securities
available for sale - - - 17,706 17,706
Net Loss (12,954) - (1,282,412) - (1,295,366)
----------- --------- -------------- ----------- -------------
Comprehensive Income (Loss) (12,954) - (1,282,412) 17,706 (1,277,660)
----------- --------- -------------- ----------- -------------
Balance at September 30, 2000 $ (201,472) $ 5,000 $ 24,481,439 $ (16,799) $ 24,268,168
=========== ========= ============== =========== =============
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 Six Months Ended September 30, 2000 and 1999
(Unaudited)
2000 1999
------------- -------------
Net cash used for operating activities $ (93,463) $ (139,724)
------------- -------------
Cash flows from investing activities:
Purchases of marketable securities (223,286) (399,725)
Proceeds from sales and maturities of
marketable securities 159,235 659,720
Advance to Local Limited Partnership (35,551) -
Investments in Local Limited Partnerships - (25,000)
Cash distributions received from Local
Limited Partnerships 160,701 87,378
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Net cash provided by investing activities 61,099 322,373
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Net increase (decrease) in cash and cash equivalents (32,364) 182,649
Cash and cash equivalents, beginning 307,807 114,347
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Cash and cash equivalents, ending $ 275,443 $ 296,996
============= =============
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 Form 10-K for the year
ended March 31, 2000. In the opinion of management, these financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the Fund's financial position and results of
operations. The results of operations for the period may not be indicative of
the results to be expected for the year.
The Managing General Partner has elected to report results of the Local Limited
Partnerships on a 90 day lag basis because the Local Limited Partnerships report
their results on a calendar year basis. Accordingly, the financial information
about the Local Limited Partnerships that is included in the accompanying
financial statements is as of June 30, 2000 and 1999.
1. Investments in Local Limited Partnerships
The Fund uses the equity method to account for its limited partnership interests
in nineteen Local Limited Partnerships which own and operate multi-family
housing complexes. The Fund, as Investor Limited Partner, pursuant to the
various Local Limited Partnership Agreements, which contain certain operating
and distribution restrictions, has generally acquired a 99% interest, with the
exception of Springwood which is a 19.8% interest, in the profits, losses, tax
credits and cash flows from operations of each of the Local Limited
Partnerships. Upon dissolution, proceeds will be distributed according to each
respective partnership agreement.
The following is a summary of investments in Local Limited Partnerships at
September 30, 2000:
Capital contributions and advances paid to
Local Limited Partnerships and purchase price
paid to withdrawing partners of Local Limited
Partnerships $ 39,574,703
Cumulative equity in losses of Local Limited
Partnerships (excluding cumulative unrecognized losses
of $1,712,345) (18,270,127)
Cash distributions received from Local Limited
Partnerships (934,578)
---------------
Investments in Local Limited Partnerships before
adjustments 20,369,998
Excess of investment costs over the underlying net
assets acquired:
Acquisition fees and expenses 1,252,338
Accumulated amortization of acquisition fees and expenses (203,738)
---------------
Investments in Local Limited Partnerships before
reserve for valuation 21,418,598
Reserve for valuation of investment in Local Limited Partnership (35,551)
---------------
Investments in Local Limited Partnerships $ 21,383,047
===============
The Fund's share of the net losses of the Local Limited Partnerships for the six
months ended September 30, 2000 totaled $1,332,964. For the six months ended
September 30, 2000, the Fund has not recognized $251,942 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 September 30, 2000, the Fund has committed to make future capital
contributions and pay future purchase price installments on its investments in
Local Limited Partnerships. These future payments are contingent upon the
properties' 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 September 30, 2000, the Fund had cash and cash equivalents of $275,443
compared with $307,807 at March 31, 2000. This decrease is due to purchases of
marketable securities, advances to Local Limited Partnerships and cash used for
operations. These decreases are partially offset by proceeds from sales and
maturities of marketable securities and cash distributions received from Local
Limited Partnerships.
As of September 30, 2000, approximately $2,221,000 of marketable securities has
been designated as Reserves by the Managing General Partner. The Reserves were
established to be used for working capital of the Fund and contingencies related
to the ownership of Local Limited Partnership interests. Management believes
that the interest income earned on Reserves, along with cash distributions
received from Local Limited Partnerships, to the extent available, will be
sufficient to fund the Fund's ongoing operations. Reserves may be used to fund
operating deficits, if the Managing General Partner deems funding appropriate.
At September 30, 2000, the Fund has committed to make future capital
contributions and pay future purchase price installments on its investments in
Local Limited Partnerships. These future payments are contingent upon the
properties' achievement of certain criteria as set forth in the Local Limited
Partnership Agreements and total approximately $408,000. In addition, the Fund
has set aside $217,000 for future capital contributions to one Local Limited
Partnership.
Since the Fund invests as a limited partner, the Fund has no contractual duty to
provide additional funds to Local Limited Partnerships beyond its specified
investment. Thus, as of September 30, 2000, the Fund had no contractual or other
obligation to any Local Limited Partnership which had not been paid or provided
for, except as described above.
In the event a Local Limited Partnership encounters operating difficulties
requiring additional funds, the Fund might deem it in its best interests to
provide such funds, voluntarily, in order to protect its investment. No such
event has occurred to date.
Cash Distributions
No cash distributions were made during the six months ended September 30, 2000.
Results of Operations
The Fund's results of operations for the three and six months ended September
30, 2000 resulted in a net loss of $683,316 and $1,295,366, respectively, as
compared to a net loss of $616,148 and $1,171,215 for the same periods in 1999.
The increase in net loss is primary attributable to increases in equity in
losses of Local Limited Partnerships, general and administrative expenses, and
provision for valuation of investment in Local Limited Partnerships and a
decrease in other revenue.
BOSTON FINANCIAL TAX CREDIT FUND VII
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Property Discussions
As previously reported, Grand Boulevard Renaissance, located in Chicago,
Illinois, has been experiencing operating difficulties and has difficulties in
achieving debt service coverage. As a result of the operating difficulties, the
Local General Partner has been negotiating with the lender to reduce the
interest rate on the current mortgage. However, the negotiations slowed during
the third quarter because the individual with whom the Local General Partner had
been negotiating resigned his position. The Managing General Partner performed a
site visit in April and found the property to be in good physical condition.
Occupancy improved from 83% at June 30, 2000 to 93% at September 30, 2000. The
Managing General Partner will continue to work closely with the Local General
Partner and new management agent to monitor operations.
As previously reported, Los Claveles II (Trujillo Alto, Puerto Rico) continues
to perform poorly. The property requires significant capital for maintenance and
repair and also faces crime and security issues. As of September 30, 2000,
occupancy was 45%. Effective December 30, 1999, the property restructured its
existing mortgage loan balance, in the approximate amount of $9 million, into a
$4 million first mortgage with an interest rate of 6% amortized over a 30-year
term and a $5 million second mortgage with no interest and principal payable
from cash flow. No debt service payments were required until November 2000. The
reduction in debt service payments makes cash available for use towards the
necessary maintenance and repairs required at the property. However, due to
certain issues, the necessary repairs have not yet been completed and operations
have not improved. As a result, the property was unable to make the November 1,
2000 debt service payment. Although the loan is technically in default, the
workout agreement contains a clause that obligates the lender to renegotiate the
terms of the workout agreement in the event that the terms of the agreement are
not met. As part of the loan restructuring, the Local General Partner was
replaced. The Managing General Partner will continue to closely monitor the
property's operations.
Operations at Oak Ridge, located in Macon, Georgia, continue to suffer primarily
due to low occupancy and rental rates. The low occupancy is generally
attributable to lack of public transportation, site management turnover, as well
as a fire in one of the buildings during the fourth quarter of 1999. The
building that experienced the fire was back on line as of March 2000. Also
during March 2000, a new on-site manager was hired to further enhance tenant
marketing efforts, which include direct mailing and posting fliers on cars, as
well as enhanced interaction with the local housing authority to attract more
tenants with Section 8 certificates. These efforts positively impacted occupancy
as the property was 84% occupied at September 30, 2000, its highest level since
1996. The Managing General Partner will continue to work closely with the
management agent and Local General Partner to monitor property operations and
marketing efforts.
The Fund has implemented policies and practices for assessing potential
impairment of its investments in Local Limited Partnerships. The investments are
analyzed by real estate experts to determine if impairment indicators exist. If
so, the carrying value is compared to the undiscounted future cash flows
expected to be derived from the asset. If there is a significant impairment in
carrying value, a provision to write down the asset to fair value will be
recorded in the Fund's financial statements.
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 September 30, 2000.
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: November 14 , 2000 BOSTON FINANCIAL TAX CREDIT FUND VII,
A LIMITED PARTNERSHIP
By: Arch Street VII, Inc.,
its Managing General Partner
/s/Randolph G. Hawthorne
----------------------------------------
Randolph G. Hawthorne
Managing Director, Vice President and
Chief Operating Officer