June 29, 1998 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Boston Financial Qualified Housing Tax Credits L.P. V Annual Report on Form 10-K for the Year Ended March 31, 1998 Commission File Number 0-19706 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 the subject report. Very truly yours, /s/Dianne Groark Dianne Groark Assistant Controller QH510K-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended Commission file number March 31, 1998 0-19706 BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (Exact name of registrant as specified in its charter) Massachusetts 04-3054464 (State of organization) (I.R.S. Employer Identification No.) 101 Arch Street, 16th Floor Boston, Massachusetts 02110-1106 (Address of Principal executive office) (Zip Code) Registrant's telephone number, including area code 617/439-3911 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered None None Securities registered pursuant to Section 12(g) of the Act: UNITS OF LIMITED PARTNERSHIP INTEREST (Title of Class) 100,000 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Subsection 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] State the aggregate sales price of partnership units held by non-affiliates of the registrant. $60,904,650 as of March 31, 1998 DOCUMENTS INCORPORATED BY REFERENCE: LIST THE FOLLOWING DOCUMENTS IF INCORPORATED BY REFERENCE AND THE PART OF THE FORM 10-K INTO WHICH THE DOCUMENT IS INCORPORATED: (1) ANY ANNUAL REPORT TO SECURITY HOLDERS: (2) ANY PROXY OR INFORMATION STATEMENT: AND (3) ANY PROSPECTUS FILED PURSUANT TO RULE 424(b) OR (c) UNDER THE SECURITIES ACT OF 1933. Part of Report on Form 10-K into Which the Document Documents incorporated by reference is Incorporated Post-effective amendments No. 1 - 5 to the Form S-11 Registration Statement, File # 33-29935 Part I, Item 1 Acquisition Reports Part I, Item 1 Post-effective amendment No. 6 to the Registration Statement on Form S-11, File # 33-29935 Part III, Item 12 Prospectus - Sections Entitled: "Estimated Use of Proceeds" Part III, Item 13 "Management Compensations and Fees" Part III, Item 13 "Profits and Losses for Tax Purposes, Tax Credits and Cash Distributions" Part III, Item 13 BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 1998 TABLE OF CONTENTS Page No. PART I Item 1 Business K-3 Item 2 Properties K-6 Item 3 Legal Proceedings K-12 Item 4 Submission of Matters to a Vote of Security Holders K-12 PART II Item 5 Market for the Registrant's Units and Related Security Holder Matters K-13 Item 6 Selected Financial Data K-14 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations K-15 Item 8 Financial Statements and Supplementary Data K-17 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure K-17 PART III Item 10 Directors and Executive Officers of the Registrant K-18 Item 11 Management Remuneration K-19 Item 12 Security Ownership of Certain Beneficial Owners and Management K-20 Item 13 Certain Relationships and Related Transactions K-20 PART IV Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K K-23 SIGNATURES K-24 PART I Item 1. Business Boston Financial Qualified Housing Tax Credits L.P. V (the "Partnership") is a Massachusetts limited partnership formed on June 16, 1989 under the laws of the State of Massachusetts. The Partnership's partnership agreement ("Partnership Agreement") authorized the sale of up to 100,000 units of Limited Partnership Interest ("Units") at $1,000 per Unit, adjusted for certain discounts. The Partnership raised $68,928,650 ("Gross Proceeds"), net of discounts of $350, through the sale of 68,929 Units. Such amounts exclude five unregistered Units previously acquired for $5,000 by the Initial Limited Partner, which is also one of the General Partners. The offering of Units terminated on August 31, 1991. No further sale of Units is expected. The Partnership is engaged solely in the business of real estate investment. On March 1, 1997, an affiliate of the Partnership's Managing General Partner, Boston Financial GP1-LLC, became the Local General Partner of Burbank Limited Partnership I ("Burbank"). As a result, the Partnership was deemed to have control over Burbank (the "Combined Entity") and the accompanying financial statements are presented in combined form to conform with the required accounting treatment under generally accepted accounting principles. However, this change only affects the presentation of the Partnership's operating results, not the business of the Partnership. Accordingly, presentation of information about industry segments is not applicable and would not be material to an understanding of the Partnership's business taken as a whole. The Partnership has invested as a limited partner in other limited partnerships ("Local Limited Partnerships") which own and operate residential apartment complexes ("Properties") some of which benefit from some form of federal, state or local assistance programs and all of which qualify for the low-income housing tax credits ("Tax Credits") added to the Internal Revenue Code (the "Code") by the Tax Reform Act of 1986. The investment objectives of the Partnership include the following: (i) to provide current tax benefits in the form of Tax Credits which qualified limited partners may use to offset their federal income tax liability; (ii) to preserve and protect the Partnership's capital; (iii) to provide limited cash distributions from property operations which are not expected to constitute taxable income during the expected duration of the Partnership's operations; and (iv) to provide cash distributions from sale or refinancing transactions. There cannot be any assurance that the Partnership will attain any or all of these investment objectives. Table A on the following page lists the Properties owned by the Local Limited Partnerships in which the Partnership has invested. Item 7 of this Report contains other significant information with respect to such Local Limited Partnerships. As required by applicable rules, the terms of the acquisition of each Local Limited Partnership interest have been described in supplements to the Prospectus and collected in the post-effective amendments to the Registration Statement listed in Part IV of this Report (collectively, the "Acquisition Reports"); such descriptions are incorporated herein by this reference. TABLE A SELECTED LOCAL LIMITED PARTNERSHIP DATA Date Properties Owned by Local Interest Limited Partnerships* Location Acquired - -------------------------------- ---------------------- -------------- Strathern Park/Lorne Park (1) Los Angeles, CA 07/05/90 Park Caton Catonsville, MD 08/17/90 Cedar Lane I London, KY 09/10/90 Silver Creek II Berea, KY 08/15/90 Rosecliff Sanford, FL 09/18/90 Brookwood Ypsilanti, MI 10/01/90 Oaks of Dunlop Colonial Heights, VA 01/01/91 Water Oak Orange City, FL 01/01/91 Yester Oaks Lafayette, GA 01/01/91 Ocean View Fernandina Beach, FL 01/01/91 Wheeler House Nashua, NH 01/01/91 Archer Village Archer, FL 01/01/91 Timothy House Towson, MD 03/05/91 Westover Station Newport News, VA 03/30/91 Carib III St. Croix, VI 03/21/91 Carib II St. Croix, VI 03/01/91 Whispering Trace Woodstock, GA 05/01/91 New Center Detroit, MI 06/27/91 Huguenot Park New Paltz, NY 06/26/91 Hillwood Pointe Jacksonville, FL 07/19/91 Pinewood Pointe Jacksonville, FL 07/31/91 Westgate Bismark, ND 07/25/91 Woodlake Hills Pontiac, MI 08/01/91 Bixel House Los Angeles, CA 07/31/91 Magnolia Villas North Hollywood, CA 07/31/91 Schumaker Place Salisbury, MD 09/20/91 Circle Terrace Lansdowne, MD 12/06/91 * The Partnership's interest in profits and losses of each Local Limited Partnership arising from normal operations is approximately 99% except for a 95% interest in Strathern Park/Lorne Park Apartments and an 88.6% interest in Huguenot Park. Profits and losses arising from sale or refinancing transactions are allocated in accordance with the respective Local Limited Partnership Agreements. (1) On January 1, 1994, Lorne Park merged into Strathern Park in a business combination accounted for as a pooling of interests. Lorne Park's total assets, liabilities and partners' equity were combined with Strathern Park at their existing book value, and neither partnership recognized a gain or loss on the merger. Although the Partnership's investments in Local Limited Partnerships are not subject to seasonal fluctuations, the Partnership's equity in losses of Local Limited Partnerships, to the extent it reflects the operations of individual Properties, may vary from quarter to quarter based upon changes in occupancy and operating expenses as a result of seasonal factors. Each Local Limited Partnership has, as its general partners ("Local General Partners"), one or more individuals or entities not affiliated with the Partnership or its General Partners. In accordance with the partnership agreements under which such entities are organized ("Local Limited Partnership Agreements"), the Partnership depends on the Local General Partners for the management of each Local Limited Partnership. As of March 31, 1998, the following Local Limited Partnerships have a common Local General Partner or affiliated group of Local General Partners accounting for the specified percentage of the capital contributions to Local Limited Partnerships: (i) Timothy House and Maidens Choice, representing 10.05%, have Shelter Development Corp. as Local General Partner; (ii) Hillwood Pointe, Pinewood Pointe and Whispering Trace, representing 11.89%, have Flournoy Development Co. as Local General Partner; (iii) Silver Creek and Cedar Lane, representing .87%, have Robinson A. Williams as Local General Partner; (iv) Water Oak, Yester Oaks and Ocean View, representing 1.71%, have Seals & Associates, Inc. & E. Lamar Seals as Local General Partners; (v) Bixel House and Harmony Apartments, representing 7.05%, have Julian Weinstock Construction Co., Inc. as Local General Partner; and (vi) Carib Villas II and Carib Villas III, representing 1.21%, have First Centrum Corp. as Local General Partner (BF Lansing Limited Partnership, an affiliate of the Managing General Partner, became the Administrative General Partner in Carib Villas II and Carib Villas III on January 31, 1993). The Local General Partners of the remaining Local Limited Partnerships are identified in the Acquisition Reports, which are incorporated herein by this reference. The Properties owned by the Local Limited Partnerships in which the Partnership has invested are, and will continue to be, subject to competition from existing and future apartment complexes in the same areas. The continued success of the Partnership will depend on many outside factors, most of which are beyond the control of the Partnership and which cannot be predicted at this time. Such factors include general economic and real estate market conditions, both on a national basis and in those areas where the Properties are located, the availability and cost of borrowed funds, real estate tax rates, operating expenses, energy costs and government regulations. In addition, other risks inherent in real estate investment may influence the ultimate success of the Partnership, including: (i) possible reduction in rental income due to an inability to maintain high occupancy levels or adequate rental levels; (ii) possible adverse changes in general economic conditions and local conditions, such as competitive over-building, or a decrease in employment or adverse changes in real estate laws, including building codes; and (iii) the possible future adoption of rent control legislation which would not permit increased costs to be passed on to the tenants in the form of rent increases, or which suppress the ability of the Local Limited Partnerships to generate operating cash flow. Since most of the Properties benefit from some form of government assistance, the Partnership is subject to the risks inherent in that area including decreased subsidies, difficulties in finding suitable tenants and obtaining permission for rent increases. In addition, any Tax Credits allocated to investors with respect to a Property are subject to recapture to the extent that the Property or any portion thereof ceases to qualify for the Tax Credits. Other future changes in federal and state income tax laws affecting real estate ownership or limited partnerships could have a material and adverse affect on the business of the Partnership. The Partnership is managed by Arch Street V, Inc., the Managing General Partner of the Partnership. The other General Partner of the Partnership is Arch Street V Limited Partnership. To economize on direct and indirect payroll costs, the Partnership, which does not have any employees, reimburses The Boston Financial Group Limited Partnership, an affiliate of the General Partners, for certain expenses and overhead costs. A complete discussion of the management of the Partnership is set forth in Item 10 of this Report. Item 2. Properties The Partnership owns limited partnership interests in twenty-seven Local Limited Partnerships which own and operate Properties, some of which benefit from some form of federal, state or local assistance programs and all of which qualify for the Tax Credits added to the Code by the Tax Reform Act of 1986. The Partnership's ownership interest in each Local Limited Partnership is generally 99%, except for Strathern Park/Lorne Park, Westgate and Huguenot Park, where the Partnership's ownership interest is 95%, 49.5% and 88.6%, respectively. Each of the Local Limited Partnerships has received an allocation of Tax Credits from its relevant state tax credit agency. In general, the Tax Credit runs for ten years from the date the Property is placed in service. The required holding period (the "Compliance Period") of the Properties is fifteen years. During these fifteen years, the Properties must satisfy rent restrictions, tenant income limitations and other requirements, as promulgated by the Internal Revenue Service, in order to maintain eligibility for the Tax Credit at all times during the Compliance Period. Once a Local Limited Partnership has become eligible for the Tax Credits, it may lose such eligibility and suffer an event of recapture if its Property fails to remain in compliance with the requirements. To date, none of the Local Limited Partnerships have suffered an event of recapture of Tax Credits. In addition, some of the Local Limited Partnerships have obtained one or a combination of different types of loans such as: i) below market rate interest loans; ii) loans provided by a redevelopment agency of the town or city in which the property is located at favorable terms; and iii) loans that have repayment terms that are based on a percentage of cash flow. The schedules on the following pages provide certain key information on the Local Limited Partnership interests acquired by the Partnership. Capital Contributions Total Paid Mortgage loans Occupancy Local Limited Partnership Number Committed at through payable at Type at Property Name of March 31, March 31, December 31, of March 31, Property Location Apt. Units 1998 1998 1997 Subsidy* 1998 - ------------------------- ----------- -------------- -------------- --------------- ------------- ---------- Strathern Park/Lorne Park, a California Limited Partnership (1) Strathern Park/Lorne Park Los Angeles, CA 241 $8,418,667 $8,418,667 $17,482,959 None 99% Maiden Choice Limited Partnership Park Caton Catonsville, MD 101 2,513,300 2,513,300 4,036,347 None 96% Cedar Lane I, Ltd. Cedar Lane I London, KY 36 288,587 288,587 1,115,791 None 100% Silver Creek II, Ltd. Silver Creek II Berea, KY 24 193,278 193,278 770,058 None 100% Tompkins/Rosecliff, Ltd. Rosecliff Sanford, FL 168 3,604,720 3,604,720 5,591,237 None 98% Brookwood L.D.H.A. Brookwood Ypsilanti, MI 81 2,373,295 2,373,295 3,040,777 None 96% Water Oak Apartment, L.P. Water Oak Orange City, FL 40 293,519 293,519 1,258,505 None 100% Capital Contributions Total Paid Mortgage loans Occupancy Local Limited Partnership Number Committed at through payable at Type at Property Name of March 31, March 31, December 31, of March 31, Property Location Apt. Units 1998 1998 1997 Subsidy* 1998 - ---------------------------- ------------ -------------- ------------ --------------- ---------- ------------ Yester Oaks, L.P. Yester Oaks Lafayette, GA 44 319,254 319,254 1,289,338 FmHA 95% Ocean View Apartments, L.P. Ocean View Fernandina Beach, FL 42 334,177 334,177 1,369,108 None 97% Burbank Limited Partnership I Wheeler House Nashua, NH 17 300,531 300,531 707,659 Section 8 99% Archer Village, Ltd. Archer Village Archer, FL 24 171,380 171,380 710,331 FmHA 92% The Oaks of Dunlop Farms, L.P. Oaks of Dunlop Colonial Heights, VA 144 2,791,280 2,791,280 4,441,748 None 100% Timothy House Limited Partnership Timothy House Towson, MD 112 3,064,250 3,064,250 2,537,465 None 100% Westover Station Associates, L.P. Westover Station Newport News, VA 108 1,972,947 1,972,947 2,668,441 None 99% Capital Contributions Total Paid Mortgage loans Occupancy Local Limited Partnership Number Committed at through payable at Type at Property Name of March 31, March 31, December 31, of March 31, Property Location Apt. Units 1998 1998 1997 Subsidy* 1998 - ---------------------------- -------------- ----------- ------------- ----------------- --------- ------------- Christiansted Limited Dividend Housing Association Carib III St. Croix, VI 24 322,260 322,260 1,485,819 FmHA 92% St. Croix II Limited Partnership Carib II St. Croix, VI 20 347,680 347,680 1,405,035 FmHA 95% Whispering Trace Apartments, A Limited Partnership Whispering Trace Woodstock, GA 40 1,093,330 1,093,330 1,393,392 None 92% Historic New Center Apartments Limited Partnership New Center Detroit, MI 104 2,899,000 2,899,000 3,504,633 Section 8 93% Huguenot Park Associates, L.P. Huguenot Park New Paltz, NY 24 982,358 982,358 1,400,000 None 100% Cobblestone Place Townhomes, A Limited Partnership Hillwood Pointe Jacksonville, FL 100 2,356,133 2,356,133 2,961,816 None 97% Kensington Place Townhomes, A Limited Partnership Pinewood Pointe Jacksonville, FL 136 3,153,173 3,153,173 4,010,215 None 97% Capital Contributions Total Paid Mortgage loans Occupancy Local Limited Partnership Number Committed at through payable at Type at Property Name of March 31, March 31, December 31, of March 31, Property Location Apt. Units 1998 1998 1997 Subsidy* 1998 - -------------------------- ----------- -------------- ----------- ---------------- ---------- ------------- Westgate Apartments Limited Partnership Westgate Bismark, ND 60 935,893 935,893 1,378,233 None 90% Woodlake Hills Limited Partnership Woodlake Hills Pontiac, MI 144 4,154,670 4,154,670 3,845,347 None 98% Bixel House, a California Limited Partnership Bixel House Los Angeles, CA 76 710,677 710,677 1,376,019 Section 8 97% Harmony Apartments, a California Limited Partnership Magnolia Villas North Hollywood, CA 65 3,203,996 3,203,996 3,097,554 None 97% Schumaker Place Associates, L.P. Schumaker Place Salisbury, MD 96 2,910,453 2,910,453 2,928,084 None 79% Circle Terrace Associates Limited Partnership Circle Terrace Lansdowne, MD 303 5,811,234 5,811,234 9,822,423 Section 8 100% ------- ------------ ------------ ------------- 2,374 $ 55,520,042 $ 55,520,042 $ 85,628,334 ======= ============ ============ ============= * FmHA This subsidy, which is authorized under Section 515 of the Housing Act of 1949, can be one or a combination of different types of financing. For instance, FmHA may provide: 1) direct below-market-rate mortgage loans for rural rental housing; 2) mortgage interest subsidies which effectively lower the interest rate of the loan to 1%; 3) a rental assistance subsidy to tenants which allows them to pay no more than 30% of their monthly income as rent with the balance paid by the federal government; or 4) a combination of any of the above. Section 8 This subsidy, which is authorized under Section 8 of Title II of the Housing and Community Development Act of 1974, allows qualified low-income tenants to pay 30% of their monthly income as rent with the balance paid by the federal government. (1) On January 1, 1994, Lorne Park merged into Strathern Park in a business combination accounted for as a pooling of interests. Lorne Park's total assets, liabilities and partners' equity were combined with Strathern Park at their existing book value, and neither partnership recognized a gain or loss on the merger. The combined Partnerships constructed a 241 Unit apartment project (Lorne Park: 72 Units, Strathern Park: 169 Units) for tenants whose income is very low to moderate. Two Local Limited Partnerships invested in by the Partnership each represent more than 10% of the total capital contributions to be made to Local Limited Partnerships by the Partnership. The first is Strathern Park/Lorne Park, a California Limited Partnership. Strathern Park/Lorne Park, representing 15.16% of the total capital contributions to Local Limited Partnerships, is a 241-unit apartment complex located in Los Angeles, California. Strathern Park/Lorne Park is financed by a combination of private and public sources, including a first mortgage at 9.41% interest and 30 year term with California Community Reinvestment Corporation, a consortium of private lenders. Secondary financing has a term of 40 years and is provided by the Community Redevelopment Agency of the City of Los Angeles and a U.S. Housing and Urban Development Action Grant, with payments made from the residual receipts of the project. The other Local Limited Partnership which represents more than 10% of the total capital contributions made to Local Limited Partnerships is Circle Terrace Associates Limited Partnership. Circle Terrace, representing 10.47% of the total capital contributions to Local Limited Partnerships, is a substantially renovated 303-unit apartment complex located in Lansdowne, Maryland with 23 garden-style buildings and a newly-constructed community building. All of the units at Circle Terrace benefit from Section 8 Loan Management Set Aside Program. Additionally, Circle Terrace assumed a HUD Section 236 mortgage and financing by Crestar of Richmond Virginia, Inc. and by Maryland's Department of Housing and Community Rental Housing Program. The Property also has a loan financed by Baltimore County's Community Development Block Grant program, and it received weatherization funds from the U.S. Department of Energy. The duration of the leases for occupancy in the Properties described above are six to twelve months. The Managing General Partner believes the Properties described herein are adequately covered by insurance. Additional information required under this Item, as it pertains to the Partnership, is contained in Items 1, 7 and 8 of this Report. Item 3. Legal Proceedings The Partnership is not a party to any pending legal or administrative proceeding. However, Tompkins/Rosecliff, Ltd. which owns a property in Sanford, Florida, is involved in certain litigation with an entity formerly affiliated with this Partnership and its previous local general partner. It is possible that the Partnership will be named as a defendant in this litigation. It does not currently appear that this matter presents a material risk to the Partnership. However, in the opinion of management, there is currently a remote possibility that this litigation could ultimately result in a loss of this property and its credits. The Partnership will vigorously pursue its legal rights if this becomes a material risk in the future. The Partnership has retained counsel to represent its interest in this matter. Item 4. Submission of Matters to a Vote of Security Holders None. PART II Item 5. Market for the Registrant's Units and Related Security Holder Matters There is no public market for the Units, and it is not expected that a public market will develop. If a Limited Partner desires to sell Units, the buyer of those Units will be required to comply with the minimum purchase and retention requirements and investor suitability standards imposed by applicable federal or state securities laws and the minimum purchase and retention requirements imposed by the Partnership. The price to be paid for the Units, as well as the commissions to be received by any participating broker-dealers, will be subject to negotiation by the Limited Partner seeking to sell his Units. Units will not be redeemed or repurchased by the Partnership. The Partnership Agreement does not impose on the Partnership or its General Partners any obligation to obtain periodic appraisals of assets or to provide Limited Partners with any estimates of the current value of Units. As of June 15, 1998, there were 3,293 record holders of Units of the Partnership. Cash distributions, when made, are paid annually. No cash distributions were paid for the years ended March 31, 1998, 1997 and 1996. In the Partnership's early years, cash available for distribution was derived from the interest earned on the temporary investment of funds held by the Partnership prior to paying capital contributions to Local Limited Partnerships. All cash distributions made to date have constituted a return of capital for generally accepted accounting principles. Item 6. Selected Financial Data The following table sets forth selected financial information regarding the Partnership's financial position and operating results. This information should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements and Notes thereto, which are included in Items 7 and 8 of this Report. March 31, March 31, March 31, March 31, March 31, 1998 1997 1996 1995 1994 ------------ ------------ ------------ ------------- ------------ Revenue (E) $ 321,439 $ 204,683 $ 224,012 $ 171,863 $ 232,489 Equity in losses of Local Limited Partnerships (E) (4,777,460) (4,044,413) (4,695,617) (4,747,136) (4,698,334) Net loss (5,838,302) (4,337,761) (4,952,448) (5,110,677) (4,982,538) Per Limited Partnership Unit (A) (83.85) (62.30) (71.13) (73.40) (71.56) Cash and cash equivalents (E) 239,932 449,567 243,644 72,535 92,522 Marketable securities 3,064,717 2,840,127 3,099,255 3,196,496 3,512,954 Investment in Local Limited Partnerships 24,775,767 30,531,768 34,878,562 39,667,730 44,417,695 Total assets (B) 28,905,668 33,871,495 38,246,869 42,985,386 48,069,381 Long-term debt (E) 707,659 - - - - Total liabilities (E) 1,002,330 298,276 318,728 149,379 114,131 Cash Distributions - - - - - Other data: Passive loss (C) (5,324,956) (5,154,301) (5,187,774) (5,204,384) (5,177,324) Per Limited Partnership Unit (A,C) (76.48) (74.03) (74.51) (74.75) (74.36) Portfolio income (C) 361,519 281,707 350,417 233,083 379,338 Per Limited Partnership Unit (A,C) 5.19 4.05 5.03 3.35 5.45 Low-Income Housing Tax Credit (C) 10,512,076 10,512,996 10,506,229 10,519,636 10,447,764 Per Limited Partnership Unit (A,C) 150.98 150.99 150.90 151.09 150.06 Local Limited Partnership interests owned at end of period (D) 27 27 27 27 28 (A) Per Limited Partnership Unit data is based upon 68,929 outstanding Units. (B) Total assets include the net investment in Local Limited Partnerships. (C) Income tax information is as of December 31, the year end of the Partnership for income tax purposes. (D) On January 1, 1994, Strathern Park and Lorne Park merged. (E) Revenue for the year ended March 31, 1998 includes $99,367 of rental and other revenues from the Combined Entity that is included in the combined revenue on the Combined Statement of Operations. Equity in losses of Local Limited Partnerships in the year ended March 31, 1998 does not include $188,247 of losses from the Combined Entity that has been combined with the Partnership's loss on the Combined Statement of Operations. Cash and cash equivalents at March 31, 1998 include $224 of cash and cash equivalents from the Combined Entity that has been combined with the Partnership in the Combined Balance Sheet. The long-term debt at March 31, 1998 is related to the Combined Entity. Total liabilities includes $715,968 that has been combined with the Partnership in the Combined Balance Sheet. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources At March 31, 1998, the Partnership (including the Combined Entity) had cash and cash equivalents of $239,932, compared with $449,567 at March 31, 1997. The decrease is attributable to net cash used for operations and purchases of marketable securities, partially offset by proceeds from sales and maturities of marketable securities and cash distributions received from Local Limited Partnerships. Approximately $2,732,000 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 Partnership and contingencies related to the ownership of Local Limited Partnership interests. Management believes that the investment income earned on the Reserves, along with cash distributions received from Local Limited Partnerships, to the extent available, will be sufficient to fund the Partnership's ongoing operations and any contingencies that may arise. Reserves may be used to fund Partnership operating deficits, if the Managing General Partner deems funding appropriate. Since the Partnership invests as a limited partner, the Partnership has no contractual duty to provide additional funds to Local Limited Partnerships beyond its specified investment. Thus, at March 31, 1998, the Partnership 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 Partnership 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 year ended March 31, 1998. In prior years, cash available for distribution was derived from the interest earned on the temporary investment of the Partnership's funds, at money market rates, prior to the funds being contributed to the Partnership's Local Limited Partnership investments. Based on the results of 1997 operations, the Local Limited Partnerships are not expected to distribute significant amounts of cash to the Partnership because such amounts will be needed to fund Property operating costs. In addition, many of the Properties benefit from some type of federal or state subsidy and, as a consequence, are subject to restrictions on cash distributions. Therefore, it is expected that only a limited amount of cash will be distributed to investors from this source in the future. Results of Operations 1998 versus 1997 The Partnership's results of operations for the year ended March 31, 1998 resulted in a net loss of $5,838,302 as compared to a net loss of $4,337,761 for the same period in 1997. The increase in net loss is primarily attributable to an increase in equity in losses of Local Limited Partnerships, provision for valuation of rental property and a provision for valuation of Investment in Local Limited Partnership. Equity in losses of Local Limited Partnerships increased due to a general increase in operating expenses for the Local Limited Partnerships. Other revenue increased due to an increase in distributions received by the Partnership from the Local Limited Partnerships. 1997 versus 1996 The Partnership's results of operations for the year ended March 31, 1997 resulted in a net loss of $4,337,761 as compared to a net loss of $4,952,448 for the same period in 1996. This improved net loss position is primarily attributable to a decrease in equity in losses of Local Limited Partnerships and an increase in investment revenue, offset by a decrease in other revenue. The decrease in equity in losses of Local Limited Partnerships is due to rental subsidy receipts in 1996 which were reserved for in the prior year. Investment revenue increased because of improved returns earned on investments in securities during fiscal year 1997. Effect of recently issued Accounting Standard The Financial Accounting Standards Board recently issued Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income. The standard requires that changes in comprehensive income be shown in a financial statement that is displayed with the same prominence as other financial statements. The standard is effective for fiscal years beginning after December 15, 1997. The Partnership will adopt the new standard beginning in the first quarter of the fiscal year ending March 31, 1999, but it is not expected to have a significant effect on the Partnership's financial position or results of operations. Low-Income Housing Tax Credits The 1997, 1996 and 1995 Tax Credits per Unit were $150.98, $150.99 and $150.90, respectively. The Tax Credit per Limited Partnership Unit stabilized in 1993 at approximately $151.00 per Unit. The credits are expected to remain stable through the year 2000 and then they are expected to decrease as certain properties reach the end of the ten year credit period. On November 10, 1997, the Partnership transferred 50% of its interest in capital and profits of Westgate Apartments to the local general partner in order to protect the Partnership in the event of a foreclosure-induced recapture of these tax credits. Property Discussions Limited Partnership interests have been acquired in twenty-seven Local Limited Partnerships which are located in ten states and the Virgin Islands. Five of the properties, totaling 612 units, were existing and underwent rehabilitation; twenty-two properties, consisting of 1,762 units, were new construction. All properties have completed construction or rehabilitation and initial lease-up. Historic New Center in Detroit, Michigan is generating operating deficits due to low occupancy and collection problems. The Managing General Partner, Local General Partner and property manager are working to improve collections. In October 1997, a new site manager was hired to focus on marketing and collections as well as improvements to the appearance of the property. As previously reported, the Managing General Partner and the Local General Partner have been in negotiations with the lender to obtain debt service relief through a loan modification. In April 1998, an agreement was reached in order to restructure the mortgage with a reduction in debt service by a paydown of the mortgage and an interest rate reduction. This restructure should enable the property to cover the debt service and provide capital for physical improvements. Occupancy continues to fluctuate due to volatility of the tenant profile, however, occupancy at December 31, 1997 was 94%. The Managing General Partner will continue to closely monitor the property operations. As previously reported, the Local General Partner for Wheeler House in Nashua, New Hampshire was replaced by an affiliate of the Managing General Partner with the approval of the lender after the Local General Partner filed for protection under the provisions of the Chapter 7 bankruptcy laws. The Managing General Partner has replaced the Local General Partner as management agent of the property with an unaffiliated management agent. The Local General Partner's bankruptcy status has not affected the property. Operations remain stable and occupancy is at 100%. Westgate, located in North Dakota, has been performing satisfactorily. However, affiliates of the Managing General Partner have been working with the local general partner who has raised some concerns over the long-term financial health of the property. In an effort to reduce possible future risk, the Managing General Partner consummated the transfer of 50% of the Partnership's interest in capital and profits in Westgate to the local general partner. The Managing General Partner has the right to transfer the Partnership's remaining interest to the local general partner any time after one year has elapsed. The Partnership will retain its full share of tax credits until such time as the remaining interest is put to the local general partner. For financial reporting purposes, the remaining carrying value of the Partnership's investment in this Local Limited Partnership has been fully reserved. In accordance with Financial Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", which is effective for fiscal years beginning after December 15, 1995, the Partnership has implemented policies and practices for assessing impairment of its real estate assets and investments in local limited partnerships. Each asset is analyzed by real estate experts to determine if an impairment indicator exists. If so, the current value is compared to the fair value and if there is a significant impairment in value, a provision to write down the asset to fair value will be charged against income. Inflation and Other Economic Factors Inflation had no material impact on the operations or financial condition of the Partnerships for the years ended March 31, 1998, 1997 and 1996. Since some of the properties benefit from some form of government assistance, the Partnership is subject to the risks inherent in that area including decreased subsidies, difficulties in finding suitable tenants and obtaining permission of rent increases. In addition, any Tax Credits allocated to investors with respect to a property are subject to recapture to the extent that the property or any portion thereof ceases to qualify for the Tax Credits. Certain of the properties in which the Partnership invests may be located in areas suffering from poor economic conditions. Such conditions could have an adverse effect on the rent or occupancy levels at such properties. Nevertheless, management believes that the generally high demand for below market rate housing will tend to negate such factors. However, no assurance can be given in this regard. Item 8. Financial Statements and Supplementary Data Information required under this Item is submitted as a separate section of this Report. See Index on page F-1 hereof. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. PART III Item 10. Directors and Executive Officers of the Registrant The Managing General Partner of the Partnership is Arch Street V, Inc., a Massachusetts corporation (the "Managing General Partner" or "Arch Street, Inc."), an affiliate of The Boston Financial Group Limited Partnership ("Boston Financial"), a Massachusetts limited partnership. George Fantini, Jr., a Vice President of the Managing General Partner, resigned his position effective June 30, 1995. Donna Gibson, a Vice President of the Managing General Partner, resigned from her position on September 13, 1996. Georgia Murray resigned as Managing Director, Treasurer and Chief Financial Officer of the General Partner on May 25, 1997. Fred N. Pratt, Jr. resigned as Managing Director of the General Partner on May 28, 1997. William E. Haynsworth resigned as Managing Director and Chief Operating Officer of the General Partner on March 23, 1998. The Managing General Partner was incorporated in June 1989. Randolph G. Hawthorne is the Chief Operating Officer of the Managing General Partner and had the primary responsibility for evaluating, selecting and negotiating investments for the Partnership. The Investment Committee of the Managing General Partner approved all investments. The names and positions of the principal officers and the directors of the Managing General Partner are set forth below. Name Position Jenny Netzer Managing Director and President Michael H. Gladstone Managing Director, Vice President and Clerk Randolph G. Hawthorne Managing Director, Vice President and Chief Operating Officer James D. Hart Chief Financial Officer and Treasurer Paul F. Coughlan Vice President Peter G. Fallon, Jr. Vice President William E. Haynsworth Vice President The other General Partner of the Partnership is Arch Street V Limited Partnership, a Massachusetts limited partnership ("Arch Street L.P.") that was organized in June 1989. Arch Street, Inc. is the managing general partner of Arch Street L.P. The Managing General Partner provides day-to-day management of the Partnership. Compensation is discussed in Item 11 of this report. Such day-to-day management does not include the management of the Properties. The business experience of each of the persons listed above is described below. There is no family relationship between any of the persons listed in this section. Jenny Netzer, age 42, graduated from Harvard University (B.A., 1976) and received a Master's in Public Policy from Harvard's Kennedy School of Government in 1982. She joined Boston Financial in 1987 and is a Senior Vice President leading the Institutional Tax Credit Team. She is also a member of the Senior Leadership Team. Previously, Ms. Netzer led Boston Financial's new business initiatives and managed the firm's Asset Management division, which is responsible for the performance of 750 properties and providing service to 35,000 investors. Before joining Boston Financial, she was Deputy Budget Director for the Commonwealth of Massachusetts where she was responsible for the Commonwealth's health care and public pension programs' budgets. Ms. Netzer was also Assistant Controller at Yale University and has been a member of the Watertown Zoning Board of Appeals. Michael H. Gladstone, age 41, graduated from Emory University (B.A. 1978) and Cornell University (J.D., MBA, 1982). He joined Boston Financial in 1985 and currently serves as Vice President and as the company's General Counsel. Prior to joining Boston Financial, Mr. Gladstone was associated with the law firm of Herrick & Smith. Mr. Gladstone is a member of the National Realty Committee and has served on the advisory board to the Housing and Development Reporter, a national publication on housing issues. Randolph G. Hawthorne, age 48, is a graduate of Massachusetts Institute of Technology (B.S., 1971) and Harvard Graduate School of Business (M.B.A., 1973). He has been associated with Boston Financial since 1973 and has served as the Treasurer of Boston Financial. Currently a Senior Vice President of the firm, Mr. Hawthorne's primary responsibility is structuring and acquiring real estate investments. Mr. Hawthorne is Past Chairman of the Board of the National Multi Housing Council, having served on the board since 1989. He is a past president of the National Housing and Rehabilitation Association, is a member of the Residential Development Council of the Urban Land Institute, as well as a member of the Advisory Board of the Berkeley Real Estate Center at the University of California. In addition to speaking at industry conferences, he is on the Editorial Advisory Boards of the Tax Credit Advisor and Multi-Housing News. James D. Hart, age 40, earned his Bachelor of Arts degree from Trinity College and his Masters of Business Administration from the Amos Tuck School at Dartmouth College. Mr. Hart serves as Chief Financial Officer and is a member of the Senior Leadership Team. Prior to joining Boston Financial, Mr. Hart was engaged in venture capital management on behalf of institutional investors, including the negotiation and structuring of private equity and mezzanine transactions as a Vice President of Interfid Ltd., and later in the operational management of a venture-backed software company, as Managing Director and Chief Financial Officer of Bitstream Inc. Mr. Hart has also served on the Board of Directors of several investee companies, including those that went on to complete initial public offerings. Paul F. Coughlan, age 54, is a graduate of Brown University (B.A., 1965) and served in the United States Navy before entering the securities business in 1969. He was employed as an Account Executive by Bache & Company until 1972 and then by Reynolds Securities Inc. He joined Boston Financial in 1975 and is currently a Senior Vice President on the Institutional Tax Credit Team. Peter G. Fallon, Jr., age 59, graduated from the College of the Holy Cross (B.S., 1960) and Babson College (M.B.A., 1965). He joined Boston Financial in 1970, shortly after its formation, to raise capital for the firm's investments. He is currently a Senior Vice President and a member of the Institutional Tax Credits Team with responsibility for marketing institutional investments. Previously, he has served as president of BFG Securities, as a director of Boston Financial and as marketing director for public and corporate funds. Mr. Fallon has also served as Chairman of the Board of Directors for Boston College High School as well as a director of a local bank. William E. Haynsworth, age 58, is a graduate of Dartmouth College (B.A., 1961) and Harvard Law School (L.L.B., 1964; L.L.M., 1969). Prior to joining Boston Financial in 1977, Mr. Haynsworth was Acting Executive Director and General Counsel of the Massachusetts Housing Finance Agency. He was also the Director of Non-Residential Development of the Boston Redevelopment Authority and an associate of the law firm of Goodwin, Procter & Hoar. Appointed Senior Vice President in 1986, Mr. Haynsworth brings over 25 years of experience structuring real estate investments. Mr. Haynsworth is a member of the Executive Committee and the Board of Directors of the Affordable Housing Tax Credit Coalition. He is a member of the Senior Leadership Team, the firm's Executive Committee and the Board of Directors of Boston Financial. Item 11. Management Remuneration Neither the directors or officers of Arch Street, Inc., the partners of Arch Street L.P. nor any other individual with significant involvement in the business of the Partnership receives any current or proposed remuneration from the Partnership. Item 12. Security Ownership of Certain Beneficial Owners and Management As of March 31, 1998, the following is the only entity known to the Partnership to be the beneficial owner of more than 5% of the total number of Units outstanding: Amount Title of Name and Address Beneficially Percent of Class of Beneficial Owner Owned Class Limited Oldham Institutional Tax Credits LLC 8,024 Units 11.64% Partner 101 Arch Street Boston, MA Oldham Institutional Tax Credits LLC is an affiliate of Arch Street V, Inc., the Managing General Partner. The equity securities registered by the Partnership under Section 12(g) of the Act consist of 100,000 Units, 68,929 of which had been sold to the public as of March 31, 1998. The remaining Units were deregistered in Post-Effective Amendment No. 6, dated January 21, 1992, herein incorporated by this reference. Holders of Units are permitted to vote on matters affecting the Partnership only in certain unusual circumstances and do not generally have the right to vote on the operation or management of the Partnership. As of March 31, 1998, Arch Street L.P. owns five (unregistered) Units not included in the 68,929 Units sold to the public. Additionally, five registered Units were sold to an employee of an affiliate of the Managing General Partner of the Registrant. Such Units were sold at a discount of 7% of the Unit price for a total discount of $350 and a total purchase price of $4,650. Except as described in the preceding paragraphs, neither Arch Street, Inc., Arch Street L.P., Boston Financial nor any of their executive officers, directors, partners or affiliates is the beneficial owner of any Units. None of the foregoing persons possesses a right to acquire beneficial ownership of Units. The Partnership does not know of any existing arrangement that might at a later date result in a change in control of the Partnership. Item 13. Certain Relationships and Related Transactions The Partnership paid certain fees to and reimbursed certain expenses of the Managing General Partner or its affiliates (including Boston Financial) in connection with the organization of the Partnership and the offering of Units. The Partnership was also required to pay certain fees to and reimburse certain expenses of the Managing General Partner or its affiliates (including Boston Financial) in connection with the administration of the Partnership and its acquisition and disposition of investments in Local Limited Partnerships. In addition, the General Partners are entitled to certain Partnership distributions under the terms of the Partnership Agreement. Also, an affiliate of the General Partners will receive up to $10,000 from the sale or refinancing proceeds of each Local Limited Partnership if it is still a limited partner at the time of such a transaction. All such fees, expenses and distributions paid in the three years ending March 31, 1998 are described below and in the sections of the Prospectus entitled "Estimated Use of Proceeds", "Management Compensation and Fees" and "Profits and Losses for Tax Purposes, Tax Credits and Cash Distributions". Such sections are incorporated herein by reference. The Partnership is permitted to enter into transactions involving affiliates of the Managing General Partner, subject to certain limitations established in the Partnership Agreement. Information required under this item is contained in Note 5 to the financial statements presented as a separate section of this Report. The affiliates of the Managing General Partner which have received fee payments and expense reimbursements from the Partnership are as follows: Organizational fees and expenses and selling expenses In accordance with the Partnership Agreement, the Partnership was required to pay certain fees to and reimburse expenses of the General Partners and others in connection with the organization of the Partnership and the offering of its Limited Partnership Units. Selling commissions, fees and accountable expenses related to the sale of the Units totaling $9,499,984 have been charged directly to Limited Partners' equity. In connection therewith, $5,858,935 of selling expenses and $3,641,049 of offering expenses incurred on behalf of the Partnership have been paid to an affiliate of the General Partners. The Partnership was required to pay a non-accountable expense allowance for marketing expense equal to a maximum of 1% of Gross Proceeds; this is included in total offering expenses. The Partnership has capitalized an additional $50,000 which was reimbursed to an affiliate of the General Partners. Total organization and offering expenses exclusive of selling commissions did not exceed 5.5% of the Gross Proceeds and organizational and offering expenses, inclusive of selling commissions did not exceed 14.0% of the Gross Proceeds. No organizational fees and expenses and selling expenses were paid during the three years ended March 31, 1998. Acquisition fees and expenses In accordance with the Partnership Agreement, the Partnership was required to pay acquisition fees to and reimburse acquisition expenses of the Managing General Partner or its affiliates for selecting, evaluating, structuring, negotiating and closing the Partnership's investments in Local Limited Partnerships. Acquisition fees totaled 7% of the gross offering proceeds. Acquisition expenses, which include such expenses as legal fees and expenses, travel and communications expenses, costs of appraisals, accounting fees and expenses, were expected to total 1.5% of the gross offering proceeds. As of March 31, 1998, acquisition fees totaling $4,825,005 for the closing of the Partnership's Local Limited Partnership Investments have been paid to an affiliate of the Managing General Partner. Acquisition expenses totaling $899,430 at March 31, 1998 were incurred and have been reimbursed to an affiliate of the Managing General Partner. No acquisition fees or expenses were paid during the three years ended March 31, 1998. Asset Management Fees In accordance with the Partnership Agreement, an affiliate of the Managing General Partner is paid an Asset Management Fee for services in connection with the administration of the affairs of the Partnership. The affiliate currently receives the base amount of .351% (as adjusted by the CPI factor) of Gross Proceeds annually as the Asset Management Fee. Asset Management Fees incurred in each of the three years ended March 31, 1998 are as follows: 1998 1997 1996 ---------- ---------- ---------- Asset Management Fees $ 238,087 $ 231,035 $ 224,953 Salaries and benefits expense reimbursements An affiliate of the Managing General Partner is reimbursed for the cost of the Partnership's salaries and benefits expenses. The reimbursements are based upon the size and complexity of the Partnership's operations. Reimbursements made in each of the three years ended March 31, 1998 are as follows: 1998 1997 1996 ---------- ---------- --------- Salaries and benefits expense reimbursements $ 127,926 $ 117,763 $ 115,696 Cash distributions paid to the General Partners In accordance with the Partnership Agreement, the General Partners of the Partnership, Arch Street V, Inc. and Arch Street V Limited Partnership, receive 1% of cash distributions made to partners. No cash distributions were paid to the General Partners in each of the three years ended March 31, 1998. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a)(1) and (a)(2) Documents filed as a part of this Report In response to this portion of Item 14, the financial statements, financial statement schedule and the auditors' report relating thereto are submitted as a separate section of this Report. See Index on page F-1 hereof. The reports of auditors of the Local Limited Partnerships relating to the audits of the financial statements of such Local Limited Partnerships appear in Exhibit (28)(1) of this Report. All other financial statement schedules and exhibits for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under related instructions or are inapplicable, and therefore have been omitted. (a)(3) See Exhibit Index contained herein. (a)(3)(b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter ended March 31, 1998. (a)(3)(c) Exhibits Number and Description in Accordance with Item 601 of Regulation S-K 27. Financial Data Schedule 28. Additional Exhibits (a) 28.1 Reports of Other Independent Auditors (b) Audited financial statements of Local Limited Partnership Strathern Park/Lorne Park (a)(3)(d) None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V By: Arch Street V, Inc. its Managing General Partner By: /s/Randolph G. Hawthorne Date: June 29, 1998 Randolph G. Hawthorne, Managing Director, Vice President and Chief Operating Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Managing General Partner of the Partnership and in the capacities and on the dates indicated: By: /s/William G. Haynsworth Date: June 29, 1998 William G. Haynsworth, Managing Director, Vice President and Chief Operating Officer By: /s/Michael H. Gladstone Date: June 29, 1998 Michael H. Gladstone, A Managing Director Item 8. Financial Statements and Supplementary Data BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) Annual Report on Form 10-K For The Year Ended March 31, 1998 Index Page No. Report of Independent Accountants For the years ended March 31, 1998, 1997 and 1996 F-2 Combined Financial Statements Combined Balance Sheets - March 31, 1998 and 1997 F-3 Combined Statements of Operations - Years Ended March 31, 1998, 1997 and 1996 F-4 Combined Statements of Changes in Partners' Equity (Deficiency) - Years Ended March 31, 1998, 1997 and 1996 F-5 Combined Statements of Cash Flows - Years Ended March 31, 1998, 1997 and 1996 F-6 Notes to the Combined Financial Statements F-7 Financial Statement Schedule Schedule III - Real Estate and Accumulated Depreciation F-21 See also Index to Exhibits on Page K-22 for the financial statement of the Local Limited Partnership included as a separate exhibit in this Annual Report on Form 10-K. Other schedules have been omitted as they are either not required or the information required to be presented therein is available elsewhere in the financial statements and the accompanying notes and schedules. REPORT OF INDEPENDENT ACCOUNTANTS To the Partners Boston Financial Qualified Housing Tax Credits L.P. V: We have audited the accompanying combined balance sheets of Boston Financial Qualified Housing Tax Credits L.P. V as of March 31, 1998 and 1997, and the related combined statements of operations, changes in partners' equity (deficiency) and cash flows and the financial statement schedule listed in Item 14(a) of this Report on Form 10-K, for each of the three years in the period ended March 31, 1998. These financial statements and the financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and the financial statement schedule based on our audits. As of March 31, 1998 and 1997, 85% and 88%, respectively, of total assets, and for the years ended March 31, 1998, 1997 and 1996, 90%, 93% and 95% of net loss, respectively, reflected in the combined financial statements of the Partnership, relate to Local Limited Partnerships for which we did not audit the financial statements. The financial statements of these Local Limited Partnerships were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to those investments in Local Limited Partnerships, is based solely on the reports of other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the reports of other auditors, the combined financial statements referred to above present fairly, in all material respects, the financial position of Boston Financial Qualified Housing Tax Credits L.P. V, as of March 31, 1998 and 1997 and the results of its operations and its cash flows for each of the three years in the period ended March 31, 1998, in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic combined financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. Coopers & Lybrand L.L.P. Boston, Massachusetts June 22, 1998 BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) COMBINED BALANCE SHEETS March 31, 1998 and 1997 1998 1997 --------------- --------- Assets Cash and cash equivalents $ 239,932 $ 449,567 Mortgagee escrow deposits 382 - Tenant security deposit escrow 3,017 - Investments in Local Limited Partnerships, net of reserve for valuation of $590,197 in 1998 (Note 4) 24,775,767 30,531,768 Marketable securities, at fair value (Notes 1 and 3) 3,064,717 2,840,127 Rental property at cost, net of accumulated depreciation (Note 5) 778,924 - Replacement reserve escrow 2,888 - Other assets 40,041 50,033 --------------- --------------- Total Assets $ 28,905,668 $ 33,871,495 =============== =============== Liabilities and Partners' Equity Accounts payable to affiliates (Note 6) $ 79,210 $ 88,227 Accounts payable and accrued expenses 72,983 35,692 Mortgage note payable (Note 7) 707,659 - Tenant security deposits payable 3,017 - Deferred revenue (Note 8) 139,461 174,357 --------------- --------------- Total Liabilities 1,002,330 298,276 --------------- --------------- Minority interest in Local Limited Partnership 140,554 - General, Initial and Investor Limited Partners' Equity 27,777,237 33,615,539 Net unrealized losses on marketable securities (14,453) (42,320) --------------- --------------- Total Partners' Equity 27,762,784 33,573,219 --------------- --------------- Total Liabilities and Partners' Equity $ 28,905,668 $ 33,871,495 =============== =============== The accompanying notes are an integral part of these combined financial statements. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) COMBINED STATEMENTS OF OPERATIONS For the Years Ended March 31, 1998, 1997 and 1996 1998 1997 1996 ------------ ------------ -------- Revenue: Rental $ 98,473 $ - $ - Investment (Note 3) 179,999 191,349 146,575 Other 42,967 13,334 77,437 ------------ ------------ ------------ Total Revenue 321,439 204,683 224,012 ------------ ------------ ------------ Expenses: General and administrative (includes reimbursements to an affiliate in the amounts of $127,926, $117,763 and $115,696) (Note 6) 237,092 237,545 225,369 Asset management fees, related party (Note 6) 238,087 231,035 224,953 Provision for valuation of Investment in Local Limited Partnership 590,197 - - Rental operations, exclusive of depreciation 30,067 - - Provision for valuation of rental property 160,000 - - Interest 64,148 - - Depreciation 35,299 - - Amortization 29,291 29,451 30,521 ------------ ------------ ------------ Total Expenses 1,384,181 498,031 480,843 ------------ ------------ ------------ Loss before minority interest in losses of Local Limited Partnership and equity in losses of Local Limited Partnerships (1,062,742) (293,348) (256,831) Minority interest in losses of Local Limited Partnership 1,900 - - Equity in losses of Local Limited Partnerships (Note 4) (4,777,460) (4,044,413) (4,695,617) ----------- ----------- ----------- Net Loss $ (5,838,302) $ (4,337,761) $(4,952,448) ============ ============ =========== Net Loss allocated: General Partners $ (58,383) $ (43,378) $ (49,524) Limited Partners (5,779,919) (4,294,383) (4,902,924) ------------ ------------ ------------ $ (5,838,302) $(4,337,761) $(4,952,448) ============= ============= ============ Net Loss per Limited Partnership Unit (68,929 Units) $ (83.85) $ (62.30) $ (71.13) ============ ============ ============ The accompanying notes are an integral part of these combined financial statements. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY) For the Years Ended March 31, 1998, 1997 and 1996 Net Initial Investor Unrealized General Limited Limited Gains Partners Partner Partners (Losses) Total Balance at March 31, 1995 $ (163,049) $ 5,000 $ 43,063,797 $ (69,741) $ 42,836,007 Net change in net unrealized loss on marketable securities available for sale - - - 44,582 44,582 Net Loss (49,524) - (4,902,924) - (4,952,448) ------------ ------------ ------------ ------------ ------------ Balance at March 31, 1996 (212,573) 5,000 38,160,873 (25,159) 37,928,141 Net change in net unrealized loss on marketable securities available for sale - - - (17,161) (17,161) Net Loss (43,378) - (4,294,383) - (4,337,761) ------------ ------------ ------------ ------------ ------------ Balance at March 31, 1997 (255,951) 5,000 33,866,490 (42,320) 33,573,219 Net change in net unrealized loss on marketable securities available for sale - - - 27,867 27,867 Net Loss (58,383) - (5,779,919) - (5,838,302) ------------ ------------ ------------ ------------ ------------ Balance at March 31, 1998 $ (314,334) $ 5,000 $ 28,086,571 $ (14,453) $ 27,762,784 ============ ============ ============ ============ ============ The accompanying notes are an integral part of these combined financial statements. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) COMBINED STATEMENTS OF CASH FLOWS For the Years Ended March 31, 1998, 1997 and 1996 1998 1997 1996 ------------ ------------ -------- Cash flows from operating activities: Net loss $(5,838,302) $(4,337,761) $(4,952,448) Adjustments to reconcile net loss to net cash used for operating activities: Equity in losses of Local Limited Partnerships 4,777,460 4,044,413 4,695,617 Provision for valuation of Investment in Local Limited Partnership 590,197 - - Provision for valuation of rental property 160,000 - - Depreciation and amortization 64,590 29,451 30,521 Gain on sale of marketable securities (1,154) (1,560) (1,027) Minority interest in losses of Local Limited Partnership (1,900) - - Increase (decrease) in cash arising from changes in operating assets and liabilities: Tenant security deposits (131) - - Mortgagee escrow deposits 3,990 - - Other assets 10,992 (24,625) 23,217 Accounts payable to affiliate (25,605) 16,700 6,016 Accounts payable and accrued expenses 21,457 (32,191) (15,985) Tenant security deposits payable 131 - - Deferred revenue (34,896) (4,961) 179,318 ------------ ------------ ------------ Net cash used for operating activities (273,171) (310,534) (34,771) ------------ ------------ ------------ Cash flows from investing activities: Investments in Local Limited Partnerships - - (213,500) Purchases of marketable securities (2,889,608) (755,442) (2,462,289) Proceeds from sales and maturities of marketable securities 2,694,039 998,969 2,605,139 Cash distributions received from Local Limited Partnerships 241,893 272,930 276,530 Advance to affiliate (1,000) - - Replacement reserve deposits (739) - - Cash received upon assumption of General Partner interest in a Combined Entity 937 - - ------------ ------------ ------------ Net cash provided by investing activities 45,522 516,457 205,880 ------------ ------------ ------------ Cash flows from financing activities: General Partner contribution 23,462 - - Payment of mortgage principal (5,448) - - ------------ ------------ ------------ Net cash provided by financing activities 18,014 - - ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents (209,635) 205,923 171,109 Cash and cash equivalents, beginning 449,567 243,644 72,535 ------------ ------------ ------------ Cash and cash equivalents, ending $ 239,932 $ 449,567 $ 243,644 ============ ============ ============ The accompanying notes are an integral part of these combined financial statements. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) Notes to the Combined Financial Statements 1. Organization Boston Financial Qualified Housing Tax Credits L.P. V ("the Partnership") was formed on June 16, 1989 under the laws of the State of Massachusetts for the primary purpose of investing, as a limited partner, in other limited partnerships ("Local Limited Partnerships"), some of which own and operate apartment complexes benefiting from some form of federal, state or local assistance, and each of which qualifies for low-income housing tax credits. The Partnership's objectives are to: (i) provide current tax benefits in the form of tax credits which qualified investors may use to offset their federal income tax liability; (ii) preserve and protect the Partnership's capital; (iii) provide limited cash distributions from property operations which are not expected to constitute taxable income during Partnership operations; and (iv) provide cash distributions from sale or refinancing transactions. The General Partners of the Partnership are Arch Street V, Inc., a Massachusetts corporation, which serves as the Managing General Partner, and Arch Street V Limited Partnership, a Massachusetts Limited Partnership whose general partner consists of Arch Street V, Inc., which also serves as the Initial Limited Partner. Both of the General Partners are affiliates of the Boston Financial Group Limited Partnership ("Boston Financial"). The fiscal year of the Partnership ends on March 31. The Partnership's partnership agreement (the "Partnership Agreement") authorized the sale of up to 100,000 units of limited partnership interests ("Units") at $1,000 per Unit, adjusted for certain discounts. On August 31, 1991, the Partnership held its final investor closing. In total, the Partnership received $68,928,650 of capital contributions, net of discounts, from investors admitted as Limited Partners for 68,929 Units. Generally, profits, losses, tax credits and cash flows from operations are allocated 99% to the Limited Partners and 1% to the General Partners. Net proceeds from a sale or refinancing will be allocated 95% to the Limited Partners and 5% to the General Partners after certain priority payments. Under the terms of the Partnership Agreement, the Partnership initially designated 4% of the Gross Proceeds from the sale of Units as a reserve for working capital of the Partnership and contingencies related to ownership of Local Limited Partnership interests. The Managing General Partner may increase or decrease such Reserves from time to time, as it deems appropriate. At March 31, 1998, the Managing General Partner has designated approximately $2,732,000 of marketable securities as such Reserves. 2. Significant Accounting Policies Basis of Presentation and Combination The Partnership accounts for its investments in Local Limited Partnerships, with the exception of the Combined Entity (defined below), using the equity method of accounting, because the Partnership does not have a majority control of the major operating and financial policies of the Local Limited Partnerships in which it invests. Under the equity method, the investment is carried at cost, adjusted for the Partnership's share of income or loss of the Local Limited Partnerships, additional investments and cash distributions from the Local Limited Partnerships. Equity in income or loss of the Local Limited Partnerships is included currently in the Partnership's operations. The Partnership has no obligation to fund liabilities of the Local Limited Partnerships beyond its investment, therefore, a Local Limited Partnership's investment will not be carried below zero. To the extent that equity losses are incurred when a Local Limited Partnership's respective investment balance has been reduced to zero, the losses will be suspended to be used against future income. Distributions received from Local Limited Partnerships whose respective investment balance has been reduced to zero are included in income. Excess investment cost over the underlying net assets acquired have arisen from acquisition fees paid and expenses reimbursed to an affiliate of the Partnership. These fees and expenses are included in the Partnership's Investments in Local Limited Partnerships and are being amortized on a straight-line basis over 35 years. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) Notes to the Combined Financial Statements (continued) 2. Significant Accounting Policies (continued) Basis of Presentation and Combination (continued) The Partnership recognizes a decline in carrying value of its investment in Local Limited Partnerships when there is evidence of a non-temporary decline in the recoverable amount of the investment. There is a possibility that the estimates relating to reserves for non-temporary declines in carrying value of investments in Local Limited Partnerships may be subject to material near term adjustments. The Partnership, as a limited partner in the Local Limited Partnerships, is subject to risks inherent in the ownership of property which are beyond its control, such as fluctuations in occupancy rates and operating expenses, variations in rental schedules, proper maintenance and continued eligibility for tax credits. If the cost of operating a property exceeds the rental income earned thereon, the Partnership may deem it in its best interest to voluntarily provide funds in order to protect its investment. On March 1, 1997, an affiliate of the Partnership's Managing General Partner, Boston Financial GP1-LLC, became the Local General Partner of Burbank Limited Partnership ("Burbank"), a Local Limited Partnership in which the Partnership has invested. Since the Local General Partner of Burbank is an affiliate of the Partnership and has a controlling financial interest in Burbank, as set forth in paragraph 22 of ARB 51, these combined financial statements include all activity at Burbank beginning on March 1, 1997. All significant intercompany balances and transactions have been eliminated. As used herein, the "Combined Entity" refers to Burbank. The General Partners have decided to report the results of the Local Limited Partnerships, including the Combined Entity, 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 combined financial statements is as of December 31, 1997, 1996 and 1995. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash Equivalents Cash equivalents consist of short-term money market instruments with original maturities of 90 days or less at acquisition and approximate fair value. Marketable Securities Marketable securities consists primarily of U.S. Treasury instruments and various asset-backed investment vehicles. The Partnership's marketable securities are classified as "Available for Sale" securities and are reported at fair value as reported by the brokerage firm at which the securities are held. Realized gains and losses from the sales of securities are based on the specific identification method. Unrealized gains and losses are excluded from earnings and reported as a separate component of partners' equity. Income Taxes No provision for income taxes has been made as the liability for such taxes is an obligation of the partners of the Partnership. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) Notes to the Combined Financial Statements (continued) 2. Significant Accounting Policies (continued) Effect of recently issued Accounting Standards The Financial Accounting Standards Board recently issued Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income. The standard requires that changes in comprehensive income be shown in a financial statement that is displayed with the same prominence as other financial statements. The standard is effective for fiscal years beginning after December 15, 1997. The Partnership will adopt the new standard beginning in the first quarter of the fiscal year ending March 31, 1999, but it is not expected to have a significant effect on the Partnership's financial position or results of operations. Rental Property Real estate and personal property of the Combined Entity is recorded in accordance with SFAS 121. The Combined Entity provides for depreciation using primarily the straight-line method over its estimated useful lives. Rental Income Rental income, principally from short-term leases on the Combined Entity's apartment units, is recognized as income under the accrual method as the rents become due. Fair Value of Financial Instruments Statements of Financial Accounting Standards No. 107 ("SFAS No. 107"), Disclosures About Fair Value of Financial Instruments, requires disclosure for the fair value of most on- and off-balance sheet financial instruments for which it is practicable to estimate that value. The scope of SFAS No. 107 excludes certain financial instruments, such as trade receivables and payables when the carrying value approximates the fair value and investments accounted for under the equity method, and all nonfinancial assets, such as real property. Unless otherwise described, the fair values of the Partnership's assets and liabilities which qualify as financial instruments under SFAS No. 107 approximate their carrying amounts in the accompanying balance sheets. Reclassifications Certain reclassifications have been made to prior years' financial statements to conform to the current year presentation. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) Notes to the Combined Financial Statements (continued) 3. Marketable Securities A summary of marketable securities is as follows: Gross Gross Unrealized Unrealized Fair Cost Gains Losses Value Debt securities issued by the US Treasury and other US government agencies $ 2,934,294 $ 5,308 $ (21,353) $ 2,918,249 Mortgage backed securities 144,876 1,592 - 146,468 ------------ ----------- ---------- ------------ Marketable securities at March 31, 1998 $ 3,079,170 $ 6,900 $ (21,353) $ 3,064,717 ============ =========== ========== ============ Debt securities issued by the US Treasury $ 2,646,693 $ 492 $ (42,951) $ 2,604,234 Mortgage backed securities 235,754 1,938 (1,799) 235,893 ------------ ----------- ---------- ------------ Marketable securities at March 31, 1997 $ 2,882,447 $ 2,430 $ (44,750) $ 2,840,127 ============ =========== ========== ============ The contractual maturities at March 31, 1998 are as follows: Fair Cost Value Due in one year or less $1,786,173 $1,767,834 Due in one year to five years 1,148,121 1,150,415 Mortgage backed securities 144,876 146,468 ----------- ----------- $ 3,079,170 $ 3,064,717 =========== =========== Actual maturities may differ from contractual maturities because some borrowers have the right to call or prepay obligations. Proceeds from sales and maturities of marketable securities were approximately $2,694,000, $999,000 and $2,605,000 for the years ended March 31, 1998, 1997 and 1996, respectively. Included in investment income are gross gains of $7,205 and gross losses of $6,051 which were realized on the sales during the year ended March 31, 1998, gross gains of $2,951 and gross losses of $1,391 which were realized on the sales during the year ended March 31, 1997 and gross gains of $13,257 and gross losses of $12,230 which were realized on the sales during the year ended March 31, 1996. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) Notes to the Combined Financial Statements (continued) 4. Investments in Local Limited Partnerships The Partnership uses the equity method to account for its limited partner interest in twenty six Local Limited Partnerships, excluding the Combined Entity in 1998. Each of these Local Limited Partnerships owns and operates multi-family housing complexes, most of which are government-assisted. The Partnership, 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, with the exception of Strathern Park/Lorne Park Apartments and Huguenot Park, which are 95% and 88.6%, respectively. Upon dissolution, proceeds will be distributed according to each respective partnership agreement. The following is a summary of Investments in Local Limited Partnerships, excluding the Combined Entity in 1998, at March 31, 1998, 1997 and 1996: 1998 1997 1996 ------------ ------------ -------- Capital contributions paid to Local Limited Partnerships and purchase price paid to withdrawing partners of Local Limited Partnerships $55,219,511 $55,520,042 $55,491,515 Cumulative equity in losses of Local Limited Partnerships (excluding unrecognized losses of $133,567 and $2,143 in 1998 and 1997, respectively) (29,735,570) (25,141,481) (21,097,068) Cumulative cash distributions received from Local Limited Partnerships (973,056) (731,163) (458,233) ------------ ------------ ------------ Investments in Local Limited Partnerships before adjustment 24,510,885 29,647,398 33,936,214 Excess of investment cost over the underlying net assets acquired: Acquisition fees and expenses 1,039,751 1,039,751 1,068,278 Accumulated amortization of acquisition fees and expenses (184,672) (155,381) (125,930) ------------ ------------ ------------ Investments in Local Limited Partnerships 25,365,964 30,531,768 34,878,562 Reserve for valuation of Investment in Local Limited Partnership (590,197) - - ------------ ------------ ------------ $ 24,775,767 $ 30,531,768 $ 34,878,562 ============ ============ ============== The Partnership has provided a reserve for valuation for one of its investments in Local Limited Partnerships, Westgate Apartments, because there is evidence of a non-temporary decline in the recoverable amount of the investment. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) Notes to the Combined Financial Statements (continued) 4. Investments in Local Limited Partnerships (continued) Summarized financial information, as of December 31, 1997, 1996 and 1995 (due to the Partnership's policy of reporting the financial information of its Local Limited Partnership interests on a 90 day lag basis) of all Local Limited Partnerships accounted for on the equity method (excluding the Combined Entity beginning on the date of combination) in which the Partnership has invested as of that date is as follows: Summarized Balance Sheets - as of December 31, 1997 1996 1995 -------------- -------------- -------- Assets: Investment property, net $ 113,022,632 $ 119,404,292 $ 124,034,671 Current assets 3,319,977 3,109,145 3,233,198 Other assets 5,949,514 5,944,574 6,000,099 -------------- -------------- -------------- Total Assets $ 122,292,123 $ 128,458,011 $ 133,267,968 ============== ============== ============== Liabilities and Partners' Equity: Long-term debt $ 84,044,067 $ 85,520,204 $ 86,578,579 Current liabilities (including current portion of long-term debt) 8,060,589 7,168,891 6,037,081 Other liabilities 1,456,872 1,389,432 1,553,129 -------------- -------------- -------------- Total Liabilities 93,561,528 94,078,527 94,168,789 Partnership's Equity 23,844,561 29,509,002 33,857,070 Other Partners' Equity 4,886,034 4,870,482 5,242,109 -------------- -------------- -------------- Total Liabilities and Partners' Equity $ 122,292,123 $ 128,458,011 $ 133,267,968 ============== ============== ============== Summarized Income Statements - for the years ended December 31, Rental and other income: $ 14,309,317 $ 14,377,262 $ 14,078,555 -------------- -------------- -------------- Expenses: Operating 7,622,343 7,389,143 7,301,056 Interest 5,919,806 6,159,027 6,683,070 Depreciation and amortization 5,786,902 4,970,595 4,896,252 -------------- -------------- -------------- Total Expenses 19,329,051 18,518,765 18,880,378 -------------- -------------- -------------- Net Loss $ (5,019,734) $ (4,141,503) $ (4,801,823) ============== ============== ============== Partnership's share of Net Loss $ (4,908,884) $ (4,046,556) $ (4,695,617) ============== ============== ============== Other partners' share of Net Loss $ (110,850) $ (94,947) $ (106,206) ============== ============== ============== For the years ended March 31, 1998 and 1997, the Partnership has not recognized $131,424 and $2,143, respectively, of equity in losses of Local Limited Partnerships relating to two Local Limited Partnerships where cumulative equity in losses exceeded its total investments in these Local Limited Partnerships. The Partnership's equity as reflected by the Local Limited Partnerships of $23,844,561 differs from the Partnership's Investments in Local Limited Partnerships before adjustment of $24,510,885 principally because: a) the Partnership has not recognized $133,567 of equity in losses of two Local Limited Partnerships whose equity in losses exceeded its total investment; b) distributions made by Local Limited Partnerships during the quarter ended March 31, 1998 are not reflected in the December 31, 1997 balance sheets of the Local Limited Partnerships; and c) syndication costs charged to equity by a Local Limited Partnership are not reflected in the Partnership's investment in the Local Limited Partnership. Notes to the Combined Financial Statements (continued) 5. Rental Property Real estate and personal property belonging to the Combined Entity at December 31, 1997 is as follows: Land $ 42,000 Building and improvements 1,004,939 ----------- 1,046,939 Less: Accumulated depreciation (268,015) Total $ 778,924 =========== During the year ended December 31, 1997, an impairment loss of $160,000 was recognized on the real estate in the Combined Entity, which decreased the carrying value to $1,046,939. 6. Transactions with Affiliates An affiliate of the Managing General Partner currently receives the base amount of .351% (as adjusted by the CPI factor) of Gross Proceeds annually as the Asset Management Fee for administering the affairs of the Partnership. Asset Management Fees of $238,087, $231,035 and $224,953 for the years ended March 31, 1998, 1997 and 1996, respectively, have been included in expenses. Included in accounts payable to affiliate at March 31, 1998 and 1997 are $60,556 and $59,177, respectively, of asset management fees due to an affiliate of the Managing General Partner. An affiliate of the Managing General Partner is reimbursed for the actual cost of the Partnership's operating expenses. Included in general and administrative expenses for the years ended March 31, 1998, 1997 and 1996 are $127,926, $117,763 and $115,696, respectively, that the Partnership has paid or is payable as reimbursement for salaries and benefits expenses. The amounts payable for salaries and benefits at March 31, 1998 and 1997 are $18,654 and $29,050, respectively. BF Lansing Limited Partnership ("BF Lansing"), an affiliate of the Managing General Partner, is the Administrative General Partner in two Local Limited Partnerships in which the Partnership has invested, St. Croix II, Limited Partnership ("Carib Villas II") and Christiansted Limited Partnership ("Carib Villas III"). BF Lansing's only responsibility in relation to the two Local Limited Partnerships is the selection of a management agent. BF Lansing selected Lansing Management Company ("LMC"), an affiliate of the Managing General Partner, as the management agent for Carib Villas II and III. The management fee charged to each property is equal to 5% of property gross revenues. Included in operating expenses in the summarized income statements in Note 4 to the financial statements are $21,120, $15,305 and $11,837, respectively, of fees paid to LMC for the years ended December 31, 1997, 1996 and 1995. LMC is also the management agent for Historic New Center, another Local Limited Partnership in which the Partnership invested. Included in operating expenses in the summarized income statements in Note 4 to the financial statements are $21,986, $24,561 and $21,336, respectively, of fees earned by LMC for the years ended December 31, 1997, 1996 and 1995. Boston Financial Property Management ("BFPM"), an affiliate of the Managing General Partner, is the management agent for Woodlake Hills, a Local Limited Partnership in which the Partnership is invested. The management fee charged to the property is 4% of property gross revenues. Included in operating expenses in the summarized income statements in Note 4 to the financial statements are $34,752, $37,497 and $42,852, respectively, of fees earned by BFPM for the years ended December 31, 1997, 1996 and 1995. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) Notes to the Combined Financial Statements (continued) 7. Mortgage Notes Payable The Combined Entity has a mortgage note payable of $750,000 amortized over 30 years at a rate of 11.5%. On December 27, 1997, the mortgage holder of the note reduced the interest rate to 10% for a period of one year; this reduction changed the monthly payment from $7,427 to $6,143. It is anticipated that by the end of the one year, the Combined Entity will have negotiated a new financing agreement with another lending institution. As of December 31, 1997, the remaining balance on this note is $707,659. As the terms of this note have been negotiated under current conditions, the fair value of the note approximates its carrying value as of December 31, 1997. 8. Deferred Revenue Under the terms of a Local Limited Partnership Agreement, the Partnership was required to fund a Supplemental Reserve in the amount of $196,000. The original purpose of the contribution was to fund the development expenses of the Local Limited Partnership. In lieu of transferring the Supplemental Reserve to the Local Limited Partnership, the Partnership designated $196,000 of its cash and cash equivalents for this purpose. Since the funds were not needed, the Local Limited Partnership Agreement allows that the established Supplemental Reserve, along with the interest earned, are available to pay the Partnership its annual priority distribution. As of March 31, 1998, $99,000 has been released to the Partnership. The balance of the Supplemental Reserve is included in cash and cash equivalents. This balance, along with the accrued interest thereon, has also been accounted for as deferred revenue, as it represents the future annual priority distributions to be released to the Partnership from this Reserve. 9. Litigation The Partnership is not a party to any pending legal or administrative proceeding. However, Tompkins/Rosecliff, Ltd. which owns a property in Sanford, Florida, is involved in certain litigation with an entity formerly affiliated with this partnership and its previous local general partner. It is possible that the Partnership will be named as a defendant in this litigation. It does not currently appear that this matter presents a material risk to the Partnership. However, in the opinion of management, there is currently a remote possibility that this litigation could ultimately result in a loss of this property and its credits. The Partnership will vigorously pursue its legal rights if this becomes a material risk in the future. The Partnership has retained counsel to represent its interest in this matter. 10. Transfer of Interest in Local Limited Partnership On November 10, 1997, the Managing General Partner transferred 50% of its interest in capital and profits of Westgate to the local general partner. Included in this transfer is a put option. The put option grants the Managing General Partner the right to put the Partnership's remaining interest to the local general partner any time after one year has elapsed. For financial reporting purposes, the Partnership has written down the remaining carrying value of this investment to zero, because it is unknown as to whether the Partnership will be able to recover its invested balances. The Partnership will retain its full share of tax credits until such time as the remaining interest is put to the local general partner. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) Notes to the Combined Financial Statements (continued) 11. Federal Income Taxes A reconciliation of the loss reported in the Combined Statements of Operations for the years ended March 31, 1998, 1997 and 1996 to the loss reported for federal income tax purposes for the years ended December 31, 1997, 1996 and 1995 is as follows: 1998 1997 1996 ------------ ------------ -------- Net Loss per Statement of Operations $ (5,838,302) $(4,337,761) $(4,952,448) Adjustment for equity in losses of Local Limited Partnerships for financial reporting purposes over (under) equity in losses for tax purposes (1,419,314) (555,803) 115,395 Equity in losses of Local Limited Partnerships not recognized for financial reporting purposes (131,424) (2,143) - Adjustment to reflect March 31, fiscal year-end to December 31, tax year-end 31,986 (46,742) 28,653 Adjustment for expenses not currently deductible for tax purposes - 114,572 55,889 Related party expenses paid in current year but expensed for book purposes in prior year (114,572) (55,889) (54,420) Adjustment for accelerated amortization for tax purposes over amortization for financial reporting purposes (8,383) (10,828) (8,426) Provision for valuation of Investment in Local Limited Partnership not deductible for tax purposes 590,197 - - Other - 22,000 (22,000) ------------ ------------ ------------ Net Loss for federal income tax purposes $ (6,889,812) $ (4,872,594) $ (4,837,357) ============ ============ ============ BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) Notes to the Combined Financial Statements (continued) 11. Federal Income Taxes (continued) The differences of the assets and liabilities of the Partnership for financial reporting purposes and tax reporting purposes for the year ended March 31, 1998 are as follows: Financial Tax Reporting Reporting Purposes Purposes Differences Investments in Local Limited Partnerships $ 24,775,767 $ 23,114,290 $ 1,661,477 ============= ============= ============ Other assets $ 4,129,901 $ 13,054,826 $ (8,924,925) ============= ============= =========== Liabilities $ 1,002,330 $ 217,179 $ 785,151 ============= ============= ============ The differences in assets and liabilities of the Partnership for financial reporting purposes are primarily attributable to: (i) for financial reporting purposes, the Partnership combines the financial statements of one Local Limited Partnership with its financial statements; for tax reporting purposes, this entity is carried on the equity method; (ii) the Partnership has provided a reserve for valuation of approximately $590,000 against one of its investments in Local Limited Partnerships for financial reporting purposes; (iii) the cumulative equity in loss from Local Limited Partnerships, including the Combined Entity, for tax reporting purposes is approximately $2,163,000 greater than for financial reporting purposes, including approximately $134,000 of losses the Partnership has not recognized relating to two Local Limited Partnerships whose cumulative equity in losses exceeded its total investment; (iv) the amortization of acquisition fees for tax reporting purposes exceeds financial reporting purposes by approximately $51,000; (v) approximately $34,000 of cash distributions received from Local Limited Partnerships during the quarter ended March 31, 1998 are not included in the Partnership's Investments in Local Limited Partnerships for tax reporting purposes at December 31, 1997; and (vi) organizational and offering costs of approximately $9,500,000 that have been capitalized for tax reporting purposes, are charged to Limited Partners' equity for financial reporting purposes. The differences of the assets and liabilities of the Partnership for financial reporting purposes and tax reporting purposes for the year ended March 31, 1997 are as follows: Financial Tax Reporting Reporting Purposes Purposes Differences Investments in Local Limited Partnerships $ 30,531,768 $29,997,313 $ 534,455 ============ =========== ============ Other assets $ 3,339,727 $13,071,499 $ (9,731,772) ============ =========== ============ Liabilities $ 298,276 $ 227,063 $ 71,213 ============ =========== ============== The differences in assets and liabilities of the Partnership for financial reporting purposes are primarily attributable to (i) the cumulative equity in losses of the Local Limited Partnerships is approximately $612,000 greater for tax reporting purposes; (ii) the amortization of acquisition fees for tax reporting purposes exceeds financial reporting purposes by approximately $43,000; (iii) approximately $121,000 of cash distributions received from Local Limited Partnerships during the quarter ended March 31, 1997 are not included in the Partnership's Investments in Local Limited Partnerships for tax reporting purposes at December 31, 1996; and (iv) organizational and offering costs of approximately $9,500,000 that have been capitalized for tax reporting purposes, are charged to Limited Partners' equity for financial reporting purposes. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) Notes to the Combined Financial Statements (continued) 12. Supplemental Combining Schedules Balance Sheets Boston Financial Qualified Housing Wheeler Tax Credits House L.P V (A) (Burbank) (B) Eliminations Combined Assets Cash and cash equivalents $ 239,708 $ 224 $ - $ 239,932 Mortgagee escrow deposits - 382 - 382 Tenant security deposit escrow - 3,017 - 3,017 Investments in Local Limited Partnerships, net 24,704,680 - 71,087 24,775,767 Marketable securities, at fair value 3,064,717 - - 3,064,717 Rental property at cost, net of accumulated depreciation - 778,924 - 778,924 Replacement reserve escrow - 2,888 - 2,888 Other assets 40,041 - - 40,041 --------------- --------------- ------------- -------------- Total Assets $ 28,049,146 $ 785,435 $ 71,087 $ 28,905,668 =============== =============== ============= ============== Liabilities and Partners' Equity Accounts payable to affiliates $ 79,210 $ - $ - $ 79,210 Accounts payable and accrued expenses 67,691 5,292 - 72,983 Mortgage note payable - 707,659 - 707,659 Tenant security deposits payable - 3,017 - 3,017 Deferred revenue 139,461 - - 139,461 --------------- --------------- ------------- -------------- Total Liabilities 286,362 715,968 - 1,002,330 --------------- --------------- ------------- -------------- Minority interest in Local Limited Partnership - - 140,554 140,554 --------------- --------------- ------------- -------------- General, Initial and Investor Limited Partners' Equity 27,777,237 69,467 (69,467) 27,777,237 Net unrealized losses on marketable securities (14,453) - - (14,453) --------------- --------------- ------------- -------------- Total Partners' Equity 27,762,784 69,467 (69,467) 27,762,784 --------------- --------------- ------------- -------------- Total Liabilities and Partners' Equity$ 28,049,146 $ 785,435 $ 71,087 $ 28,905,668 =============== =============== ============= ============== (A) As of March 31, 1998. (B) As of December 31, 1997. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) Notes to the Combined Financial Statements (continued) 12. Supplemental Combining Schedules (continued) Statements of Operations For the Year Ended March 31, 1998 Boston Financial Qualified Housing Wheeler Tax Credits House L.P. V (A) (Burbank) (B) Eliminations Combined Revenue: Rental $ - $ 98,473 $ - $ 98,473 Investment 179,908 91 - 179,999 Other 42,164 803 - 42,967 --------------- --------------- ------------- ------------ Total Revenue 222,072 99,367 - 321,439 --------------- --------------- ------------- ------------ Expenses: General and administrative 237,092 - - 237,092 Asset management fees, related party 238,087 - - 238,087 Provision for valuation of Investment in Local Limited Partnership 590,197 - - 590,197 Rental operations, exclusive of depreciation - 30,067 - 30,067 Provision for valuation of rental property - 160,000 - 160,000 Interest - 64,148 - 64,148 Depreciation - 35,299 - 35,299 Amortization 29,291 - - 29,291 --------------- --------------- ------------- ------------ Total Expenses 1,094,667 289,514 - 1,384,181 --------------- --------------- ------------- ------------ Loss before minority interest in losses of Local Limited Partnership and equity in losses of Local Limited Partnerships (872,595) (190,147) - (1,062,742) Minority interest in losses of Local Limited Partnership - - 1,900 1,900 Equity in losses of Local Limited Partnerships (4,965,707) - 188,247 (4,777,460) --------------- --------------- ------------- ------------ Net Loss $ (5,838,302) $ (190,147) $ 190,147 $ (5,838,302) =============== =============== ============= ============ (A) For the year ended March 31, 1998. (B) For the period March 1, 1997 through December 31, 1997. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) Notes to Combined Financial Statements (continued) 12. Supplemental Combining Schedules (continued) Statements of Cash Flows Boston Financial Qualified Housing Wheeler Tax Credits House L.P. V (A) (Burbank) (B) Eliminations Combined Cash flows from operating activities: Net Loss $ (5,838,302) $ (190,147) $ 190,147 $ (5,838,302) Adjustments to reconcile net loss to net cash used for operating activities: Equity in losses of Local Limited Partnerships 4,965,707 (188,247) 4,777,460 Provision for valuation of Investment in Local Limited Partnership 590,197 - - 590,197 Provision for valuation of rental property - 160,000 - 160,000 Depreciation and amortization 29,291 35,299 - 64,590 Gain on sale of marketable securities (1,154) - - (1,154) Minority interest in losses of Local Limited Partnership - - (1,900) (1,900) Increase (decrease) in cash arising from changes in operating assets and liabilities: Tenant security deposits - (131) - (131) Mortgagee escrow deposits - 3,990 - 3,990 Other assets 10,992 - - 10,992 Accounts payable to affiliates (9,017) (16,588) - (25,605) Accounts payable and accrued expenses 31,999 (10,542) - 21,457 Tenant security deposits payable - 131 - 131 Deferred revenue (34,896) - - (34,896) --------------- --------------- ------------- ------------ Net cash used for operating activities (255,183) (17,988) - (273,171) --------------- --------------- ------------- ------------ Cash flows from investing activities: Purchases of marketable securities (2,889,608) - - (2,889,608) Proceeds from sales and maturities of marketable securities 2,694,039 - - 2,694,039 Cash distributions received from Local Limited Partnerships 241,893 - - 241,893 Advance to affiliate (1,000) - - (1,000) Replacement reserve deposits - (739) - (739) Cash received upon assumption of General Partner interest in a Combined Entity - 937 - 937 --------------- ------------- ------------ ------------ Net cash provided by investing activities 45,324 198 - 45,522 --------------- ------------- ------------ ------------ BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) Notes to the Combined Financial Statements (continued) 12. Supplemental Combining Schedules (continued) Statements of Cash Flows (continued) Boston Financial Qualified Housing Wheeler Tax Credits House L.P. V (A) (Burbank) (B) Eliminations Combined Cash flows from financing activities: General Partner contribution - 23,462 - 23,462 Payment of mortgage principal - (5,448) - (5,448) --------------- ------------- ------------ ------------ Net cash provided by financing activities 18,014 - 18,014 --------------- ------------- ------------ ------------ Net increase (decrease) in cash and cash equivalents (209,859) 224 - (209,635) Cash and cash equivalents, beginning 449,567 - - 449,567 --------------- ------------- ------------ ------------ Cash and cash equivalents, ending $ 239,708 $ 224 $ - $ 239,932 =============== ============= ============ ============ (A) For the year ended March 31, 1998. (B) For the period March 1, 1997 through December 31, 1997. Boston Financial Qualified Housing Tax Credits L. P. V Schedule III - Real Estate and Accumulated Depreciation of Property Owned by Local Limited Partnerships in which Registrant has invested at March 31, 1998 COST AT INTEREST ACQUISITION DATE ------------------------------------- NET IMPROVEMENTS NUMBER TOTAL CAPITALIZED OF ENCUM- BUILDING AND SUBSEQUENT TO DESCRIPTION UNITS BRANCES * LAND IMPROVEMENTS ACQUISITION Low and Moderate Income Apartment Complexes Strathern Park/Lorne Park 241 $17,482,959 $4,369,500 $10,513,639 $10,997,952 Los Angeles, CA Maidens Choice 101 4,036,347 807,791 2,013,769 3,414,899 Baltimore, MD Cedar Lane 36 1,115,791 40,000 1,375,512 11,854 London, KY Silver Creek 24 770,058 20,000 946,812 0 Berea, KY Rosecliff 168 5,591,237 1,200,000 3,304,950 4,578,797 Orlando, FL Brookwood 81 3,040,777 91,470 344,580 4,533,211 Ypsilanti Township, MI Water Oak 40 1,258,505 98,058 1,467,944 5,638 Orange City, FL Yester Oaks 44 1,289,338 47,105 1,574,145 2,489 Lafayette, GA Ocean View 42 1,369,108 112,620 1,600,421 7,347 Ferandina Beach, FL Wheeler House 17 707,659 42,000 1,139,412 (134,473) Nashua, NH Archer Village 24 710,331 40,000 861,288 38,869 Archer, FL Oaks of Dunlop 144 4,441,748 631,959 6,492,444 135,225 Colonial Heights, VA Timothy House 112 2,537,465 11,638 6,344,664 412,666 Towson, MD Westover Station 108 2,668,441 305,645 4,299,613 4,489 Newport News, VA Carib Villas III 24 1,485,819 107,582 1,802,466 2,764 St. Croix, VI Carib Villas II 20 1,405,035 57,720 1,787,528 2,764 St. Croix, VI Whispering Trace 40 1,393,392 218,000 2,413,145 (485,934) Woodstock, GA New Center 104 3,504,633 79,652 3,534,776 2,932,510 Detroit, MI Huguenot Park 24 1,400,000 83,000 2,088,664 0 New Paltz, NY Hillwood Pointe 100 2,961,816 454,185 5,103,711 11,854 Jacksonville, FL Pinewood Pointe 136 4,010,215 555,093 6,809,808 486,038 Jacksonville, FL Boston Financial Qualified Housing Tax Credits L. P. V Schedule III - Real Estate and Accumulated Depreciation of Property Owned by Local Limited Partnerships in which Registrant has invested at March 31, 1998 COST AT INTEREST ACQUISITION DATE ------------------------------------- NET IMPROVEMENTS NUMBER TOTAL CAPITALIZED OF ENCUM- BUILDING AND SUBSEQUENT TO DESCRIPTION UNITS BRANCES * LAND IMPROVEMENTS ACQUISITION Low and Moderate Income Apartment Complexes Westgate 60 $ 1,378,233 $ 215,168 $ 2,152,519 $ 24,702 Bismark, ND Woodlake Hills 144 3,845,347 233,690 6,481,250 2,386,284 Pontiac, MI Bixel House 76 1,376,019 190,746 2,294,879 50,061 Los Angeles, CA Harmony 65 3,097,554 0 7,020,696 117,826 North Hollywood, CA Schumaker Place 96 2,928,084 531,776 1,627,716 3,603,531 Salisbury, MD Circle Terrace 303 9,822,423 0 7,884,733 8,513,503 Lansdown, MD --------------------------------------------------------------------------------- SUBTOTAL 2,374 85,628,334 10,544,398 93,281,084 41,654,866 LESS: Combined Entity 17 707,659 42,000 1,139,412 (134,473) --------------------------------------------------------------------------------- TOTAL 2,357 $84,920,675 $10,502,398 $92,141,672 $41,789,339 ================================================================================= (1) The aggregate cost for Federal Income Tax purposes is approximately $ 145,640,000. * Mortgage notes payable generally represent non-recourse financing of low-income housing projects payable with terms of up to 40 years with interest payable at rates ranging from 8.25% to 11%. The Partnership has not guaranteed any of these mortgage notes payable. Boston Financial Qualified Housing Tax Credits L. P. V Schedule III - Real Estate and Accumulated Depreciation of Property Owned by Local Limited Partnerships in which Registrant has invested at March 31, 1998 GROSS AMOUNT AT WHICH CARRIED AT DECEMBER 31, 1997 LIFE ON ----------------------------------------------------------- WHICH DEPRECIATION BUILDING AND ACCUMULATED DATE IS COMPUTED DATE DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION BUILT (YEARS) ACQUIRED ----------- ---- ------------ ----- ------------ ----- ------- -------- Low and Moderate Income Apartment Complexes Strathern Park/Lorne Park $5,889,320 $19,991,771 $25,881,091 $5,213,507 1991 various 07/05/90 Los Angeles, CA Maidens Choice 807,791 5,428,668 6,236,459 1,584,762 1991 various 08/17/90 Baltimore, MD Cedar Lane 40,000 1,387,366 1,427,366 302,494 1991 various 09/10/90 London, KY Silver Creek 20,000 946,812 966,812 212,528 1990 various 08/15/90 Berea, KY Rosecliff 1,120,000 7,963,747 9,083,747 2,132,914 1991 various 09/18/90 Orlando, FL Brookwood 522,673 4,446,588 4,969,261 974,213 1992 various 10/01/90 Ypsilanti Township, MI Water Oak 98,058 1,473,582 1,571,640 368,126 1991 various 01/01/91 Orange City, FL Yester Oaks 47,105 1,576,634 1,623,739 408,270 1991 various 01/01/91 Lafayette, GA Ocean View 112,620 1,607,768 1,720,388 429,002 1991 various 01/01/91 Ferandina Beach, FL Wheeler House 42,000 1,004,939 1,046,939 268,015 1991 various 01/01/91 Nashua, NH Archer Village 40,000 900,157 940,157 240,973 1991 various 01/01/91 Archer, FL Oaks of Dunlop 631,959 6,627,669 7,259,628 1,985,033 1991 various 01/01/91 Colonial Heights, VA Timothy House 11,638 6,757,330 6,768,968 1,148,952 1992 various 03/05/91 Towson, MD Westover Station 305,645 4,304,102 4,609,747 868,023 1991 various 03/30/91 Newport News, VA Carib Villas III 239,009 1,673,803 1,912,812 474,009 1992 various 03/21/91 St. Croix, VI Carib Villas II 197,195 1,650,817 1,848,012 456,959 1991 various 03/01/91 St. Croix, VI Whispering Trace 218,000 1,927,211 2,145,211 638,586 1990 various 05/01/91 Woodstock, GA New Center 96,116 6,450,822 6,546,938 1,402,574 1992 various 06/27/91 Detroit, MI Huguenot Park 83,000 2,088,664 2,171,664 512,659 1991 various 06/26/91 New Paltz, NY Hillwood Pointe 454,185 5,115,565 5,569,750 1,327,798 1991 various 07/19/91 Jacksonville, FL Pinewood Pointe 555,093 7,295,846 7,850,939 1,865,409 1991 various 07/31/91 Jacksonville, FL Boston Financial Qualified Housing Tax Credits L. P. V Schedule III - Real Estate and Accumulated Depreciation of Property Owned by Local Limited Partnerships in which Registrant has invested at March 31, 1998 GROSS AMOUNT AT WHICH CARRIED AT DECEMBER 31, 1997 LIFE ON ------------------------------------------------------------ WHICH DEPRECIATION BUILDING AND ACCUMULATED DATE IS COMPUTED DATE DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION BUILT (YEARS) ACQUIRED ----------- ---- ------------ ----- ------------ ----- ------- -------- Low and Moderate Income Apartment Complexes Westgate $ 238,920 $ 2,153,469 $ 2,392,389 $ 505,340 1991 various 07/25/91 Bismark, ND Woodlake Hills 187,588 8,913,636 9,101,224 1,857,807 1992 various 08/01/91 Pontiac, MI Bixel House 190,746 2,344,940 2,535,686 776,557 1991 various 07/31/91 Los Angeles, CA Harmony 0 7,138,522 7,138,522 1,854,304 1991 various 07/31/91 North Hollywood, CA Schumaker Place 1,023,027 4,739,996 5,763,023 940,251 1992 various 09/20/91 Salisbury, MD Circle Terrace 1,104,269 15,293,967 16,398,236 2,929,726 1993 various 12/06/91 Lansdown, MD ------------------------------------------------------------ SUBTOTAL 14,275,957 131,204,391 145,480,348 31,678,791 LESS: Combined Entity 42,000 1,004,939 1,046,939 268,015 ------------------------------------------------------------ TOTAL $14,233,957 $130,199,452 $144,433,409 $31,410,776 ============================================================ Summary of property owned and accumulated depreciation: Property Owned December 31, 1997 - -------------------------------------------------------------------------------- Balance at beginning of period $145,480,438 Additions during period: Less current year Wheeler House (1,046,939) Other acquisitions 125,851 Improvements etc. 34,059 -------------------- (887,029) Deductions during period: Cost of real estate sold 0 Impairment of Assets (1) (160,000) -------------------- (160,000) --------------------- Balance at close of period $144,433,409 ===================== Property Owned December 31, 1996 - -------------------------------------------------------------------------------- Balance at beginning of period $145,304,421 Additions during period: Other acquisitions 13,520 Improvements etc. 162,497 -------------------- 176,017 Deductions during Period: Cost of real estate sold 0 Reclassification to intangible assets 0 -------------------- 0 --------------------- Balance at close of period $145,480,438 ===================== Property Owned December 31, 1995 - -------------------------------------------------------------------------------- Balance at beginning of period $145,215,379 Additions during period: Other acquisitions 27,195 Improvements etc. 131,065 -------------------- 158,260 Deductions during period: Cost of real estate sold (69,218) Reclassification to intangible assets 0 -------------------- (69,218) --------------------- Balance at close of period $145,304,421 ===================== (1) During the year ended December 31, 1997, Wheeler House recognized an impairment loss on its rental property in the net amount of $160,000 as a result of applying FASB 121, Accounting for the Impairment of Long Lived Assets and for Long Lived Assets to be Disposed of. Accumulated Depreciation December 31, 1997 - --------------------------------------------------- Balance at beginning of period 26,076,146 Additions during period: Less current year Wheeler House (268,015) Depreciation 5,602,645 ---------------- Balance at close of period $31,410,776 ================ Accumulated Depreciation December 31, 1996 - --------------------------------------------------- Balance at beginning of period 21,269,750 Additions during period: Depreciation 4,806,396 ---------------- Balance at close of period $26,076,146 ================ Accumulated Depreciation December 31, 1995 - --------------------------------------------------- Balance at beginning of period 16,571,920 Additions during period: Depreciation 4,697,830 ---------------- Balance at close of period $21,269,750 ================ BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS V (A Limited Partnership) Annual Report on form 10-K For The Year Ended March 31, 1998 Reports of Independent Auditors [Letterhead] [LOGO] JOHN J. LEHOTAN, C.P.A. 4385 W. Main Street Brown City, MI 48416 To The Partners of Woodlake Hills Limited Partnership Detroit, Michigan Independent Auditor's Report I have audited the accompanying balance sheet of Woodlake Hills Limited Partnership, a Michigan limited partnership as of December 31, 1997 and the related statements of profit and loss, partners' equity and cash flow for the year then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted our audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Woodlake Hills Limited Partnership as of December 31, 1997 and the results of its operations and its cash flow for the year then ended in conformity with generally accepted accounting principles. /s/John J. Lehotan Certified Public Accountant, C.P.A. February 5, 1998 [Letterhead] [LOGO] JOHN J. LEHOTAN, C.P.A. Brown City, MI To The Partners of Woodlake Hills Limited Partnership Detroit, Michigan Independent Auditor's Report I have audited the accompanying balance sheet of Woodlake Hills Limited Partnership, a Michigan limited partnership as of December 31, 1996 and the related statements of profit and loss, partners' equity and cash flow for the year then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted our audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Woodlake Hills Limited Partnership as of December 31, 1996 and the results of its operations and its cash flow for the year then ended in conformity with generally accepted accounting principles. /s/John J. Lehotan Certified Public Accountants February 5, 1997 [Letterhead] [LOGO] JOHN J. LEHOTAN, C.P.A. 4385 W. Main Street Brown City, MI 48416 To The Partners of Woodlake Hills Limited Partnership Detroit, Michigan Independent Auditor's Report I have audited the accompanying balance sheet of Woodlake Hills Limited Partnership, a Michigan limited partnership as of December 31, 1995 and the related statements of profit and loss, partners' equity and cash flow for the year then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Woodlake Hills Limited Partnership as of December 31, 1995 and the results of its operations and its cash flow for the year then ended in conformity with generally accepted accounting principles. /s/John J. Lehotan Certified Public Accountants February 11, 1996 [Letterhead] [LOGO] NANAS, STERN, BIERS, NEINSTEIN AND CO.LLP 9454 Wilshire Boulevard Beverly Hills, California 90212-2907 Independent Auditors' Report The Partners Strathern Park Los Angeles, California We have audited the accompanying balance sheet of Strathern Park (a California limited partnership), as of December 31, 1997 and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Strathern Park as of December 31, 1997, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information on Schedules I, II and III is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Nanas, Stern, Biers, Neinstein and Co., LLP NANAS, STERN, BIERS, NEINSTEIN AND CO. January 28, 1998 [Letterhead] [LOGO] NANAS, STERN, BIERS, NEINSTEIN AND CO. , LLP 9454 Wilshire Boulevard Beverly Hills, California 90212-2907 Independent Auditors' Report The Partners Strathern Park Los Angeles, California We have audited the accompanying balance sheet of Strathern Park (a California limited partnership), as of December 31, 1996 and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Strathern Park as of December 31, 1996, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information on Schedules I, II and III is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Nanas, Stern, Biers, Neinstein and Co. NANAS, STERN, BIERS, NEINSTEIN AND CO. January 14, 1997 [Letterhead] [LOGO] NANAS, STERN, BIERS, NEINSTEIN AND CO. 9454 Wilshire Boulevard Beverly Hills, California 90212-2907 Independent Auditors' Report The Partners Strathern Park Los Angeles, California We have audited the accompanying balance sheet of Strathern Park (a California limited partnership), as of December 31, 1995 and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Strathern Park as of December 31, 1995, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information on Schedules I, II and III is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Nanas, Stern, Biers, Neinstein and Co. NANAS, STERN, BIERS, NEINSTEIN AND CO. January 23, 1996 [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Maiden Choice Limited Partnership We have audited the accompanying balance sheet of Maiden Choice Limited Partnership as of December 31, 1997, and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Maiden Choice Limited Partnership as of December 31, 1997, and the results of its operations, changes in partners' equity and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 21 through 33 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the Consolidated Audit Guide for Audits of HUD Programs, we have also issued reports dated January 6, 1998, on our consideration of Maiden Choice Limited Partnership's internal control and on its compliance with specific requirements applicable to CDA programs, fair housing and non-discrimination, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer Identification Number: 52-1088612 Audit Principal: William T. Riley, Jr. January 6, 1998 [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Maiden Choice Limited Partnership We have audited the accompanying balance sheet of Maiden Choice Limited Partnership as of December 31, 1996, and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Maiden Choice Limited Partnership as of December 31, 1996, and the results of its operations, changes in partners' equity and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 20 through 34 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the Consolidated Audit Guide for Audits of HUD Programs, we have also issued reports dated January 6, 1997, on our consideration of Maiden Choice Limited Partnership's internal control structure and on its compliance with specific requirements applicable to CDA programs, affirmative fair housing, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer Identification Number: 52-1088612 Audit Principal: William T. Riley January 6, 1997 [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Maiden Choice Limited Partnership We have audited the accompanying balance sheet of Maiden Choice Limited Partnership as of December 31, 1995, and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Maiden Choice Limited Partnership as of December 31, 1995, and the results of its operations, changes in partners' equity and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 20 trough 29 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued reports dated January 18, 1996, on our consideration of Maiden Choice Limited Partnership's internal control structure and on its compliance with specific requirements applicable to CDA programs, affirmative fair housing, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer Identification Number: 52-1088612 Audit Principal: William T. Riley, Jr. January 18, 1996 [Letterhead] [LOGO] Miller, Mayer, Sullivan & Stevens LLP INDEPENDENT AUDITORS' REPORT To the Partners Rural Development Cedar Lane I, Ltd. London, Kentucky We have audited the accompanying balance sheets of Cedar Lane I, Ltd., (a limited partnership) Case No. 20-063-621358072, as of December 31, 1997 and 1996 and the related statements of operations, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and the standards for financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cedar Lane I, Ltd. as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated February 2, 1998 on our consideration of Cedar Lane I, Lts.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental data included in this report is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements, and in our opinion, is presented fairly, in all material respects, in relation to the basic financial statements taken as a whole. /s/Miller, Mayerm Sullivan & Stevens Lexington, Kentucky February 2, 1998 [Letterhead] [LOGO] Miller, Mayer, Sullivan & Stevens LLP INDEPENDENT AUDITORS' REPORT To the Partners Rural Development Cedar Lane I, Ltd. London, Kentucky We have audited the accompanying balance sheets of Cedar Lane I, Ltd., (a limited partnership) Case No. 20-063-621358072, as of December 31, 1996 and 1995 and the related statements of operations, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with generally accepted auditing standards and the standards for financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cedar Lane I, Ltd. as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated January 27, 1997 on our consideration of Cedar Lane I, Lts.'s internal control structure and compliance with laws and regulations. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental data included in this report is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements, and in our opinion, is presented fairly, in all material respects, in relation to the basic financial statements taken as a whole. /s/Miller, Mayerm Sullivan & Stevens Lexington, Kentucky January 27, 1997 Letterhead] [LOGO] Miller, Mayer, Sullivan & Stevens LLP INDEPENDENT AUDITORS' REPORT To the Partners Silver Creek II, Ltd. We have audited the accompanying balance sheets of Silver Creek II, Ltd., (a limited partnership), as of December 31, 1997 and 1996, and the related statements of operations, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Silver Creek II, Ltd. as of December 31, 1997 and 1996 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental data included in this report is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements, and in our opinion, is presented fairly in all material respects, in relation to the basic financial statements taken as a whole. /s/Miller, Mayerm Sullivan & Stevens Lexington, Kentucky January 27, 1998 [Letterhead] [LOGO] Miller, Mayer, Sullivan & Stevens LLP INDEPENDENT AUDITORS' REPORT To the Partners Silver Creek II, Ltd. We have audited the accompanying balance sheets of Silver Creek II, Ltd., (a limited partnership), as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Silver Creek II, Ltd. as of December 31, 1996 and 1995 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental data included in this report is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements, and in our opinion, is presented fairly in all material respects, in relation to the basic financial statements taken as a whole. /s/Miller, Mayerm Sullivan & Stevens Lexington, Kentucky January 28, 1997 [Letterhead] [LOGO] Deloitte & Touche LLP Suite 1800 200 South Orange Avenue Orlando, Florida 32801 INDEPENDENT AUDITORS' REPORT To the General Partner and Limited Partners of Tomkins/Rosecliff, Ltd.: We have audited the accompanying balance sheet of Tomkins/Rosecliff, Ltd. (a Florida Limited Partnership) as of December 31, 1997, and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tomkins/Rosecliff, Ltd. (a Florida Limited Partnership) as of December 31, 1997, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. /s/Deloitte & Touche LLP February 6, 1998 [Letterhead] [LOGO] Deloitte & Touche LLP Suite 1800 200 South Orange Avenue Orlando, Florida 32801 INDEPENDENT AUDITORS' REPORT To the General Partner and Limited Partners of Tomkins/Rosecliff, Ltd.: We have audited the accompanying balance sheet of Tomkins/Rosecliff, Ltd. (a Florida Limited Partnership) as of December 31, 1996, and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tomkins/Rosecliff, Ltd. (a Florida Limited Partnership) as of December 31, 1996, and the results of its operations and its cash flow for the year then ended in conformity with generally accepted accounting principles. /s/Deloitte & Touche LLP January 24, 1997 [Letterhead] [LOGO] Deloitte & Touche LLP Suite 1800 200 South Orange Avenue Orlando, Florida 32801 INDEPENDENT AUDITORS' REPORT To the General Partner and Limited Partners of Tomkins/Rosecliff, Ltd.: We have audited the accompanying balance sheet of Tomkins/Rosecliff, Ltd. (a Florida Limited Partnership) as of December 31, 1995, and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tomkins/Rosecliff, Ltd. (a Florida Limited Partnership) as of December 31, 1995, and the results of its operations and its cash flow for the year then ended in conformity with generally accepted accounting principles. /s/Deloitte & Touche LLP February 2, 1996 [Letterhead] [LOGO] Follmer, Rudzewicz & Co., P.C. January 22, 1998 INDEPENDENT AUDITORS' REPORT To the Partners of: Brookwood L.D.H.A. Limited Partnership 28388 Franklin Road Southfield, Michigan 48034 We have audited the accompanying Balance sheet of Brookwood L.D.H.A. Limited Partnership (a Michigan limited partnership), MSHDA Development No. 832 as of December 31, 1997 and the related Statement of Profit and Loss, changes in in accumulated earnings and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of Brookwood L.D.H.A. Limited Partnership, MSHDA No. 832 as of December 31, 1997, and the results of its operations, the changes in its cumulative income and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information of Brookwood L.D.H.A. Limited Partnership, MSHDA No. 832 on pages 11 through 14 is presented for the purpose of additional analysis and is not a required part of the basic financial statements. This additional information is the responsibility of the partnership's management. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated January 22, 1998 on our consideration of the partnership's internal control structure and a report dated January 22, 1998 on its compliance with laws and regulations. /s/Follmer, Rudzewicz & Co., P.C. Follmer,Rudzewicz & Co. P.C. Certified Public Accountants Southfield, Michigan 38-1910111 [Letterhead] [LOGO] Follmer, Rudzewicz & Co., P.C. January 30, 1997 INDEPENDENT AUDITORS' REPORT To the Partners Brookwood L.D.H.A. Limited Partnership 28388 Franklin Road Southfield, Michigan 48034 We have audited the accompanying Balance sheet of Brookwood L.D.H.A. Limited Partnership (a Michigan limited partnership), MSHDA Development No. 832 as of December 31, 1996 and the related Statement of Profit and Loss, changes in in accumulated earnings and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Brookwood L.D.H.A. Limited Partnership, MSHDA No. 832 as of December 31, 1996, and the results of its operations, the changes in its cumulative income and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information of Brookwood L.D.H.A. Limited Partnership, MSHDA No. 832 on pages 11 through 14 is presented for the purpose of additional analysis and is not a required part of the basic financial statements. This additional information is the responsibility of the partnership's management. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated January 30, 1997 on our consideration of the partnership's internal control structure and a report dated January 30, 1997 on its compliance with laws and regulations. /s/Follmer, Rudzewicz & Co., P.C. Follmer,Rudzewicz & Co. P.C. Certified Public Accountants Southfield, Michigan 38-1910111 [Letterhead] [LOGO] Follmer, Rudzewicz & Co., P.C. January 24, 1996 INDEPENDENT AUDITOR'S REPORT To the Partners Brookswood L.D.H.A. Limited Partnership 28388 Franklin Road Southfield, Michigan 48034 We have audited the accompanying balance sheet of Brookswood L.D.H.A. Limited Partnership (a Michigan Limited Partnership), MSHDA Development No. 832, as of December 31, 1995, and the related statements of profit and loss, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Brookswood L.D.H.A. Limited Partnership at December 31, 1995 and the results of its operations and cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental data on pages 11 through 13 are presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. /s/Follmer, Rudzewicz & Co., P.C. Follmer,Rudzewicz & Co. P.C. Certified Public Accountants Southfield, Michigan 38-1910111 [Letterhead] BILLIE J. BURNETT,CPA 5 Benton Drive Nashua, NH 03060 (603) 883-4230 To The Partners Burbank Limited Partnership I I have audited the accompanying balance sheets of Burbank Limited Partnership I as of December 31, 1997 and 1996, and the related statements of income, partners' equity and cash flows for the years then ended. The financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audits, provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Burbank Limited Partnership I as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/Billie J. Burnett Billie J. Burnett January 12, 1998 [Letterhead] BILLIE J. BURNETT,CPA 5 Benton Drive Nashua, NH 03060 (603) 883-4230 To The Partners Burbank Limited Partnership I I have audited the accompanying balance sheets of Burbank Limited Partnership I as of December 31, 1996 and 1995, and the related statements of income, partners' equity and cash flows for the years then ended. The financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audits, provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Burbank Limited Partnership I as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/Billie J. Burnett Billie J. Burnett January 8, 1997 [Letterhead] [LOGO] Wall Einchorn & Chernitzer., P.C. Certified Public Accountants First Virginia Bank Towers 555 Main Street Suite 1500 Post Office Box 3610 Norfolk, Virginia 23514 Alvin A. Wall, CPA Telephone (757)625-4700 Martin A. Einhorn, CPA Telephone (757)625-0527 Jeffrey S. Chernitzer, CPA INDEPENDENT AUDITORS' REPORT To the Partners Virginia Housing Development Authority The Oaks of Dunlop Farms, L. P. 601 South Belvidere Street (A Limited Partnership) Richmond, Virginia 23220 Norfolk, Virginia We have audited the accompanying balance sheets of The Oaks of Dunlop Farms, L.P. (A Limited Partnership), VHDA Project Number 90-0300-C, as of December 31, 1997 and 1996, and the related statements of operations , partners' equity, and cash flows for the years then ended. These financial statements are the responsibility of the projects management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of VHDA Project Number 90-0300-C as of December 31, 1997 and 1996, and the results of its operations, changes in partners' equity, and cash flows for the years then ended in conformity with generally accepted accounting principles. The accompanying supplementary information (shown on pages 10 to 17) is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Wall, Einhorn & Chernitzer, P.C. Norfolk, Virginia January 25, 1998 [Letterhead] [LOGO] Wall Einchorn & Chernitzer., P.C. Certified Public Accountants First Virginia Bank Towers 555 Main Street Suite 1500 Post Office Box 3610 Norfolk, Virginia 23514 Alvin A. Wall, CPA Telephone (757)625-4700 Martin A. Einhorn, CPA Telephone (757)625-0527 Jeffrey S. Chernitzer, CPA INDEPENDENT AUDITORS' REPORT To the Partners Virginia Housing Development Authority The Oaks of Dunlop Farms, L. P. 601 South Belvidere Street (A Limited Partnership) Richmond, Virginia 23220 Norfolk, Virginia We have audited the accompanying balance sheets of The Oaks of Dunlop Farms, L.P. (A. Limited Partnership), VHDA Project Number 90-0300-C, as of December 31, 1996 and 1995, and the related statements of operations , partners' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of VHDA Project Number 90-0300-C as of December 31, 1996 and 1995, and the results of its operations, changes in partners' equity, and cash flows for the years then ended in conformity with generally accepted accounting principles. The accompanying supplementary information (shown on pages 9 to 12) is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Wall, Einhorn & Chernitzer, P.C. Norfolk, Virginia January 22, 1997 [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Timothy House Limited Partnership We have audited the accompanying balance sheet of Timothy House Limited Partnership as of December 31, 1997 and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Timothy House Limited Partnership as of December 31, 1997, and the results of its operations, changes in partners' equity and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 21 through 33 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the Consolidated Audit Guide for Audits of HUD Programs, we have also issued reports dated January 10, 1998, on our consideration of Timothy House Limited Partnership's internal control structure and on its compliance with requirements applicable to CDA programs, fair housing, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer January 10, 1998 Identification Number: 52-1088612 Audit Principal: William T. Riley, Jr. [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Timothy House Limited Partnership We have audited the accompanying balance sheet of Timothy House Limited Partnership as of December 31, 1996, and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Timothy House Limited Partnership as of December 31, 1996, and the results of its operations, changes in partners' equity and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 20 through 34 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the Consolidated Audit Guide for Audits of HUD Programs, we have also issued reports dated January 14, 1997, on our consideration of Timothy House Limited Partnership's internal control structure and on its compliance with specific requirements applicable to CDA programs, affirmative fair housing, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer January 14, 1997 Identification Number: 52-1088612 Audit Principal: William T. Riley, Jr. [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS REPORT To the Partners Timothy House Limited Partnership We have audited the accompanying balance sheet of Timothy House Limited Partnership as of December 31, 1995 and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Timothy House Limited Partnership as of December 31, 1995 and the results of its operations, changes in partners' equity and its cash flow for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 20 through 28 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements, and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued reports dated January 16, 1996, on our consideration of Timothy House Limited Partnership's internal control structure and on its compliance with specific requirements applicable to CDA programs, affirmative fair housing, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer January 16, 1996 Identification Number: 52-1088612 Audit Principal: William T. Riley, Jr. [Letterhead] Wilfore & Wynn A Professional Corporation Certified Public Accountants INDEPENDENT AUDITORS' REPORT The Partners Westover Station Associates, L.P. (A Limited Partnership) Newport News, Virginia We have audited the accompanying balance sheets of Westover Station Associates, L.P., VHDA Project Number 90,0303-C, as of December 31, 1997 and 1996 and the related statements of operations, partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with generally accepted auditing standards and the Virginia Housing Development Authority's Mortgagor/Grantee's Audit Guide. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Westover Station Associates, L.P. at December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules included in the report are presented for purposes of additional analysis and are not a required part of the basic financial statements of Westover Station Associates, L.P. Such information has been subjected to the auditing procedures applied in the audit of the basis financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/Wilfore & Wynn Wilfore & Wynn Virginia Beach, Virginia February 5, 1998 4530 Professional Circle Virginia Beach, Virginia 23455-6498 Telephone (804)456-0111 Fax (804)473-1095 [Letterhead] Wilfore & Wynn A Professional Corporation Certified Public Accountants INDEPENDENT AUDITORS' REPORT The Partners Westover Station Associates, L.P. (A Limited Partnership) Newport News, Virginia We have audited the accompanying balance sheets of Westover Station Associates, L.P. as of December 31, 1996 and 1995 and the related statements of operations, partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Westover Station Associates, L.P. at December 31, 1996 and 1995, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. The supplemental schedules and supporting data required by VHDA are prepared in accordance with VHDA requirements and have been tested by us as part of our auditing procedures followed in the examinantion of the financial statements mentioned above and, in our opinion, they are fairly stated in all material respects in relation to the financial statements taken as a whole. /s/Wilfore & Wynn Wilfore & Wynn Virginia Beach, Virginia February 10, 1997 (2) 4530 Professional Circle Virginia Beach, Virginia 23455-6498 Telephone (804)456-0111 Fax (804)473-1095 [Letterhead] Kirschner Hutton Perlin, P.C. Certified Public Accountants 26913 Northwestern Hwy. Suite 510 Southfield, Michigan 48034-8444 Telephone: (810) 356-3880 Facsimile: (810) 356-3885 Independent Auditors' Report Partners January 19, 1998 Christiansted Limited Dividend Housing Association Limited Partnership We have audited the accompanying balance sheet of Christiansted Limited Dividend Housing Association Limited Partnership as of December 31, 1997 and 1996, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Christiansted Limited Dividend Housing Association Limited Partnership as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/Kirshner Huton Perlin, P.C. [Letterhead] Kirschner Hutton Perlin, P.C. Certified Public Accountants 26913 Northwestern Hwy. Suite 510 Southfield, Michigan 48034-8444 Telephone: (810) 356-3880 Facsimile: (810) 356-3885 Independent Auditors' Report Partners January 22, 1997 Christiansted Limited Dividend Housing Association Limited Partnership We have audited the accompanying balance sheet of Christiansted Limited Dividend Housing Association Limited Partnership as of December 31, 1996 and 1995, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Christiansted Limited Dividend Housing Association Limited Partnership as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/Kirshner Huton Perlin, P.C. Kirschner Hutton Perlin, P.C. Certified Public Accountants 26913 Northwestern Hwy. Suite 510 Southfield, Michigan 48034-8444 Telephone: (810) 356-3880 Facsimile: (810) 356-3885 Independent Auditors' Report Partners January 17, 1998 St. Croix II. Limited Partnership We have audited the accompanying balance sheet of St. Croix II, Limited Partnership as of December 31, 1997 and 1996, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of St. Croix II, Limited Partnership as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/Kirshner Huton Perlin, P.C. [Letterhead] Kirschner Hutton Perlin, P.C. Certified Public Accountants 26913 Northwestern Hwy. Suite 510 Southfield, Michigan 48034-8444 Telephone: (810) 356-3880 Facsimile: (810) 356-3885 Independent Auditors' Report Partners January 22, 1997 St. Croix II. Limited Partnership We have audited the accompanying balance sheet of St. Croix II, Limited Partnership as of December 31, 1996 and 1995, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of St. Croix II, Limited Partnership as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/Kirshner Huton Perlin, P.C. [Letterhead] [LOGO] KPMG Peat Marwick LLP 303 Peachtree Street, N.E. Suite 2000 Atlanta, GA 30308 Independent Auditors' Report The Partners Kensignton Place Townhomes, A Limited Partnership: We have audited the accompanying balance sheets of Kensignton Place Townhomes, A Limited Partnership as of December 31, 1997 and 1996, and the related statements of loss, partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Kensignton Place Townhomes, A Limited Partnership as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP February 16, 1998 [Letterhead] [LOGO] KPMG Peat Marwick LLP 303 Peachtree Street, N.E. Suite 2000 Atlanta, GA 30308 Independent Auditors' Report The Partners Kensignton Place Townhomes, A Limited Partnership: We have audited the accompanying balance sheets of Kensignton Place Townhomes, A Limited Partnership as of December 31, 1996 and 1995, and the related statements of loss, partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Kensignton Place Townhomes, A Limited Partnership as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP February 5, 1997 [Letterhead] [LOGO] KPMG Peat Marwick LLP 303 Peachtree Street, N.E. Suite 2000 Atlanta, GA 30308 Independent Auditors' Report The Partners Cobblestone Place Townhomes, A Limited Partnership: We have audited the accompanying balance sheets of Cobblestone Place Townhomes, A Limited Partnership as of December 31, 1997 and 1996, and the related statements of loss, partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cobblestone Place Townhomes, A Limited Partnership as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP February 16, 1998 [Letterhead] [LOGO] KPMG Peat Marwick LLP 303 Peachtree Street, N.E. Suite 2000 Atlanta, GA 30308 Independent Auditors' Report The Partners Cobblestone Place Townhomes, A Limited Partnership: We have audited the accompanying balance sheets of Cobblestone Place Townhomes, A Limited Partnership as of December 31, 1996 and 1995, and the related statements of loss, partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cobblestone Place Townhomes, A Limited Partnership as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP January 20, 1997 [Letterhead] [LOGO] KPMG Peat Marwick LLP 303 Peachtree Street, N.E. Suite 2000 Atlanta, GA 30308 Independent Auditors' Report The Partners Whispering Trace Apartments, A Limited Partnership: We have audited the accompanying balance sheets of Whispering Trace Apartments, A Limited Partnership as of December 31, 1997 and 1996, and the related statements of loss, partners' capital (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Whispering Trace Apartments, A Limited Partnership as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP February 16, 1998 [Letterhead] [LOGO] KPMG Peat Marwick LLP 303 Peachtree Street, N.E. Suite 2000 Atlanta, GA 30308 Independent Auditors' Report The Partners Whispering Trace Apartments, A Limited Partnership: We have audited the accompanying balance sheets of Whispering Trace Apartments, A Limited Partnership as of December 31, 1996 and 1995, and the related statements of loss, partners' capital (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Whispering Trace Apartments, A Limited Partnership as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP February 10, 1997 [letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS REPORT To the Partners Huguenot Park Associates, L.P. We have audited the accompanying balance sheet of Huguenot Park Associates, L.P. as of December 31, 1997 and 1996, and the related statements of operations, partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Huguenot Park Associates, L.P. as of December 31, 1997 and 1996, and the results of its operations, the changes in partners' capital and cash flows for the year then ended, in conformity with generally accepted accounting principles. /s/Reznick Fedder & Silverman Bethesda, Maryland January 20, 1998 [letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS REPORT To the Partners Huguenot Park Associates, L.P. We have audited the accompanying balance sheet of Huguenot Park Associates, L.P. as of December 31, 1996, and the related statements of operations, partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Huguenot Park Associates, L.P. as of December 31, 1996, and the results of its operations, the changes in partners' capital and cash flows for the year then ended, in conformity with generally accepted accounting principles. /s/Reznick Fedder & Silverman Bethesda, Maryland January 18, 1997 [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS REPORT To the Partners Huguenot Park Associates, L.P. We have audited the accompanying balance sheet of Huguenot Park Associates L.P. as of December 31, 1995 and the related statements of operations, partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Huguenot Park Associates, L.P. as of December 31, 1995 and the results of its operations, changes in partners' equity and its cash flow for the year then ended in conformity with generally accepted accounting principles. /s/Reznick Fedder & Silverman Bethesda, Maryland January 22, 1996 [Letterhead] [LOGO] Charles Bailly & Company P.L.L.P. INDEPENDENT AUDITOR'S REPORT The Partners Westgate Apartments Limited Partnesrhip Wahpeton, North Dakota We have audited the accompanying balance sheets of Westagate Apartments Limited Partnership as of December 31, 1997 and 1996, and the related statements of operations, partners' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Westgate Apartments Limited Partnership as of December 31, 1997 and 1996, and the results of its operations, and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/Charles Bailly & Company P.L.L.P. Fargo, North Dakota January 21, 1998 [Letterhead] [LOGO] Charles Bailly & Company P.L.L.P. INDEPENDENT AUDITOR'S REPORT The Partners Westgate Apartments Limited Partnesrhip Wahpeton, North Dakota We have audited the accompanying balance sheets of Westagate Apartments Limited Partnership as of December 31, 1996 and 1995, and the related statements of operations, partners' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Westgate Apartments Limited Partnership as of December 31, 1996 and 1995, and the results of its operations, and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/Charles Bailly & Company P.L.L.P. Fargo, North Dakota January 18, 1997 [Letterhead] [LOGO] Charles Bailly & Company P.L.L.P. INDEPENDENT AUDITORS REPORT The Partners Westgate Apartments Limited Partnesrhip Wahpeton, North Dakota We have audited the accompanying balance sheets of Westagate Apartments Limited Partnership as of December 31, 1995 and 1994, and the related statements of operations, partners' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Westgate Apartments Limited Partnership as of December 31, 1995 and 1994 and the results of its operations, changes in partners' equity and its cash flow for the year then ended in conformity with generally accepted accounting principles. /s/Charles Bailly & Company P.L.L.P. Fargo, North Dakota January 22, 1996 [Letterhead] SUAREZ ACCOUNTANCY CORPORATION 150 W. Seventh Street Suite 100 San Pedro, CA 900731 Richard Suarez Telephone (310) 832-7887 Fax (310) 832-6563 Independent Auditor's Report To The Partners of Bixel House Los Angeles, California I have audited the accompanying balance sheet of Bixel House as of December 31, 1997, and the related statements of operations, changes in partners' capital, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bixel House at December 31, 1997, and the results of its operations and cash flows for the year then ended, in conformity with generally accepted accounting principles. /s/Suarez Accountancy Corporation San Pedro, California January 15, 1998 [Letterhead] SUAREZ ACCOUNTANCY CORPORATION 150 W. Seventh Street Suite 100 San Pedro, CA 900731 Richard Suarez Telephone (310) 832-7887 Fax (310) 832-6563 Independent Auditor's Report To The Partners of Bixel House Los Angeles, California I have audited the accompanying balance sheet of Bixel House as of December 31, 1996, and the related statements of operations, changes in partners' capital, and cash flows for the year then ended. The financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bixel House at December 31, 1996, and the results of its operations and cash flows for the years then ended, in conformity with generally accepted accounting principles. /s/Suarez Accountancy Corporation Certified Public Accountant San Pedro, California February 14, 1997 [Letterhead] SUAREZ ACCOUNTANCY CORPORATION 150 W. Seventh Street Suite 100 San Pedro, CA 900731 Richard Suarez Telephone (310) 832-7887 Fax (310) 832-6563 Independent Auditor's Report To The Partners of Bixel House Los Angeles, California I have audited the accompanying balance sheet of Bixel House as of December 31, 1995, and the related statements of operations, changes in partners, capital, and cash flows for the years then ended. The financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audits, provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bixel House as of December 31, 1995, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/Suarez Accountancy Corporation Certified Public Accountant San Pedro, California February 9, 1996 [Letterhead] SUAREZ ACCOUNTANCY CORPORATION 150 W. Seventh Street Suite 100 San Pedro, CA 900731 Richard Suarez Telephone (310) 832-7887 Fax (310) 832-6563 Independent Auditor's Report To The Partners of Harmony Apartments Los Angeles, California I have audited the accompanying balance sheet of Harmony Apartments as of December 31, 1997, and the related statements of operations, changes in partners' capital, and cash flows for the year ended December 31, 1997. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audit provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Harmony Apartments at December 31, 1997, and the results of its operations and cash flows for the year ended December 31, 1997 in conformity with generally accepted accounting principles. /s/Suarez Accountancy Corporation San Pedro, California February 11, 1998 [Letterhead] SUAREZ ACCOUNTANCY CORPORATION 150 W. Seventh Street Suite 100 San Pedro, CA 900731 Richard Suarez Telephone (310) 832-7887 Fax (310) 832-6563 Independent Auditor's Report To The Partners of Harmony Apartments Los Angeles, California I have audited the accompanying balance sheet of Harmony Apartments as of December 31, 1996, and the related statements of operations, changes in partners' capital, and cash flows for the year ended December 31, 1996. The financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Harmony Apartments at December 31, 1996, and the results of its operations and cash flows for the year ended December 31, 1996 in conformity with generally accepted accounting principles. /s/Suarez Accountancy Corporation Certified Public Accountant San Pedro, California February 14, 1997 [Letterhead] SUAREZ ACCOUNTANCY CORPORATION 150 W. Seventh Street Suite 100 San Pedro, CA 900731 Richard Suarez Telephone (310) 832-7887 Fax (310) 832-6563 Independent Auditor's Report To The Partners of Harmony Apartments Los Angeles, California I have audited the accompanying balance sheet of Harmony Apartments as of December 31, 1995, and the related statements of operations, changes in partners, capital, and cash flows for the year ended December 31, 1995. The financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audits, provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Harmony Apartments as of December 31, 1995, and the results of its operations and its cash flows for the year ended December 31, 1995 in conformity with generally accepted accounting principles. /s/Suarez Accountancy Corporation Certified Public Accountant San Pedro, California February 13, 1996 [Letterhead] [LOGO] Halbert, Katz & Co., P.C. 121 South Broad Street Philadelphia, Pennsylvania 19107 INDEPENDENT AUDITORS' REPORT To the Partners Schumaker Place Associates, L.P. Wilmington, Delaware We have audited the accompanying balance sheets of Schumaker Place Associates, L.P., as of December 31, 1997 and December 31, 1996, and the related statements of loss, partners' capital (capital deficiency) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Schumaker Place Associates, L.P., as of December 31, 1997 and December 31, 1996, and the results of its operations, changes in partners' capital (capital deficiency) and its cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audit were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supporting information included in the report (shown on page 12) is presented for the purpose of additional analysis and is not a required part of the basic financial statements of Schumaker Place Associates, L.P. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Halbert Katz &Co January 30, 1998 [Letterhead] [LOGO] Halbert, Katz & Co., P.C. 121 South Broad Street Philadelphia, Pennsylvania 19107 INDEPENDENT AUDITORS' REPORT To the Partners Schumaker Place Associates, L.P. Wilmington, Delaware We have audited the accompanying balance sheets of Schumaker Place Associates, L.P., as of December 31, 1996 and December 31, 1995, and the related statements of loss, partners' capital (capital deficiency) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Schumaker Place Associates, L.P., as of December 31, 1996 and December 31, 1995, and the results of its operations, changes in partners' capital (capital deficiency) and its cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audit were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supporting information included in the report (shown on page 11) is presented for the purpose of additional analysis and is not a required part of the basic financial statements of Schumaker Place Associates, L.P. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Halbert Katz &Co January 30, 1997 [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Circle Terrace Associates Limited Partnership We have audited the accompanying balance sheet of Circle Terrace Associates Limited Partnership as of December 31, 1997, and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Circle TerraceAssociates Limited Partnership as of December 31, 1997, and the results of its operations, the changes in partners' equity and cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 25 through 37 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the "Consolidated Audit Guide for Audits of HUD Programs", we have also issued reports dated January 21, 1998, on our consideration of Circle Terrace Associates Limited Partnership's internal control and on its compliance with specific requirements applicable to Major HUD and CDA programs, fair housing and non-discrimination, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer January 21, 1998 Identification Number: 52-1088612 Audit Principal: Lester A. Kanis [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Circle Terrace Associates Limited Partnership We have audited the accompanying balance sheet of Circle Terrace Associates Limited Partnership as of December 31, 1996, and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Circle TerraceAssociates Limited Partnership as of December 31, 1996, and the results of its operations, the changes in partners' equity and cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 26 trough 40 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the "Consolidated Audit Guide for Audits of HUD Programs", we have also issued reports dated January 18, 1997, on our consideration of Circle Terrace Associates Limited Partnership's internal control structure and on its compliance with specific requirements applicable to Major HUD and CDA programs, affirmative fair housing, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer January 14, 1997 Identification Number: 52-1088612 Audit Principal: Lester A. Kanis [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS REPORT To the Partners Circle Terrace Associates Limited Partnership We have audited the accompanying balance sheet of Circle Terrace Associates Limited Partnership as of December 31, 1995 and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Circle TerraceAssociates Limited Partnership as of December 31, 1995 and the results of its operations, the changes in partners' equity and its cash flow for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 26 trough 32 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements, and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the "Consolidated Audit Guide for Audits of HUD Programs", we have also issued reports dated January 29, 1996, on our consideration of Timothy House Limited Partnership's internal control structure and on its compliance with specific requirements applicable to CDA programs, affirmative fair housing, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer January 29, 1996 Identification Number: 52-1088612 Audit Principal: Lester A. Kanis [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS REPORT To the Partners Water Oaks Apartments, Ltd. We have audited the accompanying balance sheets of Water Oaks Apartments, L.P., RHS Project No. 09-64-581801555 as of December 31, 1997 and 1996 and the related statements of operations, partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Water Oaks Apartments, L.P., RECD Project No. 09-64-581801555 as of December 31, 1997 and 1996, and the results of its operations, changes in partners' equity and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 15 through 22 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information, has been subjected to the auditing procedures applied in the audit of the basic financial statements, and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards we have also issued reports dated January 9, 1998, on our consideration of Water Oak Apartments L.P.'s internal control and on its compliance with laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Atalnta, Georgia January 9, 1998 [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS REPORT To the Partners Water Oaks Apartments, Ltd. We have audited the accompanying balance sheet of Water Oaks Apartments, Ltd.,RECD Project No. 09-64-581801555 as of December 31, 1995 and the related statements of operations, partners' deficit and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Water Oaks Apartments , Ltd. for the year ended December 31, 1994 were audited by other auditors whose report dated February 1, 1996, expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Water Oaks Apartments, Ltd., RECD Project No. 09-64-581801555 as of December 31, 1995 and the results of its operations, changes in partners' deficit and its cash flow for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 16 trough 18 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements, and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards we have also issued reports dated February 1, 1996, on our consideration of Water Oak Apartments L.P.'s internal control structure and a report dated February 1, 1996 on its compliance with laws and regulations. /s/Reznick Fedder & Silverman Atlanta, Georgia February 1, 1996 [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Archer Village, Ltd. We have audited the accompanying balance sheets of Archer Village, Ltd., RHS Project No.: 09-001-267869575 as of December 31, 1997 and 1996, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Archer Village, Ltd., RHS Project No.: 09-001-267869575 as of December 31, 1997 and 1996, and the results of its operations, changes in partners' equity and its cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 16 through 22 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards we have also issued reports dated January 9, 1998, on our consideration of Archer Village, Ltd.'s internal control structure and its compliance with laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Atlanta, Georgia January 9, 1998 [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Archer Village, Ltd. We have audited the accompanying balance sheets of Archer Village, Ltd., RHS Project No.: 09-001-267869575 as of December 31, 1996 and 1995, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Archer Village, Ltd., RHS Project No.: 09-001-267869575 as of December 31, 1996 and 1995, and the results of its operations, changes in partners' equity and its cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 16 through 18 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards we have also issued reports dated January 24, 1997, on our consideration of Archer Village, Ltd.'s internal control structure and on its compliance with laws and regulations. /s/Reznick Fedder & Silverman Atlanta, Georgia January 24, 1997 [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Ocean View Apartments, L.P. We have audited the accompanying balance sheets of Ocean View Apartments, L.P.,RHS Project No.: 09-45-581801553, as of December 31, 1997 and 1996, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ocean View Apartments, L.P., RHS Project No.: 09-45-581801553, as of December 31, 1997 and 1996, and the results of its operations, the changes in partners' equity and cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 15 through 20 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards we have also issued reports dated January 9, 1998 on our consideration of Ocean View Apartments, L.P.'s internal control structure and on its compliance with laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Atlanta, Georgia January 9, 1998 [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Ocean View Apartments, L.P. We have audited the accompanying balance sheets of Ocean View Apartments, L.P.,RHS Project No.: 09-45-581801553, as of December 31, 1996 and 1995, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ocean View Apartments, L.P., RHS Project No.: 09-45-581801553, as of December 31, 1996 and 1995, and the results of its operations, changes in partners' equity and its cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 16 through 19 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards we have also issued reports dated January 24, 1997 on our consideration of Ocean View Apartments, L.P.'s internal control structure and on its compliance with laws and regulations. /s/Reznick Fedder & Silverman Atlanta, Georgia January 24, 1997 [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Yester Oaks, L.P. We have audited the accompanying balance sheets of Yester Oaks, L.P.,RHS Project No.: 11-046-0581814319, as of December 31, 1997 and 1996, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Yester Oaks, L.P., RHS Project No.: 11-046-0581814319 as of December 31, 1997 and 1996, and the results of its operations, changes in partners' equity and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages ____ through ____ is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued reports dated January 9, 1998, on our consideration of Yester Oaks L.P.'s internal control and on its compliance with laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Atlanta, Georgia January 9, 1998 [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Yester Oaks, L.P. We have audited the accompanying balance sheets of Yester Oaks, L.P.,RHS Project No.: 11-046-0581814319, as of December 31, 1996 and 1995, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Yester Oaks, L.P., RECD Project No.: 11-046-0581814319 as of December 31, 1996 and 1995, and the results of its operations, changes in partners' equity and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 15 through 16 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued reports dated January 24, 1997, on our consideration of Ocean View Apartments L.P.'s internal control structure and on its compliance with laws and regulations. /s/Reznick Fedder & Silverman Atlanta, Georgia January 24, 1997 [letterhead] Haran & Associates Ltd. INDEPENDENT AUDITOR'S REPORT To the Partners HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP Detroit, Michigan We have audited the accompanying balance sheet of HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP as of December 31, 1996, and the related statements of profit and loss, changes in partners' equity and statement of cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP as of December 31, 1996, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. /s/Haran & Associates Ltd. Certified Public Accountants Wilmette, Illnois Illnois Certificate No. 060-3097692 January 29, 1997 [letterhead] Haran & Associates Ltd. INDEPENDENT AUDITORS REPORT To the Partners Historic New Center Apartments Limited Partnership Detroit, Michigan We have audited the accompanying statement of assets, liabilities and partners' equity -income tax basis of Historic New Center Apartments Limited Partnership (a limited partnership) as of December 31, 1995, and the related statements of profit and loss- income tax basis, changes in partners' equity -income tax basis and statement of cash flows- income tax basis for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in the notes to the financial statements, the Partnership's policy is to prepare its financial statements on the basis of accounting used for income tax purposes and are not intended to be presented in conformity with generally acepted accounting principles. In our opinion, the financial statements referred to above present fairly in all material respects, the assets, liabilities and partners' equity of Historic New Center Apartments Limited Partnership as of December 31, 1994, and its statements of income (loss), changes in partners' equity and its cash flows for the year then ended, on the basis of accounting described in the notes to the financial statements. /s/Haran & Associates Ltd. January 20, 1995 STRATHERN PARK DECEMBER 31, 1997 Nanas, Stern, Biers, Neinstein & Co. LLP Certified Public Accountants 9454 Wilshire Boulevard Beverly Hills, California 90212-2901 Tel (310) 273-2501 Fax (310) 859-0374 INDEPENDENT AUDITORS' REPORT The Partners Strathern Park Los Angeles, California We have audited the accompanying balance sheet of Strathern Park (a California limited partnership), as of December 31, 1997 and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Strathern Park as of December 31, 1997, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information on Schedules I, II and III is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Nanaa, Stern, Biers, Neinstein and Co. LLP Nanas, Stern, Biers, Neinstein and Co. LLP January 28, 1998 STRATHERN PARK BALANCE SHEET DECEMBER 31, 1997 ASSETS Cash and cash equivalents (Note 5) $ 75,050 Receivables 28,003 Reserve for replacements (Note 5) 138,827 Tenant security deposits (Note 5) 120,342 Rental property - at cost (Note 2) Land $ 5,889,320 Buildings 19,042,548 Equipment and furnishings 949,223 -------------- 25,881,091 Less: accumulated depreciation (5,213,507) 20,667,584 -------------- Other assets Syndication fee (Net of accumulated amortization of $112,219) 606,448 ------------------ TOTAL ASSETS $ 21,636,254 ================== LIABILITIES Accounts payable and accrued expenses $ 72,821 Security deposits 106,609 Accrued interest payable (Note 2) 3,940,215 Long term debt (Notes 2 and 5) 17,482,959 ------------------ TOTAL LIABILITIES 21,602,604 DEFERRED INCOME 20,604 PARTNERS' EQUITY (Note 3) 13,046 ------------------ TOTAL LIABILITIES AND PARTNERS' EQUITY $ 21,636,254 ================== See accompanying auditors' report. The notes are an integral part of these financial statements. STRATHERN PARK STATEMENT OF PARTNERS' EQUITY YEAR ENDED DECEMBER 31, 1997 Profit Balance Net Distri- Balance and Loss January Loss butions December Percentage 1, 1997 for the year Paid 31, 1997 -------------- -------------- -------------- -------------- -------------- GENERAL PARTNER Safran Associates Investment Partnership II, A California Limited Partnership 1% $ (58,039) $ (13,443) $ (702) $ (72,184) CLASS A LIMITED PARTNER Safran Associates Investment Partnership II, A California Limited Partnership 4% (233,957) (53,774) (9,110) (296,841) INVESTOR LIMITED PARTNER Boston Financial Qualified Housing Tax Credits L.P.V., A Massachusetts Limited Partnership 95% 1,745,523 (1,277,121) (86,331) 382,071 SPECIAL LIMITED PARTNER S L P 90, Inc. --- --- --- --- --- -------------- -------------- -------------- -------------- $ 1,453,527 $ (1,344,338) $ (96,143) $ 13,046 ============== ============== ============== ============== See accompanying auditors' report. The notes are an integral part of these financial statements. STRATHERN PARK STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997 INCOME Gross potential - rents $ 1,547,419 (Vacancies) (12,686) Interest 13,651 Miscellaneous 41,426 -------------- TOTAL INCOME $ 1,589,810 EXPENSES (Note 4) Administrative expense 143,310 Management fees 123,995 Utilities 134,201 Operating and maintenance expense 321,412 Taxes and insurance 180,032 Interest expense - Mortgage note payable 552,976 Interest expense - Notes payable 684,796 Depreciation and amortization 793,426 -------------- 2,934,148 --------------- NET LOSS $ (1,344,338) =============== See accompanying auditors' report. The notes are an integral part of these financial statements. STRATHERN PARK STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1997 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $ (1,344,338) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization $ 793,426 (Increase)/Decrease in - Receivables 10,579 Tenant security deposits 1,673 (Decrease)/Increase in - Accounts payable and accrued expenses (12,978) Accrued interest payable 624,031 Security deposits (888) Deferred income 366 ------------ Total Adjustments 1,416,209 -------------- Net Cash Provided by Operating Activities 71,871 CASH FLOWS FROM INVESTING ACTIVITIES Deposits to reserve for replacements (82,055) Releases from reserve for replacements 39,880 Purchase of equipment (4,626) ------------ Net Cash Used in Investing Activities (46,801) CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on mortgage (69,492) Distributions paid (96,143) ------------ Net Cash Used in Financing Activities (165,635) -------------- Net Decrease in Cash and Cash Equivalents (140,565) Cash and cash equivalents at January 1, 1997 215,615 -------------- Cash and cash equivalents at December 31, 1997 $ 75,050 ============== SUPPLEMENTAL DISCLOSURE OF CASH FROM INFORMATION: Cash paid during the year for interest $ 617,557 ============ See accompanying auditors' report. The notes are an integral part of these financial statements. STRATHERN PARK NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997 Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES Organization - Strathern Park (the partnership) was organized pursuant to a limited partnership agreement dated March 28, 1989 as amended. Effective June 1, 1990, the partnership agreement was amended with the admission of a new limited partner who purchased a 95% limited partnership interest for a total capital contribution of $5,963,067. On January 1, 1994 Lorne Park was merged into Strathern Park. The combined partnerships constructed a 241 unit apartment project (Lorne Park 72 units, Strathern Park 169 units) located in Sun Valley, California for tenants whose income is very low to moderate. The project is regulated under the terms of certain of its loan agreements. Such agreements contain certain restrictions concerning rental charges, the number of units rented to tenants in the very low, low and moderate income levels and other matters. Those restrictions of rent and income shall remain in effect for a minimum of 30 years. Use of Estimates in the Preparation of Financial Statements - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant Accounting Policies - Method of Accounting - The partnership books are maintained and its financial statements and tax returns are prepared on the accrual basis. Cash Equivalents - For purposes of the statement of cash flows, the partnership considers all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents. Rental Property - The partnership records property, equipment and improvements at the cost of acquisition or construction. The cost of maintenance and repairs is charged to operations as incurred; significant renewals and betterments are capitalized. Depreciation is computed using the straight line method for financial statement purposes and accelerated methods for tax purposes. Estimated useful lives for financial statement purposes are as follows: Classification Life --------------------- --------------- Buildings 27.5 Years Equipment and furnishings 5-7 Years Amortization - amortization of syndication costs is computed using the straight line method over a period of 40 years. STRATHERN PARK NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997 Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (Cont.) Income Taxes - The project receives low-income tax credits provided under Section 42 of the Internal Revenue Code. Also, no provision for income taxes has been included since the income or loss of the partnership as well as the tax credits are required to be reported by the respective partners on their separate income tax returns. Note 2 LONG TERM DEBT Mortgage note payable, secured by First Deed of Trust, requiring monthly payments of $51,913, including interest at 9.41% per annum, maturing February, 2022. $ 5,858,679 Note payable secured by Second Deed of Trust, payable to the Community Redevelopment Agency of the City of Los Angeles with interest at 7% per annum. Interest accrues from the date of issuance of the first certificate of occupancy which is December 26, 1991. Unpaid principal together with all accrued and unpaid interest are due and payable in full upon the maturity of the primary permanent loan, but not later than 40 years from date of issuance. Principal and interest payments may be made in annual installments from the residual receipts of the project, as the term residual receipts is defined in the loan agreement. The note was funded by a Housing Development Grant from the United States Department of Housing and Urban Development. The terms of the Grant agreement impose certain restrictions on the use of the Grant proceeds and operating policies of the partnership. Accrued interest on this note at December 31, 1997 amounted to $2,128,864. 5,179,105 Note payable secured by Third Deed of Trust, payable to the Community Redevelopment Agency of the City of Los Angeles, with interest at 5% per annum. Interest accrues from the date of issuance of the first certificate of occupancy which is December 26, 1991. Unpaid principal together with all accrued and unpaid interest are due and payable in full upon the maturity of the primary permanent loan, but not later than 40 years from date of issuance. Principal and interest payments may be made in annual installments from the residual receipts of the project, as the term residual receipts is defined in the loan agreement. Accrued interest on this note at December 31, 1997 amounted to $1,811,351. 6,445,175 ----------------- $ 17,482,959 ================= STRATHERN PARK NOTES TO FINANCIAL STATEMENTS DECEMBR 31, 1997 Note 2 LONG TERM DEBT (Contd.) Maturities of long term debt as of December 31, 1997 for the succeeding five years are as follows: Years ended December 31, 1998 65,779 1999 72,337 2000 77,942 2001 87,318 2002 96,023 Thereafter 17,083,560 --------------- $ 17,482,959 =============== Note 3 DISTRIBUTION TO PARTNERS Pursuant to the terms of the partnership agreement, as amended, and the loan agreement with the Community Redevelopment Agency of the City of Los Angeles, distributions are payable only from residual receipts, as defined in the agreements. Distributions are apportioned as follows: 1) 40% to the Community Redevelopment Agency of the City of Los Angeles (CRA) 2) The remaining 60% is allocated as follows: a) The Investor Limited Partner (Boston) is to receive any cumulative return ($60,000 annually) in arrears; b) The next $63,158 is distributed 95% to Boston, 4% to the Class A Limited Partner (SAIP II) and 1% to the General Partner (SAIP II); c) Any additional cash is used to repay any partner advances to the partnership; d) The next $63,158 is distributed 5% to Boston, 94% to SAIP II (Limited Partner) and 1% to SAIP II (General Partner); e) Thereafter, cash is distributed 50% to Boston, 49% to SAIP II (Limited Partner) and 1% to SAIP II (General Partner). STRATHERN PARK NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997 Note 4 RELATED PARTY TRANSACTIONS There were no direct compensation payments to the partners during the year. However, there were related party transactions which occurred which are set forth below: (Income) Receivable Expense (Payable) Account for the At December Name Description No. Year 31, 1997 ---------------------------------- --------------------- --------------- --------------- ----------------- Thomas Safran and Associates, Inc.(TS&A, Inc.) Management fee 6320 $ 111,491 $ --- =============== ================= In addition, the project reimbursed TS&A, Inc. for allocated common costs such as office supplies, salaries, payroll taxes, and insurance. The aggregate total of such reimbursements was $92,671 for the year. The general partner has a direct ownership interest in the management company listed above. Thomas Safran & Associates, Inc. (TS&A, Inc.) has subcontracted certain accounting and supervisory functions to Insignia Residential Group of California, Inc. (IRG) for a period of two years commencing August 1, 1997. TS&A, Inc. will continue to be the managing agent and IRG will report to them on a monthly basis. The agreement among TS&A, Inc., IRG and the Project provides a portion of the approved management fees to be paid to IRG for their services. Note 5 DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS Cash and Short Term Investments - The carrying amount approximates fair value because of the short maturity of those investments. Long Term Debt (First Deed of Trust) - The project does not have the right to prepay this debt during the first ten years of the term of this note. Accordingly, the carrying amount approximates its fair value. Long Term Debt (Second & Third Deed of Trust) - The carrying amount approximates fair value because there is no ready market for such debt, repayment/refinancing is severely restricted by the CRA and HUD. December 31, 1997 ---------------------------------- Carrying Fair Amount Value Cash and Short Term Investments $ 334,219 $ 334,219 Long Term Debt (First Deed of Trust) (5,858,679) (5,858,679) Long Term Debt (Second & Third Deed of Trust) (11,624,280) (11,624,280) STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING BALANCE SHEET FORMAT DECEMBER 31, 1997 SCHEDULE I Page 1 of 2 STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING BALANCE SHEET FORMAT DECEMBER 31, 1997 ASSETS CURRENT ASSETS 1110 Petty cash $ 500 1120 Cash in bank 74,550 1130 Rent receivables 25,655 1140 Miscellaneous receivables 2,348 1191 Tenant security deposits 120,342 -------------- Total Current Assets $ 223,395 RESERVES AND DEPOSITS 1320 Reserve for replacements 138,827 FIXED ASSETS 1410 Land 5,889,320 1420 Buildings 19,042,548 1450 Equipment and furnishings 949,223 -------------- 25,881,091 4100 Less: accumulated depreciation (5,213,507) -------------- Total Fixed Assets 20,667,584 OTHER ASSETS 1820 Syndication fee (Net of accumulated amortization of $112,219) 606,448 --------------- TOTAL ASSETS $ 21,636,254 =============== SCHEDULE I Page 2 of 2 STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING BALANCE SHEET FORMAT DECEMBER 31, 1997 LIABILITIES AND PARTNERS' EQUITY CURRENT LIABILITIES 2110 Accounts payable $ 25,256 Accrued interest payable - 1st mortgage 47,565 2191 Tenant security deposit liability 106,609 -------------- Total Current Liabilities $ 179,430 MORTGAGE NOTE PAYABLE CURRENT PORTION 1st mortgage note payable current portion 65,779 LONG TERM LIABILITIES Accrued interest payable - notes 2nd mortgage note payable 2,128,864 3rd mortgage note payable 1,811,351 Mortgage notes payable 2321 1st mortgage note payable 5,792,900 2322 2nd mortgage note payable 5,179,105 2323 3rd mortgage note payable 6,445,175 2210 Deferred income 20,604 -------------- Total Long Term Liabilities 21,377,999 PARTNERS' EQUITY 3130 Limited partners' equity 85,230 3131 General partners' equity (72,184) -------------- Total Owners' Equity 13,046 --------------- TOTAL LIABILITIES AND PARTNERS' EQUITY $ 21,636,254 =============== SCHEDULE II Page 1 of 4 STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING - STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997 REVENUE Rent revenue 5120 Apartments $ 1,482,095 5121 Tenant assistance payments 52,472 5130 Furniture and equipment --- 5140 Stores and commercial 12,852 5170 Garage and parking spaces --- 5180 Flexible subsidy income --- 5190 Miscellaneous --- -------------- Total rent revenue $ 1,547,419 Vacancies 5220 Apartments (12,686) 5240 Stores and commercial --- 5270 Garage and parking spaces --- 5290 Miscellaneous --- -------------- Total Vacancies (12,686) -------------- Net Rental Revenue 1,534,733 Financial Revenue 5410 Interest Income - operations 3,254 5430 Interest Income - residual receipts --- 5440 Interest income - reserve for replacements 4,692 5490 Interest income - miscellaneous 5,705 -------------- Total Financial Revenue 13,651 Other Revenue 5910 Laundry and vending 26,400 5920 NSF and late charges 6,725 5930 Damages and cleaning fees 2,782 5940 Forfeited tenant security deposits 2,129 5990 Other revenue 3,390 5991 Non-cash revenue --- -------------- Total Other Revenue 41,426 -------------- NET REVENUE $ 1,589,810 ============== SCHEDULE II Page 2 of 4 STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING - STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997 EXPENSES Administrative Expenses 6210 Advertising $ 1,482 6250 Other renting expense --- 6310 Office salaries 15,299 6311 Office supplies 46,028 6320 Management fee 123,995 6330 Manager or superintendent salary 44,382 6331 Manager's rent free unit --- 6340 Legal expenses (project) 2,581 6350 Auditing expenses (project) 9,500 6351 Bookkeeping fees/accounting services --- 6360 Telephone and answering services 10,282 6370 Bad debts 13,756 6390 Miscellaneous administrative expenses --- -------------- Total Administrative Expenses $ 267,305 Utilities Expenses 6420 Fuel oil/coal --- 6450 Electricity 38,537 6451 Water 56,476 6452 Gas 7,061 6453 Sewer 32,127 -------------- Total Utilities Expenses 134,201 Operating & Maintenance 6510 Janitor and cleaning payroll --- 6515 Janitor and cleaning supplies 5,449 6517 Janitor and cleaning contract --- 6519 Exterminating payroll/contract 1,527 6520 Exterminating supplies --- 6525 Garbage and trash removal 13,379 6530 Security payroll/contract 18,611 SCHEDULE II Page 3 of 4 STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING - STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997 EXPENSES (Cont.) Operating & Maintenance (Cont.) 6535 Grounds payroll $ --- 6536 Grounds supplies 10,648 6537 Grounds contract 27,910 6540 Repairs payroll 71,622 6541 Repairs material 40,743 6542 Repairs contract 81,225 6545 Elevator maintenance/contract --- 6546 Heating/cooling repairs and maintenance 2,518 6547 Swimming pool maintenance/contract --- 6548 Snow removal --- 6560 Decorating payroll/contract 27,775 6561 Decorating supplies 20,005 6570 Other, gasoline --- 6590 Miscellaneous operating and maintenance --- -------------- Total Operating and Maintenance $ 321,412 Taxes and Insurance 6710 Real estate taxes 124,522 6711 Payroll taxes (FICA) 13,155 6719 Miscellaneous taxes, licenses --- 6720 Property and liability insurance 21,402 6721 Fidelity bond insurance --- 6722 Workmen's compensation 8,563 6723 Health insurance and other benefits 8,281 6729 Other insurance --- 6790 Miscellaneous taxes and insurance --- -------------- Total Taxes and Insurance 175,923 Interest on Mortgage Notes 6821 Interest on 1st mortgage 552,976 SCHEDULE II Page 4 of 4 STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING - STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997 EXPENSES (Cont.) Other Financial Expenses 6690 Amortization $ 17,967 6830 Interest on notes payable (long term) 684,796 6850 Mortgage insurance premium --- 6890 Miscellaneous financial expenses 4,109 6895 Non-cash expense --- -------------- Total Financial Expenses $ 706,872 -------------- TOTAL EXPENSES BEFORE DEPRECIATION 2,158,689 -------------- PROFIT (LOSS) BEFORE DEPRECIATION (568,879) 6600 Depreciation 775,459 -------------- OPERATING PROFIT (LOSS) (1,344,338) Other Expenses Prior Period (Entity) --- -------------- NET PROFIT (LOSS) $ (1,344,338) ============== 1st mortgage principal payment $ 69,492 2nd mortgage principal payment --- 3rd mortgage principal payment --- -------------- Total mortgage principal payments $ 69,492 ============== Actual replacement reserve deposits $ 82,055 Replacement or painting reserve releases $ (39,880) Cash subsidies --- Capital improvements not expensed --- Capital contribution or disbursement $ 96,143 SCHEDULE III STRATHERN PARK COMPUTATION OF RESIDUAL RECEIPTS DECEMBER 31, 1997 Net income (loss) as of December 31, 1997 $ (1,344,338) ADD: Depreciation $ 775,459 Amortization 17,967 Community Redevelopment Agency loan interest 322,259 Housing Development Grant loan interest 362,537 Releases from reserve for replacements 39,880 1,518,102 -------------- --------------- 173,764 LESS: Principal payments on mortgage (69,492) Deposits to reserve for replacements (82,055) Payments for capital expenditures (4,626) (156,173) -------------- --------------- RESIDUAL RECEIPTS, as defined in the partnership agreement at December 31, 1997 $ 17,591 =============== STRATHERN PARK DECEMBER 31, 1996 INDEPENDENT AUDITORS' REPORT The Partners Strathern Park Los Angeles, California We have audited the accompanying balance sheet of Strathern Park (a California limited partnership), as of December 31, 1996 and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Strathern Park as of December 31, 1996, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information on Schedules I, II and III is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Nanas, Sterns, Biers, Neinstein and Co. LLP NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP January 14, 1997 STRATHERN PARK BALANCE SHEET DECEMBER 31, 1996 ASSETS Cash (Note 5) $215,615 Receivables 38,582 Reserve for replacements (Note 5) 96,652 Tenant security deposits (Note 5) 122,015 Rental property - at cost (Note 2) Land 5,889,320 Buildings 19,042,548 Equipment and furnishings 944,597 -------------- 25,876,465 Less: accumulated depreciation (4,438,048) -------------- 21,438,417 Other assets Syndication fee (Net of accumulated amortization of $94,252) 624,415 -------------- TOTAL ASSETS $22,535,696 ============== LIABILITIES Accounts payable and accrued expenses $85,799 Security deposits 107,497 Accrued interest payable (Note 2) 3,316,184 Long term debt (Notes 2 and 5) 17,552,451 -------------- TOTAL LIABILITIES 21,061,931 DEFERRED INCOME 20,238 PARTNERS' EQUITY (NOTE 3) 1,453,527 -------------- TOTAL LIABILITIES AND PARTNERS' EQUITY $22,535,696 ============== See accompanying auditors' report. The notes are an integral part of these financial statements. STRATHERN PARK STATEMENT OF PARTNERS' EQUITY YEAR ENDED DECEMBER 31, 1996 Profit Balance Net Distri- Balance and Loss January Loss butions December Percentage 1, 1996 for the year Paid 31, 1996 ------------------------------------------------------------------------ GENERAL PARTNER Safran Associates Investment Partnership II, A California Limited Partnership 1% $(44,808) $(12,443) $(788) $(58,039) CLASS A LIMITED PARTNER Safran Associates Investment Partnership II, A California Limited Partnership 4% (181,046) (49,771) (3,140) (233,957) INVESTOR LIMITED PARTNER Boston Financial Qualified Housing Tax Credits L.P.V., A Massachusetts Limited Partnership 95% 3,002,218 (1,182,070) (74,625) 1,745,523 SPECIAL LIMITED PARTNER S L P 90, Inc. --- --- --- --- --- ------------------------------------------------------------ $2,776,364 $(1,244,284) $(78,553) $1,453,527 ============================================================ See accompanying auditors' report. The notes are an integral part of these financial statements. STRATHERN PARK STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1996 INCOME Gross possible rents $1,524,672 (Vacancies) (7,097) Interest 11,370 Miscellaneous 34,321 --------------- TOTAL INCOME $1,563,266 EXPENSES (Note 4) Administrative expense 128,724 Management fees 118,048 Utilities 114,579 Operating and maintenance expense 227,504 Taxes and insurance 167,311 Interest expense - Mortgage note payable 569,657 Interest expense - Notes payable 684,796 Depreciation and amortization 796,931 --------------- 2,807,550 --------------- NET LOSS $(1,244,284) =============== See accompanying auditors' report. The notes are an integral part of financial statements. STRATHERN PARK STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1996 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $(1,244,284) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization $796,931 Increases in - Miscellaneous receivables (4,079) Rent receivable (28,375) Accrued interest payable 684,796 Accounts payable and accrued expenses 4,781 Deferred income 20,238 Decreases in - Tenant security deposits 3,445 Security deposits (5,643) Total Adjustments 1,472,094 ----------------- Net Cash Provided by Operating Activities 227,810 CASH FLOWS FROM INVESTING ACTIVITIES Increase in reserve for replacements (24,336) CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on mortgage (52,868) Interest payments on notes payable from residual receipts (52,368) Distributions paid (78,553) ------------ Net Cash Used in Financing Activities (183,789) ----------------- Net Increase in Cash and Cash Equivalents 19,685 Cash and cash equivalents at Janaury 1, 1996 195,930 ----------------- Cash and cash equivalents at December 31, 1996 $215,615 ================= SUPPLEMENTAL DISCLOSURE OF CASH FROM INFORMATION: Cash paid during the year for interest $622,453 ============ Cash paid during the year for taxes $800 ============ See accompanying auditors' report. The notes are an integral part of these financial statements. STRATHERN PARK NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES Organization Strathern Park (the partnership) was organized pursuant to a limited partnership agreement dated March 28, 1989 as amended. Effective June 1, 1990, the partnership agreement was amended with the admission of a new limited partner who purchased a 95% limited partnership interest for a total capital contribution of $5,963,067. On January 1, 1994 Lorne Park was merged into Strathern Park. The combined partnerships constructed a 241 unit apartment project (Lorne Park 72 unites, Strathern Park 169 units) located in Sun Valley, California for tenants whose income is very low to moderate. The project is regulated under the terms of certain of its loan agreements. Such agreements contain certain restrictions concerning rental charges, the number of units rented to tenants in the very low, low and moderate income levels and other matters. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant Accounting Policies - Method of Accounting - The partnership books are maintained and its financial statements and tax returns are prepared on the accrual basis. Cash Equivalents - For purposes of the statement of cash flows, the partnership considers all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents. Rental Property - The partnership records property, equipment and improvements at the cost of acquisition or construction. The cost of maintenance and repairs is charged to operations as incurred; significant renewals and betterments are capitalized. Depreciation is computed using the straight line method for financial statement purposes and accelerated methods for tax purposes. Estimated useful lives for financial statement purposes are as follows: Classification Life - --------------- Buildings 27.5 Years Equipment and furnishings 7 Years Amortization - amortization of syndication costs is computed using the straight line method over a period of 40 years. Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (Cont.) Income Taxes - The project receives low-income tax credits provided under Section 42 of the Internal Revenue Code. Also, no provision for income taxes has been included since the income or loss of the partnership as well as the tax credits are required to be reported by the respective partners on their separate income tax returns. Note 2 LONG TERM DEBT Mortgage note payable, secured by First Deed of Trust, requiring monthly payments of $51,913, including interest at 9.41% per annum, maturing February, 2022. $5,928,171 Note payable secured by Second Deed of Trust, payable to the Community Redevelopment Agency of the City of Los Angeles with interest at 7% per annum. Interest accrues from the date of issuance of the first certificate of occupancy which is December 26, 1991. Unpaid principal together with all accrued and unpaid interest are due and payable in full upon the maturity of the primary permanent loan, but not later than 40 years from date of issuance. Principal and interest payments may be made in annual installments from the residual receipts of the project, as the term residual receipts is defined in the loan agreement. The note was funded by a Housing Development Grant from the United States Department of Housing and Urban Development. The terms of the Grant agreement impose certain restrictions on the use of the Grant proceeds and operating policies of the partnership. Accrued interest on this note at December 31, 1996 amounted to $1,774,998. 5,179,105 Note payable secured by Third Deed of Trust, payable to the Community Redevelopment Agency of the City of Los Angeles, with interest at 5% per annum. Interest accrues from the date of issuance of the first certificate of occupancy which is December 26, 1991. Unpaid principal together with all accrued and unpaid interest are due and payable in full upon the maturity of the primary permanent loan, but not later than 40 years from date of issuance. Principal and interest payments may be made in annual installments from the residual receipts of the project, as the term residual receipts is defined in the loan agreement. Accrued interest on this note at December 31, 1996 amounted to $1,556,241. 6,445,175 ----------------- $17,552,451 ================= Note 2 LONG TERM DEBT (Contd.) Maturities of long term debt as of December 31, 1996 for the succeeding five years are as follows: Years ended December 31, 1997 $59,816 1998 65,779 1999 72,337 2000 77,942 2001 87,318 Thereafter 17,189,259 ----------------- $17,552,451 ================= Note 3 DISTRIBUTION TO PARTNERS Pursuant to the terms of the partnership agreement, as amended, and the loan agreement with the Community Redevelopment Agency of the City of Los Angeles, distributions are payable only from residual receipts, as defined in the agreements. Distributions are apportioned as follows: 1) 40% to the Community Redevelopment Agency of the City of Los Angeles (CRA) 2) The remaining 60% is allocated as follows: a) The Investor Limited Partner (Boston) is to receive any cumulative return ($60,000 annually) in arrears; b) The next $63,158 is distributed 95% to Boston, 4% to the Class A Limited Partner (SAIP II) and 1% to the General Partner (SAIP II); c) Any additional cash is used to repay any partner advances to the partnership; d) The next $63,158 is distributed 5% to Boston, 94% to SAIP II (Limited Partner) and 1% to SAIP II (General Partner); e) Thereafter, cash is distributed 50% to Boston, 49% to SAIP II (Limited Partner) and 1% to SAIP II (General Partner). Note 4 RELATED PARTY TRANSACTIONS There were no direct compensation payments to the partners during the year. However, there were related party transactions which occurred which are set forth below: (Income) Receivable Expense (Payable) Account for the At December Name Description No. Year 31, 1996 - --------------------------------------------------------------------------------- Thomas Safran and Associates, Inc. Management fee 6320 118,048 (73) =========================== In addition, the project reimbursed the management company for allocated common costs such as office supplies and health insurance. The aggregate total of such reimbursements was $17,341 for the year. The general partner has a direct ownership interest in the management company listed above. Note 5 DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS Cash and Short Term Investments - The carrying amount approximates fair value because of the short maturity of those investments. Long Term Debt (First Deed of Trust) - The project does not have the right to prepay this debt during the first ten years of the term of this note. Accordingly, the carrying amount approximates its fair value. Long Term Debt (Second & Third Deed of Trust) - The carrying amount approximates fair value because there is no ready market for such debt, repayment/refinancing is severely restricted by the CRA and HUD. December 31, 1996 ----------------------------------- Carrying Fair Amount Value Cash and Short Term Investments $434,282 $434,282 Long Term Debt (First Deed of Trust) (5,928,171) (5,928,171) Long Term Debt (Second & Third Deed of Trust) (11,624,280) (11,624,280) STRATHERN PARK SCHEDULE I BOSTON FINANCIAL QUALIFIED HOUSING Page 1 of 2 BALANCE SHEET FORMAT DECEMBER 31, 1996 ASSETS CURRENT ASSETS Petty cash 500 Cash in bank 215,115 Rent receivables 35,940 Miscellaneous receivables 2,642 Tenant security deposits 122,015 ---------------- Total Current Assets 376,212 RESERVES AND DEPOSITS Reserve for replacements 96,652 FIXED ASSETS Land 5,889,320 Buildings 19,042,548 Equipment and furnishings 944,597 ---------------- 25,876,465 Less: accumulated depreciation (4,438,048) ---------------- Total Fixed Assets 21,438,417 OTHER ASSETS Syndication fee (Net of accumulated amortization of $94,252) 624,415 ---------------- TOTAL ASSETS 22,535,696 ================ STRATHERN PARK SCHEDULE I BOSTON FINANCIAL QUALIFIED HOUSING Page 2 of 2 BALANCE SHEET FORMAT DECEMBER 31, 1996 LIABILITIES AND PARTNERS' EQUITY CURRENT LIABILITIES Accounts payable 37,750 Accrued interest payable - 1st mortgage 48,049 Tenant security deposit liability 107,497 ---------------- Total Current Liabilities 193,296 MORTGAGE NOTE PAYABLE CURRENT PORTION 1st mortgage note payable current portion 59,816 LONG TERM LIABILITIES Accrued interest payable - notes 2nd mortgage note payable 1,818,646 3rd mortgage note payable 1,497,538 Mortgage notes payable 1st mortgage note payable 5,868,355 2nd mortgage note payable 5,179,105 3rd mortgage note payable 6,445,175 Deferred income 20,238 ---------------- Total Long Term Liabilities 20,829,057 OWNERS' EQUITY Limited partners' equity 1,511,566 General partners' equity (58,039) ---------------- Total Owners' Equity 1,453,527 ---------------- TOTAL LIABILITIES AND PARTNERS' EQUITY 22,535,696 ================ STRATHERN PARK SCHEDULE II BOSTON FINANCIAL QUALIFIED HOUSING - Page 1 of 4 STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1996 REVENUE Rent revenue Apartments 1,465,438 Tenant assistance payments 46,529 Furniture and equipment --- Stores and commercial 12,705 Garage and parking spaces --- Flexible subsidy income --- Miscellaneous --- ------------- Total rent revenue 1,524,672 Vacancies Apartments (7,097) Stores and commercial --- Garage and parking spaces --- Miscellaneous --- ------------- Total Vacancies (7,097) --------------- Net Rental Revenue 1,517,575 Financial Revenue Interest Income - operations 2,973 Interest Income - residual receipts --- Interest income - reserve for replacements 3,835 Interest income - miscellaneous 4,562 ------------- Total Financial Revenue 11,370 Other Revenue Laundry and vending 21,534 NSF and late charges 2,848 Damages and cleaning fees 2,168 Forfeited tenant security deposits 2,486 Other revenue 5,285 Non-cash revenue --- ------------- Total Other Revenue 34,321 --------------- NET REVENUE 1,563,266 =============== STRATHERN PARK SCHEDULE II BOSTON FINANCIAL QUALIFIED HOUSING - Page 2 of 4 STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1996 EXPENSES Administrative Expenses Advertising 469 Other renting expense --- Office salaries 6,815 Office supplies 48,699 Management fee 118,048 Manager or superintendent salary 47,125 Manager's rent free unit --- Legal expenses (project) 3,183 Auditing expenses (project) 9,500 Bookkeeping fees/accounting services --- Telephone and answering services 6,159 Bad debts 6,774 Miscellaneous administrative expenses --- ------------- Total Administrative Expenses 246,772 Utilities Expenses Fuel oil/coal --- Electricity 37,754 Water 43,777 Gas 5,686 Sewer 27,362 ------------- Total Utilities Expenses 114,579 Operating & Maintenance Janitor and cleaning payroll --- Janitor and cleaning supplies 8,164 Janitor and cleaning contract --- Exterminating payroll/contract 1,484 Exterminating supplies --- Garbage and trash removal 12,035 Security payroll/contract 4,295 STRATHERN PARK SCHEDULE II BOSTON FINANCIAL QUALIFIED HOUSING - Page 3 of 4 STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1996 EXPENSES (Cont.) Operating & Maintenance (Cont.) Grounds payroll --- Grounds supplies 3,481 Grounds contract 27,060 Repairs payroll 59,020 Repairs material 23,635 Repairs contract 73,340 Elevator maintenance/contract --- Heating/cooling repairs and maintenance 403 Swimming pool maintenance/contract --- Snow removal --- Decorating payroll/contract 2,804 Decorating supplies 11,783 Other, gasoline --- Miscellaneous operating and maintenance --- ------------- Total Operating and Maintenance 227,504 Taxes and Insurance Real estate taxes 116,658 Payroll taxes (FICA) 11,306 Miscellaneous taxes, licenses 765 Property and liability insurance 22,635 Fidelity bond insurance 149 Workmen's compensation 5,698 Health insurance and other benefits 10,100 Other insurance --- Miscellaneous taxes and insurance --- ------------- Total Taxes and Insurance 167,311 Interest on Mortgage Notes Interest on 1st mortgage 569,657 STRATHERN PARK SCHEDULE II BOSTON FINANCIAL QUALIFIED HOUSING - Page 4 of 4 STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1996 EXPENSES (Cont.) Other Financial Expenses Amortization 17,967 Interest on notes payable (long term) 684,796 Mortgage insurance premium --- Miscellaneous financial expenses --- Non-cash expense --- ------------- Total Financial Expenses 702,763 --------------- TOTAL EXPENSES BEFORE DEPRECIATION 2,028,586 --------------- PROFIT (LOSS) BEFORE DEPRECIATION (465,320) Depreciation 778,964 --------------- OPERATING PROFIT (LOSS) (1,244,284) Other Expenses Prior Period (Entity) --- --------------- NET PROFIT (LOSS) (1,244,284) =============== 1st mortgage principal payment 52,868 2nd mortgage principal payment --- 3rd mortgage principal payment --- --------------- Total mortgage principal payments 52,868 =============== Actual replacement reserve deposits 75,836 Replacement or painting reserve releases (51,500) Cash subsidies --- Capital improvements not expensed --- Capital contribution or disbursement 78,553 STRATHERN PARK SCHEDULE III COMPUTATION OF RESIDUAL RECEIPTS DECEMBER 31, 1996 Net income (loss) as of December 31, 1996 (1,244,284) ADD: Depreciation 778,964 Amortization 17,967 Community Redevelopment Agency loan interest 322,259 Housing Development Grant loan interest 362,537 Releases from reserve for replacements 51,500 1,533,227 ---------------- ---------------- 288,943 LESS: Principal payments on mortgage (52,868) Deposits to reserve for replacements (75,836) Payments for capital expenditures --- (128,704) ---------------- ---------------- RESIDUAL RECEIPTS, as defined in the partnership agreement 160,239 ================ STRATHERN PARK DECEMBER 31, 1995 INDEPENDENT AUDITORS' REPORT The Partners Strathern Park Los Angeles, California We have audited the accompanying balance sheet of Strathern Park (a California limited partnership), as of December 31, 1995 and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Strathern Park as of December 31, 1995, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information on Schedules I, II and III is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/NANAS, STERN, BIERS, NEINSTEIN AND CO. January 23, 1996 STRATHERN PARK BALANCE SHEET DECEMBER 31, 1995 ASSETS Cash (Note 5) $ 195,930 Receivables 6,128 Reserve for replacements (Note 5) 72,316 Tenant security deposits (Note 5) 125,460 Rental property - at cost (Note 2) Land 5,889,320 Buildings 19,042,548 Equipment and furnishings 944,597 -------------- 25,876,465 Less: accumulated depreciation (3,659,084) 22,217,381 -------------- Other assets Syndication fee (Net of accumulated amortization of $76,285) 642,382 -------------- TOTAL ASSETS $ 23,259,597 ============== LIABILITIES Accounts payable and accrued expenses $ 81,018 Security deposits 113,140 Accrued interest payable (Note 2) 2,683,756 Long term debt (Notes 2 and 5) 17,605,319 -------------- TOTAL LIABILITIES 20,483,233 PARTNERS' EQUITY (Note 3) 2,776,364 -------------- TOTAL LIABILITIES AND PARTNERS' EQUITY $ 23,259,597 ============== See accompanying auditor's report. The notes are an integral part of these financial statements. STRATHERN PARK STATEMENT OF PARTNERS' EQUITY YEAR ENDED DECEMBER 31, 1995 Profit Balance Net Distri- Balance and Loss January Loss butions December Percentage 1, 1995 for the year Paid 31, 1995 -------------- -------------- -------------- -------------- -------------- GENERAL PARTNER Safran Associates Investment Partnership II, A California Limited Partnership 1% $ (31,654) $ (12,958) $ (196) $ (44,808) CLASS A LIMITED PARTNER Safran Associates Investment Partnership II, A California Limited Partnership 4% (128,429) (51,833) (784) (181,046) INVESTOR LIMITED PARTNER Boston Financial Qualified Housing Tax Credits L.P.V., A Massachusetts Limited Partnership 95% 4,251,870 (1,231,028) (18,624) 3,002,218 SPECIAL LIMITED PARTNER S L P 90, Inc. --- --- --- --- --- -------------- -------------- -------------- -------------- $ 4,091,787 $ (1,295,819) $ (19,604) $ 2,776,364 ============== ============== ============== ============== See accompanying auditor's report. The notes are an integral part of these financial statements. STRATHERN PARK STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1995 INCOME Gross possible rents $ 1,495,927 (Vacancies) (8,769) Interest 9,231 Miscellaneous 36,631 -------------- TOTAL INCOME $ 1,533,020 EXPENSES (Note 4) Administrative expense 128,069 Management fees 120,662 Utilities 116,167 Operating and maintenance expense 240,409 Taxes and insurance 164,707 Interest expense - Mortgage note payable 571,330 Interest expense - Notes payable 684,796 Depreciation and amortization 802,699 2,828,839 -------------- -------------- NET LOSS $ (1,295,819) ============== See accompanying auditor's report. The notes are an integral part of these financial statements. STRATHERN PARK STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1995 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $ (1,295,819) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization $ 802,699 Increases in - Accrued interest payable 684,796 Tenant security deposits - funded (7,565) Tenant security deposits 3,621 Decreases in - Interest receivable 1,028 Rent receivable 3,019 Accounts payable and accrued expenses (23,154) ------------ Total Adjustments 1,464,444 -------------- Net Cash Provided by Operating Activities 168,625 CASH FLOWS FROM INVESTING ACTIVITIES Increase in reserve for replacements (9,533) CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on mortgage (51,222) Interest payments on notes payable from residual receipts (13,070) Distributions paid (19,604) ------------ Net Cash Used in Financing Activities (83,896) -------------- Net Increase in Cash and Cash Equivalents 75,196 Cash and cash equivalents at Janaury 1, 1995 120,734 -------------- Cash and cash equivalents at December 31, 1995 $ 195,930 ============== SUPPLEMENTAL DISCLOSURE OF CASH FROM INFORMATION: Cash paid during the year for interest $ 584,801 ============ Cash paid during the year for taxes $ 800 ============ See accompanying auditor's report. The notes are an integral part of these financial statements. STRATHERN PARK NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES Organization - Strathern Park (the partnership) was organized pursuant to a limited partnership agreement dated March 28, 1989 as amended. Effective June 1, 1990, the partnership agreement was amended with the admission of a new limited partner who purchased a 95% limited partnership interest for a total capital contribution of $5,963,067. On January 1, 1994 Lorne Park was merged into Strathern Park. The combined partnerships constructed a 241 unit apartment project (Lorne Park 72 unites, Strathern Park 169 units) located in Sun Valley, California for tenants whose income is very low to moderate. The project is regulated under the terms of certain of its loan agreements. Such agreements contain certain restrictions concerning rental charges, the number of units rented to tenants in the very low, low and moderate income levels and other matters. Use of Estimates in the Preparation of Financial Statements - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant Accounting Policies - Method of Accounting - The partnership books are maintained and its financial statements and tax returns are prepared on the accrual basis. Cash Equivalents - For purposes of the statement of cash flows, the partnership considers all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents. Rental Property - The partnership records property, equipment and improvements at the cost of acquisition or construction. The cost of maintenance and repairs is charged to operations as incurred; significant renewals and betterments are capitalized. Depreciation is computed using the straight line method for financial statement purposes and accelerated methods for tax purposes. Estimated useful lives for financial statement purposes are as follows: Classification Life ---------------- -------------- Buildings 27.5 Years Equipment and furnishings 7 Years Amortization - amortization of syndication costs is computed using the straight line method over a period of 40 years. STRATHERN PARK NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (Cont.) Income Taxes - The project receives low-income tax credits provided under Section 42 of the Internal Revenue Code. Also, no provision for income taxes has been included since the income or loss of the partnership as well as the tax credits are required to be reported by the respective partners on their separate income tax returns. Note 2 LONG TERM DEBT Mortgage note payable, secured by First Deed of Trust, requiring monthly payments of $35,875, including interest at 9.41% per annum, maturing February, 2022. $ 5,981,039 Note payable secured by Second Deed of Trust, payable to the Community Redevelopment Agency of the City of Los Angeles with interest at 7% per annum. Interest accrues from the date of issuance of the first certificate of occupancy which is December 26, 1991. Unpaid principal together with all accrued and unpaid interest are due and payable in full upon the maturity of the primary permanent loan, but not later than 40 years from date of issuance. Principal and interest payments may be made in annual installments from the residual receipts of the project, as the term residual receipts is defined in the loan agreement. The note was funded by a Housing Development Grant from the United States Department of Housing and Urban Development. The terms of the Grant agreement impose certain restrictions on the use of the Grant proceeds and operating policies of the partnership. Accrued interest on this note at December 31, 1995 amounted to $1,456,109. 5,179,105 Note payable secured by Third Deed of Trust, payable to the Community Redevelopment Agency of the City of Los Angeles, with interest at 5% per annum. Interest accrues from the date of issuance of the first certificate of occupancy which is December 26, 1991. Unpaid principal together with all accrued and unpaid interest are due and payable in full upon the maturity of the primary permanent loan, but not later than 40 years from date of issuance. Principal and interest payments may be made in annual installments from the residual receipts of the project, as the term residual receipts is defined in the loan agreement. Accrued interest on this note at December 31, 1995 amounted to $1,227,647. 6,445,175 ------------------- $ 17,605,319 =================== STRATHERN PARK NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 Note 2 LONG TERM DEBT (Cont.) Maturities of long term debt as of December 31, 1995 for the succeeding five years are as follows: Years ended December 31, 1996 $ 52,868 1997 59,816 1998 65,779 1999 72,337 2000 77,942 Thereafter 17,276,577 --------------- $ 17,605,319 =============== Note 3 DISTRIBUTION TO PARTNERS Pursuant to the terms of the partnership agreement, as amended, and the loan agreement with the Community Redevelopment Agency of the City of Los Angeles, distributions are payable only from residual receipts, as defined in the agreements. Distributions are apportioned as follows: 1) 40% to the Community Redevelopment Agency of the City of Los Angeles (CRA) 2) The remaining 60% is allocated as follows: a) The Investor Limited Partner (Boston) is to receive any cumulative return ($60,000 annually) in arrears; b) The next $63,158 is distributed 95% to Boston, 4% to the Class A Limited Partner (SAIP II) and 1% to the General Partner (SAIP II); c) Any additional cash is used to repay any partner advances to the partnership; d) The next $63,158 is distributed 5% to Boston, 94% to SAIP II (Limited Partner) and 1% to SAIP II (General Partner); e) Thereafter, cash is distributed 50% to Boston, 49% to SAIP II (Limited Partner) and 1% to SAIP II (General Partner). STRATHERN PARK NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 Note 4 RELATED PARTY TRANSACTIONS There were no direct compensation payments to the partners during the year. However, there were related party transactions which occurred which are set forth below: (Income) Receivable Expense (Payable) Account for the At December Name Description No. Year 31, 1995 --------------------------- -------------------- --------------- --------------- ------------------- Thomas Safran and Associates, Inc. Management fee 6320 120,662 (8,882) =============== =================== In addition, the project reimbursed the management company for allocated common costs such as office supplies, manager's salary, administrative assistant's salary, payroll taxes and health insurance. The aggregate total of such reimbursements was $88,752 for the year. The general partner has a direct ownership interest in the management company listed above. Note 5 DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS Cash and Short Term Investments - The carrying amount approximates fair value because of the short maturity of those investments. Long Term Debt (First Deed of Trust) - The project does not have the right to prepay this debt during the first ten years of the term of this note. Accordingly, the carrying amount approximates its fair value. Long Term Debt (Second & Third Deed of Trust) - The carrying amount approximates fair value because there is no ready market for such debt, repayment/refinancing is severely restricted by the CRA and HUD. December 31, 1995 ------------------------------------ Carrying Fair Amount Value Cash and Short Term Investments $ 393,706 $ 393,706 Long Term Debt (First Deed of Trust) (5,981,039) (5,981,039) Long Term Debt (Second & Third Deed of Trust) (11,624,280) (11,624,280) STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING BALANCE SHEET FORMAT DECEMBER 31, 1995 STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING BALANCE SHEET FORMAT DECEMBER 31, 1995 ASSETS CURRENT ASSETS Cash in bank $ 195,930 Rent receivables 5,794 Accrued receivables 334 Tenant security deposits 125,460 -------------- Total Current Assets $ 327,518 RESERVES AND DEPOSITS Reserve for replacements 72,316 FIXED ASSETS Land 5,889,320 Buildings 19,042,548 Equipment and furnishings 944,597 -------------- 25,876,465 Less: accumulated depreciation (3,659,084) -------------- Total Fixed Assets 22,217,381 OTHER ASSETS Syndication fee (Net of accumulated amortization of $76,285) 642,382 -------------- TOTAL ASSETS $ 23,259,597 ============== SCHEDULE I STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING BALANCE SHEET FORMAT DECEMBER 31, 1995 LIABILITIES AND PARTNERS' EQUITY CURRENT LIABILITIES Accounts payable $ 32,540 Accrued interest payable - 1st mortgage 48,478 Tenant security deposit liability 113,140 -------------- Total Current Liabilities $ 194,158 MORTGAGE NOTE PAYABLE CURRENT PORTION 1st mortgage note payable current portion 52,868 LONG TERM LIABILITIES Accrued interest payable - notes 2nd mortgage note payable 1,456,109 3rd mortgage note payable 1,227,647 Mortgage notes payable 1st mortgage note payable 5,928,171 2nd mortgage note payable 5,179,105 3rd mortgage note payable 6,445,175 -------------- Total Long Term Liabailities 20,236,207 OWNERS' EQUITY Limited partners' equity 2,821,172 General partners' equity (44,808) -------------- Total Owners' Equity 2,776,364 -------------- TOTAL LIABILITIES AND PARTNERS' EQUITY $ 23,259,597 ============== SCHEDULE II STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING - STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1995 REVENUE Rent revenue Apartments $ 1,440,031 Tenant assistance payments 55,896 Furniture and equipment --- Stores and commercial --- Garage and parking spaces --- Flexible subsidy income --- Miscellaneous --- ------------- Total rent revenue $ 1,495,927 Vacancies Apartments (8,769) Stores and commercial --- Garage and parking spaces --- Miscellaneous --- ------------- Total Vacancies (8,769) -------------- Net Rental Revenue 1,487,158 Financial Revenue Interest Income - operations 1,992 Interest Income - residual receipts --- Interest income - reserve for replacements 3,848 Interest income - miscellaneous 3,391 ------------- Total Financial Revenue 9,231 Other Revenue Laundry and vending 24,233 NSF and late charges 4,096 Damages and cleaning fees 2,610 Forfeited tenant security deposits --- Other revenue 5,692 Non-cash revenue --- ------------- Total Other Revenue 36,631 -------------- NET REVENUE $ 1,533,020 ============== SCHEDULE II STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING - STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1995 EXPENSES Administrative Expenses Advertising $ --- Other renting expense --- Office salaries 13,526 Office supplies 45,223 Management fee 120,662 Manager or superintendent salary 44,473 Manager's rent free unit --- Legal expenses (project) 5,131 Auditing expenses (project) 9,250 Bookkeeping fees/accounting services --- Telephone and answering services 5,532 Bad debts 4,934 Miscellaneous administrative expenses --- -------------- Total Administrative Expenses $ 248,731 Utilities Expenses Fuel oil/coal --- Electricity 31,594 Water 45,958 Gas 6,909 Sewer 31,706 -------------- Total Utilities Expenses 116,167 Operating & Maintenance Janitor and cleaning payroll --- Janitor and cleaning supplies 8,231 Janitor and cleaning contract --- Exterminating payroll/contract 4,216 Exterminating supplies --- Garbage and trash removal 15,067 Security payroll/contract 1,917 SCHEDULE II STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING - STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1995 EXPENSES (Cont.) Operating & Maintenance (Cont.) Grounds payroll $ 9,523 Grounds supplies 1,323 Grounds contract 37,241 Repairs payroll 43,951 Repairs material 67,376 Repairs contract 30,654 Elevator maintenance/contract --- Heating/cooling repairs and maintenance 475 Swimming pool maintenance/contract --- Snow removal --- Decorating payroll/contract 6,880 Decorating supplies 13,555 Other, gasoline --- Miscellaneous operating and maintenance --- -------------- Total Operating and Maintenance $ 240,409 Taxes and Insurance Real estate taxes 112,369 Payroll taxes (FICA) 9,271 Miscellaneous taxes, licenses 800 Property and liability insurance 26,512 Fidelity bond insurance --- Workmen's compensation 4,866 Health insurance and other benefits 10,889 Other insurance --- Miscellaneous taxes and insurance --- -------------- Total Taxes and Insurance 164,707 Interest on Mortgage Notes Interest on 1st mortgage 571,330 SCHEDULE II STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING - STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1995 EXPENSES (Cont.) Other Financial Expenses Amortization $ 17,967 Interest on notes payable (long term) 684,796 Mortgage insurance premium --- Miscellaneous financial expenses --- Non-cash expense --- -------------- Total Financial Expenses $ 702,763 -------------- TOTAL EXPENSES BEFORE DEPRECIATION 2,044,107 -------------- PROFIT (LOSS) BEFORE DEPRECIATION (511,087) Depreciation 784,732 -------------- OPERATING PROFIT (LOSS) (1,295,819) Other Expenses Prior Period (Entity) --- -------------- NET PROFIT (LOSS) $ (1,295,819) ============== 1st mortgage principal payment $ 51,222 2nd mortgage principal payment --- 3rd mortgage principal payment --- -------------- Total mortgage principal payments $ 51,222 ============== Actual replacement reserve deposits $ 79,732 Replacement or painting reserve releases $ (70,199) Cash subsidies --- Capital improvements not expensed --- Capital contribution or disbursement $ 19,604 SCHEDULE III STRATHERN PARK COMPUTATION OF RESIDUAL RECEIPTS DECEMBER 31, 1995 Net income (loss) as of December 31, 1995 $ (1,295,819) ADD: Depreciation $ 784,732 Amortization 17,967 Community Redevelopment Agency loan interest 322,259 Housing Development Grant loan interest 362,537 Releases from reserve for replacements 70,199 1,557,694 -------------- --------------- 261,875 LESS: Principal payments on mortgage (51,222) Deposits to reserve for replacements (79,732) Payments for capital expenditures --- (130,954) -------------- --------------- RESIDUAL RECEIPTS, as defined in the partnership agreement at December 31, 1995 $ 130,921 ===============