November 13, 1996
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 Edgar for Quarter Ended September 30, 1996
File No. 0-24584
Dear Sir/Madam:
Pursuant to the requirements of Rule 901(d) of Regulation S-T, enclosed is one
copy of subject report.
Very truly yours,
/s/Marie D. Reynolds
Marie D. Reynolds
Assistant Controller
TC7-10Q2.DOC
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)of the SecuritiesExchange Act of 1934
(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, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended September 30, 1996 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
incorporation or organization) Identification No.)
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 - September 30, 1996 (Unaudited)
and March 31, 1996 1
Statements of Operations (Unaudited) - For the Three and
Six Months Ended September 30, 1996 and 1995 2
Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Six Months Ended September 30, 1996 3
Statements of Cash Flows (Unaudited) - For the Six
Months Ended September 30, 1996 and 1995 4
Notes to Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION
Items 1-6 10
SIGNATURE 11
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
BALANCE SHEETS
September 30, March 31,
1996 1996
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 753,739 $ 334,845
Other current assets 25,791 29,943
------------ ------------
Total current assets 779,530 364,788
Investments in Local Limited Partnerships (Note 2) 33,466,652 34,328,400
Restricted cash 232,951 227,320
Marketable securities, at fair value (Note 1) 2,905,474 3,855,342
Organization costs, net of accumulated
amortization of $35,833 and
$30,833, respectively 14,167 19,167
------------ ------------
Total Assets $ 37,398,774 $ 38,795,017
============ ============
Liabilities and Partners' Equity
Current liabilities:
Accounts payable to affiliates $ 210,753 $ 212,975
Accounts payable and accrued expenses 36,374 66,417
------------ ------------
Total current liabilities 247,127 279,392
------------ ------------
Commitments (Note 3)
General, Initial and Investor Limited Partners' Equity 37,186,448 38,536,506
Net unrealized losses on marketable securities (34,801) (20,881)
------------ ------------
Total Partners' Equity 37,151,647 38,515,625
------------ ------------
Total Liabilities and Partners' Equity $ 37,398,774 $ 38,795,017
============ ============
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, 1996 and 1995
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
----------------- ---------------- ----------------- ----------------
Revenue:
Investment $ 61,366 $ 75,473 $ 103,118 $ 85,751
Other 250 17,664 66,833 43,989
-------------- ------------- ------------- --------------
Total Revenue 61,616 93,137 169,951 129,740
-------------- ------------- ------------- --------------
Expenses:
Asset management fee,
related party 68,826 67,146 137,652 134,292
General and administrative
(includes reimbursements
to an affiliate in the amounts
of $61,782 and $43,332 in
1996 and 1995, respectively) 53,981 60,362 119,859 120,101
Amortization 11,458 11,038 22,915 20,237
-------------- ------------- ------------- --------------
Total Expenses 134,265 138,546 280,426 274,630
-------------- ------------- ------------- --------------
Loss before equity in losses
of Local Limited Partnerships (72,649) (45,409) (110,475) (144,890)
Equity in losses of
Local Limited Partnerships (644,393) (588,370) (1,239,583) (1,257,435)
-------------- ------------- ------------- --------------
Net Loss $ (717,042) $ (633,779) $ (1,350,058) $ (1,402,325)
============== ============= ============= ==============
Net Loss allocated:
To General Partners $ (7,171) $ (6,338) $ (13,501) $ (14,023)
To Limited Partners (709,871) (627,441) (1,336,557) (1,388,302)
-------------- ------------- ------------- --------------
$ (717,042) $ (633,779) $ (1,350,058) $ (1,402,325)
============== ============= ============= ==============
Net Loss per Limited
Partnership Unit
(50,930 Units) $ (13.94) $ (12.32) $ (26.24) $ (27.26)
============= ============= ============ ==============
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)
(Unaudited)
For the Six Months Ended September 30, 1996
Initial Investor Net
General Limited Limited Unrealized
Partners Partners Partners Losses Total
Balance at March 31, 1996 $ (58,956) $ 5,000 $ 38,590,462 $ (20,881) $ 38,515,625
Net change in net unrealized
losses on marketable securities
available for sale - - - (13,920) (13,920)
Net Loss (13,501) - (1,336,557) - (1,350,058)
---------- ------- ------------ ----------- ------------
Balance at September 30, 1996 $ (72,457) $ 5,000 $ 37,253,905 $ (34,801) $ 37,151,647
========== ======= ============ =========== ============
The accompanying notes are an integral part of these financial statements
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended September 30, 1996 and 1995
1996 1995
------------- ---------
Net cash used for operating activities $ (173,078) $ (57,174)
------------ ------------
Cash flows from investing activities:
Purchases of marketable securities (498,336) (9,234,778)
Proceeds from sales and maturities
of marketable securities 1,494,706 9,717,406
Investments in Local Limited Partnerships (525,824) (2,194,019)
Cash distributions received from
Local Limited Partnerships 127,057 73,148
Payment of acquisition fees and expenses - (47,407)
Restricted cash (5,631) -
------------ ------------
Net cash provided by (used for) investing activities 591,972 (1,685,650)
------------ ------------
Cash flows from financing activities:
Payment of organizational and offering expenses - (2,389)
------------ ------------
Net cash used for financing activities - (2,389)
------------ ------------
Net increase (decrease) in cash and cash equivalents 418,894 (1,745,213)
Cash and cash equivalents, beginning of period 334,845 1,768,604
------------ ------------
Cash and cash equivalents, end of period $ 753,739 $ 23,391
============ ============
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, 1996. 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. Certain reclassifications have been made to prior period
financial statements to conform to current period classification.
1. Marketable Securities
A summary of Marketable Securities is as follows:
Gross Gross
Unrealized Unrealized
Cost Gains Losses Fair Value
Debt securities issued by
the US Treasury $ 1,729,758 $ - $ (12,784) $ 1,716,974
Mortgage backed securities 1,210,517 - (22,017) 1,188,500
------------ -------- --------- -----------
Marketable securities at
September 30, 1996 $ 2,940,275 $ - $ (34,801) $ 2,905,474
============ ======== ========= ===========
Debt securities issued by
the US Treasury and other
US government corporations
and agencies $ 2,563,670 $ - $ (10,111) $ 2,553,559
Mortgage backed securities 1,312,553 - (10,770) 1,301,783
------------ -------- --------- -----------
Marketable securities at
March 31, 1996 $ 3,876,223 $ - $ (20,881) $ 3,855,342
============ ======== ========= ===========
The contractual maturities at September 30, 1996 are as follows:
Cost Fair Value
Due in one year or less $ 614,789 $ 611,678
Due in one to five years 1,114,968 1,105,296
Mortgage backed securities 1,210,517 1,188,500
------------ ------------
$ 2,940,274 $ 2,905,474
============ ============
Actual maturities may differ from contractual maturities because some borrowers
have the right to call or prepay obligations. Proceeds from sales and maturities
were approximately $1,495,000 and $9,717,000 for the six months ended September
30, 1996 and 1995, respectively. Included in investment income are gross gains
of $66,706 and $28,628 and gross losses of $6,284 and $93,792 which were
realized on these sales during the six months ended September 30, 1996 and 1995,
respectively.
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
2. 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
generally acquired a 99% interest in the profits, losses, tax credits and cash
flows from operations of each of the Local Limited Partnerships. In the case of
Springwood, the Fund has a 19.80% interest and an affiliate of the General
Partner owns the remaining 79.2% Limited Partnership interest. 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, 1996 (unaudited):
Capital Contributions paid to Local Limited Partnerships
and purchase price paid to withdrawing partners of
Local Limited Partnerships $ 39,052,558
Cumulative equity in losses of Local Limited Partnerships (6,537,811)
Cash distributions received from Local Limited Partnerships (227,205)
-------------
Investments in Local Limited Partnerships before adjustments 32,287,542
Excess of investment cost over the underlying net assets acquired:
Acquisition fees and expenses 1,252,338
Accumulated amortization of acquisition fees and expenses (73,228)
-------------
Investments in Local Limited Partnerships $ 33,466,652
=============
Summarized financial information from the combined financial statements of the
nineteen Local Limited Partnerships in which the Fund has invested is as
follows:
Summarized Balance Sheets - as of June 30, 1996 (Unaudited)
Assets:
Investment property, net $ 101,875,478
Current assets 4,983,325
Other assets 3,610,334
-------------
Total Assets $ 110,469,137
=============
Liabilities and Partners' Equity:
Long-term debt $ 58,558,706
Current liabilities (includes current portion of long term debt) 4,708,293
Other debt 4,172,856
-------------
Total Liabilities 67,439,855
Partners' Equity 43,029,282
-------------
Total Liabilities and Partners' Equity $ 110,469,137
=============
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Investments in Local Limited Partnership (continued)
Summarized Statements of Operations for the six months ended June 30, 1996
(unaudited):
Rental and other income $ 6,022,197
------------
Expenses:
Operating 2,826,328
Interest 2,448,520
Depreciation and amortization 2,042,992
------------
Total Expenses 7,317,840
Net Loss $ (1,295,643)
============
Fund's share of Net Loss $ (1,239,583)
============
Other Partners' share of Net Loss $ (56,060)
============
3. Commitments
At September 30, 1996, 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 as set forth in the Local Limited Partnership
Agreements and total approximately $911,000.
4. Transactions with Affiliates
Lansing Management Company ("LMC"), an affiliate of the Managing General Partner
is the management agent for Twin Oaks Meadows. The management fee charged to the
property is equal to 5% of the property's gross revenues. Included in operating
expenses of the summarized income statement in Note 2 to the financial
statements is $11,184 of fees earned by LMC for the six months ended June 30,
1996.
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At September 30, 1996, the Fund had cash and cash equivalents of $753,739 as
compared with $334,845 at March 31, 1996. 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. These increases are partially offset by investments in
Local Limited Partnerships and cash used for operating activities.
As of September 30, 1996 approximately $2,509,000 of cash, cash equivalents and
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, 1996, 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 as set forth in the Local Limited Partnership
Agreements and total approximately $911,000.
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, 1996, 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
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, 1996.
Results of Operations
The Fund's results of operations for the three and six months ended September
30, 1996 resulted in net losses of $717,042 and $1,350,058 as compared to net
losses of $633,779 and $1,402,325 for the same periods in 1995. The increase in
net loss for the three months ended September 30, 1996 as compared to the same
period in 1995 is the result of a decrease in revenue. The improved net loss
position for the six months ended September 30, 1996 as compared to the same
period in 1995 is primarily attributable to an increase in revenue.
The decrease in revenue for the three months ended September 30, 1996 as
compared to the same period in 1995 is a result of a decrease in the amount of
interest earned on securities, because as capital contributions are paid to
Local Limited Partnerships the fund has less money to invest.
The increase in revenue for the six months ended September 30, 1996 as compared
to the same period in 1995 is a result of significantly lower capital losses
realized on sales and maturities of marketable securities during the six months
ended September 30, 1996.
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Property Discussions
As previously reported, one of the local limited partnerships in which the Fund
has invested, Los Claveles, experienced operating difficulties as a result of
widespread water infiltration that caused subsidy payments to be suspended on 85
of the 180 units until the repairs were completed. The suspension of Section 8
payments has resulted in large fluctuations in monthly revenue and caused the
property to fall substantially behind in its debt service and default on its
mortgage. The Partnership cured the default by advancing $208,000 from the
developer's escrow. Nevertheless, the property continues to suffer from poor
management, delayed subsidy payments and increasing capital repair issues. The
Managing General Partner continues to actively negotiate with the general
partners, lender and local housing authority to replace both the management
agent and the Local General Partners. We have reached a tentative agreement with
the lender to provide debt service relief in order to stabilize property
operations. Resolving the property's problems will likely require advances from
property and Partnership reserves. In the meantime, the management agent has
applied for a rent increase which is pending HUD approval.
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, 1996.
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 13, 1996 BOSTON FINANCIAL TAX CREDIT FUND VII,
A LIMITED PARTNERSHIP
By: Arch Street VII, Inc.,
its Managing General Partner
/s/Georgia Murray
Georgia Murray
A Managing Director, Treasurer and
Chief Financial Officer