August 13, 1996
Securities and Exchange Commission
Filer Support, Edgar
Operation Center, Stop 0-7
6432 General Green Way
Alexandria, VA 22312
Re: Boston Financial Tax Credit Fund VII, A Limited Partnership
Report on Form 10-Q for Quarter Ended June 30, 1996
File No. 0-24584
Gentlemen:
Pursuant to the requirements of Rule 901(d) of Regulation S-T, enclosed is one
copy of subject report.
Very truly yours,
/s/Marie D. Reynolds
Marie D. Reynolds
Assistant Controller
TC7-Q1.DOC
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended June 30, 1996 Commission file number 0-24584
Boston Financial Tax Credit Fund VII, A Limited Partnership
(Exact name of registrant as specified in its charter)
Massachusetts 04-3166203
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Arch Street, Boston, Massachusetts 02110-1106
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617)439-3911
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page No.
- - ------------------------------ --------
Item 1. Financial Statements
Balance Sheets - June 30, 1996 (Unaudited)
and March 31, 1996 1
Statements of Operations (Unaudited) -
For the Three Months Ended June 30, 1996 and 1995 2
Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Three Months Ended June 30, 1996 3
Statements of Cash Flows (Unaudited) -
For the Three Months Ended June 30, 1996 and 1995 4
Notes to Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION
Items 1-6 10
SIGNATURE 11
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
BALANCE SHEETS
June 30, March 31,
1996 1996
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 441,780 $ 334,845
Other current assets 27,822 29,943
------------ ------------
Total current assets 469,602 364,788
Investments in Local Limited Partnerships (Note 2) 34,124,310 34,328,400
Restricted cash 230,205 227,320
Marketable securities, at fair value (Note 1) 3,277,223 3,855,342
Organization costs, net of accumulated
amortization of $33,333 and
$30,833, respectively 16,667 19,167
------------ ------------
Total Assets $ 38,118,007 $ 38,795,017
============ ============
Liabilities and Partners' Equity
Current liabilities:
Accounts payable to affiliates $ 217,655 $ 212,975
Accrued expenses 39,866 66,417
------------ ------------
Total current liabilities 257,521 279,392
Commitments (Note 3)
General, Initial and Investor Limited Partners' Equity 37,903,490 38,536,506
Net unrealized losses on marketable securities (43,004) (20,881)
------------ ------------
Total Partners' Equity 37,860,486 38,515,625
------------ ------------
Total Liabilities and Partners' Equity $ 38,118,007 $ 38,795,017
============ ============
The accompanying notes are an integral part of these
financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended June 30, 1996 and 1995
1996 1995
------------ ---------
Revenue:
Other $ 66,583 $ 26,325
Investment 41,752 10,278
---------- ----------
Total Revenue 108,335 36,603
---------- ----------
Expenses:
Asset management fee, related party 68,826 67,146
General and administrative expenses (includes reimbursements
to an affiliate in the amounts of $33,200 and $25,511, respectively) 65,878 59,739
Amortization 11,457 9,199
---------- ----------
Total Expenses 146,161 136,084
---------- ----------
Loss before equity in losses of
Local Limited Partnerships (37,826) (99,481)
Equity in losses of Local Limited Partnerships (595,190) (669,065)
----------- ----------
Net Loss $ (633,016) $ (768,546)
========== ==========
Net Loss allocated:
To General Partners $ (6,330) $ (7,685)
To Limited Partners (626,686) (760,861)
---------- ----------
$ (633,016) $ (768,546)
========== ==========
Net Loss per Limited Partnership Unit
(50,930 Units) $ (12.30) $ (14.94)
========== ==========
The accompanying notes are an integral part of these
financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
(Unaudited)
For the Three Months Ended June 30, 1996
Initial Investor Net
General Limited Limited Unrealized
Partners Partners Partners Losses Total
Balance at March 31, 1996 $(58,956) $ 5,000 $ 38,590,462 $ (20,881) $ 38,515,625
Net change in net unrealized
losses on marketable securities
available for sale - - - (22,123) (22,123)
Net Loss (6,330) - (626,686) - (633,016)
--------- ------- ------------- --------- -------------
Balance at June 30, 1996 $(65,286) $ 5,000 $ 37,963,776 $ (43,004) $ 37,860,486
======== ======= ============ ========= ============
The accompanying notes are an integral part of these
financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended June 30, 1996 and 1995
1996 1995
------------- ---------
Net cash provided by (used by) operating activities $ (68,861) $ 123,108
------------ -----------
Cash flows from investing activities:
Purchase of marketable securities - (5,767,398)
Proceeds from sales and maturities of
marketable securities 581,755 7,984,300
Cash distributions received from Local
Limited Partnerships 122,750 34,921
Investments in Local Limited Partnerships (525,824) (635,700)
Restricted cash (2,885) -
------------ -----------
Net cash provided by investing activities 175,796 1,616,123
------------ -----------
Net increase in cash and cash equivalents 106,935 1,739,231
Cash and cash equivalents, beginning of period 334,845 1,768,604
------------ -----------
Cash and cash equivalents, end of period $ 441,780 $ 3,507,835
============ ===========
The accompanying notes are an integral part of these
financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the financial
statements and notes thereto included with the Fund's 10-K for the year ended
March 31, 1996. In the opinion of management, these financial statements include
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the Fund's financial position and results of operations. The
results of operations for the periods may not be indicative of the results to be
expected for the year.
1. Marketable Securities
A summary of Marketable Securities is as follows:
Gross Gross
Unrealized Unrealized
Cost Gains Losses Fair Value
Debt securities issued by
the US Treasury and other
US government corporations
and agencies $ 2,060,934 $ - $ (16,953) $ 2,043,981
Mortgage backed securities 1,259,293 - (26,051) 1,233,242
------------ -------- ---------- -----------
Marketable securities at
June 30, 1996 $ 3,320,227 $ - $ (43,004) $ 3,277,223
============ ======== ========== ===========
Debt securities issued by
the US Treasury and other
US government corporations
and agencies $ 2,563,670 $ - $ (10,111) $ 2,553,559
Mortgage backed securities 1,312,553 - (10,770) 1,301,783
------------ -------- ---------- ------------
Marketable securities at
March 31, 1996 $ 3,876,223 $ - $ (20,881) $ 3,855,342
============ ======== ========== ============
The contractual maturities at June 30, 1996 are as follows:
Cost Fair Value
Due in one year or less $ 1,244,638 $ 1,238,396
Due in one to five years 816,296 805,585
Mortgage backed securities 1,259,293 1,233,242
------------ ------------
$ 3,320,227 $ 3,277,223
============ ============
Actual maturities may differ from contractual maturities because some borrowers
have the right to call or prepay obligations. Proceeds from sales and maturities
were approximately $582,000 and $7,984,000 for the three months ended June 30,
1996 and 1995, respectively. Included in investment income are gross gains of
$27,496 and gross losses of $1,737 which were realized on sales in the three
months ended June 30, 1996 and gross gains of $7,082 and gross losses of $93,775
which were realized on these sales in the three months ended June 30, 1995.
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Investments in Local Limited Partnerships
The Fund has acquired interests in nineteen Local Limited Partnerships which own
and operate, or will operate multi-family housing complexes. The Fund, as
Investor Limited Partner, pursuant to the various Local Limited Partnership
Agreements, has generally acquired a 99%, with the exception of Springwood which
is 19.80%, interest in the profits, losses, tax credits and cash flows from
operations of each of the Local Limited Partnerships. Upon dissolution, proceeds
will be distributed according to each respective partnership agreement.
The following is a summary of Investments in Local Limited Partnerships at June
30, 1996:
Capital Contributions paid to Local Limited Partnerships
and purchase price paid to withdrawing partners of
Local Limited Partnerships $ 39,052,558
Cumulative equity in losses of Local Limited Partnerships (5,893,418)
Cash distributions received from Local Limited Partnerships (222,898)
--------------
Investments in Local Limited Partnerships before adjustments 32,936,242
Excess of investment cost over the underlying net assets acquired:
Acquisition fees and expenses 1,252,338
Accumulated amortization of acquisition fees and expenses (64,270)
-------------
Investments in Local Limited Partnerships $ 34,124,310
=============
Summarized financial information from the combined financial statements of the
nineteen Local Limited Partnerships in which the Fund has invested is as
follows:
Summarized Balance Sheets - as of March 31, 1996 (Unaudited)
Assets:
Investment property, net $ 102,482,184
Current assets 5,218,745
Other assets 3,588,230
-------------
Total Assets $ 111,289,159
=============
Liabilities and Partners' Equity:
Current liabilities (includes current portion of long term debt) $ 4,701,235
Long-term debt 58,953,977
Other debt 3,945,542
-------------
Total Liabilities 67,600,754
Partners' Equity 43,688,405
-------------
Total Liabilities and Partners' Equity $ 111,289,159
=============
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Investments in Local Limited Partnership (continued)
Summarized Statements of Operations -
For the Three Months Ended March 31, 1996:
Rental and other income $ 3,042,439
------------
Expenses:
Operating 1,415,844
Interest 1,218,952
Depreciation and amortization 1,024,772
------------
Total Expenses 3,659,568
Net Loss $ (617,129)
============
Partnership's share of Net Loss $ (595,190)
============
Other Partners' share of Net Loss $ (21,939)
============
3. Commitments
At June 30, 1996, the Fund has committed to make future capital contributions
and pay future purchase price installments on its investments in Local Limited
Partnerships. These future payments are contingent upon the achievement of
certain criteria as set forth in the Local Limited Partnership Agreements and
total approximately $1,128,000.
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At June 30, 1996, the Fund had cash and cash equivalents of $441,780, compared
with $334,845 at March 31, 1996. The increase is primarily attributable to
proceeds from sales of marketable securities and cash distributions received
from local limited partnerships, partially offset by investments in local
limited partnerships and cash used for operating activities.
As of June 30, 1996 approximately $2,551,000 of marketable securities has been
designated as reserves by the Managing General Partner. The reserves were
established to be used for working capital of the Fund and contingencies related
to the ownership of Local Limited Partnership interests. Management believes
that the interest income earned on reserves, along with cash distributions
received from Local Limited Partnerships, to the extent available, will be
sufficient to fund the Fund's ongoing operations. Reserves may be used to fund
operating deficits if the Managing General Partner deems funding appropriate.
At June 30, 1996, the Fund has committed to make future capital contributions
and pay future purchase price installments on its investments in Local Limited
Partnerships. These future payments are contingent upon the achievement of
certain criteria as set forth in the Local Limited Partnership Agreements and
total approximately $1,128,000.
Since the Fund invests as a limited partner, the Fund has no contractual duty to
provide additional funds to Local Limited Partnerships beyond its specified
investment. Thus, as of June 30, 1996, the Fund had no contractual or other
obligation to any Local Limited Partnership, which had not been paid or provided
for, except as described above.
In the event a Local Limited Partnership encounters operating difficulties
requiring additional funds, the Fund might deem it in its best 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 in the three months ended June 30, 1996.
Results of Operations
The Fund's results of operations for the three months ended June 30, 1996
resulted in a net loss of $633,016 as compared to a net loss of $768,546 for the
same period in 1995. The improved net loss position is primarily attributable to
a decrease in equity in losses of Local Limited Partnerships and an increase in
investment income.
Equity in losses of Local Limited Partnerships decreased during the three months
ended June 30, 1996 as compared to June 30, 1995, due to an increase in the
number of Local Limited Partnerships interests which are now in the operational
phase. The increase in the number of operational Local Limited Partnerships from
fifteen to nineteen has resulted in an increase in total revenues in excess of
the increase in total expenses.
Investment income increased during the three months ended June 30, 1996, the
result of higher returns earned on the sales of marketable securities as
compared to the 1995 period.
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Property Discussions
As previously reported, one of the local limited partnerships in which the Fund
has invested, Los Claveles, has experienced operating difficulties as a result
of widespread water infiltration that caused subsidy payments to be suspended on
85 of the 180 units until the repairs were completed. The suspension of Section
8 payments has resulted in large fluctuations in monthly revenue and caused the
property to fall substantially behind in its debt service and default on its
mortgage. In January 1996, a default notice was received from the lender. The
default notice has since been cured with an advance ($208,000) of capital
contribution. During a recent site visit, it was discovered that the property
continues to be poorly managed, as deferred maintenance issues continue to
increase. Additional funds are needed to correct the water damage, as well as to
cure outstanding payables. The Local General Partner has agreed to resolve these
issues, and submit a proposal which addresses these problems in August. The
Managing General Partner is actively negotiating to replace both the management
agent and the Local General Partner.
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K
(a)Exhibits - None
(b)Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended June 30, 1996.
BOSTON FINANCIAL TAX CREDIT FUND VII, A LIMITED PARTNERSHIP
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DATED: August 13, 1996 BOSTON FINANCIAL TAX CREDIT FUND VII,
A LIMITED PARTNERSHIP
By: Arch Street VII, Inc.,
its Managing General Partner
/s/Georgia Murray
Georgia Murray
A Managing Director, Treasurer and
Chief Financial Officer