February 14, 2002
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Boston Financial Tax Credit Fund VIII, A Limited Partnership
Report on Form 10-QSB for the Quarter Ended December 31, 2001
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 a copy of subject report.
Very truly yours,
/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller
TC8-Q3.DOC
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(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, 2001
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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 0-26522
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Boston Financial Tax Credit Fund VIII, A Limited Partnership
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(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
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(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 VIII
(A Limited Partnership)
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page No.
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Item 1. Financial Statements
Balance Sheet (Unaudited) - December 31, 2001 1
Statements of Operations (Unaudited) - For the Three and Nine
Months Ended December 31, 2001 and 2001 2
Statement of Changes in Partners' Equity (Deficiency) (Unaudited) -
For the Nine Months Ended December 31, 2001 3
Statements of Cash Flows (Unaudited) - For the Nine
Months Ended December 31, 2001 and 2001 4
Notes to the Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II - OTHER INFORMATION
Items 1-6 8
SIGNATURE 9
BOSTON FINANCIAL TAX CREDIT FUND VIII
(A Limited Partnership)
BALANCE SHEET
December 31, 2001
(Unaudited)
Assets
Cash and cash equivalents $ 86,809
Investments in Local Limited Partnerships, net (Note 1) 17,584,564
Marketable securities, at fair value 770,112
Other assets 11,122
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Total Assets $ 18,452,607
=============
Liabilities and Partners' Equity
Accounts payable to affiliate $ 604,899
Accrued expenses 30,353
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Total Liabilities 635,252
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General, Initial and Investor Limited Partners' Equity 17,793,929
Net unrealized gains on marketable securities 23,426
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Total Partners' Equity 17,817,355
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Total Liabilities and Partners' Equity $ 18,452,607
=============
The accompanying notes are an integral part of these
financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended December 31, 2001 and 2000
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31, December 31, December 31,
2001 2000 2001 2000
------------- ------------- -------------- ---------------
Revenue:
Investment $ 13,853 $ 25,266 $ 51,244 $ 74,696
Other 100 50 950 1,030
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Total Revenue 13,953 25,316 52,194 75,726
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Expenses:
Asset management fees, affiliate 54,446 52,679 163,338 158,037
General and administrative
expenses (includes
reimbursements to affiliates
in the amounts of $30,244
and $18,957 in 2001 and
2000, respectively) 48,059 (26,186) 103,671 55,466
Provision for valuation
of Investment in Local
Limited Partnerships 231,368 8,884 714,471 8,884
Amortization 7,486 7,486 22,458 22,458
------------- ------------- -------------- ---------------
Total Expenses 341,359 42,863 1,003,938 244,845
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Loss before equity in losses
of Local Limited Partnerships (327,406) (17,547) (951,744) (169,119)
Equity in losses of Local
Limited Partnerships (Note 1) (247,138) (536,791) (1,479,699) (1,488,771)
------------- ------------- -------------- ---------------
Net Loss $ (574,544) $ (554,338) $ (2,431,443) $ (1,657,890)
============= ============= ============== ===============
Net Loss allocated:
To General Partners $ (5,745) $ (5,543) $ (24,314) $ (16,579)
To Limited Partners (568,799) (548,795) (2,407,129) (1,641,311)
------------- ------------- -------------- ---------------
$ (574,544) $ (554,338) $ (2,431,443) $ (1,657,890)
============= ============= ============== ===============
Net Loss per Limited
Partnership Unit (36,497 Units) $ (15.58) $ (15.04) $ (65.95) $ (44.97)
============= ============= ============== ===============
The accompanying notes are an integral part of these
financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII
(A Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
For the Nine Months Ended December 31, 2001
(Unaudited)
Initial Investor Net
General Limited Limited Unrealized
Partner Partner Partners Gains Total
----------- --------- -------------- ----------- ------------
Balance at March 31, 2001 $ (114,094) $ 100 $ 20,339,366 $ 22,705 $ 20,248,077
----------- --------- -------------- ----------- -------------
Comprehensive Income (Loss):
Change in net unrealized gains
on marketable securities
available for sale - - - 721 721
Net Loss (24,314) - (2,407,129) - (2,431,443)
----------- --------- -------------- ----------- -------------
Comprehensive Income (Loss) (24,314) - (2,407,129) 721 (2,430,722)
----------- --------- -------------- ----------- -------------
Balance at December 31, 2001 $ (138,408) $ 100 $ 17,932,237 $ 23,426 $ 17,817,355
=========== ========= ============== =========== =============
The accompanying notes are an integral part of these
financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended December 31, 2001 and 2000
(Unaudited)
2001 2000
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Net cash used for operating activities $ (128,628) $ (150,771)
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Net cash provided by investing activities 134,859 87,369
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Net increase (decrease) in cash and cash equivalents 6,231 (63,402)
Cash and cash equivalents, beginning of period 80,578 188,645
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Cash and cash equivalents, end of period $ 86,809 $ 125,243
============= =============
The accompanying notes are an integral part of these
financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII
(A Limited Partnership)
Notes to the Financial Statements
(Unaudited)
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-QSB and do not include all of the
information and note disclosures required by accounting principles generally
accepted in the United States of America. These statements should be read in
conjunction with the financial statements and notes thereto included with the
Fund's Form10-KSB for the year ended March 31, 2001. 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
periods may not be indicative of the results to be expected for the year.
The Managing General Partner of the Fund has elected to report results of the
Local Limited Partnerships in which the Fund has a limited partnership interest
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 September 30, 2001 and 2000.
1. 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. Upon dissolution of the Local Limited Partnerships, proceeds will be
distributed according to the partnership agreements.
The following is a summary of investments in Local Limited Partnerships at
December 31, 2001:
Capital contributions and advances paid to Local Limited Partnerships $ 30,157,241
Cumulative equity in losses of Local Limited Partnerships (11,827,260)
Cumulative cash distributions received from Local Limited Partnerships (707,812)
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Investments in Local Limited Partnerships before adjustments 17,622,169
Excess of investment costs over the underlying net assets acquired:
Acquisition fees and expenses 1,048,010
Accumulated amortization of acquisition fees and expenses (193,233)
--------------
Investments in Local Limited Partnerships prior to reserve for valuation 18,476,946
Reserve for valuation of investments in Local Limited Partnerships (892,382)
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Investments in Local Limited Partnerships $ 17,584,564
===============
The Fund has provided a reserve for valuation for its investments in certain
Local Limited Partnerships because there is evidence of non-temporary declines
in the recoverable amount of these investments.
For the nine months ended December 20, 2001, the Fund advanced $723,355 to
certain Local Limited Partnerships to fund operating shortfalls, all of which
was reserved. In addition the Fund received $8,884 from one Local Limited
Partnership as a repayment of previous advances.
The Fund's share of net losses of the Local Limited Partnerships for the nine
months ended December 31, 2001 is $1,479,699.
BOSTON FINANCIAL TAX CREDIT FUND VIII
(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 its 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, 2001, the Fund had cash and cash equivalents of $86,809, as
compared to $80,578 at March 31, 2001. This increase is primarily attributable
to proceeds from sales of marketable securities and cash distributions received
from Local Limited Partnerships. This increase is partially offset by advances
paid to Local Limited Partnerships to fund Property operations.
At December 31, 2001, approximately $857,000 of cash, cash equivalents and
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. The Managing General
Partner 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 December 31, 2001, the Fund had no contractual or other
obligation to any Local Limited Partnership which had not been paid or provided
for.
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. As of
December 31, 2001, the Fund advanced approximately $892,000 to one Local Limited
Partnership to fund operating deficits.
Cash Distributions
No cash distributions were made during the nine months ended December 31, 2001.
Results of Operations
Three Month Period
For the three months ended December 31, 2001, the Fund's operations resulted in
a net loss of $574,544, as compared to $554,338 for the three months ended
December 31, 2000. The increase in net loss is primarily attributable to an
increase in provision for valuation of investments in Local Limited
Partnerships, partially offset by a decrease in equity in losses of Local
Limited Partnerships.
BOSTON FINANCIAL TAX CREDIT FUND VIII
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Results of Operations (continued)
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Nine Month Period
For the nine months ended December 31, 2001, the Fund's operations resulted in a
net loss of $2,431,443, as compared to $1,657,890 for the nine months ended
December 31, 2000. The increase in net loss is primarily attributable to an
increase in provision for valuation of investments in Local Limited Partnerships
as a result of advances made to one of the Local Limited Partnerships which had
been experiencing operating difficulties.
Property Discussions
The Fund's investment portfolio consists of limited partnership interests in 10
Local Limited Partnerships, each of which owns and operates a multi-family
apartment complex. A majority of the Properties have stabilized operations and
operate above break-even. A few Properties generate cash flow deficits that the
Local General Partners of those Properties fund through project expenses loans,
subordinated loans or operating escrows. However, some properties have
persistent operating difficulties that could either: i) have an adverse impact
on the Fund's liquidity; ii) result in their foreclosure or iii) result in the
Managing General Partner deeming it appropriate for the Fund to dispose of its
interest in the Local Limited Partnership. Also, the Managing General Partner,
in the normal course of the Fund's business, may desire to dispose of certain
Local Limited Partnerships. The following Property discussions focus only on
such Properties.
Live Oaks Plantation, located in West Palm Beach, Florida, has historically
generated operating deficits due to difficulty in attracting and maintaining
quality tenants. In addition, the Property's curb appeal has diminished due to
the deferral of certain maintenance and repair projects. During the fourth
quarter of 2000, the Local General Partner indicated a desire to transfer its
interest in the Local Limited Partnership to a replacement Local General
Partner. The Managing General Partner believes that it would be in the best
interests of the Property to replace the Local General Partner. Accordingly, the
Managing General Partner has been working with the Local General Partner to
identify an acceptable replacement. In conjunction with the potential transfer,
the Local General Partner agreed to replace his affiliated on-site management
company, and in February 2001, a new on-site management company began managing
Property operations. The new management company has improved Property operations
and occupancy. The Fund has advanced a significant amount of Reserves to the
Local Limited Partnership to fund capital improvements and deferred maintenance
expenses.
Further, Live Oaks Plantation is undergoing an audit by the Internal Revenue
Service ("IRS"). The audit's focus is on the tax treatment of certain items,
such as land improvements, impact fees, utility fees and developer fees. The
Managing General Partner believe that the IRS wants to allocate some, or all, of
these costs to land rather than to the buildings. Since land cannot be included
in eligible basis and is not depreciable, tax credits and losses may be at risk.
As a result of the IRS audit, negotiations to replace the Local General Partner
have been delayed.
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 a significant impairment in carrying
value exists, a provision to write down the asset to fair value will be recorded
in the Fund's financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII
(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, 2001.
BOSTON FINANCIAL TAX CREDIT FUND VIII
(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 14, 2002 BOSTON FINANCIAL TAX CREDIT FUND VIII,
A LIMITED PARTNERSHIP
By: Arch Street VIII Limited Partnership,
its General Partner
/s/Jenny Netzer
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Jenny Netzer
Principal, Head of Housing and
Community Investment